This is a pretty scary statistic - I guess that translates to almost 3.5 million people. It's always been the case that California leads in boom times but I guess the same can be true during the bust. Not only is unemployment at the highest point in about 15 years but home prices have been sliding, as well. On top of all of this, there are reports that the state only has about a month of cash left while the politicians argue about a budget. Let's hope this is the low point.

I woke up this morning to the radio airing the news that the auto bailout has passed.  I'm glad a lot of people won't be losing their jobs but I think we're only delaying the inevitable.  The $17.4 billion bailout has provisions that require, among other things, the automakers to "prove they can restructure sufficiently" or those loans would be called back.  My question is, can the automakers really turn it around?  It's like a gambling addict who just needs some seed money to win back all the losses his accumulated over the years.  Chances are, it's just not going to happen.  And what if they don't sufficiently restructure?  Would they really care if the loans are called back?  They'd be in the same position they were before the bailout except now with three months of salaries paid.  And actually, I don't think Congress would have the guts to actually do it.  The old cry of "we can't let the US auto industry fail" will be heard again.

If the government really wanted to make a difference, they should have asked for the resignation of all top level executives from any company that asked for a loan.  The way it's setup now, these automakers will come back to Congress in March and either ask for more money or time to prove they are restructuring (probably both).  Why would anyone give money to a group of people who have a history of failure?  This is in stark contrast to a company like Toyota who hasn't had an annual corporate loss in 71 years (they expect to end the current fiscal year with a loss).  In fact their profits in 2007 alone were $14.9 billion - almost the same size as the current bailout.  With a cushion like that, who needs a handout?

So the Fed lowered the prime rate again to between 0% to 0.25%. While most folks may cheer about this, I believe it is a harbinger of some tough times ahead. Back in the early part of the decade, Japan cut its interest rates to 0% and that's where it remained for almost 6 years. Could that mean the US is in for a recession that could last that long. Not sure, but I think the optimists who think this is a half to one year long recession are deluding themselves. The circumstances of Japan's decade long recession are different so it's not an apples to apples comparison. However, Japan's recession was for the most part localized to Japan. The recession we are in now is a global recession that touches almost every country on the planet. If it took one country a decade to emerge from its recession (only to be caught up now in a global recession), how long will it take us to turn the corner?

News came just a few hours ago that the proposed government bailout of the three major US automakers had failed. The speculation is that at least one or maybe all three may file for bankruptcy in the near future. At stake is not only up to 350,000 jobs but the future of the US auto industry. Will we see any or all of the big three being sold off to foreign companies? Or will they just go away and the only cars available in the US will be from Asia or Europe?
 
For those who may think the worst during this time, I actually think a "correction" in the US auto industry might be good in the long run. Of course in the short term many people will lose their jobs - never a good thing. However, my hope is that this wake up call will jolt the US auto industry into action. That could mean cleaning out obviously ineffective executives, restructuring to become leaner/meaner, focusing on quality and designer, or hopefully all of the above. America has invented a lot of great products like the automobile, television, and microprocessor. The microprocessor is probably the only one of those three which the US still can be considered a leader in terms of innovation and quality. Let's hope this shake out is the first step towards regaining that stature in the global automobile industry.

Ike just put another post up on HuffPost. Check it out here. One thing I'd add to his recession list would be to get rid of one car in your household (assuming you have two or more). A while ago, my wife and I decided to go from a two car household to a one car household. It was painful at first but we adapted. We took more public transportation and planned trips better to make use of our one car. I would guess we probably saved thousands every year on gas, maintenance, and insurance by losing that extra car. The other unexpected benefit was that we had more time together on those car rides (maybe not a benefit for some?).
 
For those ditching their own cars all together, I'd suggest a car sharing service - City CarShare or Zipcar come to mind for those in the Bay Area.