July 6, 2008
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The Coming Depression?
The current change in the U.S. economy has led many of us to fear the coming of another economic collapse such as happened about eighty years ago. The causes of that Great Depression were many, complex, and influenced by international economic problems to a large extent. Economists aren't very good historians as a general rule, tending to see their speciality as the over-riding social force. Karl Marx, for example, put all his eggs in that particular basket and doomed his communist followers to eventual collapse - but that's another story.
It's unlikely that the present World and American economic troubles will result in anything like that world-wide disaster but it does foretell the the coming of a dramatic change in our way of life and is already resulting in hardship for many of us.
a few years ago there was mass disruption among the U.S. labor force caused by the shift in heavy industry out of the country. Those displaced industrial workers has barely settled in to new jobs when the massive rise in energy costs has led to further disruption. There has been a net loss in jobs for all of 2008 and this will probably continue.Many of my retired friends have had to drastically alter their life-style as the income from their retirement investments and company pensions has been drastically reduced. They drive less (or not at all), find themselves eating differently, and most significantly; are much more anxious about their ability to survive more drastic financial decline.
Personally, I never much trusted the over-heated stock market and based my retirement on non-stock related investments and savings. I suggest those of you who can still "feed the pig" do so - but not by investing your savings in a bear market. Try money market accounts - they pay less, but are more secure as are government bonds and tax-free munis.
Comments (7)
You're assuming that anyone has any money to invest
I've linked you
I have the impression that this depression will be worse than the ones in the past for two reasons:
1) economy nowadays is globalized, so that the cost of a cup of coffee in norway affects the paycheck of labor in south america, so that the strategies to come out from a depression nowadays must involve economical politics of all the countries of the world, and not only America (or Italy, in my case).
2) mass media are available for everybody in the world, and, although i believe that the ones that are really interested and can read between the lines of what they try to tell us is a small minority of population, allover the world we can understand the real underground actions in order to favorite one or the other company, and so, one or the other economy in the world. If WWII was fought, in the eyes of public opinion, to save the world from nazi-fascist dictature, although it was for merely economical reasons, nowadays it's more difficult to convince everybody (cultured people too) that the War to Terror is fought to save the world from terrorist attacks.
So, economic politics involve also the consciousness of common people who, i hope, will eventually understand that we (rich part of the world) cannot continue to overwork the world for our own advantage while the rest of the world is dying of hunger.
Also this time i would say that the way is to change the world economic system, and not to fight to keep it standing despite all.
Part of the problem stems from the outsourcing of high-tech jobs too. People who were in the $80K -$110K salary bracket have been losing their jobs to foreign countries for at least a decade. Those are the very people who were feeding the US market by buying $30,000 cars and $500,000 to $1 million dollar homes. When there jobs went to India, Korea, and other places, they could no longer afford to buy the things that kept the market strong.
Well... i guess they bought $30,000 cars and $500,000 to $1 million homes in India, Korea and other places?!?
And, by the way, i believe those Indians, Koreans and others would be able, by mena of those money they made out of it, to buy other American products?
@Socrates_Cafe -
I agree as you can read in my post on the issue, we sure don't have money to invest. Many Americans don't.
If things continue downward some Americans may have to get rid of the internet and things like that which are "luxuries"
I think the revolution in world communications will have a profound impact on any upcoming world economic problems. Right now the depressive effect of the changing petroleum costs and the collapsing housing/finance bubble in the US hs yet to spred to the rest of the world, but the rest of the world seems to be following US developments very closly and other governments are already taking what steps they can to bolster their own economic conditions - sometimes at the expense of the US dollar value.
Fortunately the internet has made "secret deals" very hard to keep secret and politicians are being forced to be more open and more responsive to their citizen's needs.
Here in the US though, the coming political changes seem to be keeping the congress/government from addressing problems as quickly as they might. A major part of any depression is the psychological attitude of those being affected. What's being done bout that?
Thanks-a-mundo for the blog article.Really thank you! Awesome.