As you can see I'm saving my budget by cutting parts of words out of titles.
Anyway holy shit this recession is going to be bad. Current predictions are for something around the 1970's recession; hopefully it won't go beyond that but I'm bracing for the worst.
Toronto got way too pricey to live in (I couldn't even afford the medication I need and had to calculate my budget down to the single dollar) and so I've ended up moving back to my parents in Chatham. I -was- feeling ashamed until I noticed that a lot of people have moved back home in one context or another. Not naming names but all of my friends in this situation are well educated, with no criminal record and at least decent social skills. Getting part time work is one thing; it's getting a full time job that has an income that can sustain a wholly independent lifestyle that's getting troublesome.
For those wondering precisely what's going on with the economy, this post by FMguru of somethingawful sums it up well.
"It's a perfect storm scenario:
1) The big one right now is that the housing market is melting down, and it turns out that huge sections of our economy were based entirely on the housing market booming forever. Well, the laws of gravity reasserted themselves (as they always do), and the damage keeps spreading and magnifying. Loss of jobs in housing/construction/real estate. Failures of housing companies and mortgage companies. Foreclosures and defaults skyrocket, the value of peoples' houses plummets. Banks suddenly have a ton of money lent out that will never be paid back on collateral that is suddenly worth a lot less than it was. Banks run out of liquidity, creating a credit crunch. Large chunks of the stock market tank, creating a bear market. There's a lack of confidence as nobody knows what anything is worth and the various rating agencies go out of business or have zero credibility. New investment dries up, large chunks of the economy screech to a halt simultaneously (in Silicon Valley, not a single VC-funded firm went IPO last quarter [not year]. Not one. And tech is one of the few economic bright spots!). Now, Fannie Mae, Freddie Mac, and lots of other foundation-stone too-big-too-fail entities are teetering.
2) The other side of that is with consumer spending. Our economy has been propped up for the last decade by those soaring home values. People borrowed zillions of dollars out of their home equity and pumped it into consumption. How do you think people were able to afford all those SUVs and HDTVs and iPhones in an environment where real wages were flat or declining? They were pre-spending the sale price of their homes. Well, the values of the homes have collapsed and that money spigot is shut off. So suddenly car dealers are seeing their sales collapse. So are chain restaurants. So is Starbucks. There's been a big shift in spending from national brands to blue-label store brands. And so on. Consumers have suddenly tightened their purse strings.
3) The fall off in consumer spending, along with the collapse in multiple sectors (see 1 above), leads to a shitty job market. Starbucks closes stores, GM lays off workers and closes plants, Indymac lets half its workers go. Hours are cut, benefits are cut, and nobody complains because they're just happy to have a job.
Can you see the magnifying feedback loops here? The value of houses goes down, so consumers stop spending money like they used to, so jobs are lost, and those unemployed people can't make their house payments, so they default on their house, so the bank has even more bad debt, which makes the market stagger some more and tightens lending, so there's no new investment or jobs being created, so sales forecasts are flat, so business lay off workers and cancel plans to expand, and round and round and round and round. Usually, Uncle Sam steps in to clear out bad debt, restore confidence, and prime the pump to keep the economy humming. But...
4) Through bad policy, the government and the Fed don't have a lot of options. Interest rates are so low, they can't be cut any more. We've been running $300 billion/year deficits for the last 6 years to pay for Bush's war and "stimulus" tax cuts, so there's not much more economic stimulus to be pumped into the system. We've run up an enormous amount of debt under Bush, which we've financed by selling promisory notes overseas (China mostly), which has led to a collapse in the dollar, which is making the price of government borrowing rise even higher. And states are reeling from the loss of property tax revenues, so they're going to be cutting spending and payments and new projects just when they need to start spending on that stuff to stimulate their economies and deal with increased welfare loads.
5) All of that is bad enough, but we're also going through a period of elevated supply costs, which makes everything more expensive. Energy costs have doubled, seemingly permanently, resulting in huge disruptions (and they can still go up!) and raising the price of everything. Food costs are skyrocketing, too - because of energy costs, environmental degradation, biofuel diversion, and shifting weather patterns (see 7 below). And lots of other basic commodities are running low - check out the price of copper, or even weird metals with critical industrial uses like tantalum or niobium.
6) Bad policy plus worthless dollars plus spiking commodity costs = inflation. Most of you aren't old enough to remember pre-1982 America, when inflation was last a problem but I gotta tell ya: it sucked. The only worse was the cure, which was the early Reagan recession that had national unemployment at 10%. Also, this inflationary risk really constrains the Fed's ability to act. Hope you like your economic slumps long-lasting!
7) And there are a whole bunch of long ignored but worsening problems that are coming due soon. The climate crisis is real, and it's worsening faster than the consensus projections indicated. The peak oil people are being proven right. Water supplies are becoming a huge problem worldwide. We've underinvested in decades in infrastructure - public transit, sewage, water, electrical grid, schools, you name it. Medical costs keep skyrocketing 5-10% a year, every year, with no end in sight. Oh, and the boomers are going to start retiring in about 18 months. And the number of undropped shoes grows exponentially as you stare into the future. What are we gonna do if global fisheries collapse completely, or we can't get this honeybee disease situation under control? What if a chain of hurricanes leaves Florida devastated? What if the long-predicted avian flu pandemic finally arrives? The problems are global, and economic and ecological crises will lead to all sorts of political and military and economic disruptions that will spell the end of the long peace we've had since the end of the Cold War. Think of the 1930s: unstable countries, masses of refugees, charismatic opportunists casting about for scapegoats, dwindling resources - fun!
Add it up, and it's bad. Real bad. I get a distinct 1970s vibe from the whole thing - from the supply shocks of the early years to the stagflation of the Carter era. And I think it has a great possibility to get worse rather than better. It took Japan 15 years to dig itself out of the hole the 1989 collapse of their property bubble caused them, and their society was at least socialized enough to provide a safety net for people so they wouldn't be pensionless or homeless or without medical treatment.
And what really has me depressed is the collapse in my faith in our institutions - political, economic, cultural, media - to deal with these problems. You think the American people are capable of making hard choices? You think the media is capable of presenting the problems and the solutions in a way that leads to the right options being supported? You think Wall Street and the GOP (and too many Democrats) won't figure out a way to make money on this whole thing while sticking us with the bill? How long do you think it's going to take for it to sink in - REALLY sink in - that people's houses are never going to be worth what they were five years ago, that the price of gas is never going to go down below $4/gallon, that the stock market might be flat or declining for the next decade (again, like the 1970s)? When are we going to get policy decisions that aren't just selling magic beans like increased offshore drilling or opening ANWR or coal liquifaction or hydrogen or one-shot stimulus checks or gas tax holidays or (lord help us) more capital gains tax cuts?
TL;DR: Yeah, we're fucked."