Scraponomics Episode 102: Is Another Economic Crisis Coming?

“There cannot be a crisis next week. My schedule is already full.” — Henry Kissinger

By now, some of you may be aware that commodity markets have seen a significant decline (significant being, as my grandfather would say, a masterpiece of understatement), to near 2008 levels. The question is, what does this mean for the economy? Is it nothing to worry about? Should we all be freaking out?

Historically, the scrap industry has often been seen as a fortune teller of where the economy is headed by about three to six months. The only time when the this didn’t happen, as my dad recalls it, was in 2008. At that time, the opposite occurred. Other industries in the US began to feel the effects of the crash earlier in the year, and the scrap industry felt it at the peak of the crash in October and November.

At the moment, commodity markets are cratering, but every other industry seems to be doing OK. If you read articles in Scrap magazine, the impression is we have a long road ahead of us before a recovery. Another article in Bloomberg indicates we’ve reached the bottom and the markets should begin to rise again. If you read 15 articles, you could get 15 different opinions. So, how does one choose which one to believe?

The trouble with blindly following any one philosophy is that none of them take into account roughly seven billion unpredictable humans with emotions. All signs could lead to an economic upturn, and then a labor dispute on a coast happens somewhere that affects the entire planet. All things could look in dire straits, and then the government of a superpower changes one variable in foreign policy that helps its domestic businesses.

Indeed, the only constant seems to be unpredictability, but healthy commodity markets are critical to our economy. Here’s to hoping for a quick recovery.

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