This past June was the worst month for the stock market since 1930, according to Robert Shiller of Yale housing prices have fallen more than they have since the great depression in real terms, oil is setting all time costs in real terms, major financial institutions have required massive intervention to maintain solvency in a solvency crisis of global porportions, (this aint your garden variety s&l crisis). These aren't blips that mean a downturn comparable to something which has occured over the past two or three decades, this economic situation is the 8.0 earthquake in the major urban setting, it is a big one. (Although I still believe delusion may allow for a brief recovery).

Still the saviours are really seen ahead of time. Can new developements in alternative energy make it bigger than the IT revolution? Can new treatments reduce the cost of chronic care for the aging? Aside from simple policy changes that could make life easier such as sane tax, health care, and employment policy.

The problem is that for these things to happen on large scale you need to loosen capital markets and create a growing economy built around real economic activity, this to allow for the support the sane tax policy. Right now we are just bailing water trying to keep the boat afloat, and the previously mentioned issues, things like demographics and issues having to do with global warming and resource shortages are going to make it very difficult to get past that bailing water point. The potential for the good to happen has to buck such a spiral of downturn that it is almost hard to imagine.

I heard something the other day which I found interesting, it was from one of these people arguing for sustainability and I didn't follow up on their arguments to verify the rhetoric, still...They said that the U.S. has a carbon footprint of about five planets, meaning that if everyone lived the way people here do it would take five planets of resources to allow that. O.k. no big surprise for me there, but they also said that Europeans have a carbon footprint of about half that, or two and a half planets. Now that surprises me. And while I am sure some of you out there know enough about such things to argue the real ratios the point for me is what are the implications of this on global economics, particulary growth. Oh sure, alternative "green" indsutries create economic opportunity, but we are still talking about stuff here. Plain stuff. And how there isn't enough stuff to allow for the continuation of the level of consumption which powers the economic models we are pursuing. That stuff may just be potable water, or copper, or wheat, or wood, or cotten, or affordable syringes, but the stuff isn't there. We may learn to live simpler and better, but the economic models have to take a beating in the process.

Earlier issues were just structural, as much as funding entitlement programs may just be structural no matter how daunting they seem. But there are real problems which must be dealth with at a time when capital markets are in tatters, and will remain so unless the miracle of vibrant growth returns.

So while comparisons to earlier scenarios may give us signposts as to what is sane policy now, e.g. how dangerous inflation can be to economic stability, we must be fully aware of what historic porportions our problems now are.

As for how this impacts the election I think a real wild card there is the complete break from previous administrations we see. McCain may be the ideological stepchild of Bush but he is seperated enough from the status quo to strongly appeal to independents. I think the election is wide open at this point, and I don't believe the failures of Bush will weigh too heavily on who gets elected. November is a million years away in political terms, heck Gore squandered all the gains of those Clinton years by simply being smarmy and condescending during debates. All it takes is something simple like that on either side to turn the election.