The Capitalist Era
The Great Recession
Beginning in the United States in December 2007 (and with much greater intensity since September 2008), much of the industrialized world entered into the largest Recession seen since the Second World War. This global recession took place in an economic environment characterized by various imbalances and was sparked by the outbreak of the financial crisis of 2007–2010.
In July 2009, it was announced that a growing number of economists believed that the recession may have ended, though this failed to connect with the majority of people, as job losses were still ongoing, and unemployment had recently gone past 10% in the United States alone.
The financial crisis has been linked to reckless and unsustainable lending practices resulting from the deregulation and securitization of real estate mortgages in the United States, as well as the general unregulated activities of the financial sector as a whole. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The precarious financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance, better known as the Bailouts.
The global recession resulted in a sharp drop in international trade, rising unemployment and slumping commodity prices. In December 2008, the National Bureau of Economic Research (NBER) declared that the United States had been in recession since December 2007. The recovery began in late 2010, and didn't really take off until 2011.
The Great Recession was considered the worst since the Great Depression of the 1930s, and the worst in a generation prior to the Second Depression. The conditions leading up to the crisis, characterised by an exorbitant rise in asset prices and associated boom in economic demand, are considered a result of the extended period of easily available credit, inadequate regulation and oversight, as well as increasing inequality. The US is often blamed for the recession.
The recession renewed interest in Keynesian economic ideas on how to combat recessionary conditions, no more so evident than the practices of US President Barack Obama, who's efforts to inject capitol into the market are widely credited for preventing the Great Recession from becoming a full depression. Fiscal and monetary policies were significantly eased to stem the recession and financial risks. The causes of the Recession are almost identical to those that caused both the Second Depression, and almost every other major economic crisis in the Capitalist Era.
The Sonic Boom
In 2011 the global economy had finally recovered from the Great Recession, and dramatic global economic growth began to resume. Goods and service continued to get better and cheaper thanks to manufacturing and technological advancement. While the boom did create an atmosphere of unparalleled prosperity, job anxiety and economic insecurity accelerated, due largely to accelerated economic change. What is so significant about the Sonic Boom, first coined by author Gregg Easterbrook in his book of the same name, was the vast differences in how whole countries and in some cases certain demographics handled it. Western Europe benefited less than almost any other part of the world, due in part to stubborn European economic tradition. In the United States, the generational divide between the Baby Boomers and Generation Y finally shifted to Generation Ys favor; as the generation so used to radical change and experienced with the free flow of unique ideas in the digital medium, Generation Y firmly took its place in the global market when aging Boomers and Jonesers failed to adapt to the changing times. The developing world as a whole benefited from the Sonic Boom, especially India and Eastern Europe. One of the most remarkable side effects of the period was the rapid expansion of womens' rights outside of the Western World, largely due to increased prosperity in the developing world and the need for multiple sources of income for the average household.
The Second Depression
The Second Great Depression or Second Depression was a severe worldwide economic depression in the decade preceding the Flood War. The timing of the Second Depression varied across nations, but in most countries it started in about 2024 and lasted until the mid to late 2030s. It was the longest, most widespread, and deepest depression of the 21st century. Today, the Second Depression is commonly used in unison with the Great Depression as coequal examples of how far the world's economy can decline under a capitalist system. The depression originated in the U.S., starting with the collapse of the American financial sector that began around August 19th, 2024 and became worldwide news with the Wall Street crash of October 3rd, 2024 after the failiure of the Financial Rescue Package in the Senate. From there, it quickly spread to every country in the world.
The Second Depression had devastating effects in virtually every country, rich and poor. Personal income, equity, tax revenue, profits and prices dropped while international trade plunged by 30% to 40%. Unemployment in the U.S. was the highest in the industrialized world, rising to 26%, while in other countries it rose up to 21%. Sub-urbs all around the world were hit hard, especially those dependent on the service industry. Construction was virtually halted in many countries. Farming practically collapsed in a number of countries as the lack of investments and manufacturing sources compounded with the collapse of supply caused by the changing climate. Facing plummeting demand with few alternate sources of jobs, areas dependent on service industry jobs were hit the hardest.
Some economies started to recover by the mid-2030s. However, in many countries the negative effects of the Second Depression lasted until the start of Flood War.
There was no single culprit for the economic instability that caused the Second Depression, but historians typically list four primary factors that most contributed to the severity of the crisis: Climate Change, The Equity Bubble, economic deregulation, and the Narain Administration's cuts to the defense budget. Climate Change is often ignored when discussing the Second Depression, as it the effects of climate change have effected every aspect of human society that its economic impact is often forgotten. Climate Change resulted in huge population displacements which in turn fed the refugee crisis that ate up the budgets of so many regions that little was left to combat the initial crash of local markets. The displacement issue also halted the once dynamic economies of the world's great coastal cities until the completion of their respective sea walls. Compounded by the drought in the inland farming regions and the dust storms in the drier parts of the world, economic activity was severely weakened by the changing climate.
Of all the factors the Equity bubble was the most devastating to the American middle class, and also caused the shortage of investor capitol that stopped all major venture capitol efforts of the day. 401k's dried up, housing prices fell lower than ever before, all the while with a resource shortage that sent consumer goods prices skyrocketing. This part of the crisis was made worse for investors with the financial sector's crash in 2024. With the deregulatory policies of President Palin, the financial sector invested in more risky practices than ever before, and with President Narain's further deregulatory policies, what banks were left could out right steal money from prospective investors. This utterly destroyed investor and by extension consumer confidence, and left the economy in shambles.
Finally the US defense budget reductions under President Narain, which closed all foreign bases and severely limited the size of America's armed forces, is ultimately seen as the culprit of the federal government's inaction on the depression. The US military following the end of the Second World War and prior to America's involvement in the Flood War, was the largest the world had ever seen. With over 700 bases world wide and employing people on every continent to supply and maintain its various logistical capabilities, the United States Military was to one degree or another the largest employer on Earth, contributing to economic development and a source for a wide range of jobs. Once this ended, the economies of Europe, the Pacific rim, and North America began to slowly decline. With no large military to maintain, demand for technicians, engineers, doctors, lawyers, etc. began to fall, leading to massive unemployment and slower economic activity.