In
So, taking up the challenge, here are my random thoughts......A great deal will depend on the severity, depth and length of the downturn, i.e a 2-3 year slowdown will differ from a 2-decade long depression (see here)
UPDATE: On Sunday, President-elect Obama warned of further economic pain saying:
"Even if the current economic crisis looks nothing like the Great Depression, “This is a big problem, and it’s going to get worse.”
Here are some of my thoughts for a worst case scenario......(over 75 possible events, consequences and actual headline examples)
Action Item: If you see headlines that support (or refute) my scenario events, post them along with a hot link in the comments section, below)
Scenario #4 Back to basics --2010 style (Severity-deep; Length-prolonged)
-Cash is king; you’re dead if you are in debt, easy sources of credit and leverage disappear.
-collpase of the smaller triggering housing bubble that triggered the wider credit super bubble ($48 Trillion in 2007) stretching out to 2012-2014 (see video on bubbles)
-Credit repair services bloom
-Loan sharks on every block
-A run on the banks 1920's style (ie Ukraine Restricts Bank Withdrawals to Help Liquidity (Update1)
-Opportunity savvy buyers pick up assets at fire-sale prices ie pennies on the dollar (car dealerships in receivership)
-Businesses with business models that depend on advertising revenue exclusively go bust (ie Growth of ads in video games still far away; Honda Pulls Out of Formula One Racing) and Can the 2010 Games avoid a financial crash? Tribune Co files for Chapter 11 Bankruptcy Protection
-One in four to one in three unemployed, all angry, desperate, frustrated, in denial, withdrawn from civic engagement, looking for someone to blame (see The legacy of the layoff ) greater then 10% unemployment considered a depression
-strikes, sit-ins
-Deflation-all currencies and gold drop in value
-Housing equity collapses and drop lasts till 2015 losing 50% of peak values
-City and town governments go brankrupt due to plunging property taxes (see Mayors Get in Line for U.S. Funds )
-insolvency of America's largest private crop insurance program The Famine of 2009
-regional energy and food shortages
-Government pension plans go bankrupt
-People turn to local credit unions and loose trust in banks
-Seemingly minor or innocent acts spark mass riots (Angry Greeks wreak havoc after police kill teen)
-Government support programs and pensions collapse
-Frugality, cost cutting, semi-illegal or illegal ways to save money flourish (ie people buy goods through their neighbor who is still working and gets a 40% employee discount. i.e. Native Indians who hold Indian Status Cards become buyer intermediaries for desperate people since they do not pay sales tax in Canada; people register businesses, restaurants or catering businesses fictitiously, so that they can buy at wholesale costs at food terminals and wholesale locations etc
-politics of a shrinking pie; drug wars, advertising wars, guns and arms wars, mafia wars, Russian oligarch turf wars for turf control, Rise in crime, crime against the elderly, crime by the elderly, theft, shoplifting, home invasions and breakins, online scams, gambling, counterfeiting (money, degrees, credentials), get rich quick schemes, fake products-gray market, bootleg alcohol,
-Governments bailout their friends & supporter ? ( ..."We hang the petty thieves and appoint the great ones to public office." --Aesop) or will they be more equitable? Obama: Days of 'pork ... as a strategy' are over
-Global trade collapses ie watch Baltic Exchange Dry Index (DBI) as a warning signal,(today at a low of 663 from a high of over 11,100 just a few months ago.) Dire Forecast for Global Economy and Trade
-If Ford, GM or Chysler go bankrupt, there will be a rise in black market used auto parts, as well as parts salvaging...as one blog site said... "Vietnamese turned into [“McGiever”] mechanics when all they had were old dis-repaired American military vehicles littering their country, and no access to fresh parts. Ditto for Cubans, who still drive some of their 1950's big American cars."
-Goods (food, materials, water,natural gas and gasoline) shortages, energy rationing, brownouts & blackouts,
-Bootleg gasoline using nanotechnology (alcohol + veg oil => desiel )
-Riots in the streets, SMS inspired flash mobs
-Corrupt governments overturned (Is Thailand the start of a trend?)
-Rise in fascist regimes
-Politicians look for traditional or new scape-goat groups to blame --bankers, immigrants etc
-Rise in authoritarian parties promising control & a "back to the good times & prosperity" road-map
-People turn to buying locally produced raw material & food, if they are available
-Fringe lifestyle groups (offering alternatives to the poor) proliferate ie dark greens, survivalist communities
-Condo owners squeezed and disadvantaged, (rising uncontrolled maintanence costs (inflation) & dropping equity values (deflation); also no backyards)
-Increased popularity of backyard "depression" orchards, gardens and possibly even chicken coups,
-Communal urban farms in parks and abandoned properties with cows, pigs, ducks, turkeys, chickens, goats, rabbits and sheep
-High tech urban farming in skyscrapers? especially if region prone to droughts?
-Demand for comfort foods-pies, jams, peanut butter, soaps, KD's etc
-alcohol use; bootleggers? Area residents spending less on alcohol; prohabition?
Pockets so empty in thirsty Russia stores have glut of unsold vodka
-Regions with stable sustainable electrical power (hydro or nuclear) fare better then ones dependent on imported oil or gas
-DIY industry grows, demand for affordable electric vehicles, DIY projects ie people convert electric golf carts to makeshift on-road vehicles
-Who wins out ? Zenn or GM?
-People who can afford it go “off grid" selling solar power and wind-power back to the utility (if utility has capacity to absorb excess power into grid-not all do)
-Back to wood and coal fired stoves for others
-Alternative energy popular only if prices at parity with electricity (maybe by 2010-2013)
-Growing demand for vegetable and fruit seeds, hydroponics
-Books and classes on canning and preserving food popular,....comment on Creative Class blog- "you can’t eat facebook, or twitter"
-Immigrants teach Canadians and Americans how to be self-sufficient..cook at home, fix, build, repair, can foods
-Growing use of food banks and soup kitchens
-Abandoned malls and schools turned into homeless shelters
-Pop-up farmer's markets popular; organic foods too expensive and industry dies
-Centralized preserving centers (attached to food banks) where neighbors can bring in fresh back yard produce to can and to share with the needy in exchange for canning facilities
-Doctors making house-calls
-The town strip mall will be replaced by the “swap ally” or roadways or roadsides where people will gather daily for perpetual garage sales to buy (whoever has cash) or barter trade for what you need. (like south-side New York city)
-On-line swap sites (like e-Bay) grow, but may become unaffordable do to increased shipping costs
-Growth in therepo business, auctions and conspicuous consumption recycling.
-Collapse of the supermarkets, malls and plaza’s chain stores and mega-box stores (due to the pending commercial mortgage bubble and lack of sustained shopper traffic) and the return of the local mom and pop corner variety store
-Increase in entrepreneurship, hobbies turn to businesses if your skill is needed and popular
-Government becomes the major employer, offering work security but with dropping wages and benefits
-Pensioners can't afford to live on pensions, the ones that can go back to work or start businesses
-the unemployed, working poor, down and out pensioners suffer the most ( ....I saw an older women in the subway yesterday looking for uneaten McDonald's meals in the garbage can. She walked away with all the change in my pocket, about $7 and was quite content that she would soon have a hot meal.)
-Death of the middle man, intermediary, distribution center, customers go to the source if it exists locally (Ontario does not have any local canneries left, all canned products imported—is there a local opportunity window here?
-Return of the corner fix-it store, shoe repair
-Unlicensed and unregulated neighbor-helping-neighbor daycare (children swaps)
-Growth of regional farmer’s markets
-Farm-to-mouth pilgrimages to rural areas and to farms to stock up on produce and meat (Torontonians head north to Holland Marsh)
-Migrant workers returning from the Alberta tar sands back to Newfoundland
-Reverse migration, Canadian migrant workers head to Dubai or other petro-states for work,competing with Ukrainians, Russians, Indians and Chinese (hat tip to Smart Economy blog reader Darren Harnett for this idea)
-Deflation (favors renting over home ownership) followed by hyperinflation
-Global financial epicenter of credit shifts from America (New York) to where ever Sovereign Wealth Funds (countries with petro dollars) decide to invest in next..so far everyone has been repatriating their money from Wall Street and parking it safely back home for the time being, where they go next is still up in the air
-Use Iceland, Hungary, Japan and Ukraine as pre-depression benchmark or bellweather countries
-Extreme weather-flooding, droughts, wild fires, pandemics (human & animal and plant), wheat blight (Ug 99), crop failures, tornadoes, earthquakes, volcanoes, other natural disasters,
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George Soros is publically urging people and governments to invest in infrastructure renewal and green energy yet his funds are buying "good old" coal and counting on trading carbon credits to make more money...maybe he's hedging is bets and counting on one of the wild cards above...go figure.
The Boston Globe has some predictions too
- a TV watching boom for the unemployed (....except for TV show that loose sponsors)
-the lines wouldn't be outside soup kitchens but at emergency rooms, (as workers in the US loose health benefits and delay medical prevention until it’s an emergency)
-rather than itinerant farmers we could see waves of laid-off office workers leaving homes to foreclosure and heading for areas of the country where there's more work - or just a relative with a free room over the garage.
-Already hollowed-out manufacturing cities could be all but deserted, and suburban neighborhoods left checker-boarded, with abandoned houses next to overcrowded ones.
-And above all, a depression circa 2009 might be a less visible and more isolating experience. With the diminishing price of televisions and the proliferation of channels, it's getting easier and easier to kill time alone, and free time is one thing a 21st-century depression would create in abundance. Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows, as the nation's unemployed sit at home filling their days with the cheapest form of distraction available."..[N.B. channel selection and programing may drop due to loss of advertisers and sponsors]
-The unemployeed look to Oprah and Dr Phil for direction and hope?
..well enough of the depressing blue news
...now the good news...the depression will be a once-in-a-lifetime chance to make fortunes for those entrepreneurs that are opportunity sensitive ..see our Opportunity Clinic workshop and flyer from previous Recession-proofing workshops
Add your thoughts to the comments section below
Walter Derzko
Author of the soon-to-be published book-
ISBN13: 978-0-470-73761-3
ISBN10: 0-470-73761-1
UPDATE
Wow your prediction of what a 2010 depression sounds an awful like a 2010 "recession" that we are going through now. I mean have the country is in debt and the most companies that are making money specialize in credit repair services. It is crazy to think the economy is as bad as it is and no one can predict when it will get better, sort of like the depression you talk about in this article.
Posted by: Julie Andrews | September 08, 2010 at 02:46 PM
I've added a link and quote from your post to BlogWatch: Economic Meltdown
Posted by: Wayne | December 08, 2008 at 01:20 PM