Another recession is on the horizon. What’s new, one might say, especially when booms and busts are regarded as capitalism’s “natural” trend cycles, which keep repeating. For the last five decades, “everyone and their dog” have put their faith and money in the neoliberal way of ordering economies and societies. So, it is not fair to expect this recession to be “anything different” from the past and in all probability, we would see much “demand destruction” amidst the “supply crunch” that has caused the current “stagflationary” conditions in the global economy.
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”.
So, are we equipped and energized enough to “fight” the recession? Or are we just helpless in the face of so much concentration of money and power among so few, the so-called 1% who are the benefactors of the “race to the bottom” policies and the mind-boggling complexity that our “elites” have thrust upon us? In addition, there is an ongoing “social crisis” worldwide, what with the “culture wars” (e.g. Roe vs Wade in the US) and the hardline religious stance that can result in “genocide” if left unchecked. Added to this is the overall decline in liberal democracy, weakening our institutions that protect the citizenry.
While these Ps could have still been manageable, experienced as we are with the lessons of previous plagues and recessions, another P, Putin, emerged to launch a broadside against the West, using Ukraine as a “proxy”. With no sign of a letup in the conflict, it sure looks like he is “going for broke” there, harming globalization, causing a food and fuel crisis, and contributing to inflation, the chief cause of the recession. Putin also has a hand in the fourth P, Populism, which is directly responsible for the initial setback to globalism. One can safely say that these 4 Ps are the New Horsemen of the Apocalypse.
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?
In all this mayhem, the ordinary person is “screwed”, and I don’t think it would be different this time. Otherwise, why would the celebrated Oligarchs be busy with “succession plans” when 90% of India’s people do not even earn Rs. 25,000 a month? Or, for that matter, the dire straits of the poor in India? Of course, the “spin” is in a parallel reality of its own, ignoring the “dark clouds” hovering around the Indian Economy and the sheer “demoralization” among India’s working-age population, with more than half of them not even “looking for jobs”.
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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