Economic Outlook

[dlkenny]

I came across this article today and found it a very informative read.

http://seekingalpha.com/article/103202-the...west-generation

The article deals specifically with financial concerns based in the US but I feel that in a global economy that we are all affected. Although the Canadian system is one of the strongest in the world I personally think that we are in for some very difficult economic times and a massive restructuring of how the global economy operates.

The issues discussed in the article are some that I personally have been thinking about for some time. As a 27 year old employed in the Financial Services industry I have followed the recent events both from a political and economic standpoint. I have also spent a good deal of time reading from the history books and have found that the 3 economic depressions since the industrial revolution (1837, 1873, 1929) have all been spurred by similar instances of frozen credit and limited capital from banks being overextended. The causes of these overextensions were all different, however the similarity remains and each time the equity markets subsequently collapsed due to the lack of available capital and pushed the global economy into widespread depression.

Some will argue that a depression in today's world is unlikely since today's world is different due to expanded regulation, technology and communication. However the principles are exactly the same and if businesses cannot access investment dollars for working capital they cannot function and will be forced to cut salaries and lay people off. Moreover, decreased consumption then leads to further cutbacks because of reduced production necessity. It is my feeling that regardless of the period we live in, if the unemployment rate were to soar to 30%, while people are reduced to living with extended families and are living off of food stamps because the money supply has dried up, that no amount of technology or communication will help, and at the end of the day our basic necessities for life are the same as they were in the past. I simply want people to know and acknowledge that the potential exists so that we may try to prevent such an event by making wise choices with our finances. It is also prudent to take steps to prepare oneself for the possibility of an economic depression.

I have recently spent time speaking to people about these concerns and I've noticed that there seems to be a "generation gap" and people from my generation seem to be paying attention to history and are acutely aware of the growing possibility of widespread depression. I have also had the pleasure of speaking with several older individuals who lived through the Great Depression and they too seem to be not only aware but are trying to alert people to the problem and warn them to protect themselves. The disconnect that concerns me is that of the so called Baby Boom Generation, the middle aged people whose generation constructed today's financial system (I'm not blaming anyone personally, just pointing out that it was the "leaders" of the Baby Boomers' generation who created the crisis). As I speak of a growing recession and risk of a depression to these people I find many of them are disconnected with the reality and seem indifferent, often suggesting that "things will work out" or that "markets always bounce back." I feel that the do nothing, live for today mentality is dangerous thinking and will only exacerbate the problem for future generations. As in the article, we as individuals and as a society are already hugely overextended and have lived in a false reality for 25 years and it can't last forever.

Recently I have been contemplating the future, attempting to envision what a depression might look like, how we might recover from the current economic situation, and what the future will hold in terms of prosperity. My personal opinion is that we are indeed headed into a depression - perhaps as deep as the last one and quite likely longer in duration. I believe it will spark a large scale war and a massive restructuring of civilization into a truly global economy. Historically, as capitalistic societies reach critical growth rates the growth becomes unsustainable and the civilizations eventually fall, they then restructure and physically expand to accomodate further growth. I think our economy has been in a state of unsustainable growth for the past 25 years and is due to reset itself. The long term effect of this, following some of the hardest times in history, will be the greatest period of prosperity in history. I believe times will get worse though before they get better.

I welcome your thoughts on the subject.

Edited December 20, 2008 by dlkenny

[Topaz]

Have you done any research into the World Order, the Bilderberg Group, the North American Union? I do believe they are connected. Bring all the world together through globalizing their economies, get rid of the unions, the middle-income earners, and then the shareholders, CEO's will be even richer while the workers become slaves for 10.00 hrly.

[Topaz]

Have you done any research into the World Order, the Bilderberg Group, the North American Union? I do believe they are connected. Bring all the world together through globalizing their economies, get rid of the unions, the middle-income earners, and then the shareholders, CEO's will be even richer while the workers become slaves for 10.00 hrly.

[Michael Hardner]

Have you done any research into the World Order, the Bilderberg Group, the North American Union?

No?

Good. Don't do any. That has nothing to do with the economy, except for the cottage industry it creates for the Alex Jones and David Ickes of the world. Unfortunately, a depression would likely help them.

I too have difficulty imagining a 'depression' in a world where people still trample each other to get x-boxes on sale. In a world where the essentials of life cost far less than they did, and where there is a more generous safety net than in the 1920s.

I imagine that part of the problem is that there are too many chiefs and not enough Indians, and that this bubble burst will probably sweep away a lot of speculation that happens on the markets. That includes speculating on useless new products that are launched only to end up in landfill.

[M.Dancer]

Have you done any research into the World Order, the Bilderberg Group, the North American Union? I do believe they are connected. Bring all the world together through globalizing their economies, get rid of the unions, the middle-income earners, and then the shareholders, CEO's will be even richer while the workers become slaves for 10.00 hrly.

Lend him your talking toaster so he can do his research...

[dlkenny]

Lend him your talking toaster so he can do his research...

I've spent plenty of time doing research, I'm aware of the North American Union and the impact of the European Union. I also don't see people tripping over each other for x-boxes because if the economy gets that bad that people have to rely on food stamps for sustenance the last thing they'll be thinking about are luxuries. I think common people are smart enough to know how to take care of themselves and understand the difference between luxury and necessity. It is for this reason that I don't think a depression today would be much different than in the 1930's, the luxuries of the time don't matter when hunger and shelter are the pressures of the day.

What has troubled me is that the so called "safety net" that people speak of is in no way ready for massive strain. The EI program in Canada is in good shape as it has been overflowing for years, however the government has allowed that excess revenue to be used as General Revenue instead of saving it and investing it for the lean years. Also, people speak of the red tape and bureaucracy that should prevent this type of collapse but the harsh reality is many of the guidelines that were set forth, particularily in regards to banking practices, have been largely ignored in the face of hyper-growth, potential for profit, and huge public purses due to increased tax revenues (despite falling tax rates). People, businesses, governments and banks have all been guilty of greed and overspending and were not thinking about the reality of the future. It is because of this that the guidelines and safeguards were ignored and our economy continues to edge towards collapse. To me it reeks like the same type of problems they incurred in 1929 and it scares me.

Whether we like it or not the reality is that civilizations and empires collapse and are generally replaced with larger civilizations. It has happened repeatedly over thousands of years, usually through war and the redrawing of boundaries. I am not ignorant (as some here imply) and seriously think that we're in for tough economic times followed by large scale restructuring. If you disagree or have a different opinion that's fine but I wanted to speak my thoughts.