It is only a matter of time before Greece defaults on its debts. Italy is on the brink of its own debt crisis. The United States has not recovered from the Great Recession of 2008 and appears to be heading for a second one. The projected economic growth rate for China is expected to decrease by as much as 2.5 percentage points next year, which would still give it very positive economic growth but which could be the pin that finally pops the extremely inflated real estate bubble in that country.
Any one of these events on their own could dump the world economy into the crapper. The fact that more than one of these events could happen within the next 6-12 months would be distasterous for the world economy, including Canada's. Although, we should be really worried about China. That is the country that is buying most of our natural resources, which is the sector of the economy that is keeping up Canada's economic growth. If China runs into a serious bout of economic trouble the economic recession that has been hammering Canada's industrial sector will come to its resources sector and the whole of the Canadian economy will go into a deep and probably prolonged recession.
What are we to do?
Do not count on central banks. Interest rates in the Western world are at or near zero so the central banks' ability to stimulate the economy by loweing interest rates is very limited.
That would leave only governments to take up the slack with fiscal measures to stimulate the economy. However, do not count on them. Any measures they take will probably just make things worse. Governments are completely unable to stop or reduce the duration of recessions. Unfortunately, most people do not realize that so they demand governments to act and when they do the situation invariably gets worse, which leads to demands for more action which leads increasingly desperate governments to take action, any action, that gives the appearance that they are dealing with the recession when in fact they are usually screwing things up more. At any rate, we should be watching what governments do after the next recession. They may not be able to stop or reduce the duration of a recession but they can make the recovery from one more even across their societies by what they do after the economy begins to bounce back.
Do not count on businesses either. They will demand that governments hand them billions of dollars to stay afloat "to save jobs" but they will retrench and lay people off by the 10s of thousands. As well, as they did in 2008 they will stay on the sidelines waiting for someone else to make the investments that will be necessary to finally pull the economy out of any recession.
So really, you can only count on yourself. Scary thought is it not?
Sunday, November 13, 2011
Tuesday, November 08, 2011
The "Occupy" Movement
With each passing year it is getting more difficult for ordinary citizens in the Western world to live well. Everything is becoming more expensive, from food to education to shelter to transportation. The middle class is shrinking and those who still remain there do so by means of credit. Most ordinary citizens of the Western world know that they are just one economic shock, international, national or local, from economic ruin. But for the most part it is just a slow erosion of the economic well being of ordinary citizens.
This trend has continued for decades and no government, of any political stripe, in any western country has been able to stop that erosion. Indeed, this erosion has accelerated.
The result is more and more ordinary citizens have turned away from politics, as demonstrated by the continuing trend of increasingly lower voter turnout in most Western democracies. This is disinheartening as part of the means of stopping this continued erosion is politics.
So, it is with some satisfaction that I see the creation of the "Occupy" movement. Finally, ordinary citizens are beginning to make their voices heard. Certainly many in this movement are activists but there are enough ordinary people who just want to see change to assert this movement is not just a slow motion G20 protest. Maybe it is a sign that political apathy can be reversed.
So, will the "Occupy" movement change anything?
No.
The key reason is the movement is targeting the symptom of the problem and not the underlying condition.
The 2008 recession was caused by the excesses of Wall Street and other corporate interests and that is a fact. However, the reason why they were allowed to go to such excess was the US government's decision to relax financial rules and regulations governing the work of Wall Street and the big financial players in the country. The result was a financial meltdown not seen since the 1930s that required the US government to bail out corporate America with a bailout package of more than $700,000,000,000. Considering the damage that Wall Street did to the world economy it would have been logical that US law makers would have reinstated some of the tougher financial regulations to prevent a repeat. Of course, that did not happen because Wall Street and other corporate interests took a portion of that $700 billion aid package and used it to lobby US lawmakers to keep things the way they were. They were successful. It is ironic really. Corporate interests fucked things up so much that they almost destroyed the world financial system. They demanded taxpayers funds to be used to pull their nuts out of the fire and then used that same taxpayers money to lobby the government to maintain the conditions that lead to them fucking things up to begin with.
That is the underlying problem. The voice of ordinary citizens in now completely drowned out by the very well funded voice of corporations through their lobby groups. They have proliferated to the point that ordinary citizens cannot put forward the consistant and sustained efforts necessary to convince policy makers to listen to their point of view. It is now a simple fact in the western democracies that money buys access. Corporations have the money and ordinary citizens do not. Therefore, corporations have the access and ordinary citizens do not.
Until ordinary citizens realize this and demand change to this situation nothing will change for the better for them. If the "Occupy" movement wants to begin that process they will have to change their focus. Instead of occupying Wall Street, set up their camps on the Washington Mall and demand the government begins governing for the people again, as it states in the Constitution. Of course, such protests would be broken up pretty quick for "security" reasons.
The "Occupy" movement is a reason for some cautious hope that ordinary citizens can eventually be shaken out of their apathy to redress the growing inbalance in addressing their interests over corporate interests but it still has a long way to go and you can be certain that the corporate interests will be using all available resources to maintain the current imbalance.
This trend has continued for decades and no government, of any political stripe, in any western country has been able to stop that erosion. Indeed, this erosion has accelerated.
The result is more and more ordinary citizens have turned away from politics, as demonstrated by the continuing trend of increasingly lower voter turnout in most Western democracies. This is disinheartening as part of the means of stopping this continued erosion is politics.
So, it is with some satisfaction that I see the creation of the "Occupy" movement. Finally, ordinary citizens are beginning to make their voices heard. Certainly many in this movement are activists but there are enough ordinary people who just want to see change to assert this movement is not just a slow motion G20 protest. Maybe it is a sign that political apathy can be reversed.
So, will the "Occupy" movement change anything?
No.
The key reason is the movement is targeting the symptom of the problem and not the underlying condition.
The 2008 recession was caused by the excesses of Wall Street and other corporate interests and that is a fact. However, the reason why they were allowed to go to such excess was the US government's decision to relax financial rules and regulations governing the work of Wall Street and the big financial players in the country. The result was a financial meltdown not seen since the 1930s that required the US government to bail out corporate America with a bailout package of more than $700,000,000,000. Considering the damage that Wall Street did to the world economy it would have been logical that US law makers would have reinstated some of the tougher financial regulations to prevent a repeat. Of course, that did not happen because Wall Street and other corporate interests took a portion of that $700 billion aid package and used it to lobby US lawmakers to keep things the way they were. They were successful. It is ironic really. Corporate interests fucked things up so much that they almost destroyed the world financial system. They demanded taxpayers funds to be used to pull their nuts out of the fire and then used that same taxpayers money to lobby the government to maintain the conditions that lead to them fucking things up to begin with.
That is the underlying problem. The voice of ordinary citizens in now completely drowned out by the very well funded voice of corporations through their lobby groups. They have proliferated to the point that ordinary citizens cannot put forward the consistant and sustained efforts necessary to convince policy makers to listen to their point of view. It is now a simple fact in the western democracies that money buys access. Corporations have the money and ordinary citizens do not. Therefore, corporations have the access and ordinary citizens do not.
Until ordinary citizens realize this and demand change to this situation nothing will change for the better for them. If the "Occupy" movement wants to begin that process they will have to change their focus. Instead of occupying Wall Street, set up their camps on the Washington Mall and demand the government begins governing for the people again, as it states in the Constitution. Of course, such protests would be broken up pretty quick for "security" reasons.
The "Occupy" movement is a reason for some cautious hope that ordinary citizens can eventually be shaken out of their apathy to redress the growing inbalance in addressing their interests over corporate interests but it still has a long way to go and you can be certain that the corporate interests will be using all available resources to maintain the current imbalance.
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