Is the economy on the way south again?

by Michael Smith (Veshengro)

To all intents and purposes, from the way the Bank of England and the Federal Reserve are talking, it would appear that we might be headed for another dip, after the small little up, in the economy.

While they are still trying to talk down the effect such a renewed downturn would have consumers certainly – especially in Britain – are voting against spending.

In some media reports there was even the “D”-word mentioned; the word “depression” and this might just be what we are headed for, despite the fact of whatever the powers-that-be are trying to tell us.

Even if this Depression is not going to equal the Great Depression of the 1930s, together with the arrival of the cost of oil going through the roof as a result of Peak Oil, and the UK's Industry Taskforce on Peak Oil and Energy Security (ITPOES) seeing 2013 as the year when oil will be coming to the unaffordable level as far as price and cost is concerned, we are going to be in real dire straights.

Should the experts of ITPOES be right then the rising cost of oil will be adding further problems to the economy and thus send it further south still, and even the countries that currently think that with a growth of a couple of percent, such as Germany, they are out of the Recession, will face a new a further downturn.

How the economy globally is going to handle that is a serious question and it is something that we must get ourselves prepared for for such an event too could trigger serious problems.

It would appear that in the USA they are preparing for stagflation, which means both interest rate and unemployment rate being high with the economic growth being slow – or non-existent.

The other possibility for both the USA and the UK was, and may still is, deflation, when the inflation rate actually goes into the negative realm. This normally give the economy a real serious blow.

The fact is, as far as the British people are concerned, spending is not something they are going to do and it would appear that the number of those vacationing abroad this year, in the 2010 summer, has gone down while the holidays in the country seem to have gone up and camping holidays and those in holiday camps of the Butlins and Haven kind are back on.

Staycation in the country and at home seems to be much more on the agenda this year, so at least it would appear from the number of visitors to local parks for picnics with children and such, that even the previous year when the trend really got going.

The government is trying to, obviously, get people to spend money as they have this notion, like most modern economist, that the economy and the country can only work if the economy has proper growth.

But, as I have said in a different article, the economy worked well in the old days when good were made to last and people passed those goods on to others when they died, for instance. It was not about spend, spend, spend and still our countries worked. So why are our governments and economists so fixated on economic growth.

If we are headed for another dip in the economy and it is indeed going south, once again, we better think of another approach and this approach may, in fact, be looking to saving for things again instead of buying on credit and looking for and buying things that actually last.

Maybe this is also a chance to look at a total reappraisal of our economic system, and I am not directly talking here about changing capitalism, as I do not think that there is so much wrong with it as people claim, but the system of the more, more, more is what I am talking about.

In my opinion, this is the way to go and it is a preparation for what we will be forced to change over to once the end of oil actually arrives.

© 2010

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