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‘The End of Progress’: Expect Decades of Slow Growth, Author Graeme Maxton Says

Daily Ticker

From retail sales to initial jobless claims and monthly payrolls, a recent spate of better-than-expected economic data has many wondering whether the fears of a double dip recession are overblown. (See: Consumer Confusion: Sales Up But Confidence Down — Here's Why It Makes Sense)

Even the markets seem to have looked passed the previous bearish sentiment. Both the Dow Jones Industrial Average and the S&P 500 are up more than 5 percent since the beginning of Oct. — despite the unprecedented volatility since the debt-ceiling debate in Aug.

So is the economy on the upswing and not as bad as feared?

The Daily Ticker's Aaron Task asked that of economist Graeme Maxton and author of The End of Progress: How Modern Economics Has Failed Us. As you can gather from the title of his book, Graeme is not all that optimistic.

"Everybody wants to see some good news. We want to come out of this seemingly endless slow period of growth," he says. "But, I am sorry to say it is not going to happen. It can't happen."

His reasoning: Debt, debt and more debt. Over the last 30 years all growth — from Asia to the U.S. to Europe — has been fueled by large amounts of consumer debt, bank debt and government debt.

Fast forward to today. The world's debt problem is not getting better, only worse.

It may feel like ages ago already, but it was just two months ago the U.S. Congress grappled with how to raise the country's $14 trillion debt ceiling. And across the pond, a deal over Greece's solvency has been two years in the making and fears of a contagion abound. (See: Deal or No Deal? Europe Getting "Closer and Closer to the End Game," John Mauldin Says)

On the consumers front here at home, Americans increased credit card debt in September by 1%, according to a new survey by Credit Karma. Last month the average consumer with an account had:

  • $174,137 in home mortgage loans - up 1 percent quarter-over-quarter
  • $47,361 in home equity debt - down 0.4 percent quarter-over-quarter
  • $29,939 in student loans - stable quarter-over-quarter

So then how long will it be before a recovery takes hold?

"We are destined for a correction…that will last at least 10 years and we haven't actually seen that correction yet. We've seen part of it," Graeme says. "[Consumers] have to start paying back what they borrowed, banks have to get themselves back into some sort of healthy state" as do governments around the world, most notably Greece right now.

Until the debt dissipates, you can forget a recovery. The world will chug along at a very slow pace, he says.

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