Yesterday, January 18th, the World Bank cut its global growth forecast by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico.
A graphic U. S. map also published this week by the Conference of Mayors shows estimates of how long it will be before the number of lost jobs return to pre-recession levels: in Los Angeles not until 2018; in Chicago 2015, San Jose and New York by 2014. That is, if all goes well.
The World Bank report notes that a decline in both the U. S. and Europe and weaker growth in developing countries raises the risk that the two developments will reinforce one another….China, the world’s second-biggest economy, reported today that foreign direct investment declined in December by the most since July 2009, underscoring the World Bank’s warning that developing economies should “prepare for the worst.” Home prices fell in 52 of 70 cities in December from November, statistics bureau data showed.
As candidates Gingrich and Santorum took recourse to unconcealed race-baiting—[Black] President Obama is depicted as the greatest issuer of food stamps in history. All those babies born of [Black] single moms are costing taxpayers money, says Santorum—the producer of the map graphic, HIS Global predicted the many risks that lie ahead:
The first is the possibility of a financial meltdown in the Eurozone, with some countries exiting, or a messy default by one or more of the large Eurozone countries, especially Italy or Spain. Such a “Lehman moment” for Europe would likely push the global economy into recession. The second big risk is a sharp slowdown in China’s growth [from 8% down to 5%) triggered by a bursting of its real estate bubble.
A new Bureau of Labor Statistic graph also published today shows a dis-correlation between manufacturing and manufacturing job growth. [Sorry, unable to paste the chart]
Debate rhetoric in the primary campaign ominously catches a public mood shared by many people deeply injured by economic adversity and as a result are deeply vulnerable. While no serious job proposals have been offered, candidate Santorum almost leaped over the podium with his jobs solution. He quoted a 2009 Brookings Institute study showing you can avoid poverty by doing just three things: work, graduate from high school, and get married before you have children. The Brookings authors, Isabel Sawhill and Ron Haskin, predict this will keep all but 2 percent out of poverty and they will have incomes 77 percent higher than the national average.
Such shallow answers set the stage for an unprecedented perfect storm: continuing years of high unemployment redefine joblessness as a personal moral failure for everyone not working. Those “other” people—Blacks and immigrants— are receiving help they don’t deserve because, it’s alleged , they didn’t earn it. Since the government enforces all of this, it has become your enemy. Your family’s suffering and despair is not decreasing, it’s growing, and you’re ready to follow a leader who will offer simple answers.
A current very hard film, “In the Land of Blood and Honey,” playing these days in only a few theaters, shows the sheer madness and brutality fermented 20 years ago in Bosnia when the failure to establish functional democratic institutions was added to ancient prejudices, religious dogmatism and political ambition.
Historian Tony Judt, in Postwar, described a period in Yugoslavia ten years after World War II that put in place the murderous model of ethnic cleansing depicted in Blood and Honey:
“For hours both armies clambered up rocky ravines to escape annihilation or to destroy a little group of their countrymen, often neighbors, on some jutting peak six thousand feet high, in a bleeding, starving captive land.”
In Bosnia five years later the same failure to create working democratic institutions repeated the same nightmare. In 1995 morning television in the U. S. showed thousands of people trapped at 7,000 feet on winding mountain roads where they fled with their families desperately trying to escape annihilation.
Maybe such nightmares will never happen here in the U. S., but a dangerous storm, perhaps a perfect storm, is brewing in 2012. It’s beginning to mix our stalled democratic processes with ancient habits of slavery, racism, and chronic income inequality. Given some politicians on both sides of the aisle who offer little resistance to simple solutions, the storm this year could lead to depths we’ve never imagined, opening up roads we’ve never before had to walk.
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