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For those too young to remember, this is what a recession looks like
The Guardian
World markets plunge! Newspapers full of down-pointing graphs and City traders with their heads in their hands. Some of us have been here before, specifically from 1989 to 1992, but for those who are in their 20s and unsure of what to expect, here’s a beginner’s guide to recession …
Those weekly shopping sessions will seem like a distant memory, and the merits or otherwise of organic food will suddenly appear less pressing. The empty shop on your high street will no longer be automatically taken over by bouffant-haired estate agents who install a latte-making machine and a 6ft-wide TV as a matter of priority. Instead, nothing will happen to it.
…On the brighter side, though, you will no longer be welcomed into people’s houses with the dreaded words, “Do you want the guided tour?”, and if you are, you can simply ask, “And how much less is it worth now than when you bought it?”
In a recession, it won’t be the people who have got the latest “must-have” gadget who do all the talking. Rather, people who know about root vegetables will come into their own; people who know what to do with a scrag end of lamb or how to fix a broken toaster. Triumphalism will be quelled. Interviewers might cut Victoria Beckham off when she starts talking about the latest additions to her wardrobe, and ask instead whether she leaves the bath water in for David.
Recessions encourage imaginative business ideas, novel-reading, cinema-going, and foster music more akin to the blues than the stridency of Madonna. The last one gave us Wagamama, loft living and Every Day is Like Sunday by Morrissey. Fear not, kids. You have nothing to lose but your credit cards.
(23 January 2008)
Link courtesy of Big Gav.
‘Bernanke Rides to the Rescue’ – More Cowboy Deception
Shepherd Bliss, Common Dreams
“Bernanke Rides to the Rescue” assures an heroic headline in the Jan. 23 Wild West’s “San Francisco Chronicle.” Yet all the king’s men on all the king’s horses with all their band-aids and sugar pills will not be able to prop up the rapidly crashing US economy. “Fed Gallops to the Rescue,” the corporate newspaper’s sub-headline continues its cowboy deception.
The Federal Reserve cut its short-term interest rate by an unprecedented .75% on Jan. 22. This is its largest single day slash since the central bank started disclosing its policy moves over two decades ago. Ben Bernanke’s cut and the Bush-Democrats alliance to give taxpayers a $800 gift so consumers can spend the economy back to growth will fail. Our leaders are driving the Republic to ruin-by their over-extended war-making and by depleting our natural and human resources. Other empires, including the Roman Empire, have gone this route.
Where was the National Guard when it was needed after the Hurricane Katrina hit? This will not be the last “natural disaster” provoked partly by an increasingly chaotic global climate. If Hurricane Katrina taught us anything, it is that we cannot depend on this government in the face of crises. It contributes to making catastrophes by supporting polluting, climate-changing behavior and in other disaster-making ways.
Our domestic scene is unraveling, economically and in other ways. As people get more anxious about their futures, the media’s propaganda machine encourages them to rush out and spend, rather than look at the root, systemic causes of the failing economy.
(24 January 2008)
Shepherd Bliss is an Energy Bulletin contributor.
The Politics of An Economic Nightmare
Robert Reich, Salon
A possible economic meltdown is worrisome enough, but a possible meltdown in an election year is downright frightening. For months now, Republicans have been pushing the White House to take some action that looked and sounded big enough to give them some cover if and when things got worse. President Bush has now responded with a stimulus package more than twice as large as the one Bill Clinton briefly entertained at the start of 1993 but couldn’t get passed.
Not to be outdone, Democrats want to appear at least as bold, which means they’ll suspend pay-go rules and throw fiscal responsibility out the window. In other words, hold your noses, because the “bipartisan” stimulus package that’s about to be introduced could be a real stinker, including tax cuts for everyone and everything under the sun – except, perhaps, for the key group of lower-income Americans. These are the people who don’t earn enough to pay much if any income taxes, but who are the most likely to spend whatever extra money they get and therefore are most likely to stimulate the economy. The real behind-the-scenes battle will be over whose constituencies get what tax cuts, and for how long. Don’t be surprised if the only thing Congress really stimulates is campaign contributions.
(24 January 2008)
Also at Common Dreams.
Similar thoughts from Paul Krugman.
The worst market crisis in 60 years
George Soros, Financial times
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
…Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.
The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.
Everything that could go wrong did.
…Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
The writer is chairman of Soros Fund Management
(22 January 2008)
Steady state economy
Center for the Advancement of the Steady State Economy (CASSE)
Welcome to the Center for the Advancement of the Steady State Economy (CASSE). We are a nonprofit, tax-exempt organization dedicated to advocating a sustainable economy with stabilized population and consumption. This economy is called a “steady state economy.”
Why does CASSE exist?
Slowly but surely, economic growth has become a primary threat to our national security, the environment, and future generations. For some visitors, this idea might seem heretical, but go to our resources page and expect a paradigm shift. Economic growth was a blessing for much of U.S. history, but now it is causing more problems – dire problems – than it solves. Yet economic growth remains the highest priority in the domestic policy arena! Our students and citizens are continually told that there is no limit to economic growth, in defiance of ecological principles and basic physics. We support a sustainable economy that operates within the limits dictated by Earth’s ecosystems — in short we want an economy that is balanced with nature.
What does CASSE do?
For starters, CASSE advocates a carefully crafted, scientifically sound position on economic growth. Please support the position by e-signing it (we will not contact you unless requested). We offer resources for those interested in learning about the steady state economy or teaching courses in ecological economics. We also provide commentary on standard university economics (dubbed neoclassical economics) and review current economic events. CASSE supports a speakers network that delivers presenations and lectures. Visit our action page to see how you can get more involved.
In the coming generations, what will people wish we had done? What do we want to keep for the kids and grandkids? What natural ecosystems and functions do we want to conserve?
How much growth is enough? At what point does economic growth overwhelm ecosystems and become “uneconomic”? Why not aim for better rather than bigger?
“CASSE is the foremost organization in advancing the precepts of the steady state economy to citizens and policy makers — an indispensable resource!”
-Herman Daly
(2X January 2008)
Submitted by Brian Czech, Ph.D., Visiting Assistant Professor, Virginia Tech, federal civil servant, and president, Center for the Advancement of the Steady State Economy .
