The Factor of Four: Preparing Yourself for Economic Meltdown  

Dave Pollard meditates on collapse.

The cover story of this month's Atlantic is editor James Fallows' Countdown to a Meltdown, a look at the implications of reckless Bush-Greenspan economic policies for the next generation. The only thing that isn't entirely credible to any student of history about Fallows' portrait of coming economic collapse is the date - while he sees it coming quickly and convulsively by 2016, I believe it will take a full generation to play itself out, and I would have been happier to see his scenario placed closer to the centennial of the last horrific depression, which was also caused by reckless economic mismanagement - 2029. But aside from the date, you need only read the history books (and the very recent history of countries like Argentina) to see the rationale, and even the inevitability, of Fallows' predictions.

The article is still on the newsstands, and hence not yet available online, but in essence it sees three deliberate Bush-Greenspan policies leading to economic collapse in 2009:

* Starving the government -- funding massive tax cuts for the rich by incurring monstrous debts that will have to be paid off by future generations and administrations,
* Complete reliance on cheap energy, commodities and Chinese manufactured goods instead of promoting conservation, and
* A policy of artificially suppressing interest rates to encourage reckless borrowing at all levels (personal, corporate and government), so that saving is discouraged, seniors cannot generate enough interest income to live on, and the economy becomes extremely fragile to economic changes (exactly as occurred in 1929).

The collapse scenario identifies a number of changes that occur like falling dominoes. What is interesting is that, much like the articles I have read about Peak Oil, about the non-sustainability of low interest rates, and about coming bubble burst in housing prices and (again) in stock markets, there is a recurrent 'Factor of Four' in this scenario.