Whether you celebrated or commiserated last week over the presidential and other election results, it is now another week, we still have this economic mess, and it is not going away soon. This is not your Father’s recession; this one is our very own, unique meltdown. Unemployment, even with all the creative statistical revisions that gurus of these things use, hit 6.5% nationally in figures announced last week, California’s number is significantly worse, and that figure should continue to creep up.

Retail sales news are just devastating and that’s not going to get better quickly with the year-end holidays almost upon us. In fact, many retailers’ whole years are based on what they do in the last quarter; this one is not going to be pretty and the usual January bankruptcies for those who made it through the holidays are going to feature some prominent retailers, if they can get that far.

Once again, we need to take a moment to appreciate that the tail we are trying to grab onto is attached to one hell of an enormous tiger of a problem. Those ‘financial weapons of mass destruction,’ as Warren Buffett so colorfully warned us about our economy’s love affair with all things derivative, were the direct result of either bold ignorance or forgetfulness (in the name of greed) of the gambler’s first rule of survival at the gaming tables: don’t bet what you can’t afford to lose. And now we hear that AIG needs more billions – their first bailout just won’t do!

In the article: ‘Buffet’s "time bomb" goes off on Wall Street’ by James B. Kelleher, he tells us that the CDS (credit default swaps) market galactically increased from a mere $631 billion in the year 2000, to $46 trillion in the first half of 2007. Bear in mind that the entire national debt of the United States, the richest country in earth’s history, exceeds 10 trillion dollars. According to Internet wags that monitor these things, our national debt as I write this is: $ 10,636,882,560,102.49 (courtesy of the U.S. National Debt Clock website). That means that the economic geeks wrote these exotic, financial betting instruments in a mind-boggling amount worth north of four times our national debt!

Kelleher gives one mini-example of this: a single hedge fund insured the risk of $1.3 billion of subprime mortgages for Swiss banking giant UBS in return for earning a nice $2 million per year annual premium for what was essentially insurance between private parties. The risk was, in turn, backed by a subsidiary of the hedge fund, which had capital of only $4.6 million, a laughingly (if it weren’t so tragic) small percentage of the $1.3 billion credit risk.

So, as long as the subprime mortgages were paid currently and the underlying property values securing those mortgages continued their dizzying climb, the hedge fund made exceptional profits on this highly leveraged, insurance-like investment.

But, when increasing numbers of borrowers defaulted on those mortgages and property values took their historic nosedive, the problem swiftly became UBS’ problem and no longer only the problem of the hedge fund, who could not possibly back up what they had bet on. The old saying goes, ‘if a bank lends me $1,000 and I cannot repay, that is my problem; but, if a bank lends me $1 billion and I default on repayment, that becomes the bank’s problem – the ‘too big to fail’ proposition.

But, it’s the ripple effect that’s killing us. Even mighty China’s industrial engine is sputtering and their government is going to throw a half-trillion dollar lifeline to their awesome economy. Iceland’s banking system is a smoking crater where a bunch of fishermen turned bankers thought they had found the Internet way to happiness and wealth beyond dreams of avarice.

But, according to Robert Reich’s recent blog post on TPM Café, the problem is not credit – the problem is on the demand side. Consumption has frozen up. People are only buying what they absolutely need. As a society we must right now buy what we absolutely need. That is, according to Reich, we must begin replacing our infrastructure, outmoded electricity grids, bridges, tunnels, and all kinds of public works. Reich says this is the way government can spend us back into economic health while putting people back to work and addressing a long-term, largely ignored problem.

This, before more bridges fall down and buildings cave in, like recent news stories from less developed countries even from Minneapolis. Read my lips: who is going to pay for all this stuff?

Enough debate about whether the recession has started. It’s here. It’s real. It is really something.