Collapse.

[Rocky Road]

A systemic collapse and a destruction of the dollar seems unlikely, but the way things are going, the chance of a systemic collapse are very real. Coupled with the debt problems and the "House of Cards" that is the global economy there is even more reason to believe that things are getting scary.

A recent poll by Nanos gave a very poor consumer confidence rating of the economy and its future. - (CBC)

http://www.nanosresearch.com/main.asp

What if - politicians and public officials are reluctant to really tell things how they are because they are worried about a.) getting elected again b.) they know that its not what people Want to Hear.

The growth paradigm is over, the environment is beyond wrecked.

Is there any semblance of sanity left?

[bush_cheney2004]

Why would the Canadian dollar collapse?

[treehugger]

A systemic collapse and a destruction of the dollar seems unlikely, but the way things are going, the chance of a systemic collapse are very real. Coupled with the debt problems and the "House of Cards" that is the global economy there is even more reason to believe that things are getting scary.

A recent poll by Nanos gave a very poor consumer confidence rating of the economy and its future. - (CBC)

http://www.nanosresearch.com/main.asp

What if - politicians and public officials are reluctant to really tell things how they are because they are worried about a.) getting elected again b.) they know that its not what people Want to Hear.

The growth paradigm is over, the environment is beyond wrecked.

Is there any semblance of sanity left?

you should change your name to gloom and doom.

who listens to polls anyway, you should have learned that during the last election.

[August1991]

A systemic collapse and a destruction of the dollar seems unlikely, but the way things are going, the chance of a systemic collapse are very real.

In the past few months, I had the chance to travel in Europe, and I took time to look at various battlefields: from the Seven Years War through to World War II. I have also been reading recently accounts of ordinary soldiers in the Napoleonic Wars, the Seven Years War and World War I.

Systemic collapse? World War I, IMV, was close to systemic collapse. In WWI, old guys sent millions of young guys to die in holes in the ground in northern Europe. (You have to see the holes - 100 year later - to believe the madness or "systemic collapse", as you phrase it). Or how about Dieppe?

Today, even in Greece, we are far from WWI trenches.

Mark Steyn rants on about how today's generation is borrowing from the future. Someone should explain to him that the present cannot borrow from the future unless it kills its young, or destroys its physical environment.

WWI did that. Today's government debt does neither.

-----

Consider European (Western) history over the past 100 years (1900-2000) in 25 year chunks, as viewed by someone alive at the beginning of the era.

If a European in 1900 had thought of the next 25 years, he/she would have had hope. Europe (and the West) seemed at its optimum in 1900. From Nicholas II to Teddy Roosevelt, Bell to Edison. All seemed well, with tremendous promise. In fact, the 1900-1925 period was a disaster.

A European in 1925 might too have seen things with hope: the Great War, the war to end all wars, was behind them. In 1925, Europe had hope.

In 1950, Europe was divided, destitute, destroyed. After the previous 50 years, only the optimistic believed that Europe had a future. And yet, the next 25 years were good.

In 1975, Europe and America suffered from inflation/unemployment and an endless cold war. Oil prices had suddenly risen. Nixon had resigned, America had lost a battle in Vietnam. The Soviets were strong, and about to invade Afghanistan. Anarchists placed bombs, kidnapped bankers and children of rich families. Europeans were afraid of the future. And yet, in the next 25 years, Europe created a single currency, eliminated many borders - the Iron Curtain collapsed.

----

I'm not superstitious, but maybe it is good if people are now fearful of the future.

Edited October 21, 2011 by August1991

[Moonlight Graham]

you should change your name to gloom and doom.

Actually I love his name, it's freaking delicious.

Rocky Road, my opinion is that there is a very real likelihood that there will be a massive systemic collapse of the world capitalist economic system, worse than the Great Depression. Our capitalist system depends on perpetual growth, and this may simply become unsustainable. We have seen what the financial world has done to try to avoid and recover from these boom-bust cycles that are inherent in a capitalist economy, they have tried to squeeze money in markets/industries that can't sustain themselves and eventually have collapsed (re: tech and housing bubbles), and have partook and criminal fraud or ridiculous practices in order to sustain profit growth that have inevitably caught up with them and undermined the system and contributed to a crash (re: Enron, Nortel, banks, hedge-funders)

On top of this, our governments are trying their best to "fix" the capitalist economy on different occasions over the last few decades and get back to this needed perpetual growth by throwing mountains money at businesses to bail them out and throwing huge money into the economy as "stimulus", all the while racking up massive amounts of government debts that are simply unsustainable. Also, the profits in our current economy have increasingly relied upon consumers taking out large debts to pay for this, so this wealth is simply not real and not sustainable from a consumer's perspective nor a government perspective.

Personal and government debt is the primary reason why our economies are currently still teetering on the edge of disaster, yet what has been our governments' response to get the economy back on track? Lower interest rates so people/businesses can take on MORE debt!!! Lowering lending rates in order to recover after the 2000 dotcom bubble is what greatly led to the current credit crunch and recession, and yet we are repeating the same thing again?!? Insanity. If we don't change things drastically we are headed towards a major crash sometime in the future (even if we do change things it may be unavoidable), whether it be 2 or 5 years or 20 years, but it's going to come and the busts will repeat and get worse because this drive for perpetual growth seems unsustainable and just throwing money at it that we don't even have is a short-term band-aid on a bursting dam.

[August1991]

Rocky Road, my opinion is that there is a very real likelihood that there will be a massive systemic collapse of the world capitalist economic system, worse than the Great Depression. Our capitalist system depends on perpetual growth, and this may simply become unsustainable...

Lotsa leftist people thought the same in 1960 or so....

In 1848, Leftists also thought "the world capitalist economic system" would collapse. Go figure.

Edited October 22, 2011 by August1991

[Bonam]

Actually I love his name, it's freaking delicious.

Rocky Road, my opinion is that there is a very real likelihood that there will be a massive systemic collapse of the world capitalist economic system, worse than the Great Depression.

And yet if you look at the historical data on economic growth, production, etc, even the great depression looks like little more than a temporary blip. The reality is the "world capitalist economic system" is just getting started. Just 20 years ago, the world was still divided between rival capitalist and communist powers. Only in the last 20 years has much of the developing world been embracing capitalism and enjoying economic growth. We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

[bush_cheney2004]

... We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

Yep...compete or be left behind to cry.

[August1991]

The reality is the "world capitalist economic system" is just getting started. Just 20 years ago, the world was still divided between rival capitalist and communist powers. Only in the last 20 years has much of the developing world been embracing capitalism and enjoying economic growth. We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

Competition? Price competition more likely.

Competition is two guys fighting to win the girl. Price competition is two guys building the best mall to win the girl. There's a world of difference.

IME, modern Leftists call themselves "progressives" when in fact they want to protect ordinary people against change. Ordinary people are smarter than that.

You ain't seen nothin' yet!

----

On this point, I wonder why it started in the past 20,000 years or so. Was it the ability to count our fingers that made price competition possible?

Edited October 22, 2011 by August1991

[jbg]

I'm not superstitious, but maybe it is good if people are now fearful of the future.

Truly excellent analysis. And they say the stock market climbs a "wall of worry". I do think that a realistic view of European history shows that the place was always a charnel house. One of the reasons that Canada and the U.S. are so good is we have their best people. When the Americas opened up, the better, more motivated ones came. The ones that wanted to fight ancient battles stayed and it didn't end well.

Even with the "single currency" Europe has some real problems. For us here, not so bad.

[Bonam]

Truly excellent analysis. And they say the stock market climbs a "wall of worry".

Agreed. The common sentiment almost always turns out to be completely wrong. Not always in a predictable way of course, but wrong nonetheless.

[August1991]

One of the reasons that Canada and the U.S. are so good is we have their best people.

Be careful what you say. You Americans killed over a half million of your own people (in a country of about 25 million) in a few short years between 1861-64. I won't note the deaths caused by importing slaves from Africa.

Despite our religious differences, Catholic and Protestant, we Canadians never slaughtered ourselves as you Americans have done.

jbg, I agree however that we North Americans in general are far more civilized when compared to the violent Europeans who have a propensity to annihilate themselves.

I have never had much patience for urban North Americans (metrosexuals?) who claim that European moeurs are sophisticated and civilized. To me, based on the historical record, Europeans are violent, uncivilized people. In general, North/South Americans (whether native, from Africa, Asia, Europe, Catholic or Protestant, French, English, Spanish or Portuguese speaking) are people who live together largely in peace - at least compared to Europeans.

Maybe it's the water, or the air.

[Rocky Road]

Thanks for the insights.

There are a few things I would like to add.

First,

the point made about debt expansion is completely valid, I agree whole-heartedly that we are consuming way beyond our means, and we are fast using up claims on future labour, which is what debt is-right?

Second,

I realize that Canada is a kind of safe haven for the uncertainty because of our stable banking system, but we are not an island to ourselves. 70%+ of our trade is with the US, and if the US dollar devalues well then we are headed south too.

Third,

Peak oil, water, food, overpopulation, mass extinction of oceans, climate change...

I am not trying to be anything but a realist, I realize it sounds doom and gloom, but there are some worrying trends to consider.

[CPCFTW]

the point made about debt expansion is completely valid, I agree whole-heartedly that we are consuming way beyond our means, and we are fast using up claims on future labour, which is what debt is-right?

Basically yes. Which is why government DB pension plans are so ludicrous. Putting all the investment risk on our children.

As for being a realist.. I won't touch that other than to say you are buying into too much hippy/greenpeace propaganda.

I do think the spa trip is over for the developed world for now. New generations will have to give up the 35-40hr work week dream, while the Chinese are working 12hr days for 7 days a week. It's a shame the new generations will also be burdened by paying for welfare cases, underfunded government pension plans, and interest for all the money borrowed by their parents and grandparents' hippy entitlement movement generation.

Edited October 22, 2011 by CPCFTW

[eyeball]

These are sure interesting times poised between the bottleneck of a Malthusian catastrophe and a triumphant technological/economic singularity.

If there's Mothership out there with aliens studying us I wonder if they bet on which way the chips will fall and whether we'll make it or not?

[bush_cheney2004]

Be careful what you say. You Americans killed over a half million of your own people (in a country of about 25 million) in a few short years between 1861-64. I won't note the deaths caused by importing slaves from Africa.

...or that some of these slaves "found" their way to Canada.

Despite our religious differences, Catholic and Protestant, we Canadians never slaughtered ourselves as you Americans have done.

Nope..."Canadians" did it by forced expulsion!

Maybe it's the water, or the air.

Nope again, as First Nations had even cleaner water and air and were known to destroy each other when necessary...or not.

[Evening Star]

I do think the spa trip is over for the developed world for now. New generations will have to give up the 35-40hr work week dream, while the Chinese are working 12hr days for 7 days a week.

You guys have actually pretty much sold me on this, if not so much on a willingness to accept growing inequality within our own society.

[Moonlight Graham]

And yet if you look at the historical data on economic growth, production, etc, even the great depression looks like little more than a temporary blip. The reality is the "world capitalist economic system" is just getting started. Just 20 years ago, the world was still divided between rival capitalist and communist powers. Only in the last 20 years has much of the developing world been embracing capitalism and enjoying economic growth. We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

WWII pulled the west out of depression and fueled growth for the next 60 years largely because of the babyboom generation that came out of it. Population growth meant more consumption and spending. Spending fuels our capitalist economy, and whenever we cease to spend, because of lack of faith in the economy (like now) or any other reason, the economy stagnates.

The babyboomers are starting to retire, that means they aren't making nearly as much income & are saving for the future instead of spending as they did. This means, unless we increase immigration from developing countries to make up for it, spending and likely consumption in western economies will decrease in the coming decades.

On top of this, the babyboomers will put more strain on gov welfare services like health/pension/social assistance etc. and we will need to pay for this, meaning more taxes or much more likely more federal debt, and possibly more personal debt as well.

Unfortunately, over the last few decades consumption (and economic growth) has been increasingly fueled by a) consumer debt, and government debt, ie: fantasy money/wealth we don't actually have. As we have seen recently, this debt is not sustainable at these levels. Unless we are to avoid a greater economic collapse, consumers and governments must decrease their debt. This means a further decrease in spending, not good for economic growth. Business, banks, credit cards companies, and government have been pushing debt in order to maintain capitalist economic growth. It's not sustainable, and in order to correct avoid major collapse, we will certainly need to decrease our spending.

So basically I think we're either going to keep driving our personal and government's accounts into default, or we need to prudently decrease our spending/consumption. Based on this, and the demographics I mentioned, I think we are entering a new reality where economic growth is much more modest...that is, unless we greatly increase immigration or we have another revolution in production like the past industrial revolutions that is also somehow sustainable on our resources.

[Rocky Road]

http://www.youtube.com/watch?v=kBLCv6k8zQw&feature=player_embedded#!

[dre]

And yet if you look at the historical data on economic growth, production, etc, even the great depression looks like little more than a temporary blip. The reality is the "world capitalist economic system" is just getting started. Just 20 years ago, the world was still divided between rival capitalist and communist powers. Only in the last 20 years has much of the developing world been embracing capitalism and enjoying economic growth. We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

We are ironing out the kinks of globalization, developed nations are being pressured by competition from nations with cheaper labor and markets. That's all.

Sure but that alone will put our "way of life" in jeopardy.

And youre right... its just getting started. Theres still millions and millions of jobs left to move from the developed to the developing world. In fact the vast majority of jobs that Canadians or Americans can do, are offshorable. It started out with just low level laboring jobs, but its spreading fast. And thats even with the fact we still protect so much of our economy from foreign competition. If we were to end protectionism completely our agricultural sector would cease to exist over the course of about a decade, and our healthcare industry would be mostly gone as well.

At the end of the day the only jobs that havent been exported will be the ones where its physically impossible.

[blueblood]

Sure but that alone will put our "way of life" in jeopardy.

And youre right... its just getting started. Theres still millions and millions of jobs left to move from the developed to the developing world. In fact the vast majority of jobs that Canadians or Americans can do, are offshorable. It started out with just low level laboring jobs, but its spreading fast. And thats even with the fact we still protect so much of our economy from foreign competition. If we were to end protectionism completely our agricultural sector would cease to exist over the course of about a decade, and our healthcare industry would be mostly gone as well.

At the end of the day the only jobs that havent been exported will be the ones where its physically impossible.

Wrong! The Canadian agriculture sector hasn't been this high performing since the 1970's. Have you seen what grain prices are? Not only that we have massive investment in developing countries and it still isn't bringing down prices. The fact that the economy is booming in Asia is a good thing. Eventually it will result in the cost of labour in Asia to rise and as a result it will be too expensive for North Americans to buy products from there and we will once again be producing products for ourselves.

Even through a hard hitting financial crisis, the agriculture sector hasn't missed a beat thanks to foreign jobs. Its because of throwing protectionism under the bus that our agriculture sector is thriving instead of being in the dumps like eastern canada.

[August1991]

... the point made about debt expansion is completely valid, I agree whole-heartedly that we are consuming way beyond our means, and we are fast using up claims on future labour, which is what debt is-right?

Debt expansion? What debt expansion in Canada? (Even in the US, the US federal government has powers to tax that warrant the low interest rates on 30 year government bonds.)

I realize that Canada is a kind of safe haven for the uncertainty because of our stable banking system, but we are not an island to ourselves. 70%+ of our trade is with the US, and if the US dollar devalues well then we are headed south too.

Canada has a stable banking system? Have you wondered why?

Peak oil, water, food, overpopulation, mass extinction of oceans, climate change...

WTF?

As soon as you use the word "peak", you mean to say "collapse". So, on what basis do you arrive at your conclusion of "peak".

[August1991]

Basically yes. Which is why government DB pension plans are so ludicrous. Putting all the investment risk on our children.

Huh?

If people live longer, they can work longer. IOW, they can produce more stuff for a longer period of time.

If we have better technology (computers, robots, etc), we can produce more stuff with fewer people.

If people are smarter (quicker to figure out that the robot isn't working right), we can produce more stuff.

And if we let other people make stuff rather than waste our time (ie. trade with China), we can produce more stuff.

The bottom line here is that in the future, we will produce more stuff. (And by "stuff", I mean more adult diapers, more ease to change them, and more environmentally-safe diapers.)

----

I'm not a wide-eyed utopian. For starters, I realize that longer working lives, better technology, "smarter" people and trade with China will make it much easier to produce diapers, but maybe less so the ease to change the diapers. Relative prices of things/stuff in the future will be different from what it is now.

But let's face it: We're on the right track. Everything's getting cheaper (race to the bottom). Or, alternatively, our real wages are rising (race to the top). I just love the price system. It's a double auction!

Edited October 24, 2011 by August1991

[August1991]

WWII pulled the west out of depression and fueled growth for the next 60 years largely because of the babyboom generation that came out of it. Population growth meant more consumption and spending. Spending fuels our capitalist economy, and whenever we cease to spend, because of lack of faith in the economy (like now) or any other reason, the economy stagnates.

Since Africa has several hundred million consumers, why isn't it rich?

By your logic, Africa with all its consumers and spending and population growth should be a rich place.

Rather, population growth and the baby boom in North America did not mean "more consumption and spending". It meant getting people into gainful employment and more production. But that's a more difficult question than your simplistic, half-baked Keynesian viewpoint.

Edited October 24, 2011 by August1991

[August1991]

Theres still millions and millions of jobs left to move from the developed to the developing world. In fact the vast majority of jobs that Canadians or Americans can do, are offshorable.

And how is that a bad thing?

For Chrissakes. If someone invented a way to fuel a car with water, how many jobs would we lose in the petroleum sector? And dre, you would see this is as a bad thing, the same way that you view jobs as "offshorable".

And yet if someone figured out how to fuel a car with water, such a discovery would be good for the world economy. And Canada.

Edited October 24, 2011 by August1991