Tag Archives: The Great Recession

Counting down the days to the Great Transformation

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The world as we know it has been coming to end for years now. We haven’t had to look far to perceive the portents of impending doom: in the entrails of Wall Street corpses; in the tea leaves of governments that no longer work; in the uromancy that predicts widening income gaps between the rich and the rest.

We just haven’t been able to reliably nail down a year for the Great Transformation. Until now.

A researcher at the University of Hawaii, who used to work at Dalhousie University in Halifax, N.S., thinks he knows. The point of no return will arrive. . .wait for it. . .in 2047. . .give or take.

Camillo Mora, who studies numbers for a living, tells the Globe and Mail’s science reporter Ivan Semeniuk that, overall, this is the year in which climate change will become a permanent feature of life on Earth. . .more or less.

According to the article, “The turning point arrives. . .as a worldwide average, if fossil fuel consumption continues unabated; as late as 2069 if carbon emissions are curbed. City by city, the numbers are a bit more revealing. In Montreal, for example, the new normal will arrive in 2046, and for Vancouver not until 2056. But the real spotlight of Dr. Mora’s study is the tropics, where profound changes could be entrenched in little more than a decade.”

As the good doctor says, “Today, when people talk about climate change, the images that come to mind are melting ice and polar bears. People might infer from this that the tropics will be less affected.”

People would be wrong.

But, then, there’s nothing new about that.

Once, not very long ago, people assumed that economic globalization would insert several chickens in pots from Beijing to Kalamazoo – that gross domestic products around the world would rise like juggernauts, heedless of any and all counterforces they may encounter.

Once, not very long ago, people assumed that democratically elected governments served the best, common interests of the majority of voters – that reason and circumspection would effectively quell fanatical and reactionary figures intent on reshaping the public sphere in their own ideologically pinched and impoverished image.

Now comes word from the International Monetary Fund (IMF) that, generally speaking, the world’s got itself in an economic ringer – one from which it is not likely to emerge any time soon. Welcome to the age of slow growth.

“Emerging economies have cooled off,” an item in The New York Times reveals. “Europe remains in the doldrums. The United States is facing fiscal uncertainty, and its powerful central bank is contemplating easing up on its extraordinary stimulus efforts, with potentially global ramifications.”

As things stand, the IMF “foresees the world economy increasing by about 2.9 per cent in 2013 and 3.6 per cent in 2014. That is down from 5.4 per cent in 2007, before the global recession hit.”

If its predictions pan out, a few will be spared, thanks to their impenetrable cocoons of wealth and privilege. But most can expect lower standards of living, fewer good jobs, higher costs and increasing poverty and homelessness.

Meanwhile, over in Washington, D.C., legislators are twiddling their thumbs.

“The federal government shutdown and looming deadline to raise the debt ceiling have merged into one major problem on Capitol Hill, though neither issue has a resolution in sight as the government shutdown heads into its second week,” CBS News reports. “Democrats and Republicans (have) dug further into their respective positions: Republicans are calling on Democrats to negotiate over a short-term spending bill and a debt-ceiling increase, and President Obama says he is ready to negotiate over any topic – once the Republicans pass legislation to re-open the government and raise the U.S. borrowing limit without any conditions.”

All of which prompted Laurence Booth of the University of Toronto’s esteemed Rotman School of Management to tell the Toronto Star, “Any sane person obviously believes the U.S. isn’t going to default. That would cause an earthquake in financial markets around the globe.”

Of course, once upon a time, any sane person obviously believed that climate change could very well spell the end of the world – at least, as we know it.

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A pot-kettle-black moment for a good read

Where the hypocrites float

Where the hypocrites float

It’s not that I disagree with Thomas Frank, the resident writer of Harper’s polemical column “Easy Chair” and one of America’s finest living essayists. It’s not that I take issue with his latest effort in this month’s issue of the magazine and what he says about the financial collapse of 2008 or the “waste product” that “had been deliberately moved through the bowels of a hundred shady mortgage outfits.”

In fact, I have no problem at all with his visceral renderings of the villains and thugs who further soiled the already reeking back alleys of Wall Street with the scat from their gorging on other people’s money bought with the proceeds from their particular form of legal larceny. I have no problem with this: “Bribery and deceit and crazy incentives had been the laxatives that pushed this product down the pipe; money and bonhomie and reassuring economic theory had been the sedatives that put the regulators to sleep.”

I was one of those people “who were left to cry over cratered investments.” I have friends and relatives in the United States who were left “to pay for the bailouts and endure the downturn.” No one needed to be Greek, in those days, to appreciate that this wretched thing of ours “may well be the central economic episode” of our lives.

Surely, it has scarred us, marked us, made us less generous, less trusting – especially of authority, which is ironic when you consider that it was an almost complete lack of oversight that facilitated the global disaster. Or, as Mr. Frank, puts it: “The industry would supervise itself, we were told – and we believed it. Instead, our economic order turned out to be wobbly, even rotten. The great banks looked insolvent. The great capitalists looked like criminals.”

As for the salvation of these cheats and their confederates, it was purchased at the expense of trillions of dollars in taxes – dollars that would never again be fully available to the purposes and projects for which they were intended. In the process, we learned that “there was a whole class of businesses that could not be allowed to fail, no matter what kinds of suicide missions they undertook. . .That this class’s chosen public persona was one of churlish, sniggering contempt for the non-crooks who were now required to rescue them only compounded the shock.”

And the shocks keep coming: The evisceration of what was once known as the middle class; the yawning and widening chasm between those who have and those who have not; the gnawing suspicion that meaningful economic progress is a thing of the past; the scattering of all but the richest members of the global entrepreneurs’ club; the mounting debt; the disappearing jobs; the pervasive, collective sense of impotence.

Writes Mr. Frank: “A society that believes good government to be an impossibility is unlikely to do what is necessary to keep industry honest. Instead, its regulators will come to see the regulated, rather than the public, as their main clients. . .The rest of us will resign ourselves to scandal after scandal, as a new generation of looters rises up to claim positions at the trough when the old looters retire.”

As this esteemed writer – with decidedly progressive leanings and an artful skill at the angry lament – notes, we have become hardened by our travails, cynical in the long shadow our rage once cast. We no longer demand to know how these things could happen to us. We expect them with the regularity of the changing seasons. It’s not our fault, exactly, though “we have chosen to live with that.” What else should we expect of ourselves? “Just grab your cash,” he writes, “and hang on.”

No, I don’t disagree with any of this. I take no issue with the premise or conclusions of this lengthy screed.

Still, I do wonder, as I cast my eyes down past the bottom of Mr. Frank’s worthy essay on the crimes of the rich, the essential unfairness now bred in the bone of a once-far-more-generous society, and read the following ad posted by his own employer, Harper’s, which is “accepting applications” from university grads for two art and editorial department internships:

“All interns are encouraged to generate ideas, read widely, and approach problems creatively. . .Both positions are unpaid.”

What say you now, Mr. Frank, on the subject of grabbing cash and hanging on?

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Are happy days here again?

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Here, in the shadow of the western world’s setting sun, we are languishing in a near-permanent state of decay – both victims and authors of our decidedly unenlightened self-interest.

This, at least, has been the received and incontrovertible wisdom, and there’s no longer any point in trying to save ourselves.

First, came the financial crisis of 2008, which effectively wrecked private savings, public accounts, the manufacturing sector, and the housing market. Then came the government bailouts (“stimulus” spending, if you prefer), which saddled states, provinces and cities across North America with spiraling deficits and structural debts.

Finally, came the language of the resignedly defeated: No growth is the new normal; quit your jobs and plant your gardens, for the end of our global, capitalist hegemon draws nigh.

But a funny thing happened on the way to the economic abattoir. Suddenly, with no portents or premonitions, everything got just a little bit better. How? Why? Economists, bankers, politicians are still scratching their heads.

“It’s been a long time coming,” Nariman Behravesh, the chief economist of IHS Global Insight, told The New York Times recently. “There is more optimism about the U.S. and in particular about the second half of this year and 2014. Three months ago, we wouldn’t have come to that same conclusion.”

Three months ago, no one, it seems, was ruminating on the efficacious effects of certain economic outliers, such as advancing technology, growing energy independence and the resurgence of what can only be described as a sort of gritty self-determination.

Referring to the future, George Mason University economist Tyler Cowen told The Times, “It’s better than it looked. Technological progress comes in batches and it’s just a little more rapid than it looked two years ago,” adding somewhat circumspectly: “The great stagnation will end for a lot of people but not everyone. I think there will be great breakthroughs but the distribution of those gains will go to owners of capital and intellectual property.”

Still, some economists predict the U.S. economy will outperform its average of two per cent per year growth rate by as much 1.5 percentage points over the next eight quarters, which would effectively close the doomsday chronicle of recent times.

A similar phenomenon is occurring in Canada. May was an astonishing month for employment in this country. The economy generated 95,000 new positions, most of which were full-time, private sector jobs. That was the single, largest monthly surge in more than a decade.

Again, in interviews with the Financial Post, the experts were gob-smacked. “Canada’s job gain. . .is simply stunning on the headline and most of the details,” said Derek Holt of Scotiabank Economics. It is equivalent to the U.S. adding over 1 million jobs in a single month.” Indeed, noted Douglas Porter of BMO Capital Markets, “Even outside of construction, which is definitely the eye-popping stat here. . . (May’s data) was still a mammoth number for employment.”

Naturally, Finance Minister Jim Flaherty prefers to take the long view. To the Post, he declared, “What’s more important is the positive long-trend when it comes to employment in Canada. . .We can’t be complainant. We are still facing a very volatile global economy. We recently saw European unemployment hit a record high. Canada is not immune to these challenges from beyond our border and we will be impacted.”

He is correct, of course. Canada is joined at the hip with the international community, and our national prosperity depends on the degree to which we diversify our goods and services and, crucially, our trading relationships.

And yet, the recent numbers suggest that rugged, defiant entrepreneurialism – inventiveness, creativity, opportunism – is not as easily squashed as the prophets of calamity (in whose company, I must admit, I have found myself) would have us think.

That’s worth remembering here, on the East Coast, as we gnash our teeth and wring our hands over the high cost of government, the seemingly endless string of failed economic development schemes and the hollowing out of our productive population.

The heart of true enterprise still beats. We can feel it if we try.

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