Fed’s Pianalto is out today saying that the economy will begin to recover in 2010.  The stock market loved the comment and rallied a bit, but such comments mean nothing.  First, Pianalto has no idea if the economy will begin to recover in 2010 — it likely will not.  People have been predicting the economy would begin to recover at the end of 2009.  Second, even if the economy stops failing, it says nothing about it beginning to improve.  It says nothing about jobs being created and unemployment going down.  Third, long term employment is the only thing that matters and this must be accompanied by living wage salaries.  Once demand is created at the bottom then the economy will recover.   However, little is being done to increase employment and even less is being done to increase wages.  It is going to take years, probably decades, and a new macro economic model.

Meanwhile, job destruction continues and it just doesn’t matter what the stock market does.  The government will keep pumping in money to banks, buying toxic assets, changing accounting rules, and maybe the banks’ balance sheets improve.  However, that doesn’t result in increased employment with living wage salaries.  In fact, there is a trend for banks to just consolidate and lay off their way to improved balance sheets by cutting costs.

America is in so much trouble and there is not enough emphasis on creating new jobs and new industries.  Everybody is focused on the greed and excess of CEOs which is, indeed, a crisis.  However, it is not the crisis like the person who loses a job, a home, and a family.  That person is a potential very angry person who just might want to retaliate against a system that has screwed him over.  Don’t worry about Al-Qaeda — worry about Al-Unemployed.

America is doomed.