GCX on US Booms, Busts and the Great Recession-

Over the last 20 – 30 years the US has seen tremendous wealth creation as a result of the financial and housing markets success, as fueled by a huge credit bubble.  Vast amounts of money leveraged by borrowing flowed from sector to sector through hedge funds and institutional investors – to the point that it had nowhere to go – domestically or globally.  

With theses booms, periodic busts and the ongoing credit bubble, the Great Recession should not have been a surprise.  The government’s intervention and the spending of trillions of dollars to avert a meltdown of the same success bubble instruments have kept the realities of unsustainable market growth in the forefront of Americans minds.  What makes the Great Recession so significant for sustainability reform is that at the precise time that consumer spending is required, the “baby boomer” population, which the US has relied on for growth, is now reaching retirement age and thus lower spending years.   

It is important to understand that in consumer driven economies, population demographic trends are the most critical economic driver – predicting peak spending, productivity and innovation through consumer and work life cycles.  The next US population wave of spending consumers is not projected until 2020 and that gives Americans 10+ solid years of slow growth that will create a new generation of motivated realists.

So the current Great Recession will be seen as a period that will redefine the “American Dream” towards greater sustainability with the realization that bubbles cannot last and the need to address longer term issues, such as financial reform, healthcare, and energy.  This will also enable the realization that a focus on social and environmental sustainability with developing countries will create the next Industrial Revolution.

The last Industrial Revolution created great wealth for developed countries at a time when our population was much smaller and natural resources were plentiful. However, we are using the same technologies, production organization and energy resources as we used back then.  Now resources are not abundant and emerging countries are growing much faster, with significantly higher populations – making sustainability an overwhelming priority as these countries growth could threaten existence as we know it!

The requirement for sustainability will necessitate a re-design of our production and organizational systems and new cooperation between developed and emerging countries.   The realities and opportunities will not be lost on Americans – it’s simply too large and painful of a reality check that is occurring in a relatively short period of time.

The Great Recession will provide Americans with a new middle ground and a sustainability mindset by necessitating the elimination of huge waste streams in our consumption and the reengineering of our antiquated business designs that will in turn provide job growth, business profits and new investment relationships with emerging countries.  

In our next series we’ll discuss why environmental sustainability has some unlikely closet advocates in groups that oppose it today.