This is my first blog on this platform in a while, though I will likely be writing more from here moving forward. My life seems to have moved into one of those strange interstitial periods where, despite the best of intentions, little seems to be happening. Over the years I've noticed that these are often gestational times, when the batteries are recharging and projects that had been sidelined or abandoned are re-examined and revitalized.
There are projects - I've actually been writing out chapters to a novel, though I'm nowhere near solid enough at this stage to even seek a publisher, assuming I don't just go the route that I think many others are now following of going directly to print (and eBook format) without the intervention of a formal publisher, at least to start.
While I won't go into details here, many of the ideas of the novel come about from my thoughts about where we're going, both technologically and societal, thoughts that I've expressed here and elsewhere in a more speculative mode. For those whom I've discussed this with before, this is essentially Open, Mark II, just cast into the mode of fiction rather than speculative analysis.
Regarding the "where are we going" part, what happens over the next couple of years is going to have major ramifications for the next thirty or more, probably more so than at any time since perhaps the early 1970s. The sovereign economic crisis in Greece will likely get resolved by some deft paper movement, likely at least officially out of the IMF, which in practice means that the US and Germany are effectively loaning Greece the money to try to get out of their hole.
Of course, this loan will only be effective if Greece is capable of reducing its current debt (on and off book) from 800% of GDP (yes, you read that right) to something closer to 75%. This means that all governmental expenditures stop - no health care, no unemployment insurance, no government subsidies, no education, no spending on infrastructure, and that taxes rise to 75% or more on all citizens.
Put another way, in order for any financial assistance to be even remotely useful in restoring the financial health of Greece, it will require cuts so draconian that people will be in the streets with torches and machine guns. It won't happen. This week has seen the application of a band-aid on a cancer patient.
We're facing an ebb-tide right now. There's an interesting phenomenon that anyone who's stood in the water of a beach with sizable waves can attest to. If you stand out far enough in the water, you'll notice an interesting shear force that occurs as a wave crashes and advances along the beach. Even as it is advancing, there's a back flow that is occurring, moving away from the beach, near your feet.
In the US the backflow started about 1972, which was, not coincidentally also the time when oil imports exceeded oil exports in the US for the first time. The momentum of the breaking water caused the waves to continue to advance for some time, but people already noticed that it was becoming harder to feed a family of four, that despite increasing wages, the money didn't seem to go as far, and the trips to far off places that were part and parcel of the 60s and early 70s became increasingly expensive over time.
By the mid-1980s, women were coming into the workforce less because of feminism and more because the family increasingly needed that second income to continue the lifestyle that they had, and even then the lifestyle seemed to recede. The job guaranteed for life became two jobs, then four, then eight, and has now reached a point where employment itself is becoming a dicey proposition.
Populations are becoming older globally, though most especially in the so called first-world countries. People who retire pull money out of the system rather than contributing money into it, or at least would have if a couple of back-to-back recessions didn't proceed to pull out most of that money for them. And yes, financial managers are as aware of the demographics as anyone, and increasingly the questions need to be raised about exactly where all that invested capital ultimately ended up.
We're in full ebb-tide now - beyond the demographics, the realities of Peak Oil (which by many accounts the peak of which occurred between three and five years ago) indicate that we're in for a time of oil price rises and crashes globally, meaning that there's now a very real brake acting on the economy anytime it begins to show signs of health. In that kind of environment, especially with credit still effectively frozen, development of both oil exploration and extraction rigs and development of alternative energy forms slow to a crawl because the risk premium is too high. Government investments here will help some, but those investments will take a while to show any significant returns, and as such are vulnerable to political pressures.
This second wave of the hurricane will hit an already badly weakened economy in the US and UK (and is a big part of the reason that it's already taking out the weaker economies along the Mediterranean). This is why, despite valiant efforts to keep the DOW propped above 10K, the inertia has shifted away from an explosively growing market to one that is a black swan away from a major nose dive. While it is just possible that we'll hit the best case scenario of the economy staying relatively stagnant for the next couple of years, most people already feel instinctively like we're already entering phase two of the first twenty-first century depression.
Yet, as odd as it may sound, the net effect of all this may ultimately end up proving to be positive. There have been two forms of globalization that have been taking place. The first has been the consolidation of financial power as the end game that started around the end of World War II. This gave the movers of money unprecedented control, and ended up with obscene fiscal imbalances between richest and poorest, both within countries and globally. This particular storm is destroying that power base, is eliminating the bonds of economic liberalization that overall have benefited the wealthy at the expense of the weak.
It's forcing us to rethink the notion of export oriented growth economies. At some times, growth economies are good - when a population on average is young, significant industrialization is needed to support the needs of those entering into the work force, is needed for educating the children and taking care of health and providing better infrastructure for transportation and resource distribution. When populations are old the societies contract; you need fewer goods and smaller houses, more medical services but less educational services. The economy should contract as well to reflect this. In the fullness of time this will change again, but those changes occur on the scale of decades, not years.
The second change has been globalization of communication. This is a trend I expect to continue, and it's also having far reaching effects, especially among the young. This is helping to deconstruct the command and control economy in place since the early 1950s, and replacing it with transient global webs of entrepreneurship and innovation. It will likely end up destroying education as we know it, education built largely upon the need to learn facts rather than analysis, but will replace it with something both richer and stranger than we can possibly anticipate.
It's also about to replace sovereign reserve notes with myriad local currencies, each jockeying for position on a second by second basis, their strengths and weaknesses mirroring localized economies and their ability to trade - and the soundness of their economic policies.
Phase transitions can be harrowing, sweeping away ideas that worked until they didn't that have become embedded into society, but they are also times of opportunity as new economic niches open up ... a lot like hurricanes, when you think about it.