What steps are needed for global economic recovery?

[Astronuc]

There are threads about 'What's wrong with the US economy", but I thought it would be interesting and worthwhile to look at what's going on with various economies around the world.

For example - Iceland's economy crashed.
http://www.nytimes.com/2008/11/09/world/europe/09iceland.html

. . . .
Until last spring, Iceland’s economy seemed white-hot. It had the fourth-highest gross domestic product per capita in the world. Unemployment hovered between 0 and 1 percent (while forecasts for next spring are as high as 10 percent). A 2007 United Nations report measuring life expectancy, real per-capita income and educational levels identified Iceland as the world’s best country in which to live.

Emboldened by the strong krona, once-frugal Icelanders took regular shopping weekends in Europe, bought fancy cars and built bigger houses paid for with low-interest loans in foreign currencies.

Like the Vikings of old, Icelandic bankers were roaming the world and aggressively seizing business, pumping debt into a soufflé of a system. The banks are the ones that cannot repay tens of billions of dollars in foreign debt, and “they’re the ones who ruined our reputation,” said Adalheidur Hedinsdottir, who runs a small chain of coffee shops called Kaffitar and sells coffee wholesale to stores.

There was so much work, employers had to import workers from abroad. Ms. Nordfjord, the architect, worked so much overtime last year that she doubled her salary. She was featured on a Swedish radio program as an expert on Iceland’s extraordinary building boom.

Two months ago, her company canceled all overtime. Two weeks ago, it acknowledged that work was slowing. But it promised that there would be enough to last through next summer.

The next day, everyone was herded into a conference room and fired.
. . . .

How they recover will be interesting to follow.

Similarly Pakistan's economy is in dire straits, and it is a risk for crashing, a situation which is complicated by the presence of al Qaida and Taliban in the regions on the border of Pakistan and Afghanistan.


Meanwhile -

Tough Times Strain Colleges Rich and Poor
http://www.nytimes.com/2008/11/08/education/08college.html

Working Poor and Young Hit Hard in Downturn
http://www.nytimes.com/2008/11/09/us/09young.html

Beyond the recent bailout - what steps are needed for the US and global economies to recover?

Rather than rehash the problems - what are the solutions?

 

[mgb_phys]

It does look like the entire Icelandic economy was a ponzi scheme.
They had artificially high interest rates - which attracted lots of online savings accounts from europe the banks then used that money to invest in some 'interesting' mortgage deals.
Their government was basically taking the view that the losses of a bunch of international banks that happened to operate out of iceland is nothing to do with them - and since some estimates had the losses at several $100K per head of population there's not a lot they can do.

There has been a big row in the UK over this. Although private savers are covered by the UK (because the icelandic banks needed to register in the UK) a lot of univerisities, charities and city councils had £100Ms in current accounts with icelandic banks which isn't covered.

So the UK government used anti-terrorism laws introduced to freeze terrorist funding to sieze the assets of the icelandic banks - which wasn't exactly popular in Reykjavík.

Of course last time Iceland had a crisis after cutting down all the trees it needed to build ships - they went west looking for some new land. So the population of Newfoundland should watch out.

 

[jtbell]

Of course last time Iceland had a crisis after cutting down all the trees it needed tobuild ships - they went west looking for some new land. So the population of Newfoundland should watch out.

Or maybe they'll sail southeast and England will have to deal with Vikings again!

But perhaps very civilized Vikings. When I was in grad school, I saw a cartoon from a Danish newspaper or magazine on the door of a professor in the Germanic Languages department. It showed a bunch of Vikings standing on a sinking ship, with one of them saying, "Jeg vil foreslå, at vi nedsætter et udvalg." ("I move that we name a committee.")

 

[jal]

Rather than rehash the problems - what are the solutions?

Finding and implementing ways to generate energy and reduce oil consumption.

1. http://www.pickensplan.com/index.php the Pickens Plan.
2. http://www.hyperionpowergeneration.com/ Portable nuclear energy
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[mgb_phys]

But perhaps very civilized Vikings... It showed a bunch of Vikings standing on a sinking ship, with one of them saying, "Jeg vil foreslå, at vi nedsætter et udvalg." ("I move that we name a committee.")

I asked a Norwegian colleague how they went from maurading vikings to peaceful Volvo drivers.
He thought it was natural selection - the half of the population that went 'Yeah rape and pillage' all got on boats and ended up in Ireland, Scotland and Northern England.
Those who stood back and said 'have we thought through the implications of this policy?' all stayed behind in Scandinavia. A sort of national Maxwell's demon!

 

[Proton Soup]

go fish: http://online.wsj.com/article/SB122359763876821355.html

 

[mgb_phys]

The problem with that is to get a bailout for it's banks it will probably have to join the EU which means it can no longer claim it's 200mile exclusive fishing grounds.

Even if it doesn't - it has managed to keep a working fishing industry by carefully managing fish stocks. If it suddenly decides to massively increase the catch it's going to quickly be in the same boat as Eastern Canda, the UK and every other cod fishery in the North Atlantic.

 

[OAQfirst]

My perspective is largely energy-concerned.

The ocean is a toxic garbage bin; the pollution is killing sea life. Half a million tons of hydrocarbons are dumped in the Mediterranean every year, sometimes intentionally. Tremendous waste of resources for crap, junk bought and sold at yard sales to adorn a meaningless lifestyle. Folks drive around, burning gas so they can aimlessly travel just to get out. They sit in front of the tube at night, watching sitcoms or Fox News and drinking beer.

Yet, in this waste-drenched economy, I'm doing just fine. I could afford $10 a gallon and still get by. I'm not spending my money on DVDs or CDs or PS3s. I actually get out and walk every day. I'm not putting my money into a 401k for some corporate face to spend on yet more expensive crap and hope that there's a decent return when I most need it. I'm putting it into real estate, to rent out homes and property, and other investments I can see and tender myself.

The picture of our future, a lack of oil to send our cruise ships and for companies to make those Happy Meal toys or weapons or iPhones, doesn't look so gloomy to me. Sure, it would suck for pharmaceuticals and metals, like what needles diabetics would need, for example. On the other hand, the cards have been laid out on the table, and people have chosen what to do with their resources. Is expensive oil such a bad thing? Wouldn't that push people to higher efficiency? I know the Earth would appreciate it.

Is there any indication that the world would still fair okay with how our lifestyles are affecting the environment, should we find solutions to the energy crisis and gloomy financial calendars? Because the way things are right now, I'm not too impressed with how our species is handling its affairs. It looks to me that the problems will be corrected one way or another.

Unless we manage our resources efficiently and do what matters most in life, we will own the consequences of those decisions. We can't have it all. We can't hope that technology advances and will, soon, keep our lifestyles going.