I've Got a Really Bad Feeling About This

I've written blog items before warning about the perilous state of the US economy. However, Paul Krugman in the New York Times writes a piece that really scares me. He talks specifically about the period we're now in, that is, the time between the exit of Bush and the entrance of Obama. if we stand back and look at things objectively, Bush has done little more than thrown obstacles in the way of help for hard working Americans (the unemployment benefit extension notwithstanding).

Congress has thrown the ball for bailing out the auto industry right back in Detroit's court. They've got until December 2nd to come up with their own rescue plan. Hopefully they're asking themselves whether it made sense to fly to DC in private jets. Yet this is just the tip of the iceberg. Most forecasters have already predicted a bleak holiday shopping season. That means fewer retailers will hire fewer people. Jobless claims skyrocketed last month, and it looks like there's more to come.

Then, contemplate this. The $250 to $300 billion dollars already spent from the $700 billion dollar bailout package hasn't had the desired effect. Credit markets have yet to thaw, and financial stocks in particular have been hammered all this week. That means, put simply, the banks still don't trust each other, no matter how much money you throw at them. And speaking of banks, we have seen over the past few months a staggering series of events that have shaken the confidence Americans have had in our financial institutions.

I've said before that 2009 looks anything but appetizing. Now we hear forecasts of an 8% unemployment rate, a spiral of possible home foreclosures, bank failures, and the very real possibility of one or more carmakers going belly up, and laying off all their workers. Those people who thought the markets were tanking because of Barack Obama's election ought to be feeling like fools about now. He's in fact the one who the nation will look to in order to get us out of this mess, a mess not of his creation.

The only question is how severe will the pain be before we see light at the end of this tunnel?