Perhaps the most dangerous words in the English language when used in economic forecasting.
Nonetheless, let me argue for a moment, that the current financial crisis is, in one interesting way, different from any other since the Great Depression.
Here's the difference--in all other post-War recessions, the brunt of the loss was borne by those on the margins of society, those who were over-leveraged, the less educated, blue collar workers, unskilled labor, the non-geographically mobile, etc. The affluent, the professional classes, the corporate, political and media elite could pontificate and observe the costs of globalization and the wonders of creative destruction, without feeling any particular impact.
This time it's different. The difference is in who is going to bear the brunt of this episode.
The economically marginal who've tumbled into the hell of part time hourly work without benefits had already hit bottom before this mess started. Those people weren't buying new cars, sending kids to college off the home equity ATM, and socking away six figure balances in 401k's. And we do have a frayed and tattered social safety net in this country that to some extent ameliorated and ameliorates their distress. That safety net isn't going to disappear, and is likely to improve substantially over the next couple of years, to the benefit of the economically marginal. They will suffer, but they actually face the possibility of improved circumstances.
This puppy has put those with something left to lose squarely in its cross hairs. The affluent, the professional classes, the economic elite, are the ones most at risk.Say you are an opinion leader with a major media organization, or a partner in a national law firm, or a corporate vice president with a publicly listed company. You have a six figure income, a house once worth seven figures, sizeable retirement savings, and various other financial assets.
Hopefully, you've still got the job. But everything else has taken a major hit in the last 18 months and God forbid you lose the job, because the pickings are slim, and more likely than not, whatever you can find will pay significantly less (and you'll be worth less, since part of your value at the old place was tied up in your organization specific knowledge, skills and contribution.
And if you have leverage that previously seemed modest, it will be looming major larger in the new order of things.