[HopeDance] par Richard Heinberg, Senior Fellow, Post Carbon Institute
It’s becoming increasingly likely that 2008 will go down in history as the year the Second Great Depression began. The unraveling started with the subprime mortgage fiasco and is spreading fast. The total value of all US$-based mortgage bonds is $10.4 trillion, of which 30 percent is now expected to be lost in defaults and property devaluation. That’s $3.2 trillion in losses. Trillions more are likely to evaporate from the related derivatives markets. It’s true that the global economy is pretty big, and a few hundred billion get lost under sofa cushions from time to time (as happened during the savings and loan crisis of the 1990s), and still, life goes on. But when we’re discussing trillions of dollars (with a “T”), we’re talking real money.
Such things have happened before (in 1833, 1837, 1857, 1907, 1920, and 1929), but this time it’s different. Now the problem is not just financial mismanagement; there is a deeper instability: the global economy is based on a fundamentally unsustainable exploitation of depleting natural resources, and that whole system is teetering. In his essay, “Barreling into Recession: How Oil Burst the American Bubble,” Michael Klare points out that “The economic bubble that lifted the stock market to dizzying heights was sustained as much by cheap oil as by cheap (often fraudulent) mortgages.”