You need to realize there is an economic crisis looming out there, so not being hired straight away doesn't mean YOU are incompetent... it tells more about the market.

It's hard for everybody, but I guess it can be done.

I hardly ever say this to people, because I am all "do or die", but you are really hard on yourself, too much for your own good. You are trying... why do you "have to" be the best? As long as you are decent, it's all good. Imagine if all people who are the best at what they do quit... the world would not be better off.
Truth is... only few people can be "the best". The others are average... and that is not a crime. Sometimes it's good enough. Average singers still produce songs people enjoy. Average doctors still cure people. Average architects still design houses for people to live in. It's all good. There is more to life than being competitive. You can still contribute a lot to the world.