While I do not pretend to be any sort of “financial wizard” (right - look where those folk got us), there is I think a single common cause driving our economic roller-coaster. The single cause is a flood of capital, accumulating at a compounded rate. Capital flooded the “developed” countries, overflowed, and was enough to set most of the formerly “third world” populations on a rocketing economic climb. Even though places like China and India are no where near completely developed, they are transforming from a sink to a source of capital.

Counting India and China in with the developed countries, we have most of the world’s population.

The only major area outside of the global economic boom seems to be Africa. The oil-rich countries are not hungry enough to want to transform. The mid-African countries seem to be too much of a mess. South Africa is more advanced, but also a mess. Where would the transformation start?

Seems the real answer is also the logical guess.

Manufacturing: The Rise of the Maghreb - BusinessWeek As costs rise in Eastern Europe, the company says, it’s getting harder to make a profit. North Africa, by contrast, offers far lower wages and plenty of eager workers.

Right. The non-oil-rich corner of Africa closest to developed Europe.

With all that capital sloshing around, our current economic stumble is emotional, not rational. Nothing real and major happened. California did not fall into the ocean (I would have noticed). Some investment gamblers made some bad bets - and that is just about all. Once past the current fears, all that capital has to go somewhere.

Recent government actions have three notable effects.

  1. The massive injection of spending ups the level of economic activity.
  2. A number of actions are meant to reassure investors.
  3. The federal created-money raises the chance of inflation, forcing capital off the (now risky) sidelines.

The net effect may be a recovery (aside from housing prices) sudden enough to cause whiplash.