I focused on the USA in You are democracy. That seemed natural because this country has been the most dominating force in the western world since World War II. Bad financial news for the Americans is usually bad news for the Europeans. The American economy has been recovering since the housing bubble burst in 2006, but a growing debt has been a relevant topic since Reagan’s administration. He signed the Economic Recovery Act of 1981, which was meant to encourage growth, but the experts still argue about how much good it did. No matter what the reason is, debt has been increasing the last 40 years.
You can play the debt game for a long time, but sooner or later reality will catch up. The locomotive may not come to a complete stop this year, but the ridiculous amount of debt should worry people, especially debt to foreign governments. The national debt is bad enough, but according to Reuters the student loan debt alone in the US is a staggering $ 1,2 trillion. It was less than $ 600 million in 2006. How are they going to provide the growth the country needs, not to mention help their own children through college, when they are heavily into debt before they get a job or buy a house? Buying a house might be impossible, and after a long period where each generation has done better financially and socially than the one before, we could get a couple of generations that will do worse than the previous one.
What about Europe? We seem to depend on what happens in the USA, but we also have enough crises of our own to create some turbulence. We don’t really need to wait for news from the other side of the Atlantic Ocean. It’s going to be interesting to see whether or not the EU will survive this year because the union has some major mess to untangle.
The refugee crisis has developed over a long time, and according to the UN Refugee Agency 850 000 refugees have entered Greece from the Mediterranean, while more than 150 000 entered Italy. These two countries have had to deal with an overwhelmingly discouraging task without much help from the union they are members of. The help was only offered after the problem reached central Europe. One might ask what we need a union for if it doesn’t make us stronger.
I don’t hear Grexit and Brexit on the news anymore, but there are still many voters in Britain and Greece that want to leave the EU. There also seems to be major inconsistencies between the western EU-members and the new members in the east. There is still poverty and inequality in EU, and according to a report from last year at least one in three children in half the 28 member states live in poverty. The refugee crisis and Ukraine have tested the unions philosophy and they failed miserably. Especially the latter because it didn’t happen on another continent. It happened quite literally in the heart of Europe, and the union seemed neither willing or capable of solving the conflict.
There may be European countries that like the present oil price. Countries that have neither oil or natural gas naturally want the price to be as low as possible, but they are still going to depend on the state of the world economy. There is a lot of uncertainty at the moment. The US oil production is probably just as high as the Saudi Arabian and at the end of 2015 Congress lifted a 40 year old ban on US export of oil. I believe Saudi Arabia is trying to put American companies out of business, but I don’t think they are going to succeed. It’s crazy just to try it in the present situation because they are in trouble. Saudi Arabia have had a huge deficit the last couple of years (around $ 100 billion a year) and I read somewhere that they can probably continue this for another 5 years. I think they are going to realize pretty soon that they can’t win this game, however.
EU wants to become a major player, but I think most things will still be determined by the USA, Russia and China, while Israel will be only one standing in the Middle East. I have mentioned it before, we may need a crack or a recession where no bank is too big to go bankrupt. After previous recessions, which is just another word for depression, the USA has made progress. The problem is the transition, the time between the collapse and growth. Depending how long time we are talking about that could be very painful and dramatic for the country. The problem in the USA has been that productivity and efficiency have increased since the 1970’s at the same time as the wages have flattened out. That’s why there is such an extreme difference in the standard of living among Americans.
We have had a similar development in Europe, including Norway. The Scandinavian socialism has helped to slow down the opening gap between rich and poor, but we are starting to see a wider gap now. Many people know this, but knowledge alone isn’t enough to change human behaviour. It’s hard to reverse a development we know is unfair. Maybe it takes something very dramatic to convince us.
I don’t want a depression like the big one in the 1930’s, but it might be better to let it happen instead of trying to pretend that we have evolved into a better, more just society compared to the 1930’s and 40’s. The best thing would have been fairness before it came to that. We could distribute the income more fairly so that it was possible to get an education. The way it stands now social social classes are making a comeback.