- A Humble Prediction

Sometime in the next 90 days we’ll finally hit bottom on the home building market. When we do, and it’s reflected in the numbers, everyone will be mystified at how even though output for the entire sector has gone off a cliff, unemployment stats will fail to reflect the downturn.

My friends and fellows from Goldman, Morgan Stanley and Lehman will go on the tube and talk about how robust and diversified our economy is with respect to employment, and marvel at the apparent ability of all those people to find jobs in other industries so quickly, and thus avoid becoming a blip on the "Bureau of Labor Statistics" radar. They will prattle on about the commercial real estate market, and the difference between the high end and the low end, and how all this makes things look bright for the future if the sector.

But in fact, they will be intentionally ignoring the actual issue. The reason the unemployment numbers will not reflect the economic downturn is because all but a tiny portion of the home builders in this country are almost exclusively hiring illegal aliens, and illegals don’t report. They will lose their jobs, and go back to Guatemala or Mexico, and the people who monitor our economy will continue to turn a blind eye to the issue, and the public will never be the wiser.

When the European union was solidifying under one currency, there was great debate about it’s future. People argued in good faith that it was inevitable, while others argued that “tribal Europe” put the whole endeavor on borrowed time. Everyone engaged in the debate was operating in good faith and trying to make reasoned hypotheses but still came down on two sides.

But with the issue of illegal aliens and the underground economy of the US distorting the accuracy of our economic statistics, I don’t know anyone who isn't under reporting it's apparent effect. Even my close friends, many of whom you would recognize from TV, seem to have bought into the “kool-aid” notion, that it’s only a marginal issue and is creating only a tiny overall distortion. This does not jive with my empirical observations. And I’ve never seen so many profoundly intelligent people intentionally fooling themselves before. I don't believe there is a conspiracy involved at all. But it's puzzling to see such "group think" from people who have no incentive toward it.

It's a dangerous precendent to set, and in the end it's going to work toward cementing illegal aliens as a permanent underclass in the United States. They will be something marginally more than slaves, but far less than citizens. And it's a mistake to allow this to happen, both for them, and for us.