There are no apparent breakthrough innovations and technologies ready to reignite the economy. That doesn’t mean there won’t be great innovations in the future. However innovation for most companies has not been their highest priority that has been making profit look good by creative accounting practices.
They were busy optimizing the bottom lines rather than investing in future businesses, developing new technologies ready to rescue the company’s long lasting sustainability.
During past recessions companies had world-changing inventions such as the light bulb, telephones, radios, automobiles, airplanes, televisions, transistors, microchips, computers, mobile phones, internet and so on. Now there are no breakthrough technologies ready to reignite the economy. Inventions have not been businesses’ priority only making profits that look good, but in most cases weren’t real.
Nowadays, companies are responding to the downturn with layoffs to lower their expenses, and when possible to increase prices in an attempt to maintain profits and generous executive salaries. They for sure will not go after new business opportunities, they have found that it is easier and less risky to push harder on current staff and businesses, applying creative accounting when required. They don’t believe the government’s economic data that the corner has been turned on the economy. Consequently they are very conservative about any expansion plan, and seeing that the economic environment still is further deteriorating, making it is even less likely that new expansions will come on stream.
There will be several apparent recoveries as the depression continues its trajectory, pushed up by TV annalists the so called ‘experts’ telling that the market now has bottomed out, that probably one day may happen, but not in their life time.
The problem with a depression is that it is self-energizing. As unemployment goes up, the economy becomes weaker, causing companies to downsize further and therefore adding more people to the unemployment lines. As sales go down, profits also go down. Slowly people are losing faith in the market, and driving prices and subsequently profits further down.
The crisis we’re now in will change pretty much everything. While this change will entail a great deal of pain and a reduced standard of living for a large number of people, by the time the Crisis subsides, society will have pretty much remade itself in ways that no one can predict at this point.
Today’s economy is in serious trouble, despite rigorous efforts by the US government and its many friends in the large banking institutions. The housing market battered by tsunami-like waves of defaults, foreclosures, overvaluations, historic levels of personal debt, and tight credit that has left governments as the sole lender in the market.
There’s no way of telling where the Crisis will lead, or how it will end. That’s going to depend not only on the one who is in control, but what they do, who they’re up against, and a hundred other variables that can’t even be anticipated.
One thing that seems certain is that this crisis will bring out strong leadership.
Millions of jobs are gone for good, and how millions more could disappear before we’re through, while a long-term collapse for the dollar looks inevitable.
And yet, unlike other recent minor busts and even major corrections, the lesson hundreds of millions of strapped people are learning all over again is that same lesson our ancestors learned after 1929 during last century’s depression, that lasted from well after WWI till into the 1940s.
The law of personal and financial responsibility is as irreversible as the law of gravity. And no bureaucrat no matter how popular even with the help of multi-billion dollar bailouts can change that.
Not to be negative, but it is realistic to consider the following scenario: Terrorist attacks on the oil facilities in Saudi Arabia and or Russia. If that occurs all the world’s economies will be in turmoil. And other attacks could even more disrupt society that will cause massive disorder. Recent attempt on Christmas day in a flight from Amsterdam to Detroit is just a tip of the iceberg of what is coming and feasibly. Next time people may not be that lucky, because 100% security is per definition impossible. However now is the time to prepare us for more independence of oil. Oil dependency weakens severely security because much of the world’s oil is controlled by regimes that do not share our values. Diminishing the use of fossil crude is the crucial importance in the world’s energy market. Making states like Saudi Arabia, Iran, Russia and Venezuela less powerful, and less able to fund militias and terrorist groups.
The simplest and most sensible alternative is developing ultra cheap carbon free energy. This would mean beating the price of coal used to generate electricity at under 3 cents per kilowatt-hour.
After two years of doom and gloom, market distorting bailouts, ineffective stimulus packages, etc. governments seriously should turn to latest generation nuclear energy that will be the real savior for the economy, the job creator per excellence and greening the environment in the process. Cheap electric energy distributed via smart grids, create millions of urgent needed jobs, and saves the environment from gas emissions, and, ‘if true’, avoiding global warming. Moreover there are important savings generated on environmental, social, security and military cost.
Nuclear energy is the only answer to become independent of the present energy supply. Further it makes feasible to employ alternative energy for transportation by using synthetic diesel fuel generated from coal, which is cheap and abundant, available in almost every country. Nuclear energy complies with the Kyoto Protocol. Nuclear power is compact while commercial operators in countries like France where 80% of their energy need is generated this way, is a net exporter of energy.
The industrialized world should become wise on this subject, creating millions of NEW JOBS, keeping money and urgent needed jobs in their countries, opening up a new era of prosperity and finally solving the economic crisis as result.
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