Krugman, a relatively mainstream economist with the New York Times, writes that we are in fact in the grips of an economic depression of global scale. Warren Brusee, who has been suggesting all along that unsustainable economic practices have precipitated an economic depression, writes in his mid-June 2012 blog post that the US may sidestep a worsening economic situation because of investors fleeing the EU. And many are scratching their heads as to why much of the world is still struggling through the morass of economic decline that really became apparent in fall of 2008. Anecdotally, I have well-educated, sober-minded friends who are stocking up on beans, bullets, and band-aids. Other friends are breathing a sigh of relief and spending heavily on vacations, expensive homes (though a deal in 2007 terms), and restaurants. What the heck!
My feeling is that if the Euro-Zone falls like dominoes - the uptick in foreign investment in the US will not offset the loss of wealth from our heavily interconnected financial systems. Contagion will not be contained to Europe and the impact on the US economy will be very significant. Exports will slow, lenders will stop lending, and jobs will evaporate. But, who really knows? One thing is for sure, the uncertainty is already creating volatility in the US stock market and consumer confidence is taking a real hit. So the professional prognosticators may differ in their reading of the tea leaves, but one thing is for sure: the next 6-months will be key in deciding whether the global economic situation will stabilize and improve or spiral downward. Buckle up and stay tuned!
