Home
News
In Focus
Business
Metro
Nation
World
Sports
Feature
Opinion
View more »Opinion Columns
Wan LixinOpinion deputy editor of Shanghai Daily
Forum emphasizes BRI cooperation between China and Arab countries
Rights to lower sleeper berths should be softened by empathy for fellow passengers
Sunday
- Subscribe
Related News
Home » Opinion » Book review
The next great depression is just around the corner
By Wu Jiayin |
March 28, 2009, Saturday
|
Print Edition
Print Edition
FOR most people, the first and last great depression they are likely to experience is just ahead.
This is the prediction of Harry S. Dent, Jr, author of "The Great Depression Ahead.''
He foresees a major depression following the "Great Crash of 2008-2010.'' According to him, as major depressions occur only once every 80 years, this is likely to be the only one that most people now alive will experience.
The prediction, though bold, is not groundless. It is based on demographic and technology cycles, which enabled him to predict Japan's 1990s economic slump and the US boom that began in 1998.
You do not need to share in his faith in the existence and predictability of these cycles, though. Still, you may find his methodology useful and his suggestions on investments during the depression worth considering.
Demography is widely believed to be the pivotal economic driver because demographic trends determine spending, productivity, innovation and retirement.
Hence Dent's view: "If we know when the average person enters the workforce, gets married, has kids, buys houses, earns and spends, borrows and retires debt, saves and invests, retires and dies ?? why can't we predict most key trends in our economy decades in advance? The answer is that we can!''
Likewise, the tech cycle is predictable as technology usually follows an S-curve, which means that its market penetration usually starts slow at first, then suddenly quickens and finally becomes stable.
Based mainly on these cycles, Dent attempts to predict not only the next several years, but also the next several decades and even centuries. And the predictions are not restricted to the US economy, but cover world economy as a whole.
He expects the US will enter its worst economy this year since the Great Depression in the 1930s and the depression will be followed by a long period of slow growth.
One reason is that the "Baby Boom spending cycle'' in the US will end after 2009.
Accordingly, US housing will lose as much as 50 percent of its value over the long term, says Dent. That is to say, although the biggest real estate bubble in US history has just ended, it will continue to collapse.
The end of Baby Boom spending cycle will also cause commodity prices to fall, and the deflation is likely to continue into the 2020s.
Besides, aging societies will make technological innovation more difficult as it is usually the youth who drive invention.
While the correctness of the predictions is not known, it's true that the US recession is still continuing without any sign showing when the economy is to bottom out.
Dent's predictions of global economic changes are not so rosy, either, though not without some encouraging points.
He notes that slowdowns in the developed West will be severe from 2010 through the early 2020s, which will inevitably bring down the world growth.
In particular, Asian countries that are export-dependent will encounter serious trouble, which is already happening.
Yet the good news is that some countries and regions will continue to grow.
"North America will still be one of the largest economies, and a respected and influential world power, along with China, while Europe and Russia will have long since faded,'' Dent observes.
Most of Dent's predictions of the key trends in the near future appear to be well-founded.
However, he sometimes shows over-enthusiasm with predictions based on complicated cycles and past experience. After all, they do not necessarily promise more accuracy in predicting all future events.
And it is natural if some readers take a grain of salt with his prognostication: "a broader global boom from the 5,000-year civilization cycle is likely to continue ... long past the peak of the 500-year cycle as technologies and human progress continue exponentially long term - especially beginning in the 2400s onward.''
Still, Dent offers practical advice on how to survive or even prosper in the looming great depression.
Good strategies for enterprises mean selling unwanted parts of business as soon as possible and making acquisitions that will benefit from developments in the long-term cycles.
As to individuals, it is better to retreat to cash or to buy highly rated bonds that will benefit as interest rates fall and inflation rises.
This is the prediction of Harry S. Dent, Jr, author of "The Great Depression Ahead.''
He foresees a major depression following the "Great Crash of 2008-2010.'' According to him, as major depressions occur only once every 80 years, this is likely to be the only one that most people now alive will experience.
The prediction, though bold, is not groundless. It is based on demographic and technology cycles, which enabled him to predict Japan's 1990s economic slump and the US boom that began in 1998.
You do not need to share in his faith in the existence and predictability of these cycles, though. Still, you may find his methodology useful and his suggestions on investments during the depression worth considering.
Demography is widely believed to be the pivotal economic driver because demographic trends determine spending, productivity, innovation and retirement.
Hence Dent's view: "If we know when the average person enters the workforce, gets married, has kids, buys houses, earns and spends, borrows and retires debt, saves and invests, retires and dies ?? why can't we predict most key trends in our economy decades in advance? The answer is that we can!''
Likewise, the tech cycle is predictable as technology usually follows an S-curve, which means that its market penetration usually starts slow at first, then suddenly quickens and finally becomes stable.
Based mainly on these cycles, Dent attempts to predict not only the next several years, but also the next several decades and even centuries. And the predictions are not restricted to the US economy, but cover world economy as a whole.
He expects the US will enter its worst economy this year since the Great Depression in the 1930s and the depression will be followed by a long period of slow growth.
One reason is that the "Baby Boom spending cycle'' in the US will end after 2009.
Accordingly, US housing will lose as much as 50 percent of its value over the long term, says Dent. That is to say, although the biggest real estate bubble in US history has just ended, it will continue to collapse.
The end of Baby Boom spending cycle will also cause commodity prices to fall, and the deflation is likely to continue into the 2020s.
Besides, aging societies will make technological innovation more difficult as it is usually the youth who drive invention.
While the correctness of the predictions is not known, it's true that the US recession is still continuing without any sign showing when the economy is to bottom out.
Dent's predictions of global economic changes are not so rosy, either, though not without some encouraging points.
He notes that slowdowns in the developed West will be severe from 2010 through the early 2020s, which will inevitably bring down the world growth.
In particular, Asian countries that are export-dependent will encounter serious trouble, which is already happening.
Yet the good news is that some countries and regions will continue to grow.
"North America will still be one of the largest economies, and a respected and influential world power, along with China, while Europe and Russia will have long since faded,'' Dent observes.
Most of Dent's predictions of the key trends in the near future appear to be well-founded.
However, he sometimes shows over-enthusiasm with predictions based on complicated cycles and past experience. After all, they do not necessarily promise more accuracy in predicting all future events.
And it is natural if some readers take a grain of salt with his prognostication: "a broader global boom from the 5,000-year civilization cycle is likely to continue ... long past the peak of the 500-year cycle as technologies and human progress continue exponentially long term - especially beginning in the 2400s onward.''
Still, Dent offers practical advice on how to survive or even prosper in the looming great depression.
Good strategies for enterprises mean selling unwanted parts of business as soon as possible and making acquisitions that will benefit from developments in the long-term cycles.
As to individuals, it is better to retreat to cash or to buy highly rated bonds that will benefit as interest rates fall and inflation rises.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
