Methinks '09 is going to be a terrible year for the economy. Recent items of interest in the news:

• Circuit City has officially gone tits up. They're closing all their stores and firing all 30,000 employees lock stock and barrel. No restructuring, or re-branding or what have you. Just going out of business, remember to get the lights and don't let the door hit your ass on the way out. On the plus side, since it's a complete liquidation I'm sure some of the newly unemployed will manage to swipe a stapler or maybe a monitor on their way out.
• Nortel Networks filed for bankruptcy last week. They're the largest producer of telecommunications equipment in North America, having invented the line of DMS and Meridian switches that were springboards for all kinds of other innovation from the 70's up to today. Granted, they're a Canadian company but the many employees in North Carolina and Texas aren't too happy I'm sure. It will be interesting to see what happens with the remains of Nortel- many cities and towns are still dependent on their phone service from Nortel products so portions of the company will undoubtedly live on in some fashion to support core telecomm infrastructure.
• Hertz Rental Car is cutting 4,000 jobs
• Insurer Wellpoint Inc. is cutting 1500 jobs
• Oil giant ConocoPhillips is cutting 1300 jobs
• Motorola is cutting 4000 jobs
• Pfizer is cutting 2400 jobs
• Retailer Saks Inc. is cutting 1100 jobs
• Cummins Diesel, who manufactures more than 30% of all the diesel engines in North America is cutting 800 jobs and trimming executive pay by 10 %
• Best Buy is offering buyout deals to most of it's employees, hoping to cut it's workforce voluntarily rather than bring down the axe
• Aluminum giant manufacturer Alcoa announced they're cutting 13 % of their workforce (don't have exact number of people) after posting a 1.19 billion dollar loss in the 4th quarter.

Banking & Finance:

• Citigroup posted an 8.29 billion dollar loss for the fourth quarter of '08, they're splitting up the business (can anyone say massive job cuts on the way?)
• Bank of America posted a 2.39 billion dollar loss
• Morgan Stanley posted a 2.37 billion dollar loss
• Goldman Sachs posted a 2.29 billion dollar loss, and is also the first loss for the company since going public

But, fret not good reader. The banks have already burned through a couple hundred billion in cold hard cash and they're still losing money. So, uh, we're gonna give em another couple hundred billion.

No matter which way you cut it, U.S auto companies have more job cuts on the way. Even Toyota posted a loss in the last quarter!

So, what's going on?

The problems in the financial economy have spilled over into the real economy, and now we face a vicious circle of business failures and job losses.... namely, the more jobs get cut by companies, the more working folks who draw a paycheque are removed from the economy. As that income disapears from the economy, other companies down the line get hurt and have to layoff people or close their doors, leading to yet more job losses.

Ultimately, there is a floor. Human beings have needs which must be met, you and I need to eat food and have relatively clean drinking water or else pandemonium and civil unrest ensue.

Saddly, the dirty little secret behind modern society is that much of the economy is not required to provide our basic needs. Thanks to industrial innovation, most of us aren't actually needed. An average, unskilled, run of the mill human being really isn't all that valuable. Even skilled trades will have a rough go of it unless they're willing to pack up and move to wherever the work happens to be at the time (kinda like miners)

So the question then becomes where is the floor? How many people will become unemployed before we hit the reality barrier, the point at which no more jobs can be cut because someone's needed to run the water treatment plant, farm the fields and keep the lights on? In the great depression the floor was 40 % unemployment in some areas. Today, who can say?

What we can say for certain is that 2009 is just starting, and so far it looks like it's gonna be a hummdinger....