one million Americans applied for 50,000 low-wage, part time positions at McDonald's, how will they fair when the economy deteriorates even further and even the Golden Arches stops hiring? Widespread financial ruin aside, I'm concerned about the impact on the nation's social fabric. In my very first post for ECOMINOES, I wrote about the potential for social unrest. Many readers accused me of being hyperbolic, but I stand by what I said. Long-term unemployment will break a man. (.pdf) And millions upon millions are long-term unemployed, most of them will continue to be unemployed throughout the second leg down, and millions upon millions more will become long-term unemployed as the economy continues to contract.
With the direction in which the economy is heading, Republicans are likely going to take the White House and the Senate in addition to holding the House. I would expect the new GOP regime to be much more fiscally conservative than its Bush-era counterpart. In fact, I suspect that the new GOP-controlled government will begin taking long-overdue austerity measures, which will eliminate the prospect of a new emergency unemployment benefits program. So, the growing masses of long-term unemployed will face a job market with even fewer prospects, and there will be no emergency unemployment program to count on. This is what we call a powder keg.