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Thus far, we’ve been seeing the private sector taking the brunt of the unemployment numbers, with government reportedly the only producer of jobs during this crisis.

According the Meredith Whitney, who was one of the first to warn of an imminent collapse and crisis in 2007, there is no doubt that things are about to get much worse.

Government on all levels is going broke, and we’re hear about it in the form of budget cuts, which means people are about to start losing their jobs in droves. Whitney’s shocking estimate: 2 Million.

As far as the United States are concerned, Obama has proposed a $50 billion bailout package for the states, but the states are underwater $200 billion. So, it’s really a drop in the bucket. I have no idea if it goes through or not, but there’s structural problems that make it very difficult for the economy to move forward.

You have real structural employment issues and I don’t see that getting better anytime soon.

As of the most recent BLS report (May 2010), there are 15 million people officially unemployed in the USA. If Ms. Whitney’s estimate of 2 million to be laid off from public sector jobs is correct, we would see an instant 13% increase in the number of unemployed.

In addition to losses suffered in the primary income stream of Americans through unemployment, we’ve also lost what has become our secondary income stream for the last two decades – credit.

Home equity loans and credit card loans have not been available.

Credit card loans have been cut by $1.5 trillion. We think that goes up another trillion.

Whitney also says she “has no doubt” that the real estate market will double-dip.

There’s not a lot of mortgage activity out there. And you think, how can a home price grow or how can a mortgage market grow? In fact it shrunk for the 8th consecutive quarter.

There’s no other way to look at it. They’re [home prices] going down again.

And in regards to the positive consumer spending numbers and sentiment we’ve seen on and off for the last year? According to Whitney, much of that spending came from people who chose to spend their money on necessities and retail items rather than paying their mortgage. But that’s about to change:

What happened over the last year has been that the government and banks have provided a lot of mortgage modification programs. And a lot of consumers have been smart enough to say ‘ok well, if I wait, I can get a better deal on a modification program in two, three, six months, so I’m going to pay the things, the bills that I need the most – my credit card bill, my auto bill, even my home equity bill to a certain extent.’ And they’ve been not paying their mortgage bill.

…

The thing that’s happening for the first time in a year… is banks are actually accelerating their foreclosure programs, accelerating their short sell programs. So, you’re going to see people who weren’t paying their mortgage have to pay rent and that’ll be a jar to the economy.

After watching Meredith Whitney, do you still have any doubt as to where we are headed?

Watch the CNBC interview: