Thanks to marmar for posting this in GD. I wanted to post it here so that it won't be lost in the sea of GD threads.
We've heard a lot of talk about the shape of this "recession", especially for the United States. The optimists think it will be V-shaped and that we are even now seeing the bounce upward toward growth again. Those somewhat more in tune with the deeply worrying fundamentals think it will be U-shaped, and they think we've probably hit the bottom, or nearly so, but we have some months to go before growth begins again. Then there are the pessimists, who insist on being called realists, who think it will be L-shaped, with America's economy stagnating perhaps for an entire decade, or even more after it reaches the bottom of this recession.
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At fundamental issue here is the new asset-based economic/financial model (as contrasted with a traditional income-based model) which the US and Britain in particular have progressively adopted over the past couple of decades, and whether that new model is really workable and revivable in the light of its massive collapse that began with the emergence of the subprime crisis in late July of 2007.
/snip/
The shape of this crisis, then, is a series of steps proceeding downward into the gloom for the US and Britain. The two powers are guilty of massive over-reach, and now they are suffering the terrible consequences. Sooner or later, these ongoing events that were inevitable, and that should have been foreseen before the new asset-based model was so enthusiastically and wholly adopted, will force the two powers to make the gut-wrenching, long reversion back to a more traditional economic model.
The longer their leaders resist this, the more profoundly painful and destructive the adjustment will become. Obviously, this situation provides a tremendous opportunity for the rest of the world, but especially for the increasingly wealthy and powerful states in the East, to capitalize in various ways. The ongoing crash of the US and UK liberal capitalistic incarnations of the asset-based economic/financial model also, therefore, signifies the collective rise of the Eastern managed-capitalistic (authoritarian) incarnations of the traditional income-based model.
GD Url:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5722649&mesg_id=5722649 Original Url:
http://www.atimes.com/atimes/Global_Economy/KE22Dj03.html