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2010 - Sink, Swim or grow gills

Seeking Alpha provides lots of perspectives including national, international, macro and micro but mine is local.  I live in a mostly rural Georgia County that was boomtown just 42 months ago in late 2006.  Jackson County was one of the 35 fastest growing counties in the nation.  The local paper just published a report that 171 property owners face foreclosure in April, that is the highest number so far for any month and is matched by a record 12,500 March foreclosures in nearby Atlanta.  That Jackson County number means roughly 1% of the housing stock in the entire County of roughly 16,000 households could foreclosed on in the next 30 days brining the total to 558 for the first 4 months of 2010.  Unemployment for the most recently reported month rose from 10.4% to 11.9%, a 1.5% increase in one month.

I am sure you can see that my little corner of the world is not yet experiencing a housing recovery.  I am a mortgage lender for a Community Bank and recently had to deny financing for the construction of a new $550,000 home because we could not support the value needed to build the home even though it was being constructed on 12 acres owned free and clear because distressed property is selling for well below the cost of building a new home.  The borrower was very well qualified but even after we approached several other banks trying to make it work he went away without a financing option for the project.  We now finance mostly foreclosure sales and short sales when they can get approval and our average loan amount has dropped by over $100,000 which may be a good thing in the long run but still hurts my bottom line.

I guess what I am saying is that it looks to me like we still have a very long road ahead.  Times are tough and getting tougher.  We are fortunate that we have industry here but I am worried because two of our largest employers are units of Toyota, their inland port for equipping new vehicles and an A/C compressor manufacturing plant, not to mention a trucking company managed by a friend of mine whose sole business is moving Toyota vehicles to dealers in the SE.  Jackson County borders Clarke County, home of the University of Georgia, a regional economic driver and employment center for the area.  Necessary State budget cuts are causing the University to cut jobs as well and local public schools and other government agencies are cutting staff as well. 

On the other side of us from Athens is Hall County. Hall & Jackson are the number one and two producers of Poultry and Eggs in the nation with processing operations centered in Gainesville and Athens.  The Federal Government is taking steps to make it easier to import Chicken from lower cost producer nations such as China.  This is not only an economic concern but also a safety concern.  A friend who managed quality control for a poultry plant just had to relocate to South Carolina to keep a job as the plant where he worked was closed, eliminating 500+ jobs.  He is struggling to rent in SC and keep up payments on a house he is underwater on here.

Now getting back to the big picture I know that Jackson County is just a little microcosm of the US Economy but it is pretty typical.  We have a diverse industrial base consisting of manufacturing, agriculture, service and retail but we are really having a hard time and things are getting worse.  I can't help but believe that this is pretty common across this Nation. 

With a Federal Budget that is projected to need 40+% of its funding from debt this year and the decline of the World economy we are precariously close to eliminating the buyers of that debt bringing me to my question,  where do we go from here?  Do we sink, swim or grow gills?