Dave Pollard's essays on politics & economics.

	Thursday, December 11, 2008

What's Next for the Economy I've been talking with quite a few people who are knowledgeable about the economy lately, so I thought I would share some of the things they say might well be coming before the current recession ends. What Might Happen Next         What You Can Do Now Collapse of $US by as much as 50% Sell $US investments Pay off debts and invest in items shown below Deflation (continuous price drops) for manufactured and luxury goods/services, stocks and housing Defer buying such goods Learn to haggle -- don't pay list Don't be suckered by "sales" and "limited time offers" Don't be suckered into getting back into the market(s) anytime soon Inflation (sharp price increases) for staple goods (food, energy) and land; Agricultural crisis in 2009 Grow your own, using permaculture Make meals from scratch Invest in solar, wind, geothermal, insulation  Practice energy conservation Prepare to spend more of your income on these items Spike in personal, corporate and government bankruptcies; Tight, expensive credit for most Pay off debts and avoid new ones Don't buy extended warranties If you must buy, make sure it's durable Wage deflation (annual pay cuts) All of the above Create your own sustainable Natural Enterprise Invest in know-how (carpentry, home repair, sewing, cooking) Create your own entertainment instead of buying it Learn how to buy used, wisely Spike in pension plan insolvencies Don't depend on your pension If it's a defined contribution plan, reconsider plans to retire Health care crisis (increased demand + cuts in funding) Get fit Learn to self-diagnose and (within reason) self-treat Eat healthy Practice preventive medicine Collapse of Chinese economy Create local markets Pledge to buy local Make your own Infrastructure failures Learn not to rely on the grid, Internet, or phone system Be prepared to bike or walk if public transport fails Develop carpool networks Figure out how you can work from home even if the utilities are offline Don't live in the suburbs Strengthen your local community networks Education crisis (cuts in funding) Learn to teach yourself, and unschool your kids Collaborate with community in education programs Incidentally, the consensus seems to be that we're in for a long recession, but not a depression. This is consistent with my own research, which suggests that The Long Emergency is coming, but may be a decade or two away yet. Hardest hit, as always, will be the poor, the sick, the uneducated, those who are dependent (on government, on infrastructure, on medical systems, on cheap energy etc.), and those who are highly leveraged (a lot of debt relative to the value of their assets). One of the biggest challenges for many people will be what to do when you want to (or have to) move, and there is no market for real estate in your area. Don't panic, because there are vultures out there. Many people I know are renting out their home (at less than it's worth) and renting (instead of buying) in their new community (at less than it's worth). They are effectively straddling two homes, and a whole underground market for such peer-to-peer arrangements is emerging wherever housing sales have dried up. It's not a viable long-term strategy, and it's likely that eventually people will just shrug, acknowledge that 80% of their equity is gone probably forever, and sales at the new lower prices will pick up briskly again. If/when that happens, you'll still take a bath on your old home, but you'll get your new one for a much lower price, too. Category: Economics 11:58:52 PM  trackback []  comment []

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