Anyone who thinks the world economy isn’t going to crash again is living in a dreamland. And while dreamlands are nice, especially in such tough times, they don’t help us to deal with reality.
There are two ways to see the recent global economic meltdown. In one view, the economy was basically sound, but hit a “perfect storm” of high prices and unstable loans, which shattered confidence in world markets. In the other view, this crisis has been simply one of the first of many as a fundamentally unsound system begins to crumble.
If the marketplace were to fail tomorrow, would we be able to afford another bailout? What if it happened again, after that? And at what point does the debt load of our national governments become completely and totally unmanageable?
The global meltdown provided some much-needed relief from a lot of pressures which had been building up. The price of oil climbed from under $20 a little over a decade ago to nearly $150 days before the collapse. Other industries, too, are experiencing similar pressures. There’s now a war over mackerel between Scottish fishermen and the Faraoe Islands, a fish which barely had a market a few years ago. Declining global fish stocks, and multiple failing fisheries, have been pushing heavy competition into new markets.
The hope is that oil prices and the rest of the economy will keep each other in check. For the moment that seems to be working. But $70-80 per barrel oil is still putting a lot of pressure on the system, and it’s not like anyone expects that price to come down any time soon.
Signs are now coming in that things are not good. They’re turning for the worse. In America, job figures and home sales are taking a significant turn for the worse. And neither the European nor the Asian economy is doing any better.
Is this the beginning of another crash? I don’t know. Making predictions is a risky game. Analysis is not. These signs are yet another group of cracks in the facade of a fundamentally unsustainable system. I cannot tell you tell you when it will crash again, but I can tell you that it will.

It was silly to think that the economy could simply snap back like a rubber band considering that the excesses that led to the 2008-2009 crisis were years, if not decades, in the making.

This failure won’t just be a “Black Friday”. When systems on this scale fail, it’s never just a one day, or even a one-year process. In many ways, these types of things unfold without us even noticing.
You cannot solve debt problems by borrowing more money. You cannot solve problems with the overexploitation of oil, fish, timber or water resources by continually tracking down new green pastures to ruin. And you cannot solve problems with the concentration of wealth and power by concentrating more wealth and more power.
We need to pay attention to the signs. In a global economy which is as integrated as ours, depressions can ripple through like natural disasters. People have used up all their EI and exhausted their savings to survive the last collapse. It’s going to get a lot worse when it happens again. If we do not fix the underlying problems we’re only paving the road toward a truly awful “next time”.

Advertisements