And those government subsidies are going to increase. Look at the graph below. What it shows is that the average duration of unemployment is at a 60-year high, and rising. It's now at 22.5 weeks. Unemployment benefits stop at 39 weeks, temporarily up from 26 weeks. More and more people each week are thrown into very dire circumstances when they fail to find jobs and lose their benefits. Care to wager whether unemployment benefits will be extended again when Congress comes back from vacation?

                                  
Click to enlarge.

And speaking of the increase in government payments to individuals: What's happening to this stimulus? The data recently came out, and I must admit, I was surprised. I've been writing for years that American consumers would start to save in this recession, but I thought that we'd see a more gradual rate of increase in the savings rate. The increase in savings has been nothing short of remarkable. (See graph below.)

                                  
Click to enlarge.

From a 3% drop in late 2005 -- the result of massive borrowing, primarily in mortgage-equity withdrawal and credit cards -- we've seen an increase in the savings rate to 6.9%. That's the highest rate since 1993. (It was less than 1% last August.) And total savings (on an annualized basis) was $608 billion in April, rising to $768 billion in May. That is a 30% month-over-month increase! Maybe the American consumer has found a new religion?

But there's more than just a new savings frenzy at work. Spending rose more than disposable income, so -- without that increased level of government transfer payments -- it's unlikely that savings would have risen as much. Before we get too giddy about savings going through the roof, we'll need to wait a few months to see if this was the result of the new savings religion or government transfer payments (stimulus), which will soon wind down

That being said, given the sharp increase in savings, it's no wonder shipping is down 20% and global trade in the exporting economies by 30%. No wonder retail sales are down -- except for those at Wal-Mart (WMT) and other lower-price venues.

Final thought for today: The Congressional Budget Office released another report this week, saying that the current deficit levels are unsustainable. They suggest that taxes must increase by $440 billion or spending must be cut by a like amount -- or some combination of the 2. If you assume some of the new health-care and other programs are enacted, the number comes closer to $700 billion.

This isn't a Congress that wants to cut other parts of the budget by $700 billion. Raising taxes by $700 billion (over 4% of GDP) will dip us back into recession. Not raising taxes will result in debt that cannot be funded at anywhere close to today's rates.

A recent International Monetary Fund study paints a sobering picture of the worldwide problem of countries' growing debt. Finding a trillion dollars in the market every year, when every other country is also trying to raise debt, simply isn't going to happen. It will destroy the dollar.

There are few good choices in front of us, and fewer still that are likely to be made.