A typical recession in Canada starts a bit after a US recession and is much longer. The US bottoms out and bounces back pretty quickly, while we continue to have high unemployment for a couple of years. The Report on Business and its ilk downplay the importance of this post-recession hardship because they're more concerned with the stock market, but working Canadians feel the pinch for a long time.
At this point, a recession with two or three years of layoffs is the "Good News" scenario. The US government is throwing trillions at the economy because they are in very great danger of a much worse situation than a recession. We are all teetering on the brink of a cliff and there may be no precedent for what happens next. Whole industries may shut down. We could be facing massive failures of banks, investment companies, manufacturers, retailers - even states and provinces. Every investment not protected by deposit insurance could be in jeopardy. We could enter a period of high inflation that would not only erode wealth, but undermine the efficieny of every aspect of the economy.
The economic downturn in China is particularly troubling. Just one small effect: if Chinese demand for oil declines, the Alberta oil industry could conceivably collapse. Similar shocks to other sectors that are affected by Chinese demand could be felt all over the world. The Chinese economy is vulnerable because it is still a very poor country with huge exports: it doesn't have domestic demand to cushion its vulnerability to global conditions. If it falters, it could fall hard.
The impending collapse of countries on the periphery of Europe will send shock waves around the world as they default on loans, and it's not clear (despite overwhelming evidence) that global economic leaders are preparing for it. World governments and economic organizations seem to be too much in reaction mode, and aren't being proactive enough.
If this great depression occurs - and at this point it's still just a possibility, not a certainty - then who knows what horrible political movements may grow. Hitler had his roots in the great depression of the 1930s. What might be the equivalent in a 2009 depression? Who might be the next great fascist state? Russia... China... the USA?
If we go into a depression and if it results in another world war, how will that affect the environment? Wars cause enormous environmental damage, with all the burning and sinking of ships and aramament manufacture and so on, while the environment is increasingly shaky. We could hasten the melting of the global ice caps, resulting in flooding of coastal areas and the displacement of hundreds of millions of people, just when international organizations that deal with disasters are too broke to operate in the way they were designed.
It would be comforting to know that there were people thinking about what may come and planning for it as best they could. In the short term we need to figure out what to do when the IMF runs out of money. But we also need to rethink everything we do in light of possible global economic collapse. It might not be a likely scenario, but there is a growing possibility that we're in for dark times ahead.