Wednesday, 16 November 2011

Trends about our near future. First the bad news.

Trends: first let’s get the negative stuff on the table. 
by Tom Thorne
The current trend is clearly to an economic downturn of some length. Politicians will only commit to a “possible recession” but we all know that the cards are stacked against an economic upturn and perhaps we are all looking at a decade of stifled economic opportunity. For me at age 70 that is a bleak prospect as I attempt to protect my meagre retirement savings. For a newly minted university graduate looking for a first job the prospect of using their education productively must be daunting.
The reason is, of course, governments living above their means is about to come home to roost big time. Simply stated the problem is governments spend more than their economies can bring in. In the west we are also  an aging population and that is expensive to maintain socially and so we have seen the first cuts to pensions and benefits happen in Europe which takes money and spending out of the economic cycles. European Union (EU) countries are all on the brink. EU members like Greece, Spain, Portugal, Ireland and now Italy are likely to fall into default. 
The economic fallout will be exasperated by the fools who run stock markets, banks and  investment houses with their programmed trades and lack of long term strategic economic thinking. The whole mess will snowball into a dreaded downturn. EU country bonds must now bribe investors with between 6 to 7.5 percent interest rates for buyers to even consider taking on the risk of loaning these countries money. This means that money to keep going with the status quo is more expensive and so the debts of these miscreant countries will deepen since they will never pay off the principals of their loans. 
Cash rich countries like China will scoop up all sorts of bargains when this strategic fall from economic grace happens with the first defaults. As I have said in earlier pieces I don’t know who will benefit from what I call Chinese state capitalism but it won’t be Europeans and North Americans. However the downturn will enable China to buy into the west for resources like oil and ores but also sadly for  control of high technology  intellectual property. This may stifle recovery and the innovation needed before the real crisis arrives by or before 2021.
Wasting youth through educational debt loads
In addition, throughout the western world youth unemployment of well educated people is gigantic. Some EU countries have 40 percent plus youth with no employment or at best under employment in McJobs and so-called “service positions” like call centres. Low paying part time jobs cannot hope to pay for the education debts many young people have these days. Add to this the high debt loads held by many individuals and families in the western countries and it is all a recipe for more problems and not solutions.
Also many western countries with large cadres of underemployed or unemployed youth, face huge debts for their time at university and college. They have been told all their lives that education is the way to prosper in a high technology information economy and now the promise is not happening. Hopefully all these educated young people can now use their educations to create opportunities for themselves because they can kiss away government jobs being created for them. The 99/1 protests may be the head end of some kind of social and political economic change that is evolving mostly out of frustration with existing institutions.
Also a lot of private capital is locked up by skittish entrepreneurs. Many private sector companies are sitting on piles of cash but they are reluctant to invest in new enterprise because they fear the default likelihood of their governments and the resulting general economic malaise that would result. So a vicious circle of distrust has set in. The jobs young people with educations could fill are not being created. Dare we now use the “D” word? Certainly it is psychologically depressing.
Government jobs are cutback to curtail the spiral into default and so the cycle of gloom swirls towards a lengthy recession that if we don’t stop it with private sector investment and innovation may become a depression. With governments cutting back on employment and aging populations making more demands on traditional government services such as health care there is a crunch coming that is very big and prolonged.
Gloomy isn’t it? Now add to the mix that we are now 7 billion humans on earth and in 10 years we will be possibility 12 billion people sharing this planet and the economic prospects are looking desperate another “D” word no politician will touch. How will 12 billion people be fed, clothed and kept healthy? Well we know it won’t happen with current political, economic and technological formulas.
What we are doing at this time in 2011 is staying the inevitable crash of population, pollution, environmental degradation and resource depletion that is a decade off at best. The USA- EU debt crisis and default pales, when we examine how good our rebound has to be to stave off the real crisis a decade from now.  A lot has to change and change is not something that humans do well.
© Copyright 2011, Tom Thorne, All Rights Reserved

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