It is only a hopeless situation if you let it be one. However, you are quite right that the job market is extremely crowded right now, and even more so in IT. However, it is not the only job market that's hurting. I've seen a lot of lawyers, for instance, who are in pretty rough shape...like $20-25 an hour. That's Walmart territory. There are lawyers with Harvard Law and similar credentials who sell beer at baseball games, who drive cabs, and who wait tables. These are people who you'd think have got it all...brains, beauty (a lot of beautiful people), credentials, very outgoing and personable, etc....and they can't make it as lawyers. So they do what they must to survive. You think every Indian you see has taken your nice IT job? Check out some of the Indians who drive semi trucks in this country. They too have advanced credentials. Well-educated, well-spoken (in English)...perfect for IT work right? Um...no.
That is the situation you are in, and you must adopt a survival mindset if you are to make it through it all. You can try waiting for an economic turnaround or some other kind of miracle, but it doesn't seem likely that any is coming soon. Take that Walmart or UPS or whatever job...whatever you are physically able to do. There are still jobs out there that are easy enough to do, even for older and disabled folks. They aren't as mentally stimulating as IT jobs, but let's be real...a lot of IT jobs aren't all that stimulating either.
At least you'll have some cash coming in. It's better to go through that than to just sit around in a depression for ever and ever. And if a better job comes along (maybe even an IT job), you can always try to grab it.