Just how bad is the current situation? How long will it last? Guido offers some stark analysis:
All previous down markets have lasted three eighths as long as the preceding up phase. This would mean the stock market will be going down till 2016 – 2017. Since stock markets usually rebound before the economy, one can assume the economy will remain weak and contract at least through 2016.
This all leads me to the title of this post. Is this the last Christmas of post WWII over consumption? Or is this a lost Christmas, and last year was the final hurrah? (GuidoWorld » The Last Christmas?)
Guido’s analysis strikes me as over-simplistic. “When people buy only what we need, we have a recession” — that sounds true, but what is the definition of “need”? If people are only buying what they “need” there are still a lot of people who “need” 52-inch plasma TVs.
I don’t have much faith in his pattern either: “All previous down markets have lasted three eighths as long as the preceding up phase.” If that is the pattern — and I’m not sure that it is, because I don’t see data or a reference to the data — what causes it? Is it a natural rhythm, like a heartbeat? Or is it the result of strategies and policies we’ve pursued during the time period he’s evaluating? Couldn’t a change of policy break that cycle? Couldn’t a change of culture do that, too?
I think we’re on the cusp of both. Free-market fundamentalism is a demonstrated failure; post-WWII style centralization of production has clear drawbacks people are starting to turn away from. Nixonian mega-agribusiness food policy is up for re-evaluation whether Obama pursues it or not. It’s going to be a different world sooner rather than later.
Re: “needs.” I think he was thinking a little lower on Maslow’s hierarchy. People might think they “need” a big TV, but unless they’re in video production or need it for some other job related function, I would question their “need.”
I think it’s possibly inherent in the free market model, and in that sense it’s “natural.” But a free market model is itself a cultural/ideological construction that can be changed, as you pointed out. You’re simply more optimistic than Guido, who has suggested, with others (George Carlin comes to mind), that there is a concerted effort on the part of the “real” owners/rulers of this country (read: big business) to dissolve the middle class. Provided all that’s true, a culture change would be difficult. Additionally, such a culture change would have to include an eradication (or severe curtailing at the very least) of our consume-consume-consume culture. That seems very unlikely to me.