November was the worst month in about 30 years despite a four-day end-of-month rally, which recovered over 1,000 points for the Dow. The US Treasury and US government have consistently refused to apply the term recession to the US economy but on Monday, the administration conceded that the US gross domestic product (GDP) dropped 0.5 percent in the third quarter and that the economy had been in recession since last December. The GDP growth was revised from negative 0.3 percent to negative 0.5 percent, and all other revisions were invariably for the worse.

Last month, the number of US jobs lost was 260,000. For this month, it is expected to rise to 325,000. The results will be announced later this week. By yearend the number of unemployed will reach 1.8 million, and in the first half of 2009, it will exceed 2.5 million. This will be a long and deep recession and the Federal Reserve has only just got around to admitting it. Fed Chairman Ben Bernanke kept insisting that it was only a downturn. Although he has been exceedingly active in recent weeks, together with Treasury Secretary Henry Paulson, they are months too late and the damage has been done.

The ISM reported that the US manufacturing index fell to a 26-year low in October. Shoppers took advantage of the huge discounts being offered by stores, but there will be little money available for Christmas, and sales figures for December are likely to be really bad.

With house prices declining at a record 17 percent, the outlook for this sector looks grim, and foreclosures will continue at 80,000 a month. The Fed and the Treasury, in a concerted effort to stop the rot, are injecting $100 billion into Freddie Mac and Fannie Mae and buying $500 billion worth of toxic mortgages. The Senate rejected the auto industry’s plea for help but a second plea, accompanied by a reduction in the number of models, employees and union payments, will likely meet a friendlier reception when the Democrats take over.

The Fed and the Treasury are pumping in trillions of dollars to save the economy, not caring what the long-term effect on the dollar will be. So far, it has held up well because the rest of the world is in an equally bad state. Germany, the United Kingdom and France all recorded a negative GDP of 0.5 percent in the third quarter. All these countries are also pouring money into markets. Japan is also in recession, and exports are really suffering. Not only were they lower, but when converted from dollars to yen, company profits were decimated.

The same applies to South Korea and Taiwan, and their currencies have been exceedingly weak. These two nations are export-oriented, so the US downturn has hit them very hard. Their currencies have been under pressure and fund managers have been selling their equities on a massive scale. Japan has been in trouble since 1990, and the strength of its currency because of its tiny bank rate of 0.3 percent has been a major source of worry. Speculators have been buying the yen and reinvesting in higher yielding bonds. This is known as the carry trade and has harmed Japan’s recovery.

Some countries in the euro zone are complaining that they cannot devalue their currencies to stimulate their economies. Two years ago, I wrote that the euro zone was inherently unstable and would eventually fall apart. Over the next year, this will happen and some countries will pull out.

China has produced a $586-billion stimulus package concentrated rightly on infrastructure and linking rural areas to urban areas. In terms of their relative GDPs, the Chinese effect is 17 times as large as the United States. The government normally cuts the bank rate by 0.27 percentage point, but this time they cut it by four times that amount, handing back money to the banks by reducing their reserve deposits. In 2008, China is likely to grow by 9.0 percent, compared with a high 11.4 percent last year. The Chinese government is determined to push up the growth rate to 10 percent. Their biggest fear is unemployment, so building railways is a sensible way to solve the problem.

India has been hit by senseless terrorist attacks in Mumbai, but this is unlikely to affect its economy. Thailand is in a worse state because millions of tourists have canceled their holidays. With the airport closed and a possible coup, Thailand will lose a vast number of visitors right at the peak of its tourist season.

From a $700-billion bailout, the US government has so far extracted $2 trillion and plans to rescue hundreds of regional banks. In previous downturns, it spent $160 billion, but that’s now petty cash. With the printing presses working day and night 24/7, they can inject sufficient cash to cover almost everything, but what will be the end result? The time may come when creditor nations like China ($2 trillion) and the OPEC countries will say, “Enough. We don’t want to hold this Zimbabwe-like currency, we prefer tangible assets.” So, the dollar may collapse and everyone will rush into gold, commodities, land—anything you can’t print.

The Fed has been saved temporarily by the collapse in the price of oil, down from $149 a barrel to below $50. This has removed the immediate fear of inflation and enabled central banks throughout the world to lower bank rates. More cuts are expected with most first world countries cutting their rates to 1.0 percent, possibly even to zero. Bernanke has said a further cut is feasible. I wrote last week that there could be big bear rallies without it indicating the final bottom.

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Two California couples decided to swap partners for the night.

After two hours of amazing sex, John said, “I wonder how the girls are getting on.”

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A lady walks into a drugstore and asks a salesman, “Do you have Viagra?”

“Yes,” he answers.

“Does it work?” she asks.

“Yes, it does,” he replies.

“Can I get it over the counter?” she asks.

He replies, “Only if I take two.”