Another Recession Looms! Yawn! Deja Vu! And Why It Would NOT Be “Different” This Time
It is another matter that neoliberalism has “failed” us, and yet, we keep “buying” into its promise, even in the face of overwhelming evidence that it is not working as it is intended or as evangelized by its cheerleaders. So, is it the case that a repeat of The Great Recession is looming when the only ones who benefited are its “perpetrators”, aka the bankers who caused it in the first place? Or would it be different this time around? Not likely, as the “this too shall pass” syndrome would set in, and we would “rejuvenate” after much fatigue.
Whatever the outcome, one thing is clear, the coming downturn would most likely be a “bottomless” one, with the “perfect storm” of converging economic and financial events likely to wreak havoc on all of us. To start with, decades of “easy money:”, courtesy of the Central Bank printing presses, have created asset bubbles in everything from housing to bonds and in equity markets, as well as the Unicorns (startups with Billion Dollar valuations), which, with the end of the “funny money”, would have a “hard landing”.
Already the Unicorn bubble is bursting, and Cryptos crashing, along with “troubled” Chinese property developers like Evergrande. Most of this “bonfire of vanities” could have been prevented only if we did not let the Global Economy run on “steroids” due to decades of low interest rates, which now threaten an “all hell breaking loose” scenario as the “taper and tighten” policies are shutting down the “spigots” of liquidity.
The coming recession is also unlike previous cycles as, along with the Printing Presses (a double P), the pandemic has literally and figuratively caused morbid conditions worldwide. Moreover, the “weakening” of our will, forced isolation and lockdowns making us overly dependent on technology have induced a sense of hopelessness and tiredness. The general lawlessness and chaos compound this and the anarchy that we see around us, a consequence of the fraying of the social fabric and the breakdown of the “social contract”.
The Great Recession of 2008 had a distinct “Made in the USA” label. However, this time around, everyone has their fingers in the pie. With Chinese lockdowns, Xi’s obscurantism, and Modi harking back to Atmanirbharta, or self-reliance, one wonders who our “saviours” are this time. Perhaps, we will learn, like the Srilankans, that we are “on our own”. Or is it too late to prevent the “four meals from anarchy” that more than a Dozen countries in the developing world, including some of India’s neighbours, are now starting at?
Last, this recession should be a wake-up call for the “TikTok” generations, aka the Millennials and the Gen Zers, battered as they are by the pandemic, contributing to The Great Resignation, and otherwise burning out. Coming from a Gen Xer, who has been there before, my advice would be to “ride the recession” and buckle up for months or a year of uncertainty before the dust settles, and then it is time for the next recession. After all, there are too many Kool-Aid drinkers of neoliberalism’s aspirational pull!
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Originally published at https://rammohansusarla.in on August 1, 2022.