Many, including this blogger, have warned for a long time that we were never really out of the Great Recession, and that the macroeconomic measures that seemed to imply it was over were faulty. Now the "slow down" is manifest in declining trade, shipping, manufacturing, and consumption data over months. And investors around the world are paying attention. World stock markets are tanking. The markets might recover -- some analysts say the markets reflect the printing of paper money, and governments will print more paper money (i.e., create more debt) and the markets will temporarily revive.
The journalistic mantra is that the source of the current slowdown and investment crisis is Greek debt, or Italian debt, or Spanish debt, or everybody's debt except the thrifty, hardworking Germans. But this is nonsense. The source of the crisis is that the world has run out of money to pay for the vast welfare states the advanced economies created in the past generation. The welfare state grew on the basis of debt, and now no state has enough money to pay the debt. Further, there's not enough credit to incur more debt, because there is not enough productivity or future productivity to pay off more debt.
There's not enough productivity, because there is not enough consumption; that's what the experts say, but they are wrong about why. There is not enough consumption, because through the entire Western world the labor class has fallen apart. All the welfare, all the food stamps, all the free medical care, all the easy mortgages, all the free job training, all the free or cheap education, have been to no avail. The social structure of working classes is disintegrating -- marriages failing, out-of-wedlock births rising, young men jobless and listless and getting into trouble, older men out of work and unable to gin up motivation to tackle life, standards of living declining as immorality overwhelms straight-up endeavor.
The cause of these social pathologies (and they are pathologies, because they symptomize unhealthy life and sick people) is exactly the remedy imposed on the working classes by the social experts: welfare. The working classes don't need to accumulate wealth, because the main use of wealth, the transfer to their children's generation as a basis for its middle class position, is no longer needed. They don't pay income taxes and reject work because if they do work they'll have to pay taxes, so why bother. The welfare state has sucked the spiritual health out of once vibrant, optimistic, upwardly mobile, healthy classes of workers. The white working class, which was once distant from the pathologies of the black working class, now finds itself mirroring the black working classes' moral impoverishment. The working classes are shrugging their shoulders and saying cynically, they don't give a fuck. They have guaranteed low incomes from welfare; the materialistic rewards of consumption are not worth striving for.
The middle class feels the acidity and impoverishment of the working class loam which once nourished and replenished the middle class. The middle class is detached from its historic roots, because the ladder of social mobility from lower to middle classes is broken. Deprived of the elan and joy, the spiritual sense of self-worth and accomplishment, that comes from workers and families who have advanced themselves, the middle class becomes spiritless itself. It's all dross, crumbling IKEA furniture, and peeling flat paint in suburbia. So the middle class picks up the whine -- it too wants emoluments of welfare. And as it gets them, the virtue, the values, the health of the middle class ebbs, like a patient dying from an undiagnosed wasting disease. ObamaCare, if we are so stupid as not to reform or repeal it, will apply the fatal blow of death.
The governing elite of career politicians, of banking and fiscal experts, of bureaucratic officialdom, can't restart economic growth to prosperity, because their macroeconomic models don't incorporate the social news and their fiscal models are so dishonest they reveal nothing about reality. They haven't a clue about the social pathology spreading from the lower class to the middle class. And all the remedies, that the elites and Obama in America and the egg-sucking social democratic politicians in Europe push onto the ailing classes, only fortify the pathologies destroying them.
The experts can't get consumers to spend, because consumers' income isn't increasing and in real money terms is decreasing. Because many consumers aren't working or aren't working enough to put themselves ahead. Because many consumers, the working and middle classes, signed off the American dream and bought into dreary welfare resignation. The elites keep creating money and throwing it at these groups, but this has been the problem all along: free money, free welfare, saps the spirit.
So we will have "another" recession, that is, a reinvigoration of the Great Recession that remains with us, because the experts haven't got a clue. The only hope is that government created misery will get so bad that the revolt created by the Tea Party will spread and we will have a change of regime. Throw out the governing elite, throw out the experts. Let the economy return where it belongs, on the labors of the people. When it does, those of us with faith in the American heritage believe, the people will re-create the economy and real growth will begin.