Debt is the modern slavery. And it is debt that will be the cause of the major issues this planet will face in the next 5 years. Despite having thrown over 2 trillion towards the collapse of 2008, it will seem an almost comical response in the next few years were the results to follow not so potentially devastating.
A review of the period leading up to and during the great crash of 1929 is instructive as it is chillingly close to the events that have transpired from 2008. And while many current commentators have referred to the Great Crash and then in the same sentence dismissed it as not plausible that the same series of events could occur today as those leading to the Great Depression did in the past, it remains to be seen if they are correct or like the great economists of the 1930's completely and utterly wrong.
The Great Crash was brought on by the bursting of a highly leveraged asset bubble. The New York market fell 48% to 198.69 from its high of 381.70. The following year it regained 48% as it moved to 294.07 and from there, over the next three years it fell to 41.22. If you look at the current record for 2008 to 2010 the results are stunningly close with the exception that we are currently holding the gains made in 2009 but the spectre of a debt laden world starting the taxation/inflation/cost cutting cycle is growing larger by the day.
Japan now borrows to pay its interest. The European Union is treading a razor sharp line with its rescue of Greece and its support of other debt laden members. In essence the plan is to borrow to solve a debt problem. And at the same time they have to stop spending and increase taxation. The US has increased its national debt at an atrocious rate. The ANZ countries are no better. The only countries not facing this crushing level of debt are the countries where we have been sending Petro dollars or Wal-Mart/K-Mart/Any Mart dollars.
And it is not only countries that are awash in debt. Citizens in these countries are also in debt up to their noses. In the UK, combined personal debt is greater than the GDP of the country. Where do you go from there? During the Great Crash it was not the initial fall that hurt the economies of the world. It was the de-leveraging. And while pundits in 2008 to 2010 have been and can still be heard saying "that was then and this is now" and that the money that we literally threw into the various economies would help prevent the same thing happening, it still remains that it was all debt and that debt must be repaid.
Debt is slavery and like the emancipation of the slaves in the US, freedom comes at a price. In this case it will be years of higher taxes, reduced spending, and much slower economic growth. Sadly, we all did this to ourselves and we will all have to take responsibility.