I’ve been away from my writing for two months now. The purchase and gutting of a house, on top of my regular day job, has been hectic. It also coincides with a period of real intellectual confusion that I’ve experienced over the past several months as the reality of global economic patterns, as well as political rhetoric, swirl to create a rather depressing outlook.
That outlook (which contributed to a rather famous author calling our lunch meeting the most depressing he’d ever had) builds on several announcements, pronouncements and trends that have much smarter men than I very confused as to where the global economy is going.
Much of this began, or was highlighted by the late June G20 meetings in Toronto, where the leaders of the G20 + agreed to make deficit reduction an immediate to mid-term priority (admittedly a decision that lacks any teeth whatsoever and comes with repeated allowances for “national priorities”). This despite the fact that the global economy shows no fundamental signs of real recovery.
Sure the markets have rebounded but this has been on the basis of corporate profits rather than economic data. What’s the difference you ask? Corporate profits increase as companies reap the benefits of decreased wage costs. Thus with large layoffs, as experienced during the past two years of crisis, profits are the first thing to accompany a return to stability.
Unfortunately such positive profits can be short-lived if there isn’t a commensurate increase in employment levels and exports. Read the rest of this entry »