We’re officially in a recession, and it’s going to be long and deep. Christian Renaud’s post, Grab the fiddles boys, I see smoke……., captures the predicament nicely. I also love Paul Krugman’s quote from an interview with Newseek.

We basically had a $10 trillion shadow banking system shrivel up and die. Having the Fed add $700 billion to its balance sheet, or whatever it is by now, is not enough to make up for that.

Krugman should know, he’s an expert on Japan’s financial crisis in the 1990′s. A crisis that America is going to now emulate – steep drop and years of malaise. I’ve been predicting this for years. I’m not genius, I’ve just been reading Krugman and Dean Baker, who I believe first mentioned the housing bubble in 2005. You can read more of his straight forward economic analysis at The American Prospect. People have been living in a dream world the last few years, ignoring reality. If you do it collectively it just seems to work. A great example is this video of Peter Schiff.

 
That dream world has ended. It also isn’t likely to come back for years. Looking at Japan as an example, they’ve had 10-15 years of little growth. So what will people do now? Entertainment is always good during a recession. But that’s escapism, what they’re lacking is a dream world. That’s potentially where virtual worlds can come in. A combination of entertainment and dream world. Might sound far fetched now, but when I see virtual worlds in a few years they’re full of features and content that we can only dream about today. It seems like a bright future for virtual worlds and immersive story is going to be a big part of that.