30/06/2023
ECONOMY By Steven Martin(June 30, 2023)
Recession or Depression? Choose.
Are we entering a recession or moving toward a depression is a question few wish to contemplate given how either will impact on our personal lives. Our ‘lives’ are a balancing act between survival on basics we need like water, power, food and shelter and the constant rise in the price of everything without any commensurate rise in earnings. The items that are now seen as ‘luxuries’ seem to drift further away each time we contemplate purchasing them as their affordability diminishes. The reasons given range from the War in Ukraine, Sanctions, the Climate Crisis, Inflation and many more including the usual out of field ones like overpopulation. To add to the maelstrom of collapsing banks in the USA and Switzerland (are there others?) and recessionary fears in most EU nations, the UK, Germany (semi admitting it) Japan (well 2+ decades makes including it irrelevant) and the self-inflicted pain economically (Australia versus China), the subjective analysis surrounding the great American Debt Default is promisingly optimistic about a fudged outcome while the more ‘pragmatic’ experts point to a downward spiral with the need for dictatorial controls on resources as the end result. Neither is very promising or holds out any clear cut hope for the near future. What is a recession? Merriam-Webster defines a recession as a ‘downward trend in the business cycle…characterized by a decline in production and employment, lower household incomes and spending and delays in large investments or purchases by businesses and households’. This does not sound good to me. A depression on the other hand is defined as ‘a major downswing (far more severe than a downward trend) in the business cycle, and a sharper increase in unemployment, a serious decline of growth in construction, and great reductions in international trade and capital movements. Depressions are most often measured in years and are the plummeting rather than dropping of GDP.’ Till now and still to a large extent, the world’s economy is tied and dependent on the USA’s economy, and is currently suffering from the ‘wobbles’ as the days count down for finalising the default crisis ( whatever latest development is touted). Any resolution that has been reached is only a stop gap to the unfolding of the global economic system that is occurring. The economies of China, Russia, India and others like the OPEC producers and BRICs nations have shifted away from the western markets and lessened their dependency on the Dollar. Their reliance on western consumers as their major market has decreased accordingly with most replacing the western markets with to a large degree, internal and equivalent eastern and global south ones. Economics globally has been shaped since WW2 (many say the groundwork was much earlier) by the overwhelming might of the USA’s productive output and demand. Since America accounts for more than 30% of the world's economy, its consumers are highly important as it is the single biggest market in the entire world. No matter what the political chicanery says, business comes first and all the players (producers of everything from commodities, services, culture, intellectual copyrights and on) want to be on America’s stage. However that does not mean that they either like this or accept the terms and conditions laid down by the USA in order to be able to become a participant. Many play the game but few do so willingly.
https://interouts.com/articles-Interouts(I)/Recession-or-Depression-Choose.html
