Waiting for the recession

Holidays! For me, nothing changes though. No special visits, no special shopping agenda, not many social engagements. This is what the last two crazy years done to my social presence - I was never there, and so I was struck off from many lists. Pity! But there goes my first New Year resolution.

Anyway, it is fairly cold outside. Let's be honest - it is very cold. Colder than the last season, perhaps, though no one talks about these things with any certainty. It is breezy and cold, and I noticed black ice on Thursday afternoon. One of my colleagues explained to me that global warming is not just about warming, it is about making weathers more extreme. So, a warmer July and a colder February is what we are bracing for. Almighty God, why have we forgotten you?

The shops are busy. I took a lot longer than usual to buy some of those last minute gift items. I was expecting a lot less crowd, given the recent headlines about recession. Did I think that there were less number of shoppers than last year? Yes, I did - but more like weather, one can't be certain about these things.

To update those who do not care to read the newspapers, the following is happening: The house prices are not going up. This is because people are fearful that they will not go up, and therefore not investing money in buying houses. The house prices are not going up because at this time, there is a credit squeeze, banks have a lot less loose money which they can lend to anyone. This is again because they actually gave a lot of money to lots of people who should not have borrowed so much, and that led to higher interest rates to keep the inflation down [as all those people were spending money buying things which they should not have in the first place] and this meant these people who could not afford the loans now needed to pay more to keep servicing it. So, yes, I would leave talking about this circular logic as long as you got the sense - we have got into a hole we dug for ourselves.

Funnily, I picked up a book yesterday - Boom Bust: House Prices, Banking and The Recession of 2010, by Fred Harrison. This book is published in 2005, so obviously we knew this all along. Also, almost all leading economists were warning that the debts are going too far. But the recession failed to arrive - almost like those environmental catastrophes everyone talks about and we kept doing whatever we were doing. Mr. Harrison blames two individuals - Alan Greenspan and Gordon Brown - for leading everyone down the path when they knew what lies ahead, at the same time making the point that the real flaw lies in the obsessive faith on one tool of economic management - the Interest Rate - to cure all evils.

Hopefully, this Christmas will pass happily. I am stepping out for some more last minute gifts, and I shall spend as long as I expect on the M&S queue today. So will everyone, and we shall contribute however much we can to keep the recession away [Mike observed, after noticing that I am reading Fred Harrison, that we would talk ourselves into recession]. However, the fears are unlikely to go away. This is primarily because we have an economy, which is not strong on fundamentals. The houses are bought by not those who need it for staying, but those who wants to make a profit on these. Those who need it for staying can't afford it anymore. So, we have a bubble economy - when it goes up, it goes up, but when it goes down, it goes down.

So, is this the end of the era of Globalisation? Will this bust destroy the emerging economies, turn America xenophobic, and push China down the path of military desparatism? Possibly no, but the problem is - this will make it more likely. While I shall not dig myself into a cave and wait for the end of the world, I shall head off for my shopping with this thought - the question of equality is no longer a moral question, but a pragmatic one. If the monetarist regimes across the world fails to control the economic see-saw again, this will tell us that generating economic activity without equitable distribution will make those see-saws only more violent, and they will eventually manage to throw us from our seat. I shall pray that it is not going to be this time around.


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