The relationship between oil shocks and global recessions is one that has been strongly established for decades. Since World War II, 10 out of 11 recessions in the U.S. were preceded by a sharp increase in the price of oil, while an increase in gasoline prices is often seen to cause a decrease in consumer spending, leading to an economic decline in the process. Worryingly, global conditions suggest that another oil-led recession may be on the way – one that may prove to be a long-term threat to the global economy.
We have been hearing a lot about escaping the fiscal cliff, but our problem isn’t solved. The fixes to date have been partial and temporary. There are many painful decisions ahead. Based on what I can see, the most likely outcome is that the US economy will enter a severe recession by the end of 2013.
This recession is likely be very long term. In fact, based on my view of the reasons for the recession, it may never be possible to exit from it completely.
I base the foregoing views on several observations:
5. The financial symptoms that the US and many other oil importers are experiencing bear striking similarities to the problems that many civilizations experienced prior to collapse, based on my reading of Peter Turchin and Sergey Nefedov’s book Secular Cycles. According to this analysis of eight collapses over the last 2000 years, the collapses did not take place overnight. Instead, economies moved from an Expansion Phase, to a Stagflation Phase, to a Crisis Phase, to a Depression/Intercycle Phase. Timing varies, but typically totals around 300 years for the four phases combined.
Secular Cycles: Peter Turchin, Sergey A. Nefedov: 9780691136967: Amazon.com: Books
Many historical processes exhibit recurrent patterns of change. Century-long periods of population expansion come before long periods of stagnation and decline; the dynamics of prices mirror population oscillations; and states go through strong expansionist phases followed by periods of state failure, endemic sociopolitical instability, and territorial loss. Peter Turchin and Sergey Nefedov explore the dynamics and causal connections between such demographic, economic, and political variables in agrarian societies and offer detailed explanations for these long-term oscillations–what the authors call secular cycles.
Secular Cycles elaborates and expands upon the demographic-structural theory first advanced by Jack Goldstone, which provides an explanation of long-term oscillations. This book tests that theory’s specific and quantitative predictions by tracing the dynamics of population numbers, prices and real wages, elite numbers and incomes, state finances, and sociopolitical instability. Turchin and Nefedov study societies in England, France, and Russia during the medieval and early modern periods, and look back at the Roman Republic and Empire. Incorporating theoretical and quantitative history, the authors examine a specific model of historical change and, more generally, investigate the utility of the dynamical systems approach in historical applications.
An indispensable and groundbreaking resource for a wide variety of social scientists, Secular Cycles will interest practitioners of economic history, historical sociology, complexity studies, and demography.
If Gail thinks the Crisis Phase is near based on the theories in the above book, the Fourth Turning says it arrived in 2005.
Amazon.com: The Fourth Turning: An American Prophecy – What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny (9780767900461): William Strauss, Neil Howe: Books
First came the postwar High, then the Awakening of the ’60s and ’70s, and now the Unraveling. This audacious and provocative book tells us what to expect just beyond the start of the next century. Are you ready for the Fourth Turning?
Strauss and Howe will change the way you see the world–and your place in it. In The Fourth Turning, they apply their generational theories to the cycles of history and locate America in the middle of an unraveling period, on the brink of a crisis. How you prepare for this crisis–the Fourth Turning–is intimately connected to the mood and attitude of your particular generation. Are you one of the can-do “GI generation,” who triumphed in the last crisis? Do you belong to the mediating “Silent Majority,” who enjoyed the 1950s High? Do you fall into the “awakened” Boomer category of the 1970s and 1980s, or are you a Gen-Xer struggling to adapt to our splintering world? Whatever your stage of life, The Fourth Turning offers bold predictions about how all of us can prepare, individually and collectively, for America’s next rendezvous with destiny.