Thursday January 01, 2009

Happy New Year 2009 : The Year of Collapse

Today is Thursday, 1 January 2009.

2008 had been a hell of a year. And that's putting it mildly. Even the cornucopians and economists, perennial optimists that they usually are, have been beaten, bludgeoned into shocked silence by what the contrarian community is already starting to call the Panic of 2008.

Just wait till we get into the Collapse of 2009. That's right, we're talking outright collapse nowadays in the community. Jim Kunstler has always been a leading doomer but this time round he does look like he's starting to go off the doomerosity scale. Bob Moriarty has usually been a moderate voice but he seems to have joined the doomer camp nowadays. Jim Willie is talking about not only collapse but disintegration and liquidation. And renowned peakoiler and energy investment bank CEO Matt Simmons is starting to waver somewhat from his usual optimistic outlook.

I called 2008 the Year of Inflation. We certainly got that, didn't we. It was only tempered by the Panic, the beginnings of widespread collapse that is taking down big chunks of the global economy. Do not believe for a minute that we are going to see governments and central banks around the world allow real deflation to set in. A few hundred billion dollars here and there are not close to cutting it anymore. The "solutions", "rescue packages", and "bailouts" being talked about are starting to run into the trillions of dollars. The stage is set for eventual hyperinflation.

Expect even more mass layoffs. Expect shortened working weeks. 4-day working weeks are going to become more common, especially in manufacturing. Expect factory shutdowns that at first last for days, then stretch into weeks, and then lengthen into months, before the inevitable occurs. Expect hundreds of thousands of store closures as the retail industry gets hammered into oblivion. Expect big ticket items such as houses and cars to become cheaper and cheaper still, but people do not dare to buy, or which is starting to become the case nowadays, no longer qualify for the loans.

I am calling for the unemployment rate to soar past 10%, into 20%, 30% and perhaps eventually hitting an unthinkable 50% in some demographic segments, particularly in the worst-hit areas. If that sounds like a recipe for a Great Depression, that's because you are living one already. Welcome to the Second Great Depression (can't say nobody saw this coming - this was posted 5 May 2005). Some call it the Greater Depression. The fashionistas might call it Great Depression 2.0. Whatever you might choose to call it, you are here. X marks the spot and all that.

Read up on The Five Stages of Collapse by Dmitry Orlov. We've got the financial collapse already, next up on the menu are commercial and political, followed by social and finally cultural. I hope we stop halfway - but these things tend to have a life of their own. Read up what you can on the First Great Depression of the 1920's. How life was like then, how people coped. One takeaway point I got was that during the 1920's, conditions were so bad that people started to become nicer and kinder to each other. When everyone is more or less screwed just as badly, class compression occurs, specialization is reduced, and societal complexity comes down a few notches. The alternative is Mad Max but I believe that is an unsustainable model - after all, the "meek have inherited the earth".

So. Welcome to 2009 - The Year of Collapse. Welcome to the Second Great Depression. Happy New Year 2009, and if there is indeed anything to be happy about, be happy with whatever health you have, be happy with whatever wealth you (still) have (even if some/much/most of it had been evaporated away). And be nice. We're all going to be screwed anyway, so we might as well try.

See also :

1. The Collapse of Complex Systems - Dale Allen Pfeiffer
2. Happy Inflationary New Year 2008
3. 67000 China factories closed in H1 2008 as global economic collapse takes hold
4. Baltic Dry Index falls 93% as shipping rates plunge, signalling global economic collapse

(2009-01-01 00:54:32 SGT) [Musings] Permalink

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