Bye, bye, America. See you on the other side.

With the news that the US economy is tanking faster than Battlefield Earth or Showgirls it's time for Joe Public to get serious, fast, about the magnitude of the problem.

The economy is moving in reverse faster than the government can measure.

Really? The same government that wants to implement universal healthcare can't actually measure the economy?

The contraction for the fourth quarter of 2008 had been estimated at 3.8 percent just a month ago. Then the Commerce Department raised it to an astonishing 6.2 percent Friday -- the largest revision since the government started keeping records in 1976.

I think you'll find there were a number of economists calling hooey on the government's projection of 3.8%. They had studied the collapse in investment at the top layers of production and drawn the inevitable conclusion that things were going south much quicker than mainstream economists were predicting.

That was the economy's worst showing in a quarter-century and raised the prospect that the nation could suffer its worst year since 1946.

Consider that the economy is still slowing so if it's not the worst year since 1946 then it soon will be...

"Consumers are just hunkering down and saying 'game over,' and businesses in response are cutting back on investment and employment," said Brian Bethune, economist at IHS Global Insight. "It's a negative feedback loop."

Now in its second year, the recession is expected to stretch at least through the first six months of 2009, as shoppers slash spending in the shadow of hard times at home and aboard.

Companies, in turn, are being forced to cut jobs and production while resorting to other cost-saving measures to survive.

The Commerce Department's new report was also weaker than the 5.4 percent drop economists had expected.

Why do mainstream economists have any credibility when every prediction they make is wrong, especially when it matters most? They're like climate scientists in that regard.

The biggest culprit behind the record-breaking revision: Businesses actually cut inventories instead of building them as the government originally thought. That reduced -- rather than added to -- economic activity.

Why the hell would the government expect business to increase inventories into the gale of a deepening recession? These people are lunatics. With excess capacity and inventories business was always going to liquidate stock levels - and jobs along with them. Low interest rates didn't help Japan. Why would they help America at this time?

In addition, consumers pulled back even more on their spending -- which accounts for about 70 percent of national economic activity. U.S. exports suffered a bigger drop and businesses retrenched further.

A large part of the solution is to provide tax cuts to business in order to stimulate jobs and therefore growth.

Unfortunately, President Obama and his team have decided that having wandered into a minefield the answer is to put their hands over their ears and stomp around like drunks while giving slippery, unsubstantive speeches to an increasingly concerned public and investor community. There's a reason why the Dow is in free fall.

President Obama has guaranteed the next generation a lower standard of living to what people enjoy now.

It will take something extraordinary - like the growth of Internet - to provide the productivity gain x-factor that helped the sluggish Clinton economy turn around.

Fortunately, the United States is an extraordinary country and I wouldn't put it past them to find this x-factor so there's always hope.

At this stage, though, I think that things are going to get a lot worse before they start to get any better so it's bye, bye, America. See you on the other side if our own set of looters don't manage to damage the Australian economy too badly in the meantime.

(Nothing Follows)