- In the 1970’s we had a sequence of recessions due to rapidly rising oil costs alone.
- In 1990 we had a recession due to a bust in the housing market alone.
We now have these together at the same time. We should have seen it coming. Ever since the 70’s we have been skating on thin ice. Too dainty were we to drill on our own soil. It was only a matter of time before we got our tails caught in the wringer.
Following standard remedies the following would happen
- housing bust ? – increase liquidity
- oil spurt ? – increased liquidity is bad – as money is more available oil prices rise. Decreased liquidity is needed. But that slows economies and exacerbates a housing bust.
Our economy is effectively stuck in a ditch. In one direction the ditch wall is made up of the housing bust liquidity and in the other direction the ditch wall is made up of the inverse relation of oil and liquidity.
The gears are already grinding to a halt. Credit liquidity is drying up as of this writing in September 2008. As already noted I predict a serious bust for 2009 on the basis of my conversations with various business people.
We are in serious trouble. This situation will not be remedied until we start drilling like wild men. Alternative sources of energy are just not mature enough to fill the gap quickly enough.
Most people know about the "Great Depression" of the 1930’s. However what most people do not know is they know of this one because mass communication was available then. Previously in the United States has undergone other less publicized economic turmoil. Thus the phenomenon of economic depression is not as uncommon as one might think. Here is a partial list:
- Long Depression – some say 1873 – 1893 was one long depression.
- Great Depression
- Financial Crisis – See the following topics
- Panic of 1819 – pervasive USA economic recession w/ bank failures. Book on the subject: The Panic of 1819, Reactions and Policies
- Panic of 1825 – pervasive British economic recession in which many British banks failed, & Bank of England nearly failed
- Panic of 1837 – pervasive USA economic recession w/ bank failures; a 5 yr. depression ensued.
- Panic of 1857 – pervasive USA economic recession w/ bank failures
- Panic of 1873 – pervasive USA economic recession w/ bank failures; a 4 yr. depression ensued.
- Panic of 1893 – pervasive USA economic recession w/ bank failures
- Panic of 1901 – limited to crashing of the New York Stock Exchange
- Panic of 1907 – pervasive USA economic recession w/ bank failures
- Kondratiev_wave – This may be economic theory’s version of U.F.O.s but it does predict a downturn at the correct time
- Austrian_Theory_of_the_Business_Cycle – Theory that states bubbles are a result of central banks setting interest rates artificially low – Sound familar ? Read this arty because it describes the economy very well.
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