Stewart Brand sent me this excellent piece by past Seminar Speaker, historian and author, Niall Ferguson. It is a retrospective of 02009, bravely published a year in advance. An excerpt from the intro:
“It was the year when people finally gave up trying to predict the year ahead. It was the year when every forecast had to be revised – usually downwards – at least three times. It was the year when the paradox of globalisation was laid bare for all to see, if their eyes weren’t tightly shut.”
The piece is impressive for a historian, as it puts his written history into the territory of the future. And aside from letting his McCain adviser status show fairly bluntly, I think it is an unfortunate but likely scenario. The main take away for me is that it reinforces the idea that the borrow and spend economy cannot sustain, it will always have to brutally correct at some point…
“With total debt above 350 per cent of US gross domestic product, the excesses of the age of leverage proved difficult to purge. Households reined in their consumption. Banks sought to restrict new lending. The recession deepened. Unemployment rose towards 10 per cent, and then higher. The economic downward spiral seemed unstoppable. No matter how hard they saved, Americans simply could not stabilise the ratio of their debts to their disposable incomes. The paradox of thrift meant that rising savings translated into falling consumer demand, which led to rising unemployment, falling incomes and so on, ever downwards.”
