Everyone has a pet theory. Mine is that all that is happening is the US and EU are finding all the manufacturing jobs that they outsourced are now missing from their economies. In previous recessions when it started people and companies would stop buying goods as the future would be so uncertain. As other staff members were made redundant or other businesses went to the wall first, most found their jobs more secure or they now had a small bit less competition and so felt slightly more secure in their futures. This meant they could go out and buy big ticket household items or invest in new capital machinary to capitalise on the coming recovery. This drove the recovery. The sudden release of pent up spending produced more demand at the factory and hence employment.Plantagenet wrote:dorlomin wrote:Lack of growth is going to weigh like a rock around the neck.
Colin Campbell predicted that high oil prices would hurt the poorest countries first because they wouldn't be able to afford high priced oil. Its rather a surprise that high energy prices are dampening down growth and wiping out the economies of the wealthiest set of countries in the world----the EU.
A double dip recession is hitting the EU
But over the past 20 years the loss of jobs now means that that growth in demand was elsewhere so the recvory was only ever feeble.
Emerging economies are growing faster than the price of energy. So they can bouy up through the current energy crunch. Deveoped economies are reducing in there net wealth so as people stop buying on credit cards and borrowed money they are buying less energy from a much larger per capita amount than the emerging economies. This is creating spare capacity for the dollar\euro rich emerging manufacturing economies. They are able to grow their energy consumption still as westerners downsize their demand.
The real global poor, those who are not part of the East Asian boom however are feeling just as Dr Campbell suggested they would. The Egypts and Pakistans of this world.
In the west the huge personal credit boom in the 2000s covered for the loss of manufacturing (although the spare labour capacity was taken up by the service sector which did help a huge amount) but then when it turned out the money lent was struggling to get repaid the financials had a crash. Then the state stepped in to shore up banks and continue spending. That spending has kept money flowing through the economies but the time has not been spent dealing with the underlying malaise.
Now we are slowing getting to the point where governments take away their excess spending and we see the real state of the western economies. No growth for most because without government spending there is nothing to grow with.
At this phase peak oil is not in the driving seat. But it is a clear break on the economy. Sucking money away from being productively employed developing new mechanisms for humans to exchange labour for added value.
But that sucking will not go away and only get bigger and worse. It will go to notoriously unproductive economies. Those built on extraction of resources and the associated corruption and graft, not to economies well known for the efficient employment of productive capital (be it financial or human). Another place conventional economics fails, failing to realise one of the consaquencies of peak oil is that capital is not accumulated by those most able to employ it effeciently hence able to acquire more to enhance efficiency. Its going to make ice rinks in the desert.
On an aside, some analysts are making early calls for the US to be in recession.