Tuesday, September 8, 2009

Is Consumerism Dead?

McClatchy News Service (via HuffPost) offers this overview of the fallout from the  Great Recession: credit to be tight for years, maybe decades, to come, signalling the end of consumer-led economic growth.  Even forecasters for the US Chamber of Commerce are expecting growth rates in the neighborhood of 2%, much lower than the "average" rate of 3 -3.5%.  The reason? The effective shutdown of the securitization market, those exotic packages that bundled sub-prime loans into attractive, ostensibly "risk-free" investments, thereby freeing up all sorts of credit. 

"I think this financial panic and Great Recession is an inflection point for the financial system and the economy," said Mark Zandi, the chief economist for forecaster Moody's Economy.com. "It means much less risk-taking, at least for a number of years to come — a decade or two. That will be evident in less credit and more costly credit. If you are a household or a business, it will cost you more, and it will be more difficult to get that credit."
A lot depends, however, on whether this tightening of credit--and the prospect of continuing high unemployment--gets coded as deprivation and a threat to the standard of living, or as a potentially welcome opportunity to strengthen the common wealth and to work with the tools of conviviality.  In other words, we'll have to see whether social-networking technologies can support genuine community, or whether they're offshoots of market research and the virtual mall.

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