Monday, September 21, 2009

the aftermath of the great recession part I

ASPO | Today’s article is the first of a two-part series in which I attempt to forecast general economic conditions that will affect the oil market over the next 10 years. Despite Galbraith’s sensible warning, what we will experience in the aftermath of the Great Recession is not a complete mystery. Strong evidence suggests that during the next decade, the global economy will struggle to regain a sound footing supporting vigorous growth.

This article and the next mirror closely what I will say at ASPO-USA’s upcoming conference on October 10-13 in Denver, Colorado. I am moderating the “Great Recession and the Energy Markets” discussion. I will be joined by Eric Janszen, Adam Robinson, and author Kevin Phillips.

This is not necessarily the final version of my introductory remarks in Denver, but it is close enough. I am publishing these slides early to allow those attending the conference (or those who are not able to attend) to study the issues prior to the panel itself. There is probably more material here (and next week) than I will have time to present in Denver.

I can not cover the world in a short presentation. Therefore, most of my slides examine the economic prognosis for the United States and China. These countries can be viewed as a single entity called Chimerica. By and large, a resurgence in economic growth outside Chimerica (e.g. in Japan, the Eurozone, the other BRICs) is unlikely unless both the U.S. (the world’s largest economy) and China (the world’s largest emerging economy) are prospering.

I believe substantial, perhaps overwhelming, evidence exists that points toward a protracted global downturn like that experienced in Japan during the 1990s (and beyond) following the crash of their stock market and real estate bubbles of the mid to late 1980s.