Which Countries Will Recession Destabilize?


If the current global recession gets worse, which countries or regions will it destabilize? Is there a way out?

Posted by David Ignatius on November 24, 2008 7:29 AM

Readers’ Responses to Our Question (25)

Daho Author Profile Page :

Considering the situation right now, in my personal opinion, the crisis will be global and no country will escape serious problems.
Unfortunately, for the last 25 years, the financial world went mad after immediate profits anc creating them out of deritvatives. In the old days, investments concerned real industries, manufactures or commerce, whilst during the last 25 years - especially without the progress in technology - only creating artificial profits were the goal. The people who managed our destinies and the responsible financial executives to whom the public turned to for advice and safe investments turned their backs to moral, honest and responsible financial activities to obtain maximum immediate profit and gain with enormous salaries and bonuses. In the meantime, all prudence was thrown away and to make a fast buck on paper, borrowed more that 30 times their capital to invest in - what we know now - are the subprimes and other toxic items. The governments and their agencies bowed to the enormous profits - as they gave an impression of prosperity - and did not control meticulously their banks and investment banks inside activities.
When the crisis came as a 'tsunami' everybody seemed to be taken by surprise - although there had been calls by a number of experienced member of the financial community that things were not right - and tried to take immediate and unilateral punctual measures.
This is a wrong approach, as the crisis being global, our governments and their agencies must understand that only global decisions should be taken, after determining clearly the causes and responsibilities. The personal interests of a country must be set aside for a while, as the general interests of all countries are involved.
This is certainly a difficult task but otherwise, the uphill climb to get out of the crisis will be hard long and dangerous. Dangerous because the consequences of the crisis concerns concurrently politics, economics, finances and particularly social.
During the so called prosperity period, only a very small percentage of populations has taken advantage of salaries, bonuses and golden parachutes, whilst the majority of the population thought that prosperity was there to stay - as their governments and bankers told them - and have spent more than they should. Today, layoffs are happening everyday and the number of people out of work is increasing together with their personal problems. This again is global, and China and India are suffering from the same 'disease'. Unemployment is a time bomb and should be adressed in the first place.
The people responsible for the crisis should be indicted and held personally and financially responsible, at all levels. Otherwise, everyone will feel the injustice is the rule of the day.
Consequently, the crisis is here for a long while and the people responsible of the countries' destinies have to act with haste but with good judgement, morality and honesty. Is it wishful thinking?
Finally, we notice that in such a crisis hundred of billions of dollars are found to help those who were responsible of the crisis, whilst in 'normal' times, there is no money for education, health and research.

yeolds Author Profile Page :

interesting artricle at information clearing house:

REAd and CRY:
http://www.informationclearinghouse.info/article21364.htm

yeolds Author Profile Page :

Gregory_Morales:

Sorry, can not help that my name was changed by Post Global, used to be able to type in my name, unfortuanately such is not possible anymore.

I am aware what caused the present world wide fiasco. I am a firm believer that many posters, talking heads,think tank personalities still propose that eternal growth of GNP is possible for at least the USA, if not the world. I deny such possiblity.

My argument below was trying to elucidate responses which would negate my thesis. Unfortunately, no one has yet provided such negation.
Consider that the productivity growth in USA in the last few years had some rather unique contributors:
1., the Financial sector - while the going was good, asdded considerable amount to GDP, and thus to productivity - even though industrial production fell. [if we substarct the present losses from the last 8 years of GDP growth, more than likely there would be a hiotorical decline based on constant prices -- not the USA CPI, whiu\ch is as frdaudulent as that of Canada.]

2., The housing boom added large amounts to GDP, even though such contributions were of dream-like quality -- INFLATION in price of basic assets.
3., Monopoly pricing of numerous products [software, drugs, etc] also indicative of INFLATION without any added benefit.

4., Misappropriation of taxpayers' funds regarding war materiel, all very expensive and of little general use [large part thereof was wasted in Iraq, Afganistan, Lebanon - by Israel, Georgia, Somalia, etc. The prices here also reflected INFLATION and monopoly pricng/ collusion].

5., General price rise of commodities, reflecting INFLATION, without any extra REAL WEALTH CREATED [[a barrel of oil is a barrel of oil at $50 or $150 dollars per unit.]

Was the Dept of Commerce or some other arm of the USA government reconfigure the productivity gains of the last few years taking the above into consideration, without doubt the so galled GAINS would be negligible over the time of the Bush administration.

in case of interst, my name is Salamon - you will find that name often in the Post Global Archive.
Good luck

Gregory_Morales Author Profile Page :

YEOLDS

I am use to people posting under made-up names attempting to construct arrows to delegitimate and deflect attention away from the reality of the collapse of the credit expansion economy. Name-calling and personal attacks with no real data or research…, how typical. Does not change a thing about the condition of our global credit based economy. Sense 2003, when I first started writing and presenting at national and international conferences on the likely hood of our Global Credit Expansion Economy reaching the limits and space of it’s expansion, the mainstream economist have used their ‘projections of power’ in attempt to silence these warnings. Those who have a very real interest in the perpetuation the “Factious Economy” and seem to have suffered from ‘selection bias’ in the construction of their forward looking forecasts…, are now claiming to ‘know’ what is going to happen next. They were blind-sided by the reality of equalizing global wage scales, while refusing to allow for the equalization of global labor markets. And with every passing month reform the last presentations of 'what is going on in the economy.'

The unequal levels of economic suffrage, globally, and the inability to maintain credit based expansion has constructed a condition in which most "Core" credit based economies can no longer continue to expand.

It seems that in 1980 countries such as Turkey has only some 2% of their positive economy contributors generated by credit/debt, by 2000 some 30% of that county’s positive economic contributors were being generated by credit/debt. No increase in wages, no increase in scale of cost and supply, simply an expansion of credit which removed ever greater levels of realizable earned wage incomes form the super-majority of the population in that country. Effectively, credit expansion has had a like affect on all countries with a floated currency / which participate in the global credit markets. Credit has no sure attachment to production nor labor; it has no real value until the responsibility for credit is attached to labor or production. As we recently saw – the attachment of credit values to Stocks (banking/automobile), Housing/Real Estate valuations…, and Pension responsibility..., the value become ever more based upon associative/aesthetics values a believed "worth." Nevertheless, “what do I know?”

yeolds Author Profile Page :

blund:

While the past is a great teacher in many respects, the early XXI-st century has some constraints which were never seen before [e.g 1930 great depression, minor recessions of 1973, 82, etc]:
1., World population is exploding [re even 50 years ago]
2., we have depleted the sea [numerous food fish species are gone or beyond expectation that hey will repopulate - atlantic cod, wild salmon, bluefin Tuan, etc]
3., most easily accessible high grade ore bodies were used up - scarcity of certain metals loom
4., we have used up most easily accessible energy sources [ most major rivers have dams, most major old oil fields are declining, while some secondary and expensive sources are still around - tar sands- Canada, oil shale -USA, deep sea locations- Brazil, same applies to coal;, to gas in N america and Eaurope]
5., Other countries have growing middle class, thus put strain on the total resources of PLANET EARTH - thus forcing the USA to lower standards of living, can not use 25-30% of all resources for 5% of world's population.
6., Water resources are in extreme stress, Persian Gulf, Sub sahara, California, Florida, sea water incursion into aquifiers in Japan, China and most major sea shore cities of world.
7., farm land degraditaion all over wolrd at the very time more people need more food,
8., Overproductive capacity of mass merchandise production [esp SUV-s, plasma TV, etc and other unneeded luxury goods]
Demographics world wide: more older people, less productive manpower as % of total population.

BASED ON THE ABOVE The best which can be foreseen for USA/ developed countries is slow decline in relative standard of living, with minor rise - on average - in the standard of living for 3/4 of the world's population, barring a mahjor pandemic.

blund Author Profile Page :

Ah, the old Chicken Little and the, "Sky is falling, crap.

Economies, whether capitalistic, socialistic, monarchies, despotic, etc. etc. all go through cycles. There are good times in many nations and poor times as well. Where does everyone get off thinking on their birth certificate you were garuanteed either a stable or booming economy throughout your life?

We've weathered recessions on a periodic basis and we'll weather this one as well. We've even weathered a major depression so if it comes to that we'll more then likely weather that as well.

We try hard to learn from our mistakes and put systems in place to prevent the inevitable down turns. They work for a period of time until some entity abuses the system and we have another one.

This current downturn, while bad, isn't the end of the world and shouldn't be treated as such. It's simply a challenge that needs to be overcome and I for one firmly believe it will be. Why do I believe this? I believe this becuase we, as well as other nations, have a history of overcoming economic downturns and emerging from them. Will there be suffering until we come out of it? Of course there will be. People will lose homes. Retirement accounts will suffer. Jobs will be lost. Crime will rise. All of the negative impacts associated with a recession will be magnified in the months/years ahead. I feel really bad this will happen, but I can't stop it or even slow it down. All I can do is understand that no economy is recession proof and make every attempt to plan accordingly.

Gregory_Morales Author Profile Page :

“If the current global recession gets worse, which countries or regions will it destabilize? Is there a way out?”

It is not a global recession, but a global depression - brought on by our reaching the limits of Credit expansion in the core economies around the world. All countries and regions with greater than 50% of their economies being created by Credit, Credit Expansion, or Intersest on that debt - are now destabilized. In the US the average earned wage/compensation levels have been decreasing every year for the last eight years the real cost of living has most than doubled. The American worker has been attempting to cover these depressed wage conditions by not only assuming greater levels of uncollateralized debt and depleting savings accounts, but has also been removing greater and greater levels of equity from their single family homes – if they have one. The interesting thing is, in a credit market economy, there is no real equity to be removed. Therefore, in fact, the “home equity loans” were little more than second and third mortgages – repackaged and represented at income potential to those who were gullible and innocent of their vampiric affect on future expendable earn wage incomes.

Likewise, the City, State, and National governments have fallen victim to the same ‘non-thinking’ economy policies; gathering every greater amounts of debt and borrowing again future ‘likely’ revenues sources (like social security insurance contribution from workers.) Now the governmental structures have not only the debt responsibility of all the contributions made by the American workers, but also owe on the monies they borrowed using future worker contributions. There is a level at which revenues streams fall below what is required to make the credit maintenance payments (interest payments on principle.) For only in a progressively (almost exponentially) faster economic expansion rate, can a economy based upon credit and the interests charged on that credit, could our debt based global economic system have continued to function.

The socially inept make claim that it is an increase in workers wages that drives inflation, yet over the last eight years we have seen a realizable doubling of cost of living with an over all decrease in wages. Over the last 10 years, it has been greed, and lust for ever greater levels of profits, that has driving inflation – not workers wages. Workers are not making enough money to pay both the basic cost of living and the interest payments on all the debt they have accrued to make-up for short falls in personal incomes v cost of living.

We decapitalized our companies, we defunded our pension accounts, and we decapitalized ourselves and our homes. Profits increased, cost of living increased, all while average workers’ wages decreased…, even a fool could have seen it coming – and this fool did and warned about it at every conference we attended across the Continental United States.

sportsfan2 Author Profile Page :

I must repectfully disagree with EMILSREMCHEVICH when he states that free markets don't work. This country was built on freedom of commerce. Unfortunately, in 1999 the government started telling the banks that the government would purchase bank mortgages. Until that time, no banker in his right mind would have made these risky mortgage loans. After 1999 the banks could sell these worthless sub-prime mortgages to the government. There was no risk to the banks, which violates the basic principle of free enterprise. The result? The government (Fannie Mae/Freddie Mac) ends up holding billions in worthless mortgages and causes financial disaster. If you do not believe me, I suggest you read the 9/30/1999 article in the NY Times that accurately predicts the bailout that would be necessary if the Clinton inspired legislation was passed at that time. Clinton told the banks they could not redline risky areas. This was government control. Socialism does not work. Just ask the Russians.

hgcsato Author Profile Page :

Well, the basic concepts of "risk control and risk spread" by market forces and self-adjusting and regulating markets has crashed and burned beyond recognition.

This means, we still have to wait and see, assess the damage and eventually estimate who has been hit hard and who is destroyed and who is going to walk again. Chances are USA is now heading in the same direction as UK in early 1970s....nationalisation of many sectors, abandonment of the Pound Sterling as a reserve currency and a work-out of British debt by the IMF. This time, U.S. debt is much larger than anything the rest of the world can handle and we must still wait and see about automakers, eventual farmer bailouts, airlines and many other sectors begging for aid. It will take time to figure it all out and there no magic wand.

So, ZOLKO is right. Countries used to hardship and otherwise isolated from the "trend" of interdependence will be less affected. Spain and Italy and France also have domestic mortgage markets but they never went as wild as UK or USA and, similarly, they will be slightly better off too.

EmilSremchevich Author Profile Page :

Strange that this crisis has come out of the system which has been the bible of the free marketers for the last 80-100 years. The motto of the market will take care off it, certainly has proven to be the false prophecy, resulting in the current financial calamity. Free market and let the market fix it, is just like religion, an Utopian belief by the populace in something intangible. When humans leave control of their financial destiny to greed, it yields only to more misery and more geed to the individuals who propagate this type of the market system in the first place. There are two choices here, either we let the market take care off it thus more likely fall into a black hole or allow the government to take charge of it and introduce some control to the current system which obviously has no control or discipline and will never get it.

ceciladadevoh Author Profile Page :

It is my opinion that the looming global recession would badly affect the developing world in accessing the global financial markets because of the credit crunch. Most of these countries are yet to reach the threshold of emerging economies with very little structural integration to the global financial markets. Since they on the fringes of the global economy adverse circumstances such as a recession would impact negatively on the already lopsided terms of trade on the international trade of these countries. This is because it has become more costly to do business because of the credit crunch in the global economy which would result in a more costly end product, which if compared to the fluctuating commodities market, developing countries would definitely feel the pinch most.

ceciladadevoh Author Profile Page :

It is my opinion that the looming global recession would badly affect the developing world in accessing the global financial markets because of the credit crunch. Most of these countries are yet to reach the threshold of emerging economies with very little structural integration to the global financial markets. Since they on the fringes of the global economy adverse circumstances such as a recession would impact negatively on the already lopsided terms of trade on the international trade of these countries. This is because it has become more costly to do business because of the credit crunch in the global economy which would result in a more costly end product, which if compared to the fluctuating commodities market, developing countries would definitely feel the pinch most.

Citizenofthepost-Americanworld Author Profile Page :

Thanks for the link, Zolko. Because of you (and talented speaker, professor Pierre Hillard...), I will know much more tonight on the nascent world order than I did when I woke up this morning.

1. It would seem that in the West (more particularly in the US!), many more influential people than I thought recognize that a whole new world order (financial, economic and political) needs to be created.

2. What Pierre Hillard depicts as, essentially, a new authoritarian Western world order in the making I find rather distasteful, yet very probable, given how terrorized we have become, observing the rise of China and of the other upcoming world leading nations we, for so long, treated with utmost contempt.

3. What interests me most is those the designers of that new Western world order might apparently want to leave out of it: China, most of the rest of Asia (excluding Japan, often presented as a "Western" nation after all...), Russia, the whole continent of Africa (except, possibly, countries along the Mediterranean coast), most predominantly Muslim nations unless they be drawn forcibly into Western "modernity"... (I assume it is taken for granted -- though not mentioned -- that Australia and New Zealand would be part of that new Western world order).

It may very well be, however, that those shrewd designers of world orders underestimate the force of nationalism and cultures, throughout the world, while overestimating the universality of what are exclusively Western values we have been known to betray much of the time. Professor John Gray from the London School of Economics has written abundantly and, I think, convincingly on this.

Should Pierre Hillard be right, though, it seems obvious to me that at this moment in history, the most pertinent Olympics motto, "One world one dream", could only have come from Beijing!

Thanks again, Zolko.

mohammad_allam Author Profile Page :

The ongoing financial cisis is deepening.The real picture of effect on the countries and continent is coming in the light.
In my opinion there are many areas of its impact.In term of social and economic impact,the burn will be bear by the countries of Afirca .These countries are not facing the problem of poverty,illiteracy and Famine but also the political crisis of the different nature.Other hand these countries of Africa are dependent on the philanthropic work of the developed nations particularly european nations.In the time of financial crunch the help of every sort will be stop by the developed countries.so this will have devasting impact.
In term of political impact the power of world domination is tilting towarsd the Asian or developing countries.China,India,Israel ,Brazil will benfit from this crisis.Being the most active and well planed way India will get more share than other nations.The rising imporatnce of india in term of international stauts is one shining example.The arch rival of India,china and pakistan already has shifted the policy of confrontaion to reconcilation.Through India Israel will benifit indirectly as it benefitted from the American reach of world wide.The stargetic interest partnership between Indian and Israel,the direct access to Israel companies in Indian defence,market and energy security is the best example.In other word we can say that Israel creating another centre of economic and military power in India.The fallout you can see in the cold response of indian foregn policy maker in case of Palestine.
The other area of cultural development.With this finacial crisis questioned the Western style of culture,promoting world wide.In response to this western cultural dominance through consumerism,Mackdonaldism,creditism,and open relation,there would emerge the local cultural centres around the world.The slogan of "multiculturism " which spreaded by the western media is responce of the failure of the project of uniculture dominace of the world by west.
In financial term,the ongoing crisis projecting the Islamic Banking system as another model for the world sysetm of financial operation.The new sytem is basically replacing the ongoing defective system.And all thses depends uopn the adoptability of this sytem by the rising economy of middle east as Duai a centre of fincial system.The talk of the time is how to integrate the Islamic system with the ongoing sytem of finance.
What we can do to stop this crisis to be more monster like.The American considering this as another more deadly attack on USA after 9/11.The havoc that,this created is certainly snatching the means of livelihood from American.The rising violence in American society is an indication of more violence in future.The new elcted president is already have two cancerious problem-the Afghanistan and Iraq .Now this third cancer will add more challneg to him.He has to bring equbilirium between American war spending and American economy demand for money.
There is basic law in commerce,if someone loosing then someone must have won.so on this basis the American people should set a national enquiry into this problem.So heavy amount pumped out from the operation of American economy that many fincial institutions are on door of bankruptcy.This financial crisis is not a fall out of system but the man created.In my opinion this could not be possible with the criminal nexus between Bank,Broker and Bull.The fourth naturally should be another "B" and his team.So the enquiry should be on the working of the last 5 years of working of the American Economy.The culpurit should be bring to trial.Where went the power of money?
The need of time is creat more work to provide the employement to the people and creat the new demand.For this one there should be collective effort and start the project in those areas of the world which are in need.Africa,Asia and Latin America are the ares where the large development work is in waiitng.The system of trade embargo should be ended.The countries which are under these UNO embargo and western countires should be ended.We cannot dream free trade of world woth more economic sanction of the nation of importance.
The time of need to restructure the world international financial institutions.IMF,WB and different financial institution should be make more welfare organisation with "Greatest happiness to greatest number of the people of Jenry Benthem."
The present life style of credit system of America based on even Zero system should be regularised.If we read the life style of American we find that they are just a "hired individual" whose duty is just to earn and enjoy,leave the finance and other in the hands of companies.They seem to be under net of Mafia.who is ready to give these American everythings and want that they should work only for them.
The need of time is to solve the political crisis of the world to faciliate the trade and commerce on world level smoothly.The American has to decide themselve to adjust the interest of American armament industries and the interest of the people.The approach of western led nation that "war is mother of development" should be changed.The case of Iraq and Afghanistan could not creat the demand for the American as they were expecting.This adventure delayed the finacial crsis till the end of the presidency of Mr Bush,but could not terminate.So,let there be a thinking on neo welfare approach.
And i hope in the light of the gravity of the sitution,American along with developed nations will consider the necessary adjustment in the interest of their and the world people.

Zolko Author Profile Page :

mibrooks27 & all,

ever heard about the "Amero" ? It's supposed to replace the US $, in North America (Mexico-USA-Canada), and the current crisis is the perfect excuse/reason to do so:

http://www.dailymotion.com/video/x7c8x7_conference-de-pierre-hillard-crise_news

worth watching (in french). If the US $ looses all value, the US citizens, in panic, will accept anything to save their way-of-life, and the Patriot-Act will allow the US President to do as he wishes. Did you like the FED ? Now, what about a super-FED ?

yeolds Author Profile Page :

Mike:

1.,It does appear that you have not looked at the causes of the great depression: PROTECTIONISM AROSE after the credit crunch destroyed so much wealth.

2.;Bringing back outsorced manufacturing via legislation, will not work, for first it causes inflation, second you do not have the capital for the investment _ YOU ADMITTED THAT THE USA IS BROKE, SO are her citizens.

3., you can not count on China, Japan., etc to underwrite your growing debt, for they need their money for their own nation [USA had 150 billion "help" China promised 600 billion help for her citizens, 1/3 of their reserves, 20 odd % of their GDP]. Recall that the nationalization of Freddie and Fanny was due to the rebllion of foreigners treathening to sell their bonds, a sure way to eliminate the world's reserve currency in its present FIAT form.

4., between the Feds, Treasury and the promise of the new Congress, your nation is printing untold amounts of money, which in a short while will lead to depreciation of the USA $, and major inflation, which will put the last one to shame. That will destroy even more wealth, pension funds, social security balances, etc. WEIMAR REPUBLIC II here we come.

5., Without protectionism the USA has enough infrastructure, public transport, etc on its plate to ensure major turn around in employemnt:

a., all large cities need better public transport, for the oil supplies will demand it.
b. electric cars, you need power source and distribution, wind/solar is available where the people are not, the power is needed far away from the source [your present electric distribution network is on the verge of systematic failure]
c., you need major investment in desalination for California, Florida, Georga with new distribution systems [a.k.a. large pipelines]look at Mead lake, look at other reservoirs in the far west, look at depletion of the Ogalla aqyifier, etc.
d., you need to invest in rail for commodities, and personal long distance travel [cars trucks are very inefficient versus trains]
e., you need to electrify all railroads going over the hump, so they can regain a % power use while going down hill [from the Pacific to Central USA, East Coast and back. There is no present freight railroad which comes anywhere close to the speed of the SILK EXPRESS of the turn of the xxth century [was by steam locomotives, before the age of Diesel trains] - read up on it.
f., 100-s of bridges have to be rebuilt for safety reasons [US Engineers figured the cost to be over 1.5 trillion dollars - sufficient to employ tens of thousands.
g., there are more important areas where employment is needed in USA. your country, like Canada, has neglected the ifrastructure requisite for a civilized country's economic necessity,

You do not need trade wars, you need to look into the mirror to see where there is need to improve the USA within its 50 states.

Citizenofthepost-Americanworld Author Profile Page :

What about “the current global recession”? – If only someone had a clue what the origins, the causes, the aspects and characteristics of the current global US economic crisis were, as well as who were those who did bear responsibility for it, we might come to know what, exactly, each and every one of us was really talking about, hence what the way out of that predicament could be, other than throwing money at it… and in all directions.

Failing that, it is nonetheless clear there is no need for the above crisis to get worse in order to destabilize countries and regions: it indeed has already done so.

Between January 2007 and January 2008, the price of flour in Haiti has risen by 83%, that of rice by 69%. For thousands of families in Haiti, the main daily delicacy is now “mud biscuits” (mud, with salt and vegetable waste). – That reminds one of the 900-day siege of Leningrad.

On the world market, in the first semester of 2008, the price of rice, has risen by 59%, that of wheat, corn and millet, on average, by 61%. Hungry people have rioted in 37 countries, from Egypt to the Philippines, from Bangladesh to Haiti. People who need to spend 80 to 90% of their budget on food can no more afford to eat. They are among those 2.2 billion human beings who, as measured by the World Bank, “live in absolute poverty”.

This situation is the direct result of:

1. cannibalistic speculation on food and agricultural raw materials on the Stock Exchange, following the November-December 2007 financial markets meltdown, after

2. sustenance farming having been destroyed through structural adjustments plans imposed, periodically, on the poorest countries of the world, by the IMF, and once

3. hundreds of million tons of corn and of wheat had been destroyed in the US, in 2007, under the pretence of alleviating the effects of climate change through biofuel development, an initiative professor emeritus of sociology at the university of Geneva and UN special rapporteur on the right to food Jean Ziegler has called “a crime against humanity”. *

Need we continue to ask whence that hate of the West?

Need we be surprised that we keep on hearing, throughout emerging nations, that “the time to be ourselves has come”? **

Those are clear indications as to how the current US generated economic crisis is transforming the world.


*

http://news.bbc.co.uk/2/hi/americas/7065061.stm


**

Jean Ziegler, «L’heure de nous-mêmes est venue” (The time to be ourselves has come), in « La haine de l’Occident » (The Hate of the West), Albin Michel, 2008, pp. 283-296.

mibrooks27 Author Profile Page :

YEOLS, all -
According to a Brandeis University study, As of 2006, 76% of Middle Class households were in "severe financial distress". Between 2000 and 2006, they experienced an average DECREASE in income of 22%. As of today, those numbers have changed. Now, 88% are in financial distress and 45% have seen a disastrous decrease in income, to the extent that one quarter of middle income families have been pushed below the poverty line to lower income status, with as much as half of the remaining in jeopardy of the same fate.
The study can be found here: http://www.physorg.com/news146747347.html

Related to this, and mentioned in yesterdays New York Times, is that more than 20 million unemployed American's are accessing federal programs to look for work. Now, only about half of all the unemployed have access to those programs. The total workforce for the U.S. is 116 million. Do the math! -- 20 / 116 = 17.2. Thus, the real unemployment figure, mind you using the statistical model Europe uses, is at least 17.2%. It is actually somewhere between 17.2% and 34.5%, likely around 25%. It is NOT the 6.5% or 7.5% fictitious number put out by the government. I expect they are worried that, if the real number were known, riots would break out.

So, my long winded answer to your comment is that American's and America is broke. That $850 billion bailout? It's money borrowed from China and India. We sure don't have it. Obama's proposed $500 billion "stimulus package"? More borrowed money from China. Now, in order to genuinely recover from this economic disaster we need to end the globalization nonsense. We need jobs! We need to end outsourcing, end shipping our production facilities and technology over seas. This is easily accomplished by passing some basic sane protectionist legislation that would bring back the trade tariffs we dumped in the 1990's when we embarked upon the free trade experiment. We also need punitive taxes on businesses **and investments/investors** who outsource jobs. And, we need to end insanity like the H1-B visa that has cost U.S. workers more than 3 million jobs since 2003 alone! (And, I note, every one of our trade partners has such laws.) Borrowing money from China for some bloated government program and outsourcing millions of additional jobs to them to trade for those loans simply doesn't make sense. It is madness that is doomed to not just fail, it will lead to the destruction of our entire economy.) It was job losses, unfettered FREE TRADE, that got us into this mess, and it will be job gains that will get us out of it. The easiest way to get jobs, the cheapest way to get jobs, is to make it so expensive for corporations to outsource that they bring their jobs home.

Trade tariffs, punitive taxes on corporations and investor Benedict Arnold's, ending the H1-B visa immediately, is the surest way to accomplish this. Most of those companies that have moved to cheaper labor market do no sell their goods or services there. They re-import them back to the U.S., and they do so without paying one nickel of duty or tax. Reimposing trade tariff's and duties, just like other countries do, would make those goods and services expensive. Make them expensive enough and Dell and Apple wont have their computers assembled in India or China, they and Amazon will bring their Call Center back to the U.S. if they have to pay $2 for every "incident", and Intel and IBM and Boeing and Microsoft will run smack into a wall if they cannot export sensitive technologies or employee cheap indentured servant "guest workers" to displace U.S. workers without facing lawsuits, fines, additional taxes, to say nothing of forcing them to treat those workers with the same respect and benefits and wages that thy would normally pay to U.S. workers.

Shiveh Author Profile Page :

Zolko, since this morning, a 10,000 men anti-riot special force started a week long maneuver in Tehran streets. They are practicing crowd control with heavy weaponry and helicopters. That is as you were writing “Iran will probably be very well off”. What do you think they are preparing for? Incidentally, this is the second maneuver this month. About 9 days ago they had a 30,000 strong police force practicing the same.

yeolds Author Profile Page :

mibrooks27:

Some observations on your note below:
1., The Earth has limited resources, thus the notion that there can be constant REAL growth [as opposed to the non-productive, wealth destroying financial services as USA in 185-2007] is a chimera.

2., You can not bring back the outsourced jobs to any large extent, as cost of production and short termism of USA would produce major inflation [USA citizens will not work for Chinese, Vietnamese, Polish etc wages].

3., There is no sourcce of money which can compensate for the financial meltdown of USA, not in China, not in Sovereign Wealth Funds, not in the hands of the USA/World's richest 1%. Thus the wealth destruction will be the hardeest on USA/Canada/UK, the three countries most effected/affected with the notion that the MARKET=GOD. Standard of living will decrease til the resources available on Earth are balanced by demand. No Way OUT - the second law of thermodynamics.

4., While I think Mr. Obama and his Cabinet/office staff will change the psychology of the nation, there is no way that they can restore the economy to its previous level as the cost of all the bailouts is way to large [except by shoving the cost on the next generation, a generation already in the hock for $50 trillion due to Social Security, Medicare etc.]

5., The notion that one has to replace a car, computer, stereo, etc after 3-4 years is nonsense for all these products of modern technology can last 10 years or more with minimum maintenance. This is a nail in the coffin of ever growing production runs, which are not needed in the DEVELOPED WORLD.
6., I hope most sincerely that the result of the last 8 years of economic nonsense, wars, un needed military procurement, etc will not create a social upheaval similar to that which occured in Russia after 1990.

Certain possible solutions:
1., universal health care with reality based use of new technology/drugs -- would save lot of personal bankrupcies [the main reason is major health costs according to USQA data], cut the cost of production in USA industry [especially the big 3 car makers], would involve some loss of jobs [insurance industry] and limitation on some medical practices.
2., withdraw from Iraq, Afganistan, Somalia [via proxy], all major military outpost in all foreign countries] - the funds used therein would finance neded infrastructure in USA and jobs involved in this measure [ would also use up some of the excess housing, for the returnees would have to live somewhere].
3., Major reduction in DoD budgtet, for the goods produced therein are not useful for the avarage citizen, very linmited labor involvement regarding product,and it is a misallocation of scarce natural resources [plus adds to major eniromental danger, depleted Uranium, poisonous explosives, etc] Use funds for infrastructure which is labor intensive, thus makes more jobs than missal defense, or another unnneded aircraft carrier].
4., raise taxes on rent, while allowing lower taxes on productive industries [eg. finance versus manufacturing]
5., simplify tax code, as the wealth desstroyed/misallocated to play the games of the USA tax-code [well over 10 000 pages] is another effect of useless service jobs.
6., Force all governments to write intelligible laws, wherein a law must be read in its entirety in the House, Senate and by citizens [on the net - if they wish to], thus taking away the joy of lawyers, another service industry raising cost of production. [for example the TARP Statute was over 100 pages, without any clear limitation on authority, tranaparency, etc.

7., the able engineers/scientist/mathematicians etc presently doing useless jobs in FInance, Real Estate, Insurance, DoD industry can be deployed withina shiort time to research in areas of need, ecology, energy, mass transit, etc, all needed to adjust society to available resources of the earth and the basic needs of civilization.

Aside from the above good luck to you Mikje and your compatriots of any color, faith or lack thereof, etc.

Zolko Author Profile Page :

"If the current global recession gets worse, which countries or regions will it destabilize?"

The countries most exposed to "free trade", on the giving or receiving end, will be most affected. That includes the USA and UK, but also China and the oil-exporting Gulf states.

Incidentally, Iran will probably be very well off, like Cuba, because they have learned to live with hardship and rely on themselves.

India, Europe, South-America will be touched, but to a lesser extent.

"Is there a way out?"

Tax imported products. End the outsourcing. Not something Obama looks likely to do.

yousufhashmi1 Author Profile Page :

When the typhoon passes every ship in the ocean rolls

when the weather changes the tallest trees get the effect first

Survival rule # 1 . when oxygen mask fell then take your self first and then help others.

this global recession eventually will effect each and every individual on planet, sooner or later.

Contradictory to popular belief the emerging economies like China and India will logically be most effected . The simple reason is that their rapid growth was due to luxury of outsourcing from G-8 countries.

Once the industrialized countries get the crunch then they have to review their policy. creating job for their own people to avoid social break down.

The middle class all over the world will be most destabilized specially for those emerging economies where the peoples start moving from a bicycle to Toyota

This is the time of survival. The countries should see their stability first. Stop spending, Cut down imports and wait for sunny skies and calm weather.

AnjuChandel Author Profile Page :

If the current economic recession spirals down further into depression, the countries which were "living beyond their means largely due to their unregulated and greedy financial establishments" (do we still have any doubts about which those countries are?!) will continue to suffer till they are able to - with help from more stable economies like China and India - put their economy back on track.

Barack Obama is the biggest hope and we all know that yes, he can!

mibrooks27 Author Profile Page :

Of course there's a way out, but none of the idiots that pass themselves off as our leaders will take it.Brandeis University ran a study that shows that 76% of U.S. middle class households are in extreme distress... because of jobs losses, declining income and being forced to trade basic benefits to keep jobs. Our incoming resident has turned on *every* campaign promise he made. He now proposes to increase outsourcing and free trade, proposes to quadruple the number of H1-B visas (which has cost more than 3 million U.S. workers their jobs since 2003; Obama's increase ill cost at least 1 million additional jobs), he has backtracked on his tax increases on the wealthy, his tax cuts for the middle class, he even is keeping that alphabet soup of police state collection of "anti-terrorist" organizations Bush foisted off on us.

Fixing the economy is simple: protect the jobs we have and get as many of those lost back! Bring back the trade tariffs we got rid of in the 1990's that began this free trade train wreck. Add to that, punitive taxes on corporations **and investors** in those corporations, that outsource jobs. Oh, our "free trade partners", all of whom have these sorts of laws t protect THEIR jobs, will whine. India and China will have kittens and threaten all sorts of dire consequences. Ignore them. Pass some basic and sane protectionist laws as outlined and sit back and watch the flood of jobs return home. It really is that simple. Nothing elegant, but people with jobs will spend us out of this recession. It was originally Obama's campaign theme, his promise, before he decided to side with the Washington insiders and experts against us.

Shiveh Author Profile Page :

Nothing discounts the value of hard work like prosperity does and nothing revives the concept of earning an honest buck for honest work like economic insecurity can do. This cycle has repeated again and again; it is the common cause for the rise and fall of great powers through-out history.

In our time, people of Western societies that lost a great deal after WWII could rebuild a better and more prosperous economy with hard work, ingenuity and integrity but their kids who inherit that prosperity did not see the need to work hard, got lazy and went for easy money hence lost a great deal of it. This cycle will start again and eventually economic disaster will force us to act responsibly and maturely, and to use the tools and knowledge that is at our disposal to rebuild what has been lost. The memory of good life and the desire to live well again will move us to work hard and compete effectively; the bad habits of borrow and spend and making money out of thin air will die off.

This economic collapse will be the vehicle of change and revival of economic principles that worked so well before we stopped using them. That’s the way out.

The countries that tagged along and made a living by selling their natural resources to industrialized countries will feel the pinch, but without the necessary infrastructure and the know how, there is not much they can do to counter it. Among them the ones that used their income to subsidize their economy and govern by force, will have their angry masses to deal with. Those are the countries that will be destabilized by the current economic problems. And for good reason!

Recent Comments

PostGlobal is an interactive conversation on global issues moderated by Newsweek International Editor Fareed Zakaria and David Ignatius of The Washington Post. It is produced jointly by Newsweek and washingtonpost.com, as is On Faith, a conversation on religion. Please send us your comments, questions and suggestions.