Long Crisis in Unemployment to Continue

The Long Crisis in Unemployment continues and looks to be accelerating. “Unemployment hits 25-year high. Jobless rate hits 8.1% in February as a record-high 12.5 million people are unemployed” screams the headlines of a CNN article this morning shortly after the US Commerce Department released the numbers for February.

The CNN article continues “The U.S. economy continued to hemorrhage jobs in February, bringing total job losses over the last six months to more than 3.3 million, and taking the unemployment rate to its highest level in 25 years.

The government reported Friday that employers slashed 651,000 jobs in February, down from a revised loss of 655,000 jobs in January. December’s loss was also revised higher to a loss of 681,000 jobs, a 59-year high for losses in one month.”

All of the above is merely more confirmation of what the Long Crisis has been saying all along. This is not a normal recession. One can not reasonably expect that coming off the greatest financial bubble of all time that the current crisis will end soon or that it will end well.

A financial system that destroyed itself with excesses and with the delusion that a strong economy could be built on the back of spending, debt, and consumption will have to be destroyed so that another system can take its place. Let’s hope that the new system, whatever form it will take, will place an emphasis on savings and the production of useful goods rather than consumer junk and the trading of papers back and forth.

The world economy is now in the process of imploding. The Long Crisis in unemployment is probably just ramping up. Certainly it has reached a state of self reinforcement. Each round of job cuts further reduces the strength of the economy as unemployed workers are forced to drastically reduce their spending and demand for goods and services plummet. Reduced demand means that production must be cut back and that fewer workers are needed. A feedback loop is created that will be very difficult to get out of.

All of President Obama’s economic stimulus programs wrapped up together will at best slow the rate of descent into the dark abyss of economic hell. Public works types of projects did not bring the US out of depression in the 1930′s and they are unlikely to do so today. The pace of trillions of Dollars of wealth destruction, the resulting production cut backs, and the elimination of jobs, is worldwide and just too great. We are on the alarming route to a Greater Depression.

Talking heads and policy heads alike still just do not get it. There will be no sustained recovery that will take us back to the world that we once had. That world of decadent late stage capitalism is gone to be replaced by ?????.

I expect that in spite of President Obama’s best efforts to take us back to the world of stable banks that actually lend money, no climate change worries, and plenty of cheap energy and happy motoring, those days are gone. In the end just to survive just about everything in our lives will have to be downsized, perhaps even abandoned as we can no longer afford them. That list would include houses, cars, businesses, travel, and expectations.

The Long Crisis will be a test of survival. In order to survive you must start preparing yourself for the worse.