What began initially as the Global Financial Crisis has now become the Global Economic Crisis. The global demand destruction that is raging is now leading to a massive jobs crisis that will ravage the societies of virtually every nation on the planet. Governments throughout the world will attempt to address the jobs crisis in the same manner they have been responding to the financial and economic crisis: they will beg, borrow and print money measured in the trillions of dollars to throw at the problem. Their results in combating monstrous levels of unemployment will likely be as ineffectual as our political masters and their “experts” have been in attempting to ameliorate every other aspect of the Global Economic Crisis.
Later this week, updated unemployment statistics for the United States will be released. President-elect Barack Obama has already warned that they will be “sobering,” which likely means he already knows how bad they are. However, the U.S. government deliberately understates the true unemployment rate when they release official numbers. Among the statistical gymnastics utilized by the U.S. Labor Department is the expediency of excluding discouraged jobless who have given up hope of finding employment; they simply do not exist when the U.S. government counts its number of unemployed workers. When this component of the unemployed is counted, the true jobless rate in the United States is in excess of 12%, about half the peak rate experienced during the Great Depression. No wonder Nobel Prize winning economist Paul Krugman has now joined the list of those proclaiming that the U.S. is now in an economic depression.
The consumer demand of the U.S., driven by debt, is now collapsing with the growing jobs crisis. This is leading to demand destruction for those export goods developing economies around the world depend on to employ their teeming masses. During the course of the year the jobs crisis will clearly be a global phenomena, as are all the other factors that characterize the ongoing Global Economic Crisis. While the ultimate result is unclear, history tells us that massive unemployment on a global scale rips asunder social cohesion, facilitates political extremism and despotism, and exacerbates international tensions. The jobs crisis may ultimately contribute to a geopolitical crisis that threatens the very peace of our planet.