Global Economic Crisis

The U.S. Labor Department released its worst weekly jobs report, demonstrating that the Covid-19 pandemic has unleashed a full-fledged global economic crisis more severe than the financial crisis of 2007-09, and increasingly likely to exceed the Great Depression of the 1930s in its impact.

Since the Labor Department began issuing its weekly jobless claims report in 1967, the previous record for unemployment filings was 695,000 in 1982. The expectation was that the report released today would be very bad, most estimates being in the range of one million. The actual number: 3.3 million. This is worse than devastating; it is a clear sign that we are beyond a severe global recession, and are almost certainly heading into a global economic depression.

As this is only the initial phase of the impact of the coronavirus induced unemployment, the figures just released by the Labor Department suggests the unemployment rate will likely exceed 20 %, possibly even 30 percent. It is not just the U.S. shedding jobs at an unprecedented rate; the entire global economy is being struck by a tsunami of jobs destruction. This economic catastrophe will inevitably lead to a level of severe social and political strife not experienced globally since the 1930s.

The coronavirus pandemic is not only a public health emergency of massive proportions; the response by governments worldwide has created staggering economic contraction, leading to unprecedented growth in unemployment. Initial data indicates that countries that previously had low single digit unemployment rates are now, within a period of a few weeks, seeing double-digit unemployment statistics, with no end in sight to further hemorrhaging of jobs.

Policymakers have concluded that sever measures are necessary to contain the coronavirus pandemic; shutting down all but the most essential industries , stay-at-home directives and social distancing. This has all led to unprecedented demand destruction, resulting in massive growth in the ranks of the jobless.

The world is increasingly stuck between a rock and hard place. The Covid-19 outbreak is proving so virulent, the absence of desperate measures enacted by policymakers will result in overwhelming and collapsing the public health system, resulting in massive death. What is occurring in Italy reflects this.

On the other hand, demand destruction on the scale we are witnessing will exacerbate the Global Economic Crisis now unfolding, rivaling the Great Depression in its intensity. This will implode tax revenues, ironically also leading to underfunding and ultimately collapsing public health institutions. The short-term fiscal response by governments will undoubtedly bring on the largest public debt crisis in economic history. In other words, the sovereign cannot indefinitely write checks to the hordes of unemployed , whose number will grow along with the victims of the pandemic.

There is a real possibility of mass death due to the impact of covid-19. It also must be recognized that long-term double-digit unemployment risks undermining social and political order, also leading to mass death through social disorder and massive violence by an increasingly desperate population.

The December 2013 jobs reported recently released by the U.S. Bureau of Labor Statistics  shows, on paper, a steep decline in the unemployment rate, to 6.7 percent, versus 7 percent for November. Yet, not even the usual happy chorus was cheering what, on the surface, was positive economic news. The BLS also showed that a mere 74,000 jobs were created in December by the U.S. economy.

Depending on various statistical measurements, the American economy must produce at least 150,000 jobs per month, and more realistically 200-250,000 just to keep even with the normal flow of new entrants into the U.S. labor market, based on natural population growth. In other words, based on the statistic of 74,000 jobs created in December, the actual unemployment rate in the United States should have increased rather than decrease. The reason why the official U.S. unemployment rate dropped to 6.7 percent is that a large number of long-term unemployed Americans have left the job market, either voluntarily, or arbitrarily based on the BLS statisticians deciding not to count them among the officially unemployed.

The official numbers can be ignored; in truth the United States continues to suffer the ravages of high unemployment-and underemployment-nearly six years after the onset of the global economic crisis.

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

Hillary Clinton Nude

Hillary Clinton Nude

HILLARY CLINTON NUDE

When President Obama trumpeted the first “decline” in the national unemployment rate in more than a year, I thought for a moment that the 44th U.S. president was residing in an alternative universe. How can you lose a quarter of a million jobs in a month, and simultaneously witness the unemployment rate actually post a  decline from 9.5% to “only” 9.4%? However, on reflection, it is I who reside in an  alternative universe. For if you decide to remove a whole chunk of discouraged workers, those whose long-term unemployment is deemed more or less permanent, from the official workforce count, then you can  absolutely post a reduction in the national unemployment rate while still shredding jobs, courtesy of the statistical wizards at the Department of Labor. Easy as toast.

So it is I who must apologize to President  Barack Obama for having committed the heresy of screwing up with logic my understanding of official statistics on employment in America . Of course, it makes perfect sense. Now, let’s just go ahead and save a whole lot of stimulus money by deducting everybody who is unemployed for more than a month from the official national workforce number.

If this pearl of economic policymaking is indeed valid, why not go the next step, and completely solve the problem of our national debt. Even with rising yearly deficits, we can actually reduce the total national debt by just removing a whole category of IOUs that no one seems to be worrying about at the moment. That way, Treasury Secretary Timothy Geithner can withdraw his request before Congress to increase the national debt ceiling to above $12 trillion, or nearly triple the total it was back in 2000. A brilliant solution to the nation’s fiscal imbalance, so it would appear.

But wait a moment. It seems we already are doing that. According to David M. Walker, who served as the Comptroller-General of the United States from 1998 to 2008, if the U.S. were following general accounting rules that are applicable to businesses in the private sector, it would be posting a far higher figure for the national debt. How much higher? According to Walker, there are more than $50 trillion in unfunded liabilities the U.S. government has incurred regarding future Medicare and Social Security obligations.

Fortunately, a high official with the Federal Reserve disagrees with David Walker. Unfortunately, that official, Richard W. Fisher, President of the Dallas Federal Reserve, revealed in a speech delivered in May that the actual national debt of the United States, accurately tabulating all the nation’s obligations, is a cool $100 trillion.

Now maybe all this statistical manipulation being conducted by our government officials is meant to serve some useful purpose, such as to artificially boost investor confidence and create a new stock market bubble. Perhaps Obama and his Wall Street coterie of advisors really do know what they are doing, and sceptics such as myself are just panicky doomsayers. However, I really do hope America’s foreign creditors are blissfully ignorant as to the true state of the U.S. economy and its fiscal reality. Heaven help us if they stop believing Washington’s math.

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.

The November unemployment numbers released by the U.S. Labor Department show a record 535,000 jobs were lost during the month. This is the worst monthly total of lost jobs ever tabulated, and shows that the full wrath of the global economic crisis is wreaking havoc on the United States economy. With only weeks left in the lifespan of the Bush administration, America appears rudderless at a time when its economy is in dangerous free-fall.

Many economists believe the worst is yet to come. The official unemployment rate, which excludes long-term jobless, now stands at 6.7%. Some experts are forecasting that the number will rise to 8 or 9 percent, or even higher. With fear rife among families about losing their livelihoods, consumer spending in the U.S. will continue to erode, leading to further demand destruction. This is likely to continue the trend of house price deflation, the facilitator of the current credit crisis. A vicious circle of economic implosion is now fully underway, with policy makers in the United States and throughout the world desperately throwing money in vast sums at the problem, hoping something will work. So far, however, nothing seems to be impacting the acceleration of the global economic crisis. It is likely that vast numbers of workers across the globe will be joining the ranks of the unemployed, leading to further recessionary pressures on the global economy and dangerous levels of deflation.