In reality it was the day that the camel's back broke; the contributing factors had been building for years. And since that time our politicians, bankers and economists have been seeking a solution to the problems. Five years later, are we really any closer to an answer?
Christine Lagarde, head of the International Monetary Fund, warned in November 2011 that the world faced a lost decade full of economic difficulties. If you think that she was speaking in hyperbole just look at Japan as an ongoing reference point as it enters its' third DECADE of constricted growth. If Ms. Lagarde is correct we have at least another 5-8 years of this economic morass.
Folks, this is the New Normal...this is as good as it gets... for a long time. The traditional economic levers that governments and federal banks are used to pull on are not working. It seems as though they are all simply throwing 's--t' against the wall to see what sticks. And they will likely only know after-the-fact because every attempt takes time to play out in the real world. There are no simulations that they can try; no tried and true theories on which to rely.
The individual experience will vary. Many will continue to prosper. Others will fall under the radar. But for the large majority, it is time to plan, prepare and react to an ongoing difficult situation. I don't think that I am a defeatist in these comments. Rather I am a realist.
So recent university graduates will continue to hone their skills as baristas and not as teachers; many will continue to live at home because even rent is out of reach; and a generation will be underemployed and gradually more dispirited. To be sure, there are 'signs' that the economies in North America are recovering. But GDP is barely keeping up to inflation. Europe is concerned with deflation and high unemployment especially amongst the under 25 age bracket.
I hope that I am wrong, truly I do. But if I am right - and all the indicators point this way - then plan accordingly.
The side show in the Toronto mayor's office and in the Senates in Ottawa and Washington provide us some a diversion. Perhaps they too are as good as it gets in the political arena. The problem is that their antics will pass, likely sooner than they should. For the rest of us, hunker down because this new normal may only have just begun.