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Think this recession is bad? Think again.

The recession of 2008-10(?) is generally viewed as the worst since the Great Depression. And that's probably true. We've all heard about how horrible the Great Depression was, but historically, it doesn't even rate as a blip.

I just came across this article in the Financial Times and was absolutely floored.

Quote:

FT.com / Comment / Opinion - Call this a recession? At least it isn?t the Dark Ages

Call this a recession? At least it isn’t the Dark Ages
By Bryan Ward-Perkins

Published: December 22 2009 20:36 | Last updated: December 22 2009 20:36

As we face an uncertain and worrying New Year, we can at least console ourselves with the fact that we are not living 1,600 years ago, and about to begin the year 410. In this year Rome was sacked, and the empire gave up trying to defend Britain. While this marks the glorious beginnings of “English history”, as Anglo-Saxon barbarians began their inexorable conquest of lowland Britain, it was also the start of a recession that puts all recent crises in the shade.

The economic indicators for fifth-century Britain are scanty, and derive exclusively from archaeology, but they are consistent and extremely bleak. Under the Roman empire, the province had benefited from the use of a sophisticated coinage in three metals – gold, silver and copper – lubricating the economy with a guaranteed and abundant medium of exchange. In the first decade of the fifth century new coins ceased to reach Britain from the imperial mints on the continent, and while some attempts were made to produce local substitutes, these efforts were soon abandoned. For about 300 years, from around AD 420, Britain’s economy functioned without coin.

Core manufacturing declined in a similar way. There was some continuity of production of the high-class metalwork needed by a warrior aristocracy to mark its wealth and status; but at the level of purely functional products there was startling change, all of it for the worse. Roman Britain had enjoyed an abundance of simple iron goods, documented by the many hob-nail boots and coffin-nails found in Roman cemeteries. These, like the coinage, disappeared early in the fifth century, as too did the industries that had produced abundant attractive and functional wheel-turned pottery. From the early fifth century, and for about 250 years, the potter’s wheel – that most basic tool, which enables thin-walled and smoothly finished vessels to be made in bulk – disappeared altogether from Britain. The only pots remaining were shaped by hand, and fired, not in kilns as in Roman times, but in open ‘clamps’ (a smart word for a pile of pots in a bonfire).

We do not know for certain what all this meant for population numbers in the countryside, because from the fifth to the eighth century people had so few goods that they are remarkably difficult to find in the archaeological record; but we do know its effect on urban populations. Roman Britain had a dense network of towns, ranging from larger settlements, like London and Cirencester, which also served an administrative function, to small commercial centres that had grown up along the roads and waterways. By 450 all of these had disappeared, or were well on the way to extinction. Canterbury, the only town in Britain that has established a good claim to continuous settlement from Roman times to the present, impresses us much more for the ephemeral nature of its fifth to seventh-century huts than for their truly urban character. Again it was only in the eighth century, with the (re)emergence of trading towns such as London and Saxon Southampton, that urban life returned to Britain.

For two or three hundred years, beginning at the start of the fifth century, the economy of Britain reverted to levels not experienced since well before the Roman invasion of AD 43. The most startling features of the fifth-century crash are its suddenness and its scale. We might not be surprised if, on leaving the empire, Britain had reverted to an economy similar to that which it had enjoyed in the immediately pre-Roman Iron Age. But southern Britain just before the Roman invasion was a considerably more sophisticated place economically than Britain in the fifth and sixth centuries: it had a native silver coinage; pottery industries that produced wheel-turned vessels and sold them widely; and even the beginnings of settlements recognisable as towns. Nothing of the kind existed in the fifth and sixth centuries; and it was only really in the eighth century that the British economy crawled back to the levels it had already reached before Emperor Claudius’s invasion. It is impossible to say with any confidence when Britain finally returned to levels of economic complexity comparable to those of the highest point of Roman times, but it might be as late as around the year 1000 or 1100. If so, the post-Roman recession lasted for 600-700 years.

We can take some cheer from this sad story – so far our own problems pale into insignificance. But Schadenfreude is never a very satisfying emotion, and in this case it would be decidedly misplaced. The reason the Romano-British economy collapsed so dramatically should give us pause for thought. Almost certainly the suddenness and the catastrophic scale of the crash were caused by the levels of sophistication and specialisation reached by the economy in Roman times. The Romano-British population had grown used to buying their pottery, nails, and other basic goods from specialist producers, based often many miles away, and these producers in their turn relied on widespread markets to sustain their specialised production. When insecurity came in the fifth century, this impressive house of cards collapsed, leaving a population without the goods they wanted and without the skills and infrastructure needed to produce them locally. It took centuries to reconstruct networks of specialisation and exchange comparable to those of the Roman period.

The more complex an economy is, the more fragile it is, and the more cataclysmic its disintegration can be. Our economy is, of course, in a different league of complexity to that of Roman Britain. Our pottery and metal goods are likely to have been made, not many miles away, but on the other side of the globe, while our main medium of exchange is electronic, and sometimes based on smoke and mirrors. If our economy ever truly collapses, the consequences will make fifth-century Britain seem like a picnic.

The last paragraph is bone-chilling, at least in terms of what-if games.

So let's posit a complete collapse of the global economy. For instance, a massive solar event renders all the world's computers innoperable. What happens?

Very unlikely. Because of the reason posited in the last paragraph we have had paranoid people develop arms and armies and pay college tuition for many people in exchange for their lives to protect this. To think that military might only protects a countries sovereignty would be wrong.

The economy may be intricate and perhaps even fragile but it requires an entire people to overhaul it. Not a band of thieves, terrorists or would be revolutionaries ... i.e. The Red Brigade. I disagree that bringing down an economy is easy.

There are so few industrial and light manufacturing in the United States. Heavy manufacturing still has some centers, but they still rely on parts and supplies from over seas to complete their products.

Farmed goods no longer are localized to the United States, this isn't just beef products, but also fruits and vegetables.

I personally believe that last paragraph is something that will be catastrophic. I believe that we need to be self sustaining 100%, and if you'd like to be luxurious, the extra goods comes from elsewhere, but that's luxury goods. Strawberries from South America in Winter? Really? Can we not live within the natural time clock as to when things are in season?

Quote:

Originally Posted by Cynthetiq (Post 2742389)

I personally believe that last paragraph is something that will be catastrophic. I believe that we need to be self sustaining 100%, and if you'd like to be luxurious, the extra goods comes from elsewhere, but that's luxury goods. Strawberries from South America in Winter? Really? Can we not live within the natural time clock as to when things are in season?

This is why I plan on staying where I am--or fairly close by--should such a catastrophe occur. I have vegetable seeds laid by as part of my pantry. I am fairly confident I could grow most of what I need to survive, given where I live and the climate, provided I am willing to eat with the seasons. Considering we buy our produce at the farmer's market, I am already quite used to that. I abstain from buying produce that isn't in season--to me, it doesn't taste as good and I don't like buying things flown in from Chile or New Zealand.

I've actually thought about this scale of catastrophe and made plans accordingly by expanding my knowledge of survival, both short-term and long-term. After all, the bigger they are, the harder they fall.

Quote:

Originally Posted by snowy (Post 2742444)

catastrophic potential #31734 climate is now unable to sustain vegetable life.
Tantrum ensues :p

Quote:

Originally Posted by The_Jazz (Post 2742369)

So let's posit a complete collapse of the global economy. For instance, a massive solar event renders all the world's computers innoperable. What happens?

Things get rough for a bit, I suppose. People would starve, freeze and die, especially in industrialized countries where we're more dependent on such technologies. Still, it could be worse. If you're looking to be scared, I've got a whole thread on the insane things that could happen (like a virus outbreak, super-volcano eruption, asteroid collision, etc.).

If you're worried about likelihood, it's not in the best interests of the PTB to have a complete collapse, so they can be trusted to cover their own asses and by proxy kinda cover ours.

I suppose there are things to do in order to put a collapse-net in place for you and your family. Grow a garden and urge your neighbors to do the same. Be sure you're physically fit and know at least a bit of a hands-on skilled trade like farming, metal-work, or construction. Try not to have more than three kids. Buy some property where it's uber-cheap out in the boonies where there's fertile land that simply has never been prepared to support growing.

Quote:

The latest economic indicators: We're doing better than 5th century Britain!

Posted by Justin Fox Wednesday, December 23, 2009 at 11:27 am

1 Comment • Trackback (1) • Related Topics: bailouts, banks, recovery, regulation, Middle Ages, Roman Empire
TIME is "dark" this week—that is, we've got no magazine to put out and not many people in the office. But we still have a Website, so I volunteered to pay attention to this week's economic releases and post on them when they seemed to merit attention. Well, today we've got personal spending up 0.5% and personal income up 0.4% in November, and new home sales down 11.3% (pdf) for the month. That last number looked at first like it might be significant. The decline was certainly bigger than forecasters expected. But it comes with a margin of error of plus or minus 11 percentage points. And yesterday's existing home sales figure was up by more than expected. I'll go with the verdict of Ian Shepherdson at High Frequency Economics: "this number tells us nothing at all about the future."
So my attention drifted to the FT, where Oxford historian Bryan Ward-Perkins makes the point that, while the economic downturn that seems now to be fitfully receding into the past has been really bad, it hasn't been nearly as bad as the economic downturn that followed the departure of the Romans from Britain in AD 410:

There was some continuity of production of the high-class metalwork needed by a warrior aristocracy to mark its wealth and status; but at the level of purely functional products there was startling change, all of it for the worse. Roman Britain had enjoyed an abundance of simple iron goods, documented by the many hob-nail boots and coffin-nails found in Roman cemeteries. These, like the coinage, disappeared early in the fifth century, as too did the industries that had produced abundant attractive and functional wheel-turned pottery. From the early fifth century, and for about 250 years, the potter's wheel – that most basic tool, which enables thin-walled and smoothly finished vessels to be made in bulk – disappeared altogether from Britain.

But then, as soon as he's got the reader happily thinking about how far from such privation we are today (we've still got potter's wheels!), Ward-Perkins turns things around:

The more complex an economy is, the more fragile it is, and the more cataclysmic its disintegration can be. Our economy is, of course, in a different league of complexity to that of Roman Britain. Our pottery and metal goods are likely to have been made, not many miles away, but on the other side of the globe, while our main medium of exchange is electronic, and sometimes based on smoke and mirrors. If our economy ever truly collapses, the consequences will make fifth-century Britain seem like a picnic.

So that's what Ben Bernanke and Hank Paulson and Tim Geithner were trying to save us from in autumn 2008—a complete lack of pottery and metal goods. And they succeeded!

Read more: The latest economic indicators: We’re doing better than 5th century Britain! - The Curious Capitalist - TIME.com

I found this to be a bit funny.

I wonder why we don't hear more comparisons to Argentina and Japan. Their economies melted down for some reason, it would be nice to make sure that doesn't happen here.

What I know of the Japanese economy it isn't comparable to the US, UK or any of the other tied marketplaces.

What makes the Japanese market different is the way they react to economic slowdowns.

Generally, as the economy cools stocks reduce in price. As stocks reduce, the circulation of the dollar begins to decline and value of the dollar increases. As the value of the dollar vs. the price of stocks/interest/etc becomes favorable, people buy stocks/invest/rebuild/etc and the economy bounces back. That, along with the Fed controlling interest rates and other factors, is the sole reason we've been without a depression for 70 years (where they used to be every 10-20).

In Japan whenever the economy starts to cool, the entire populace stops spending money. This hurts the economy more than the cooldown ever could, and every 10 years or so they find themselves in very deep recessions.... only to skyrocket back a year later.

The major difference is we got hit by three storms this time all at once. The collective hits from all three caused us all to react much like the Japanese and stop all buying. Match this with companies pre-emptively cutting back on their employee count, everyone who WAS secure in their job stopped spending where they otherwise would have... and made it even worse.

It won't necessarily take something as cataclysmic as a solar event taking out world computing...there are some who make the hypothesis that a return to record-high oil prices will force a reorganization of economies away from globalization toward localization.

No more Chinese manufactured goods in North America. No more fresh berries in the winter. These things will no longer be economically viable, or perhaps merely luxuries afforded only by the wealthy.

Some are still predicting $200/barrel oil prices in the foreseeable future. What would it take?

Canada's recession was "average"

As the article below states, the recession was first deemed "the next Great Depression," then "the Great Recession," but in Canada, we're now calling it "average."

Well, for our recession anyway.

Was Canada's recession 'average?' - The Globe and Mail

The 1837 depression was a really bad one. It lasted until (I think) 1841.

I'm not really panicking until someone I trust tells me to start investing in tulips.

...

I wonder how dependent our economy is on oil. I mean, sure, in our current form it's basically running everything; at the same time, necessity drives innovation, to paraphrase an old bit of wisdom. Would we be able to compensate and cope. Could some of the new technologies in their infancy be advanced enough to fill the gap, should the necessity arise?

I don't know. Economics isn't my area, and I know far less than I probably should. I just tend to view human drive and innovation as the real determining factor.

Quote:

Originally Posted by snowy (Post 2742444)

I've actually thought about this scale of catastrophe and made plans accordingly by expanding my knowledge of survival, both short-term and long-term. After all, the bigger they are, the harder they fall.

In the case of a catastrophic event, tilted meetup at Snowy's place!

Something I have always wondered in discussions of bad times like this:

Why do people think they will be able to keep whatever they have provisioned away in case of hard times? Those who have nothing and are desperate or those who have a means of force to take will simply take them from you.

You might be able to stop some. Not all.

The article was about Britain after its abandonment by Rome. Comparisons to the US do not apply. Britain had become entirely dependent on Rome's technology and when Rome left, they took their know-how with them.

A more apt comparison to today would be what we see happening in African nations which used to farm their own food, but then became dependent on the US and other countries providing their food. Now they are completely unable to feed themselves.