At the risk of sounding all gloom and doom, everything I've been reading the last few months about the global economy has me wondering if this is how the world felt in June, 1930. The Great Depression didn't happen overnight after the stock market crash in 1929, and a lot of the issues facing the US and global economies are issues that are not going to be easily handled in a short period of time.
Yesterday, Paul Krugman -- a liberal economist whose blog and columns I read regularly -- wrote this:
A thought I had today: as I understand it, when the Titanic hit that iceberg, at first the crew didn’t think it was so bad. The ship’s hull was divided into watertight compartments, and not enough of them had been ripped open to sink the ship. But the flooding from the initial hole tipped the ship, and the compartments were open at the top, so that compartments that hadn’t been ripped open by the impact of the iceberg started filling up, tipping the ship even more, flooding more compartments …
Remind you of anything in the news lately?
I stated at the end of my post in July that I sincerely hoped I was wrong, but it's looking less and less the case. After what happened with Lehman Brothers, Bear Stearns and AIG over the past four days AND the news coming out concerning Wachovia -- in conjunction with the incredible likelihood that the moment of global peak oil (thus the end of cheap oil) has finally arrived -- I am officially shitting myself.
I have very few doubts now that the next 5-10 years (at a minimum) are going to rival the Great Depression. I still sincerely and fervently hope I'm wrong -- I really don't want to be right -- but I don't know how anyone can look at the financial events of the past couple years and insist the economy will be okay sooner than later.