This brings us to the second nightmare of this implosion of the U.S. consumer-bubble: employment. The collapse of General Growth, alone, means the loss of hundreds of thousands of jobs which were directly or indirectly dependent on those 158 bankrupt malls. Yet that collapse is merely the tip of the proverbial “iceberg”.

U.S. retailers were conned by years of predictions of an “economic recovery” from compulsive liar, Ben Bernanke. With the U.S. Greater Depression having just begun, retailers must play “catch-up” in slashing costs in an attempt to reach a solvent footing, and this means slashing jobs.

A second Reuters article provides a glimpse of how this cost-cutting will proceed. “Retailers see Web offsetting spending slump,” proclaimed Reuters, in an article which attempts to put a positive “spin” on a disastrous trend. While traditional retailing is collapsing, on-line retailing has been able to tread water (so far) through the much lower costs involved in that business model.

Why is on-line retailing much more cost-effective? Because such businesses require so few employees. To this point, there is not the slightest evidence that U.S. retailers have any understanding of the collective impact of retailers across the U.S. simultaneously slashing employment. The Reuters articles clearly demonstrate this lack of awareness.

In essence, we are seeing an instant-replay of what occurred when the U.S. intentionally dismantled its manufacturing sector – and shipped it to Asia to take advantage of lower labour costs. When only a few U.S. manufacturers had done this, the benefits seemed huge, while the draw-backs seemed minimal.

However, now that the entire U.S. manufacturing sector has made this transition, it is plain to see that the costs of this short-sighted migration are enormous, while the benefits were completely temporary. The loss of the ability to generate real wealth, and the even more important loss of vast numbers of well-paying manufacturing jobs has already crippled the U.S. economy.

This is exactly what we are about to witness with the U.S, retail sector. The “clever” move by U.S. retailers to all focus their future retailing efforts on on-line retailing will initially provide a brief illusion of stability for these businesses. However, this false-hope will quickly be crushed through the reduced purchasing power caused by the tens of millions of lost jobs in the retail sector, which will result from this transition (see "U.S. economy to lose 20 MILLION jobs this year").

Awareness that the entire U.S. economy has been one, big Ponzi-scheme is only just beginning. Unfortunately, the understanding of the impact of this Ponzi-scheme imploding has not even begun.

This failure to understand the new economic paradigm of the U.S. economy will prove fatal for most U.S. retailers. It implies that each move lower for this sector will be a “surprise” for these businesses. This, in turn, means that retailers will not be “ahead of the curve” in the down-sizing of the U.S. consumer-economy, but rather will be continually reacting (belatedly) to an ever-shrinking base of U.S. consumption.

Today, the phrase “zombie banks” has become familiar to many if not most market observers. A few years from now, the phrase “zombie retailer” will become equally as familiar. This consumer economy is dead, it awaits only its burial.

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