Jeff Rubin's Shrinking World

After a quarter-century of increasing free trade and globalization, we have seen our prosperity suddenly stagger — even in China, where mere six per cent growth is effectively a recession. While GM goes bankrupt, investors still dream of a return to “normal”: the happy years before 2008.

Jeff Rubin, chief economist at CIBC World Markets for almost 20 years, makes it clear that those years were decidedly abnormal, a three-decade holiday from reality.

Globalization wasn’t the result of wise economic theories brilliantly applied. And the recession didn’t happen because American deadbeats took out mortgages they couldn’t afford. Globalization thrived on cheap oil. When the price of oil went up, recession followed.

Without resorting to arcane formulas or jargon, Rubin shows how cheap oil permitted an Atlantic salmon, caught off Norway, to travel around the world to China for processing, then back to Europe or North America to be sold at a profit. He also traces the history of earlier oil-fuelled booms and busts, and makes a good case that “peak oil” is real.

Tyee