Readers of this blog know that I have been pointing out for a long time that the majority of Americans have been in recession for a long time–it was partly masked by the housing bubble, which allowed a lot of people to pull out a whole bunch of cash from almost under the mattress (under the roof, as the case may be) and that helped paper over the fact that peoples’ wages weren’t going up fast enough to pay for health care bills, aging parents’ care, school for children, basic expenses like rent and any other catastrophe that happened to come up.

    The fact that the government today says that, according to Reuters,  "the number of U.S. workers applying for unemployment benefits soared by 38,000 last week, posting the highest reading since September 2005 and reinforcing fears that the U.S. economy has stalled…" isn’t a bit surprising. But, we’re in, perhaps, for a longer period of this mess, based on this article in The Wall Street Journal today:

The U.S., the economy at the center of the turmoil, is dragging down world growth. On Wednesday, Federal Reserve Chairman Ben Bernanke gave his most pessimistic assessment to date of the U.S. economy’s outlook, strongly suggesting that a recession is likely. In testimony before Congress, he also said the Fed projects slower global growth over the coming quarters.

 And…

Countries such as Australia, Brazil, the United Arab Emirates and Qatar are still expanding smartly, although down from 2007, because they have rich veins of high-priced oil, iron ore, alumina or copper. Old-line heavy-machinery makers such as Germany and Japan are riding out the problem because they have diversified their markets.

On the flip side, consumer-goods exporters of Asia that rode to prosperity by trading with the U.S. — Thailand, the Philippines, Malaysia and even China — are seeing their lofty growth rates sag. And the Baltic countries, Hungary and Iceland, which borrowed heavily to finance growth, are now watched by international financial institutions to see whether they will come unhinged by the credit squeeze.

    so, what it boils down to is this. Countries that can feed China and India with resources those two countries need to keep up a rapid pace of growth will fare a lot better than countries that depended on financial sleights of hand, i.e., bubbles that gave people a whole lot of cash to spend but masked real basic hardships.