Massive job losses since September 2008, Portends crime wave by September 2009

This morning I write about bleak times now for the broad economy, and bleaker times ahead -- unless you are in the business of security which will experience boom time conditions by Q3 2009. A rise in property and violent crime is forthcoming if current trends persist: shoplifting, burglaries, robbery, intimidation, extortion, kidnapping, robbery, arson, or worse. The history of severe economic negative economic shocks show a crime wave following within one year.

The US economy is in an economic death spiral of sorts with real estate, equities, commodities, business investment, and employment heading downwards fast. The animal spirits that encouraged investors of times past to invest in equities and bonds are in retreat and seeking to hold treasuries and cash. Indeed, holding cash today is viewed as a store of value as assets are rapidly losing their store of value -- homes, cars, assets, and commodities have retreated in value. Without a sizable exogenous event, within one year, indeed by Septembers' end 2009, there will be a widely recognizable, and vicious crime wave that hits this country the likes that have not been seen since the great depression. In that day, a man will set a tool down, and it will be gone.

Statistically speaking, for every rise in the unemployment rate you will notice a multiplied increase in the local property crime rate between 1.4x to 2.6.x depending on the local geography, population density, and job opportunity climate. These figures are taken from years of individual and time series data research conducted by economists and criminologists that examined the impact of rising unemployment on crime rates. One can only imagine what it must have been like living through the first great depression with unemployment rates of 24%.

Now I don't expect (or care) if anybody necessarily agrees with me -- the facts will speak for themselves. But I do hope that you will prepare yourselves for more difficult times ahead. Unfortunately for us all, time and the consequence of actions taken to date, and the downward trend are in my forecasting favor. I am putting this out now so that everyone can wake up and understand that we need to address the serious question of unemployment, loss of household income, and lack of access to capital (in homes that are depreciating monthly). Without income, people make up the difference by other means. The question is this -- how quickly do you take heed to this forecast? how will you prepare? what can you do now to make yourself much less a 'victim' or target of crime opportunity?

The economy fell off a financial cliff with the siemic event of 9/15/08 and the Lehman Brothers bankruptcy and the subsequent market events that followed. Commercial lending has literally ground to a halt, businesses have contracted spending, consumers have covered their wallets and pulled back from large purchases, and unemployment has spiked -- and this condition is not likely to turn around for many months. President Elect Obama's New Deal broadbased jobs based employment plan as announced will not cover the enormity of the jobs lost at current forecast. More creative thinking must emerge.

Leading off the front page of the New York Times on December 5, 2008, is a headline that reads -- U.S. Loses 533,000 Jobs in Biggest Drop Since 1974 . "The nation’s employers cut 533,000 jobs in November, the Bureau of Labor Statistics reported Friday. Not since December 1974, toward the end of a severe recession, have so many jobs disappeared in a single month — and the current recession, far from ending, appears to be just gathering steam." Most importantly, a total of 1.9 million jobs have been lost since December 2008, the start of the deep recession and two-thirds of these loses have occured since September 2009. This trend will continue for the foreseeable future of months and several quarters. The NY Times articles goes on to post - "More significantly, the unemployment rate does not include those too discouraged to look for work any longer or those working fewer hours than they would like. Add those people to the roster of the unemployed, and the rate hit a record 12.5 percent in November, up 1.5 percentage points since September. "

http://www.nytimes.com/2008/12/06/business/economy/06jobs.html

The chorus call asking if we are going to have a crime wave has began. Today's article of interest has the heading, "Now that the recession is official, is a crime wave coming?" http://www.daily-journal.com/archives/dj/display.php?id=432114 The article provides the following comments -- "Richard Rosenfeld is a professor of criminology and criminal justice at the University of Missouri-St. Louis. He believes it is inevitable -- no matter where you live. "My research has shown that crime rates tend to rise when consumers become pessimistic. Why? Economic theory predicts that people weigh the costs and benefits of law-abiding versus criminal behavior," he recently wrote. "Like it or not, a failing economy increases the temptation." And Rosenfeld added, "Worried consumers do not necessarily resort to street crime. But some will resort to buying stolen goods when they can no longer afford the prices at Target or Wal-Mart. As that demand increases, so does the incentive for the street criminals who supply underground markets."

It's time to prepare. In pioneer times they would circle the wagons to protect themselves. What is the equivalent of circled wagons today? More on this in coming blogs.