For the record, the following is a “Quick” snapshot of where we have been, where we are going and why!

US Influence -
Let me dwell for a moment, on the relationship between the USA & the Global Economy.
It has been suggested, in recent times, that the Global economy and in particular the BRIC countries, have De-coupled from the US and the influence of the US is now substantially lessened, on the World economy.
That said, the US economy, in GDP terms, is still greater than the next 3 countries GDP, combined.
For the Record, whilst some countries have room to manoeuvre slightly, they can not swim against the US tide and clearly, the current economic slowdown has put an end to the De-coupling suggestion, at this time!

Where are we Now
Let me put it this way, the US situation is as follows -
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.

How did we get here
There are seldom “Single Reasons or Silver Bullets” for events, such as these and this event is no different!
Going back in time, the last 200 years has seen 3 primary growth drivers –
1) Population Growth
2) Cheap & Abundant Energy (Oil)
3) Innovation

The Global Population attained 1 Billion around 1800, 2 Billion around 1930 and we have now reached over 6.5 Billion, having added 4.5 Billion in just 80 years, with WW2 intervening.
Previous energy supplies Peaked out, as the Global Population expanded, with Wood & Whale Oil giving way to the Cheaper & more abundant Crude Oil, as it started to come on stream, just on 150 years ago.
Man’s Innovation has also expanded incredibly, over the last 200 years, as the Industrial & Information revolutions, increased Production persistently, via means such as the Steam train, Aeroplane, Television, Medical technology, Nuclear fission, Computer & the Internet.

So, the scene was set and it culminated in the greatest economic boom in history, between 1995 and 2005!
This was the “Perfect storm”, for making money.

Finally, one of the oldest and most regular players came back into the game, when GREED joined the party, assuming the party would never end. Leveraging, via the Banking/Financial sector, went thru the roof, NINJA Loans came into being and the completely unregulated “Derivates Market”, went into the Stratosphere, at over US$600 Trillion, 10 times the Annual Global GDP!

However, there is a dilemma in the current economic/banking system; it REQUIRES exponential growth, within a finite environment!

The inevitable happened around 2005, two of the three major growth drivers (Population & Oil) Peaked and their combined effects had a profound influence on events. Population growth had already started to slow and the Baby Boomer generation had just started a 20 year transition, from their Peak Earning & Spending years, to being thrifty Retirees, before leaving us forever.
The slowing Population growth had already influenced the New US housing market, with construction in long term decline. However, the slowing Population Growth, combined with the Retiring Boomers, spilled over into Existing housing and that Bubble burst, as Demand slowed, forcing a vicious cycle, of falling housing values and rising Foreclosures, re-enforcing each other, in a race to oblivion.
Around the same time, Global Peak Oil, which had been long talked about, as a theory, became a reality. As Production effectively Peaked around 2005 and then started to fall, the Oil Price raced to $147 a barrel, and then, as the costs ballooned and economic reality set in, together with the perception of a faltering global economy, Oil Prices fell, as Demand also reduced.

The rest of the World joined the Party!

Many countries spent up, mainly by vastly increasing Debt and mortgaging the future, on a bet that the status Quo would return.
With Debt to GDP ratio’s approaching 100% and in some cases more, the status quo will not return!

What of the Future/Conclusions?
Now that the calm EYE of the Hurricane, created by Trillions in “government money” has nearly passed over, that “Perfect Storm” is about to re-appear, this time as a Category 5 Financial Black Swan Event!
We are now in the final stages of proving that the current system is not working & is actually unworkable, over time.
Recent increases in leverage, in the financial sector and the Peaking of two of the three major Economic drivers (of the last 200 years), are now conspiring, to bring economic growth to a shuddering halt!

The great era of Population Growth is now ending, as costs increase & Revenues fall, in line with an Aging Population and a Slowing Population Growth!

The time of the great economic enabler (Cheap & Abundant Energy), is also ending, as Production levels start to fall and EROEI (Energy Return On Energy Invested) falls from an initial 100/1, to under 10/1 now and still falling! This greatly reduces the Profit motive on some new Production and therefore the incentive to proceed with some new fields, may also lessen?

What proceeds from there, may not be pretty, but nor will be the final judgement of historians and future generations. That said, it is likely that economic Growth will ratchet down, as will share Prices & the Oil price will ratchet up, over the next 3-4 years.
Innovation, is now the final frontier for economic sustainability, the “exponential Economic Growth Fairy” is no more, it died of “shortages of natural causes (oil)”, in 2005, but in the long run, we are all dead.

The “fundamentals” are now changing!

What we do or don’t do with this new paradigm, over the next 5-10, will set the course of humanity, for the next 200 years. Be advised, this new paradigm may lead back to the future, as Globalisation, gives way more and more to a local economy, unless a NEW Cheap & Abundant Energy source is put into Production, quickly.

That said, we must now go where there is no path and leave a new trail!

We can, the $64 Trillion question is, will we?

We have only begun our trip down this abyss. There never was a Social Security Surplus. There never was a tax surplus at the beginning of this decade. It was all lies. Those who served more than 2 terms in Washington should be taken out and hung. We will end up like the Russians in the early 90’s: Burning our furniture to keep warm, and selling our silverware for our next meal. Oh,and too broke to worry about health care.

Yet I see not one response. Are those who tend to agree afraid to say so? Are those who disagree uncaring? Is this site dying? I hope not.

I’ve owned a new car only once in my life; briefly we had two vehicles but are back to one — walk or bike when possible, combine errands when not, etc. Both of us have been growing some of our food since we were kids. Turn off lights you aren’t using. Don’t buy lots of cr*p you don’t need (well, mostly — we’re both rather fond of books and have a mix of fiction, history, and utilitarian books). Buy or make clothing that lasts, mend things to get them to last a little longer. My folks were born during the tail end of the Depression and his a bit before (his dad’s a New England farmer), so we both learned about saving and taking care of what you have.

I guess a lot of folks either didn’t learn those lessons or discarded them. They’d best start learning now, even if late to the game. Meanwhile, I’ll keep teaching spinning, sewing, etc. to whoever wants to learn…

I was born in 1927, perhaps the year the exponentially growing world population reached 2 billion. Now we are approching 7 billion.(It had never been more than 0.3 billion until the current era.) In 1927 most of the world’s oil production and auto production was in the US. The horse population in the US had peaked only five years previously. Very few people in the world had even ridden in an automobile.

People were different. When I was a child if an additional checkout lane was opened those in the back of the line did not rush to it. Those waiting longest were expected to file into the new lane. And everyone knew it. I don’t think I ever once saw what is the practice today. People today don’t even know how to respond to “good morning.” What is guy up to? But I digress.

In 1927 and during my childhood trains ran on coal, electricity was generated using coal, hence so did the subway trains and street cars. But with 2 billion people this planet was still sustainable. The public transportation network was a marvel. (And while again off-topic a high school graduate knew more than many getting bachelor degrees today.)

The boomer generation did see a resurgence of action on environmental issues and yes, we have dropped the ball. But to draw a neat line in the sand at the boomer generation ignores history. Consider that it was our GREAT-GRANDPARENT’S generation that first realized the need for National Parks, wildlife refuges, and hunting/fishing laws and made the first forays into pollution regulation - the sh*t was hitting the fan WAY back then. In the blame game then, why let the intervening two generations off the hook so easily? Particularly our parent’s generation. Hell, members of the “greatest generation” authored “A Sand County Almanac” and “Silent Spring” even as that generation sat at the apex of the current oil-subsidized resource-extraction economy. Unfortunately, we boomers simply marched, most of us with blinders firmly in place, along the path laid by our parents and grandparents - pretty much like every generation always has.