To the right of us – Greece, Portugal, Spain and perhaps Italy and Ireland (GPSII):
For a long time my view on the euro has been that it may well have been a mistake, but that bygones were bygones — it could not be undone…
…but what if the bank runs and financial crisis happen anyway? In that case the marginal cost of leaving falls dramatically, and in fact the decision may effectively be taken out of policymakers’ hands…
…if Greece is in effect forced out of the euro, what happens to other shaky members?
I think I’ll go hide under the table now.
and to the left of us – China:
“My maid just asked for leave,” a friend in Beijing told me recently. “She’s rushing home to buy property. I suggested she borrow 70 percent, so she could cap the loss.”
Sigh. It’s not over. Act I was the NASDAQ (remember the NASDAQ?) tech bubble. Act II was the property/asset bubble. Act III takes place in Europe and China.
We all wonder why. Why now? A year ago I made up my personal list of 10 contributing causes (Feb 09) and, recently, I wrote up one way out of America’s particular set of challenges.
Since then I’ve been chipping at the list, looking for the cause of the cause of the cause (etc – go too deep and it’s all entropy). Sure we’ve got above average corruption and economic financialization, but those tendencies have always been with us. This feels like something novel, something that, in modern times, has come along every century or so. (In deep history every 2,000 years or so.)
I’m nominating two independent but self-reinforcing causes – information technology (IT) and the Rise of China and India (RCI, aka globalization).
The Rise of China and India (RCI) has been like strapping a jet engine with a buggy throttle onto a dune buggy. We can go real fast, but we can also get airborne – without wings. Think about the disruption of German unification – and multiply than ten thousand times.
RCI would probably have caused a Great Recession even without any technological transformations.
Except we have had technological transformation – and it’s far from over. I don’t think we can understand what IT has done to our world – we’re too embedded in the change and too much of it is invisible. When the cost of transportation fell dramatically we could see the railroad tracks. When the cost of information generation and communication fell by a thousandfold it was invisible.
The IT transformation is not stopping. If anything, it’s accelerating. There are more than 350 million mobile phone subscriptions in Africa.
Think about that for a minute.
In five years Africa will have at least 500 million 2010 iPhone/Droid interconnected equivalent devices, and Google’s sentence-salad English/China translation will probably work. I’m still thinking we miss Kurzweil’s 2045 catastrophe, but the prelude will be rough enough.
RCI and IT (RCIIT?) Alone each would have thrown the world for a loop. Together they’ve put us into an entirely new level of future shock.
We might as well get used to it.