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I predicted way back in 2008 that the recession soon to follow what was then just a "credit crisis" would last 15 years. Everybody said I was crazy. Now when I remind them, they just tell me to shut up. I was going to indulge my inner economics genius and post a blog about how and why this would occur, but of course, my inner trailer trash layabout kept me from doing it. And then I got laid off (American) or made redundant (British), and my life became so complex I didn't have the energy to even consider it. In the last couple of weeks, like a dam breaking but in reverse, my life has got a lot simpler. I now know (more or less) what I am going to do and when. So to the blog... But wait! I am not going to do the 15-year recession blog (now only 13 years of it left, of course.) The time for that has passed. The moving finger writes and having writ, moves on. Instead...
I didn't think Paul Krugman could ever become more of a hero to me than he already was. But he has. He has a cunning plan to save the US economy, and of course, it's based a bit more on history than on pure economics. If you have closely studied the 1929 stock market crash and ensuing 10-year depression, you will know that it was more due to an outbreak of war in Europe than to government or Fed policies that America began to be productive again around 1939-40. And you will know that there have been quite a few vague historical echoes in our current fiasco as well. So Krugman's idea is that the government should give up on economy-tittivating, which they are frankly no good at anyway, and fake an alien invasion.
I'm in Atlanta, which it is now hip to call ATL. I am visiting my son and his girlfriend, and I am staying in the poshest hotel I have ever been in, at a fantastically reasonable rate, thanks to Expedia. (I have a picture of it on my phone, but I will have to upload it later as this computer in the hotel doesn't seem to have a USB port available.)
I have to do another Deborama's Wednesday Website of the Week, but I cannot wait until Wednesday (I will be mostly on the road to Hattiesburg then anyway) and technicallly I should not call it WWW anymore since it is far from being weekly. But I discovered the Believer magazine, a McSweeney's publication, at my son's apartment, and I have been obsessively reading it ever since. Absolutely brilliant, and I hope they'll forgive me lifting the image, since I am using it to plug their product.
Everybody here is laid off, or about to be laid off. It's quite sad what this recession is doing to those of my kids' generation, as if they haven't suffered enough. It's bad for my generation too of course; getting made redundant just as the verdant pastures of retirement come hazily into view is no picnic, I'm sure. Hopefully, I won't find that out firsthand on my return to Blighty, although it is a possibility.
This article from the Economist analyses the prospects for renewing the Transatlantic Alliance - before it's too late.
Yet in the longer run the chances of better transatlantic co-operation may be greater than they seem at first sight. The reason is simple. For both Europe and America the long-term outlook is quite bleak. Global acceptance of American leadership has diminished both because of the Iraq war (and Guantánamo) and because of the rise of emerging powers with different ideas about how to order the world, some of which carry a whiff of 19th century great-power rivalries. Today’s Europe has little military clout, and is in demographic and (relative) economic decline.
A lot of articles on the economy and on the new administration coming to the US in January 2009 all take as a given that the power of the US, and indeed of "the west," is definitely on the wane. Some put the high-water mark back as far as 1948, although I would disagree with that. I think 1989 has at least as strong a claim. But there is no argument at all that the eight years of the Bush administration hastened the end for America, and a surprising number of pundits agree with me in pointing to Hurricane Katrina as the smoking gun that proved it to be so.
 I have had this great blog post about the economy running around in my head. I have the left view, the right view and correct view (maybe). I have how we got here and where we may be headed and what to do about it. But somehow, with reading this cacophony of voices, I am unable or unwilling to add my own. So all I can do is share.
- Madeleine Bunting of the Guardian has a stunning critique of the "free market" myths, beliefs, and orthodoxies that were in a great part responsible for our current woes.
- John Cochrane, an economist of the Chicago school, is probably a "believer" and he has the traditional conservative case against the (original) US bailout plan (now largely superseded by events - was it really only a week ago?) but also the most succinct and understandable description of what the mortgage crisis is really about.
- Freakonomics has loads of good stuff; I especially liked Save or Splurge? by Daniel Hamermesh, because of the little vignette about his marriage. (DH and I have lost over a third - a third! - of our retirement fund.)
- Recently I joined (under my "work" persona) a website community for IT and banking industry professionals that has an excellent news feed, making me overwhelmed with cluefulness. It's called Finextra and some of the more energetic (than me) members have blogs.
- Back at the Guardian, Gary Younge, a resident USA-expert, links the economic meltdown back to the people and power, and the election, of course.
- Update: stop press! I just found this, which has got everything, with large type titles. No really, go read it right now, it's brilliant.
What? We still can't say the word "depression"? How about "recession", can we at least call it that? Are we all Keynesians now?
The Guardian has a nice selection of comments and insights into the global financial crisis, coming out on the same day that Lloyd's TSB is in talks to buy out Halifax-BOS (both major UK banks and the result of earlier mega-mergers, but in more optimistic times.) But rather than being the thoughts of pundits and economists, these views are from philosophers, artists, socialists and peace activists.
Is capitalism done for? Is it even in trouble? Most of the thinkers say no. They are not so positive about the chances of the nemesis known as New Labour, however. Many of them bemoan the undeniable fact that the left does not have an inkling of a reform plan. But still, the analyses are mostly quite spot-on.
Ken Livingstone (former mayor of London) : As a system for the distribution and exchange of goods, you can't beat the market. But the mistake a lot of politicians have made is to think that because the market was good at that, it could be good at everything: it could train workers, create infrastructure, protect the environment, regulate itself. Quite obviously, it can't. Max Keiser (former broker) : This is not a blip. It's extremely significant. We will see a shift in power away from the US, and towards the developing world - to countries such as Brazil and the Gulf states that have commodities to sell, and to China, where the savings ratio is high. We are going to see a new world order. America as a driver of the global economy is finished. Shelia Rowbotham (professor of gender and labour history) : The Labour party has always been ambiguous about whether it is trying to make capitalism more efficient, or whether it is trying to soften its harshness. Since the 1970s, the left has been much weakened, as neoliberal ideas became totally ascendent. Under Blair, the idea that the Labour party was committed to any redistribution was pushed to the sidelines. I would like to see a new kind of left - a left that would relate to the present predicament. Late breaking addendum : Nobel prize-winner Joseph E. Stiglitz has an article on CNN about preventing future financial catastrophes (in the US) through prudent regulation.
If all else fails for the Republicans, they are counting on the tactic of limiting voting by poor and non-white voters. Some bright spark has siezed on the mortgage crisis as a sort of natural selection device to keep people who might want regime change away from the polls. To cut to the chase, some state Republican parties are arming their poll-watchers with list of recently foreclosed properties matched to the electoral rolls, so someone who is, say, dispossessed and evicted from their home in the weeks leading up to the election can be disenfranchised on the basis that they haven't established a new home yet and updated their address. (Some states don't allow you to update your address for quite a long period before election dates, making this tactic so much easier to deploy.) I think the story says it all; there is nothing I can add.
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