Day after day we hear that the recession is over. The President says it; his Cabinet Secretaries and spokesmen say it; the newspapers repeat it again and again in nearly every business story; and finally the talking heads on the cable networks solemnly intone every few minutes that the recession is over — except for possibly some lagging employment problems.
Among the wonders of the 21st Century is that we now have the internet so we are no longer dependent on the words of our political leaders, the newspapers, the magazines, radio, or television. It is all out there in cyberspace for those with access to the net and the initiative to look. For those who don’t have the time to research the nuances of the global economy, there are dozens or more likely hundreds out there ready to enlighten us for a fee or sometimes for free as to alternative interpretations of current events. One, of course, has to be careful as to which of the many unknown commentators out there one chooses to believe. However, given enough time and experience with alternative interpretations of publicly available information, one can come up with a set of observer/interpreters that not only disagree vehemently with the mainstream’s conventional interpretations, but more importantly tell you why in a believable fashion.
By definition, these alternative interpreters are not only saying our current recession is not over, they are literally screaming that we have a long ways to go. They warn not to be fooled by manipulated and poorly portrayed government statistics. They note that much of what the government really has to say each week is being ignored as business writers clutch at straws in an effort to reassure us that all will be well. The heart of the alternative message is that real un-/underemployment is probably double the 10 percent we hear about; the GDP and every other form of economic activity is falling, not growing; and that home foreclosures will continue to grow and house values will continue to tumble until they reach the long-term trend.
If all this sounds overly pessimistic, then note that last week the giant French investment bank Société Générale warned its customers to prepare for a possible “global economic collapse” over the next two years. Now that is really scary!
The problem, of course, is that 99 percent of us, including two U.S. administrations, think or at least say we are witnessing a periodic slowdown in the business cycle. As we all know, this unhappy situation was brought on by too much lending of every imaginable description, leveraging, and speculating on the part of our financial institutions that over the years had talked their way out of adequate government regulation.
What very few as yet appreciate is that in reality we are witnessing the opening years of a massive paradigm shift that that will bring about some of the most profound changes in our civilization since the beginning of the industrial revolution. The current faux “recovery” is nothing more than an artifact of the trillions of borrowed and printed dollars that have been injected into parts of the U.S. and global economy creating the very temporary illusion that all will soon be well.
The forces moving this paradigm shift are well known to many. First we have trillions and trillions of debt. So much that it will take a very, very long time to make our financial system solvent. Transferring the debt to the U.S. government does not solve the situation. These deficit-financed government bailouts may hold off the day of reckoning for months or maybe even a couple of years, but it will come. Second we have the depletion of much of the world’s natural resources. From oil, to minerals, to fresh water, to soil, the resources to maintain and grow the standard of living of the 6.5 billion of us are being used up at a prodigious pace.
Another resource is the ability of the world’s atmosphere to hold increasing amounts of carbon. At the minute the polls tell us that two-thirds of Americans have lost interest in whether or not our great-grandchildren can survive a six degree centigrade increase in the earth’s average temperature. In the last year, we seem to have become more concerned about not having our taxes or energy prices increased. As a civilization we can only deal with one crisis at a time.
If we have to prioritize our paradigm shift problems, it would seem that at the minute the financial/economic crisis is winning. Many are starting to wonder whether America and the world for that matter can stand another 12 months of trillion dollar deficits, negative interest rates, massive trade imbalances, money printing and borrowing.
The oil depletion problem that we talk about here is still another 24 to 48 months away from becoming a full-blown crisis. Unless of course the Chinese figure out how to convert their current financial bubble into real economic growth and begin sopping up the world’s oil at an even faster rate, then we could see an oil-price induced crisis develop much more quickly. Should there be a real global economic collapse in our immediate future, the oil depletion problem might just get lost in the debris along with much else.
There is probably not much any of us, or our elected leaders, can really do about all this, except perhaps to try and understand what is happening. The forces behind our paradigm shift grew up over decades and are unlikely to be solved or even mitigated in a noticeable fashion in years. Someday, maybe months, maybe years, maybe decades from now there will be a great awakening when a critical mass of us recognize the real nature of our problems and start to search for and implement effective solutions. Until that time things are only going to get worse and worse.
Tom Whipple is a retired government analyst and has been following the peak oil issue for several years.