Dream World vs. Ugly Reality

Like I do every day, I was scanning through the latest list of news items at The Mortgage Lender Implode-o-Meter and three, in particular, caught my eye (or rather, almost caused me to spit out my coffee).

Why? Once again, they highlight the extraordinary disconnect between the dream world that economists live in and the ugly reality that a great many Americans are forced to wade through on a regular basis.

From economic la-la land:

"Poll: Economists See 'Healthy' Expansion Under Way" (Associated Press)

CHICAGO – Economists expect the recovery to remain "firmly on track" over the next two years though job growth is likely to remain slow, according to a new survey.

The latest outlook from The National Association for Business Economics, set to be released Monday, sees regular job gains resuming this quarter but no drop in unemployment below 9 percent for another year. Consumer spending will be relatively sluggish as consumers continue to dig themselves out of debt but inflation is expected to remain subdued, and home prices should rise at a rate slightly above inflation in 2010 and 2011.

"We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets," said Lynn Reaser, the group's president and chief economist at Point Loma Nazarene University.

The NABE forecast is largely consistent with its last quarterly forecast in November and reflects an economy in slow-but-steady recovery mode.

From planet Earth:

"Millions of Unemployed Face Years Without Jobs" (MSNBC)

Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.

Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives - potentially for years to come.

Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration's proposal to extend the payments, according to the Labor Department.

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious - an unexpected turn for this onetime standup comic with X-rated material - finding in Christianity her only form of health insurance.

"I pray for healing," says Ms. Eisen, 57. "When you've got nothing, you've got to go with what you know."

"More Generations Living Under the Same Roof" (Reuters)

More generations are living under the same roof and the trend will deepen as families grappling with near double-digit unemployment share expenses, a study showed on Monday.

Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.

Thirty-seven percent of the company's real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation. Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.

"More buyers are pooling investments, considering bringing mom and dad into it," said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.

Buyers were primarily driven by financial concerns when deciding to combine generations in a household, the survey found. Health concerns were the second most common reason and strong family bonds a distant third.

Patton said one of her clients sought to bring her mother out of a health care facility. The mother and daughter pooled resources, buying a house with separate entrances with units for each and room for a caregiver.

This shift in homeownership comes as unemployment hovers just under 10 percent and many consumers are being dealt wage cuts.

College graduates unable to get jobs are often returning to their parents' homes.

Comments

[Steve]

Economists are whistling past the graveyard. Hoping that what worked yesterday (dropping interest rates and increasing government spending has always regenerated the economy) will work today. But as the credit creation process goes into reverse, governments are pushing on a string. As happened in Japan during the lost decade, consumers become fearful and start saving so that tax cuts and pay increases go into savings accounts rather than into the economy.

What if what was normal has morphed permanently into the "new normal." Economists' models aren't taking this into account.

What might occur is some "unexpected" shock, like Greece defaulting or the Euro collapsing, that will shock the economists and they will convert en masse to a more realistic viewpoint.

History will record that this shock caused the second wave. But in reality, the cards were set - it was just a matter of which shock would break first.

[roger]

Dream World vs. Ugly Reality
If you are having an American dream, you must be sleeping.

[WillyRoma]

Somewhere around the Reagan years is when it started.
I'm of course referring to the big time looting of America by the wealthy.

Yes, originally it was disguised as "supply side economics", or "national security" .... only time has shown it was merely corruption. Triggle down economics at best, blatant corruption more likely.

I once read in a Libertarian leaning local Newspaper that "Government was different factions fighting for the trigger of a gun so that they could turn it on the others". Well (as Warren Buffet noted) the in class war... wealthy won. They bought Congress and the rest is history. As Mark Twain said..."we have the best Congress money can buy". Only now they've bought the Executive branch, the Regulators,and of course...they've outright OWNED the Fed for almost the last 100 years.

So when you quote anything from "economists" , hahaha...these are merely the priests for the pharaoh interpreting why all this effort must be spent to build these seemingly useless pyramids.

'Recovery' ...who are they trying to kid?

It's a myth, a sham along the lines of:
--- the Ocean Liner Lusitania wasn't carrying arms
--- the North Vietnamese actually attacked in the Gulf of Tonkin
--- Iraq had weapons of Mass Destruction
--- Change you can belief in

All Government LIES!

And so is "Recovery"