October 10, 2008

More stuff I've stumbled upon...

I present this without comment---I don't know enough to say more than that it sounds not unreasonable...

Fabius Maximus:

Summary: Here is a brief report with conclusions only. The situation is moving too rapidly and become too complex for explanations. This post describes the natural evolution of the trends I have written about for the past year, which are now reaching a climax. Not yet, but soon we will be able to see the shape of the new world ahead in the fog. As always, we lack the data or reliable economic theory to do more than speculate about these things. See the archive at the end for posts over the past year describing how we arrived at this difficult spot.

An economic downturn has 3 stages, each with a different goal.
1. First Aid � prevent the economy from sliding into a depression.

2. Treatment — mitigate suffering during the recession, achieve a global recovery in 2010.

3. Recovery � restructuring and reforms to prepare for the expansion after 2010, and the new world beyond that.
Yes, 2010 is the earliest reasonable date for a recovery IMO from the most severe global downturn since WWII. Policy errors could length the downturn, of course.

First Aid

This is a worldwide problem, due to two long-term factors.
1. Globalization has locked us together into the same business cycle, instead of some regions being strong while others are weak.

2. We all run our economies by the same body of economic theory, Keynesian economics. No commies (except fringe states like N. Korea), and few socialist ones.
The result is like a monoculture agricultural system, vast fields planted with a generically identical crop. It is uniformly vulnerable to the same diseases and pests. We have all contracted the same infection....

"..and the new world beyond that." So who is thinking ahead? Thinking about the new world we will be shaping, just by meddling with the world's economies? I wish I could say it was Republican leaders, but I don't see any signs of it.

Posted by John Weidner at October 10, 2008 3:17 PM
Weblog by John Weidner