Record Unemployment

"500 million Americans lose their jobs every month."- 2009, Nancy Pelosi (US Speaker of the House) [The US population is 306 million]

More bad economic news I’m afraid. U.S. job losses accelerate says Reuters. Job losses in January 2009 were 598,000, the most in 34 years, and the unemployment rate reached to a 16-year high.

"The economy is just falling into oblivion and it will get worse," - Greg Salvaggio, vice president for trading at Tempus Consulting in Washington

“January's sharp drop in employment brings job losses to 3.6 million since the start of the recession in December 2007” and "about half the decline occurred in the last three months." - U.S. Commissioner of Labor Statistics Keith Hall

"It is just another confirmation that we are in a deep and long recession, and the bottom is not even in sight. Manufacturing is incredibly weak -- it's going to be a long haul." - Robert MacIntosh, chief economist for Eaton Vance Management in Boston

Unfortunately the Democrat plan to throw money in all directions and hope that things are “stimulated” is unlikely to work. Here a few reasons why:

A new book, Welcome to Obamaland: I Have Seen Your Future and It Doesn't Work by James Delingpole, describes how the Stimulus plan & Obama look a lot like Tony Blair’s England from ten years ago. If we follow the British path, the US can expect

“a morass of sprawling government that will slowly start suffocating our economy, our liberties, and our culture… From the socialized medicine that will make us want to avoid going to the doctor even when our hand is on fire; to eco-fascism that will have us spending millions … to protect un-endangered, man-eating polar bears; to immigration non-reform that will leave us wondering what country we're living in anyway; to a further dumbing down of an already execrable school system, with more PC inanities, such as banning "competitive
games" because it might disturb children's self-esteem”

The article, Is Britain going bankrupt?, states “Alistair Darling [Chancellor of the Exchequer ] has had to admit that the British economy [today] faces the most sudden economic collapse since World War Two, and the worst budget deficit of any major country in the world”

Japan tried to spend it’s way out of recession with infrastructure projects. The New York Times (shock!) noted that Japan’s Big-Works Stimulus Is Lesson.

“Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.”

Bottom Line

Will the US government learn from the mistakes of others? Don’t bet on it. Timothy Geithner, Obama’s Secretary of the Treasury, “was a young financial attaché in Japan during the collapse and subsequent doldrums.” But he got the lesson backwards and believes we need to spend more and faster than Japan did!

“Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner [Obama’s Secretary of the Treasury], who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.” - NYT

Who do you think is right?