It’s about time we did another look at the economy and give you something new to chat about over your never-ceasing dinner engagements…
This list of 15 reasons, according to Korowitz’s new paper on the trade-off between our global economy and the systemic collapses we’re experiencing, gives a detailed path for supply-chain collapse over the world. Okay so basically: why it will be that the next global meltdown will leave everyone exposed, broken and bankrupt.
1) Food Constraints Cause Stress
The interdependence of countries means that even if ONE nation was unable to produce and supply their usual produce, the world prices and economies would suffer. Between 6 and 10 fossil fuel calories are used to produce every calorie of food. Which is a problem – keep reading…
2) Financial Shocks Spread in Seconds
Gone are the days of isolation of the markets. More and more, we see that the Chinese market reflects the American market. The South African JSE tracks India, and even shocks in Europe echo around the world.
3) No More Stockpiles
Nice and easy: NO cities keep emergency supplies anymore. If something were to happen to a food supply chain for example, cities would starve.
4) Banks Spread Risk
Everytime the banks are bailed out, risk spreads to the sovereign states. Just look at how Spain has crumbled after bailing out its banks, for an example.
5) Capacity for Absorption has been Reached
The world cannot support many more default bailouts. Already Greece is said to be the last bailout ever. The world economy isn’t able to absorb lack of funds forever.
6) Credit-based Expansion
Governments and lenders finance interest payments by incurring more debt. Long-term effect? In a contraction, lenders and investors go broke. Whoops.
7) Equilibrium in Markets Near-Impossible
Okay, so I’m reading into this a bit. But the complexity within the world’s systems has become almost chaotic in terms of the effects it has. How can a single government lay out policies taking into account all of the various factors working within one economy?!
8 ) We are No Longer in Control of the Wheel
“As the risk of major systemic change grows, those [supply chain] models will likely prove increasingly erroneous as the system moves out of its historical equilibrium.”
9) Collapses cause Social Fragmentation and Spreads Fear
Economic contractions cause nationalism and xenophobia. Although a natural reaction, we’re playing with fire here – people don’t want to be contained or excluded. Ever.
10) Running out of Cheap Energy
What happens if oil flow stops tomorrow? What do we have to sustain ourselves? What happens if our energy demands don’t decrease in the next recession? Will we even have food?
It’s a little bleak. It also shows us what a huge role we have to play in the next few years. Make a difference, people.