The problems within the U.S. economy that need to be solved in order to slow the accelerating snowball and begin the return to a healthier economy are significant, in and by themselves. However, making the problems much worse is that the malaise attacking our economy has gone global.
On a daily basis, we are learning that more and more countries around the world are experiencing a recession. The economies of China, Japan and Korea have weakened. So too with countries throughout Europe. Russia’s economy has slowed. And even the economies of the oil rich countries of the Middle East are experiencing some discomfort as reduced demand and lower prices for oil occurs.
As if the U.S. economic problems were not difficult enough to fix, now the repair must play out on a world stage where consensus on any issue is always very, very challenging.
Those who say the U.S. government has more tools to use in avoiding a downturn of the magnitude of the Great Depression seemingly ignore that the U.S. does not control the world economy. We have become a country, like most, that is inextricably woven into the fabric of a global economy.
Further exacerbating the complexity of that problem is the specter of worldwide deflation…an economic force every bit as challenging as inflation…if not more so.
And even if all the economic policymakers were in agreement as to what needs to be done to strengthen the global economy, would respective political agenda’s foster consensus implementation? On a timely basis? I wish I could be more optimistic such would be the case.
So there you have it, six reasons why I believe the economic downturn will be deeper and longer than most are currently expecting. Deeper and longer than any downturn since the Great Depression. Regretfully.
I hope I am very wrong!