Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on September 10, 2016
The global economy will never be the same again
The current economic era is coming to an end, and over the next 30 or so years, the global economy is going to change massively, according to research from Deutsche Bank.
In the bank’s latest Long-Term Asset Return Study, strategists Jim Reid, Nick Burns, and Sukanto Chanda argue that the current economic age, which began sometime in the 1980s, has been characterised by globalisation, and a huge change in the world’s demographics, which has boosted growth and increased productivity.
However, that era is now at an end, and the world is staring down more than three decades of subdued growth, lower profits, higher inflation, and dwindling global trade as we adjust to a shift in demographics across the planet.
“It feels like we’re coming towards the end of an economic era. Such eras often come and go in long waves,” the report argues, continuing (emphasis ours):
“In the modern era it seems that ever since the beginning of the 1980s the global economy has been dominated by globalisation and also a complimentary and massive change in demographics. This has had a profound impact on the global economy at a macro and micro level. It’s also had a huge impact on asset performance. We will argue that this era is close to being over and the economic, political, policy and asset trends that accompanied it could soon start to reverse.”
Essentially, Reid and his colleagues argue that the world has reached a demographic peak.
In the past 30 years a perfect storm of factors — China reentering the global economy in the 70s, the fall of the Soviet Union, and to some extent, the economic liberalisation of India — added more than a billion workers into the global labour market.
This, Deutsche notes “has coincided with a general surge in the global workforce population in absolute terms and also relative to the overall population, thus creating a perfect storm and an abundance of workers.”
As the chart below illustrates, that combined with a surge in high earning, high spending workers to dramatically increase the global productivity ratio:
Deutsche Bank
However, now we’ve hit peak, what stares the world down is a fundamental shift in our economy, moving away from the globalisation and the rapid expansion that characterised the pre-financial crisis years, and towards a steadier, far less exciting economy.
Here’s more from Reid, Burns, and Chanda (emphasis ours):
“With demographics deteriorating it seems highly unlikely that the next couple of decades (possibly longer) will see real growth rates returning close to their pre-crisis, pre-leverage era levels. Obviously if there is a sustainable exogenous boost to productivity then a more optimistic scenario (relative to the one below) can be painted. At this stage it is hard to see where such a boost comes from – and even if it does, time is running out for it to prevent economic and political regime change given the existing stresses in the system.”
The dominant themes, until the end of the next era in around 2060, will include lower GDP, higher real wages, higher nominal GDP (for most), greater controls on immigration, higher taxes for the wealthy, and lower levels of international trade.
Deutsche Bank however, is at pains to point out that this fundamental change of economic cycle is nothing new, and argues that since the middle of the 19th century we’ve seen several waves of economic change.
Here’s the bank one last time:
“In relatively modern economic history we saw the first wave of globalisation between around 1860-1914; we then saw the interwar period which included an ill fated return to the Gold Standard between 1925 and various points in the 1930s depending on when individual countries subsequently left. Then post-WWII, we saw the Bretton Woods system that lasted around a quarter of a century (1945-1971); and this was followed by the high inflation period of the 1970s. You can break up economic history into alternative distinct periods but these broad eras have shaped economies, politics, policies and asset performance.”
A changing global economy
Deutsche Bank is certainly not the only institution or individual suggesting that we’re staring fundamental change in the global economy.
Soon after the UK voted to leave the EU, Barclays noted that the global economy is coming to a major crossroads, while Mohamed El-Erian, the former CEO of the Pacific Investment Management Co. (PIMCO) and current chief economic adviser to Allianz, sees a major “T-junction” in the global economy within three years.
“The road we’re on is coming to an end,” El-Erian told reporters in London earlier this year.
Reuters/Philippe Wojazer
There is also an increasing swell of feeling against the neoliberal economic consensus, that has dominated thinking since the years of Reagan and Thatcher.
In August, Nobel prize winning economist Joseph Stiglitz told Business Insider that: “Neoliberalism is dead in both developing and developed countries.” Stiglitz’s view is one echoed by many within the IMF, traditionally a great bastion of neoliberalism.
Writing in a blog post in May, three economists from the IMF — long one of the greatest champions of the neoliberal consensus — questioned the efficacy of some aspects of it, particularly when it comes to the creation of inequality.
“The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting,” Jonathan Ostry, Prakash Loungani, and Davide Furceri argued. “There is now strong evidence that inequality can significantly lower both the level and the durability of growth.”
33 Comments on "The global economy will never be the same again"
ghung on Sat, 10th Sep 2016 9:32 am
No mention of resources, and what part they play in economic growth (or contraction). Maybe they simply can’t acknowledge the perfect storm of demographic change and resource depletion. Throw in a bit of relentless climate change….
These assholes either don’t have a clue, or they think they can break the news slowly,, let it sink in over time, eh?
Don’t stampede the herd.
makati1 on Sat, 10th Sep 2016 9:34 am
We are headed to war. That is how all of these recessions/depressions end.
Notice the color of the hair of our masters. All old people soon to die, who only care about the great game they play with the lives and sweat of the peasants.
How do you prepare for war on the scale I see coming? You don’t. The lucky ones will die instantly. The others will wish they had been among the lucky ones. Oceans will not protect you this time, nor location.
Can we avoid this end? I see chances that are slim to none. But that is my view. I know there will be other ideas represented that will scale from Armageddon to Unicorns frolicking under a rainbow and smiling Leprechauns drinking Irish beer and leaning against the pot of gold. I look forward to reading them tomorrow.
Cloggie on Sat, 10th Sep 2016 9:55 am
With demographics deteriorating it seems highly unlikely that the next couple of decades (possibly longer) will see real growth rates returning close to their pre-crisis, pre-leverage era levels.
What does that mean: “deteriorating demographics”?
The world population is rapidly growing, so that’s not it.
So what does the Deutsche Bank mean when they say that “demographics is deteriorating”, causing and end to globalism and less growth or contraction.
What the banks means to say but can’t say openly is that the demographics of the Goose with the Golden Eggs is deteriorating.
Meaning: Euro’s world-wide.
We are entering a world where Mozart will be gradually replaced by the brutal sounds of rap, much to the delight of our one-worlders ghung and apneaman. We are entering a world where Enlightenment and Liberalism will be replaced by the Sharia.
Unless of course whitey begins to revolt. Like in Russia and Eastern Europe:
https://www.youtube.com/watch?v=a7xqwm_c1_k
https://www.youtube.com/watch?v=YNedllcZMys
http://hungarianspectrum.org/2016/05/21/george-soros-and-viktor-orban-from-friend-to-enemy/
Europe taking it’s own destiny into it’s own hands as well as that of European America.
ghung on Sat, 10th Sep 2016 10:13 am
Cloggoid said; “We are entering a world where Mozart will be gradually replaced by the brutal sounds of rap, much to the delight of our one-worlders ghung….”
You may have noticed, Clog, that my only interactions with you will be to call you on your lies. That’s what they are. Nothing I’ve ever written could lead anyone to think I’m a “one-worlder”. Indeed, I’ve always encouraged going local, because a world full of Cloggies is going to collective shit. But you probably knew that. Doesn’t stop you from being dis-honest, does it?
Bored much, Cloggoid?
Cloggie on Sat, 10th Sep 2016 10:31 am
ghung bites 🙂
OK. So ghung, what does your statement mean:
“World War III is well and truly underway. And we are losing.”
Shall I explain it to you?
“We” of course means USA, with which ghung clearly identifies, despite his ethnic self-identification as “English, English and English”.
What is World War III about?
Answer: the incorporation of the entire world into the US world empire.
Ghung clearly doesn’t like that because he says “we are losing” and nobody likes to loose.
Ghung – a one worlder wannabee, who knows it ain’t going to happen, a borderless world as pursued by the Sanhedrin.
QED.
peakyeast on Sat, 10th Sep 2016 10:49 am
@cloggie: The “We” is your interpretation. I see it in another way. Ghung might see it in a third way.
You are like my wife – she always thinks she knows what I mean and therefore doesnt need to listen to my explanations. And she is always wrong because she reads her own POV into my words and I am nothing like her. Interestingly she never learns – so I guess she is just hardwired to be like that. Perhaps you are the same?
So dont assume you know what those vague definitions mean.
Of course I could be wrong – that is for ghung to explain.
rockman on Sat, 10th Sep 2016 10:57 am
“…the global economy is going to change massively…”. So IOW the same old same old that has been periodically happening since the dawn of time. Way to stick your neck out, deutsche boy. LOL.
Thank goodness we at least we have a stable world economy today.
makati1 on Sat, 10th Sep 2016 11:10 am
“Thank goodness we at least we have a stable world economy today.”
Hahahahaha. Thanks for the laugh, rock.
Plantagenet on Sat, 10th Sep 2016 11:15 am
The evil neoliberal globalists have a solution for what this article called “deteriorating demographics”. They are simply going to replace the current populations in western countries with hordes of immigrants.
Problem solved!
Cheers!
Cloggie on Sat, 10th Sep 2016 11:32 am
…after encouraging feminism first.
onlooker on Sat, 10th Sep 2016 1:24 pm
Great we have a functioning world Economy. Too bad they never say the functioning for only the 0001%. Haha
Sissyfuss on Sat, 10th Sep 2016 1:38 pm
Douche Bag Bank are the scum of the Earth constantly getting away with criminal activities and being rewarded for it. They see the horror of overpopulation as a demographic problem that might affect their bottom line. May the rot in Hell!
onlooker on Sat, 10th Sep 2016 1:50 pm
Yep Banks are the scum of the Earth
shortonoil on Sat, 10th Sep 2016 1:54 pm
The global economy will never be the same again
That is sort of what we have been saying for several years.
The thing that we forgot to do was to cover it in high fructose corn syrup, and lollypops!
http://www.thehillsgroup.org/
Apneaman on Sat, 10th Sep 2016 2:17 pm
“We are entering a world where Mozart will be gradually replaced by the brutal sounds of rap”
That’s right clogged brain. I remember it well. Yup, when I was coming up in the 70’s all we had on the jukebox and radio stations was Mozart, Beethoven and the like. Weren’t no nasty rap back then.
Seems to me that about 5 minutes after rock&roll came out all the euro tards were falling over themselves to get a hold of it. Along with hollywood movies and a thousand consumer goodies.
Spare us all your euro-fag culture superiority myths ya fuck retard.
Every country in the world “raps” in their own language. No one forced them to like it.
Here are a couple of Dutch rappers.
https://www.youtube.com/watch?v=_swivbEsD50&list=PLkXPKu3dcpr5s0OBAJO7xwyUyguvYb6YX&index=1
The height of Euro culture – LMFAO
joe on Sat, 10th Sep 2016 3:41 pm
What the banksters really mean is somthing rather simple. When most of us fat armchair generals were born chinese “workers” carried things in two buckets over their shoulders and only wore blue jumpsuits. The US just done destroying chinas neighbourhood leaving it friendless and at the mercy of the soviets, so they chose to murder millions of its own people and allied with US economically.
Now the tale of time has put China firmly on top. Still friendless in its neighbourhood, but tough enough because of Maoism, it fears nothing from us fat westerners.
Sadly theres a problem, us fat lazy talkers here are getting old, soon all we will want is a good armchair and some painkiller and a reliable laxative, China is in trouble unless it can create new markets.
Apneaman on Sat, 10th Sep 2016 4:17 pm
Part of the ongoing disappointment methinks is from expectations and entitlement thinking. So many hold up that period 1945-75 in N America as something that should be eternal. That was a one shot deal that will not/cannot return. What dosen’t change? Isn’t change the one constant? The economic changes in the last 35 years suck for many, but part of that is because they are still buying into the dream. That dream of more is better. Sorry, but you can’t win at their game. Here’s an idea – stop wanting all the shit they tell you you need and stop caring what the other monkeys think about you. That’s what they count on and use against you. Your inherent need to fit in. The terror of being rejected by your peers. Do what I did and free yourself – stop caring. Learning how not to give a shit is enlightening. TPTB are enriched and in power due to the humans voluntary consumer enslavement. Seek your dopamine hits elsewhere.
https://www.youtube.com/watch?v=pl3vxEudif8
Frank D on Sat, 10th Sep 2016 5:00 pm
If you want o see the future just watch the movie SOYLENT GREEN, and you will see where we are heading, and it is not that far away
Cloggie on Sat, 10th Sep 2016 5:16 pm
“The height of Euro culture”
Vienna, 2014:
https://www.youtube.com/watch?v=j6EXnBbZmTE
(warning: very white, graphic, micro aggression ahead!)
Apey’s NWO world:
https://www.youtube.com/watch?v=u6VTj7LhCtE
Apneaman (means: “strangle sex practitioner”), anal porn addict and third world groupie is the ugly face of the NWO.
makati1 on Sat, 10th Sep 2016 6:18 pm
Joe, China is already creating new markets all over the Eurasian, African and South American continents. Or did you forget where most of the non-Westerners live? The other 6 billion v consumers.
makati1 on Sat, 10th Sep 2016 6:19 pm
Ap, Right On!
Apneaman on Sat, 10th Sep 2016 6:32 pm
Clogged, I’m not even sure what or who the NWO is. Are they the ones responsible for the crop circles? No wonder you hate em so much. Are they the same ones who helped the aliens build the pyramids? Aren’t they also responsible for converting music & movie stars to satanism? It all sounds so spooky this, No World Order. Thanks fer warning me about. Now I can take action to protect myself from these evil doers.
joe on Sat, 10th Sep 2016 10:16 pm
Mak, if you sell to people poorer than you, eventually they run out of cash. 6 billion rice eaters is not the same as 1billion petrol heads. Sorry dude
DMyers on Sat, 10th Sep 2016 10:36 pm
whatever one calls it, demographic deterioration, Soylent Green Nirvana, demographic reversal, or not enough youg’ns, this is a major factor driving the current economic situation.
Imagine it in the sense of an ideal economic growth scenario. Just turn to the Sixties. There was a rapidly growing population of conformists, the Boomers. At the same time there was a stream of new products. This combined to cause economic growth, based on production of the product and the investment by the consumer. The gist of this was a growing demand, based mostly on a straightforward correlation with growing population.
It is likely true that we will not experience growth on a comparable level in the very near future, if ever. So much has been squandered, there’s not enough left to launch the rocket. Decline is now in place. We’re lodged in the must come down of everything that went up.
makati1 on Sat, 10th Sep 2016 10:48 pm
Joe, sorry you do not seem to see the real world. Six billion “rice eaters” are not what populates those continents today. Incomes have risen dramatically in the last 10 years.
And what makes you think Europe is not going to buy Chinese stuff? Or Russians or Saudis or Canadians or even the Japanese? You should get out from behind the US MSM Iron Curtain and experience the real world.
There are maybe 300 million retirees in the world today. They do not stop buying. They just buy less. But there are about 80 million new consumers born every year. Check the labels on the stuff YOU buy and see how many have the “Made in China” label.
The Chinese will do quite well without the old people’s money, thank you.
makati1 on Sat, 10th Sep 2016 10:51 pm
DMeyers, growth is dead. RIP. It has been for the West for at least a decade or more. Some ‘developing’ countries are still growing but that too is slowing. All that is really growing is debt.
Cloggie on Sun, 11th Sep 2016 2:59 am
“Clogged, I’m not even sure what or who the NWO is. Are they the ones responsible for the crop circles? No wonder you hate em so much. Are they the same ones who helped the aliens build the pyramids? Aren’t they also responsible for converting music & movie stars to satanism? It all sounds so spooky this, No World Order. ”
Don’t worry apey, I am here to help you, if necessary even to explain to you the most simply things.
No need to go to Alex Jones or David Icke to figure it out.
Joe Biden 1992 suffices:
https://patriotnewstwo.files.wordpress.com/2015/08/biden.png
The NWO is the entire world under the AngloZionist jackboot. It’s the intended US global empire. The Judaic State, not to be confused with the Islamic State or Christian State (Paris-Berlin-Moscow) or the Confucian State (China).
Questions?
Eric Johnson on Sun, 11th Sep 2016 9:42 am
Two things, what effects of management (if any) and depletion of world resources over this period will have, can technology overcome some or all of this, and how those countries who can (emphasised) learn to equalize trade value among themselves, will fair as opposed to those who can’t. Is it possible to base life and style on fewer people, and less growth?
Bill Russell on Sun, 11th Sep 2016 11:31 am
Parson Mathis did not foresee technology breakouts. His long term view missed the mark. But, that same forecast was mirrored in the medium cycles. Key Question – will there be another new, major technology breakthrough? Second Key Question – will we also be required to revise our vision of each individual’s status, based upon the concept of limited resources? I say Yes, to both. On the second question, consider a person’s requirements, versus expectations, to live a decent life. If the “world leaders” ever truly believe, and act upon the concept that each human being must have clean air and water, food, shelter, and medical care, we will have a chance. And, their actions need not result in an asset leveling from the present haves and have nots. Sadly, none of this will occur. Within mankind, we have both good and evil. Too often, evil disrupts even the best of intentions. End result – we will destroy our civilization and ourselves. This is the lesson from History.
Sissyfuss on Sun, 11th Sep 2016 12:33 pm
Paper, I think that’s what Buddha realized when he found enlightenment under the Banyon tree,”I gotta quit giving a sh&t!”. Juan Matus said that all man’s endeavors are folly. If you don’t control your folly, it will assuredly control you.
Sissyfuss on Sun, 11th Sep 2016 12:36 pm
I meant to address Aper but the folly of my tablet wanted it on paper.
joe on Sun, 11th Sep 2016 3:17 pm
Mak, obviously im being over dramatic, however China IS the worlds second biggest economy (sorry Europhiles) and with the prospect of a post Brexit EU siding with America in trade, then the prospect of developing long term strategic markets are small. Not saying its impossible though but it really needs reforms in China and a kind of openess that they simply will NEVER sanction. Americans future growth will be slow and steady not withstanding some strong years here and there.
brough on Mon, 12th Sep 2016 9:27 am
Yes, its the end of the road for free market moneterism. Zero growth, zero interest rates and zero inflation. The funny thing is I think Milton Friedmann was really a socialist and was planning this all along. I just hope its fat bankers who get hit first.