1. The oddball recession

    Posted September 15, 2010 in ephemera  |  No Comments so far

    It’s exactly two years since the collapse of Lehman Brothers triggered the most intensive phase of the global economic crisis. That’s enough time for us to start taking a historical perspective when we look back on it, and indeed some new research indicates that the recession caused by the credit crunch was (well, is) a very odd one indeed.

    First up is a study cited by Fast Company which found that, counter to existing wisdom, crime rates actually fell in the US during the recession:

    …violent crimes declined in 2009 for the third year running, a period roughly coinciding with the recession. And property crimes declined for the seventh straight year. Aggravated assault rates dropped over 4 percent; murder rates dropped over 7 percent; and motor vehicle thefts dropped a whopping 17 percent, to select just a few of the FBI’s more remarkable findings

    Meanwhile, on this side of the pond, the BBC’s Mark Easton is asking why people in the UK are apparently feeling happier now than they did at the height of the economic boom. Happiness levels grew in 2008 and have remained fairly high ever since.

    I’d already been wondering what the hell was going on with this recession. The world’s economy has suffered massive structural damage, and the scale of the numerous crises has been enough to make your head spin. But things have been surprisingly mild if you look at measures like unemployment, interest rates, inflation, oil prices, crime and so on.

    Why is this recession so bizarre and anomaly-ridden? Two possible explanations suggest themselves.

    1. That the modern, globalised economy has developed an ability to manage crises rapidly and effectively with minimal economic fallout – in other words, the planet’s got smarter
    2. That the mildness so far has been a result of stimulus packages, and with the effects of those measures wearing off, worse times lie ahead. Basically, what we’ve experienced so far is just the first phase of what will be a prolonged and severe global depression.
    3. It’s pretty obvious which one I’d like to believe in, but optimism doesn’t come easily at times like this…