Global Trends 2025

From the National Intelligence Council's 2025 project:

1 - The whole international system—as constructed following WWII—will be revolutionized. Not only will new players—Brazil, Russia, India and China— have a seat at the international high table, they will bring new stakes and rules of the game.

2 - The unprecedented transfer of wealth roughly from West to East now under way will continue for the foreseeable future.

3 - Unprecedented economic growth, coupled with 1.5 billion more people, will put pressure on resources—particularly energy, food, and water—raising the specter of scarcities emerging as demand outstrips supply.

4 - The potential for conflict will increase owing partly to political turbulence in parts of the greater Middle East.

U.S. In Deep Recession

The U.S. economy entered a recession in April. It will last 14 months, which would make it one of the longest recessions since the Great Depression of the 1930s.

Only the 16-month recessions in the mid-1970s and early 1980s were longer. Even though the economy was technically growing in April this year it would not be unprecedented for the National Bureau of Economic Research to declare a recession was occurring then.

The NBER measures recessions by "a significant decline in economic activity spread across the economy," rather than the traditional definition of two consecutive quarters of falling GDP.

Source: Reuters.

GM Bankruptcy No Option

A study by the Center for Automotive Research (CAR) estimates that in case of a GM bankruptcy 2.5 million jobs would be lost in the first year. The logic: if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer crippling parts shortages.

Read Robert J. Samuelson's How to Bail Out General Motors.

Time for Fiscal Stimulus

From "When Consumers Capitulate" by Paul Krugman:

The ongoing efforts to bail out the financial system, even if they work, won’t do more than slightly mitigate the problem. Maybe some consumers will be able to keep their credit cards, but as we’ve seen, Americans were overextended even before banks started cutting them off.

No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.