There is "big picture" and then "BIG picture". You are obviously alluding to comments I have made, but I think mis-characterizing them. In the "BIG" picture - the Great Depression itself was a "minor speed bump" along the path of relentless, exponential, unending, technological improvement. So there is no reason to believe that GD2 (great depression 2.0) would be anything otherwise. Furthermore, I think there are MANY reasons to believe that GD2 will NOT be anywhere near as devastating as GD1. If you'd like to rehash those arguments I'm game...
As for little "big" picture - I've always maintained that I think the market is heading lower - I just don't think its going to go straight down. No one here knows. A 40% down year could be followed by a 30-40% up year (which is no where near recovering the previous year's losses) and then another 40% down year. Or maybe we just get 40% down years for 3 years in a row. Who knows. But one thing I do know is that the market isn't going to plunge every time earnings or this and that economic numbers are bad. The biggest rallies will start when "news" is the worst.
As for the big "Big" Picture, we could be entering a new paradigm related to peak everything. Energy is the prime mover of all economic activity.
If this generational effects coalesces with diminished Energy,Credit/financial resources, the basic paradigm we have been living for the last 10,000 years could change.
After early humans created/discovered agriculture there has been a more or less continuous expansion of our comfort,life expectancy and ability to form/mold the world to our liking. There is no guarantee this can continue.
While technology itself is scalable (computers will have the same or greater speed/power even if economy were cut 90%), the application of technology is not scalable, but proportional to financial and energy available.
Knowing how to build bridges is not the same as building a lot of them.
John has done a great job of extending generational theory into a practical working model for both economics and culture as well as politics.
My concern is that given the likely outcomes;economic depression/collapse, possibly a general social collapse, we could find ourselves resource bound when we reach the regeneration phase.
If you track general energy abundance with size of the world population you get a very good correlation. Obviously it is more complicated than a simple one variable cause and effect, but clearly we could not support the present global population if the energy resources were not both relatively abundant and relatively cheap (petroleum as compared the substitute human and animal locomotion).
It is also apparent that many other technologies are equally correlated with energy, especially petroleum. While there are substitutes to oil, most would require either a reduction of the earths population or a reduction of standard of living.
Now my basic argument is expanding populations and expanding standards of living have been and are the main engine of the global economy,
while in the short term energy prices are responding to the economic slowdown, in the future limited oil resources in particular will limit any recovery.
In the game theory and plans of the cold war one of the main topics was just how quickly would a given country recover it's GDP if subjected to a catastrophic event (in that context a nuclear exchange on cities and industries).
One of the main concerns was at some critical level of damage, society would be unable to regenerate.
This question is germane to economic damage as well. If the current system were to collapse just how could the populations adapt and just how long would it take to restore some significant fraction of GDP?
People eating garbage don't return to buying antiques in months or years and in fact may never do so again.
Same with the use(misuse) of credit.
After reading "The Black Swan" it is apparent the current financial and banking systems are so lean/efficient that they are extremely vulnerable to stress (fragile). There is an old joke about a farmer who had trained his mule to lower cost by reducing his food intake .....until it died.
With the current level of leverage and complexity it would be almost impossible to repair this system if it brakes.
Just imagine what it would take to sort out who owns/owes what, let along some agreement that we will just start at some arbitrary point.
In tulip mania, the common folk did not largely participate in tulip commerce, so when the system failed, life went on for most people.
It was a very disruptive time, but the Government decreed that all contracts after such and such a date were void.
What on earth kind of settlement of this kind could be crafted today?
Also when people lose their jobs and companies have reduction of workforce, both have long term permanent changes.
Even if at some point the economy recovers the capabilities of both the people and the companies are reduced from their former selves.
The longer the separation the greater the harm.
The various markets also are not the whole measure of where we are in terms of fourth turning event.
One of my personal curiosities is which leads and which lags, markets, general economics or social events.
I remember the Berlin wall coming down with complete surprise, and while certainly appreciate GDR was not a market economy,
it none the less seemed only likely from a backwards view.
So in closing the GD2 may well be less damaging than GD1, lets hope so, but there is no special reason to think so and in fact
a lot of reasons to doubt it.
