Economic storm clouds in Europe and in the U.S. are threatening to merge, with consequences likely to be significantly nonlinear, shoving the world into a cycle of economic depression and social upheaval.
Imagine a scenario in which economic depression occurs in either the U.S. or Europe but not both. It is hard to do; the two economics are simply too tightly integrated, in particular by the international flow of very poorly regulated funds. It is perhaps not too simplistic to model the global economy as a three-legged stool, with China being the third leg, along with the U.S. and Europe. That is no cause for optimism, since the Chinese leg is utterly dependent on the stimulus provided by consumption-happy Americans and Europeans. How many of those are still around these days?
As for Europe, the Economic Collapse Blog sums up a very disconcerting portrayal of the state of Europe’s economy thus:
Unemployment rates are spiking, manufacturing activity is slowing down, housing prices are crashing and major financial institutions are failing. What is happening in Europe right now appears to be an even worse version of what happened to the United States back in 2008.
Read the full post. If it is overly pessimistic, well and good; but it cannot lightly be discounted. Rather, the argument it makes about a coming European economic crash must be demonstrated to be false point by meticulous point. At the moment, that looks like a steep mountain to climb.
That leaves the last leg of our global economic stool – the U.S., where over 300,000 people just gave up looking for work in the space of August alone. Now, I ask you, why in the world would anyone give up looking for work in prime holiday season? Would it not just make more sense to go to the beach and worry about finding a job in September? Well, yes, if you had the money to go to the beach and were in the mood for some fun…which suggests that perhaps a lot of Americans are getting very desperate and discouraged. That is the classic foundation not for democracy and progress but violence and fascism.
Oh, yes, to the above picture of the U.S., add a now very steady base of 12,000,000 officially unemployed and probably half again as many uncounted unemployed. Call them “superfluous.” It makes no difference what the rest of us call those shoved to the bottom – “superfluous” or not, they exist and may decide to take action in a way the elite and perhaps all the rest of us–still balanced on the edge of the Cliff of Consumption, glancing in fear at the Valley of Superfluous People far below—may find unpleasant. Those 20,000,000 unemployed souls are only helpless as individuals. What might happen if they all decided to get on the Internet and talk to each other?
Now, let’s move to the next level and glance at the underlying socio-political context within which Americans are struggling with these economic challenges. To be very brief, that socio-economic context consists of four characteristics: 1) corruption eroding the quality of governance, 2) corporate rule undermining democracy, 3) consolidation within the ruling elite of the view that war is the answer, 4) and a return from the dead of a class society. Add these four trends up, and you have a picture of the transition from the American Dream to the American Illusion.
On exactly what basis do you think that an economic crash in the poor parts of badly divided Europe will not engulf all of Europe, then sweep over a U.S. that has blown its four-year-long chance to change, and finally knock over the poor last (Chinese) leg standing of the global economic stool?