Friday, October 24, 2008

The Recession of 2009

Communication from the future to the past is 'difficult' but sometimes it works.

A reader from 2093 writes:

"Dear Ancestor, I read your blog set in the closing months of 2008, just before the great slump, and it appears that you knew nothing about it. Lots of chat about contemporary books, TV shows and other trivia but nothing about the greatest event in the early 21st century. What were you thinking of?"

I reply as follows.

"Dear Descendant,

It is often the case that events experienced at the time have a different feel than their refraction and distillation (if I may mix metaphors) through the lenses of later historians. An interesting example is the following book:

A Country Parson. James Woodforde's Diary 1759-1802

which I once owned.

As a reviewer writes here, 'Woodforde occasionally ventures into the outside world and often finds it alarming - a trip to London sees the King (George III) insulted by the mob. There is some comment on outside events, such as the French Wars, and the American colonial rebellion, but on hearing the news of the fall of the Bastille, he gives it but the same importance as that of buying a crab. Woodforde's concerns are mostly parochial, but he does take a pride in the victories of Nelson, also from Norfolk.'

So we watched the banks all-but-collapse on TV, and worried briefly about some of our savings, but the banks got rescued. Then we heard horror stories about other people losing their life-savings in unlucky deposits, and felt for them. We watched prices go up, and economised, but did not suffer real starvation nor did anyone we knew. We understood that unemployment would hit the roof, but this had happened before in our lifetimes - especially under Margaret Thatcher - so we knew what that would be like (or we thought we did).

And we tried to get a feel for the underlying feedback/delay loops which had ensured that supply of goods and services had continued to increase exponentially, while underlying demand, fuelled by unsustainable debt, had suddenly collapsed, precipitating the crisis.

We listened to all the nonsense from politicians about how improved legislation and regulation would ensure that capitalism would never again engage in a bout of creative destruction, and we didn't believe a word of it.

So, dear Descendant, we were paying attention. It's just that like Parson Woodforde, there wasn't a whole lot we could do about it.