The collapse of the global housing bubble, leading to a banking crisis was so well flagged that to suggest we have been taken by surprise by the huge falls in stock markets is simply not credible.

Anyone with a jot of knowledge about financial market history or, more fundamentally, with an iota of common sense could have seen that the inflated markets of the past few years were an aberration.

So whether it was holiday homes in Bulgaria, bank shares in New York or hotel sites in Dublin 4, each decision was clouded by the irrationality of cheap credit. The assets were not worth a fraction of what was paid for them. Try to sell an apartment overlooking the Black Sea today and see what you’ll get for it.

However, the global markets meltdown allows us all to think where do we go from here? It’s not the end of the world, but what is necessary now is clear thinking.

We in Ireland need to accept that the past few years will not be repeated and the State has to come up with a big Plan B.

If the paper wealth associated with the banking and property sectors is a mirage which has inflated and deflated rapidly in a period of five years, what can Ireland do to build something sustainable in the future?

Sometimes these stock market crashes are interesting because they focus the mind. Just think ahead.

The big issues for the world are essentially Malthusian. I realise that he’s not a popular thinker, being associated with failing to appreciate how technology can make huge population growth possible. However, his core hypothesis is sound.

He argued that food would run out as the population grew and that ultimately, great famines would become normal.

Obviously, this didn’t happen because of great advances in agricultural productivity, but the idea that resources do run out and when they do, people suffer, seems pretty sound.

This is particularly the case now, at a time when the world’s population has never been higher. An estimated five to 10pc of humans who have ever lived in all our history are alive today!

How is this challenge affecting us? Think of what you heard yesterday morning on the radio. We heard reports from the stock markets of India and China.

But what exactly are these telling us? How do we make sense of it all?

One way of looking at the global nature of this financial market meltdown is to appreciate that the world stock markets are just a barometer of the westernisation of major parts of the globe which, up to recently, were cut off from the rest of us.

The world economy has just experienced a Malthusian shock with the opening up of China and India.

Any visitor to either of these countries can feel the palpable desire on the part of the average person to acquire a Western lifestyle (This is well captured at the moment by George Lee’s excellent RTE1 documentary.)

Whether that is a good or a bad development is a value judgement but we are where we are; and in Shanghai, people want cars, cosmetics, iPods, Starbucks, mobile phones and satellite TVs just as much as they do in Shankill.

This is a huge drain of the world’s finite resources. Think about how this change in lifestyle habits and the enormous growth in global population will impact on the world.

Over the past two decades, the world’s population has increased by 34pc to 6.7 billion from five billion. However, land available to each individual has shrunk from close to 20 acres in 1900 to five acres in 2007 due to environmental degradation. (United Nations Report on Climate Change 2007.)

Resources are the real issue, not the tittle tattle in the financial markets. History reveals that wars over resources are a recurring fact, so, whether that resource is water, oil or food, the battle is on.

People have been told this so many times now that there is really no excuse for anyone to claim to have been taken by surprise by the increases in the price of agricultural commodities or petrol that we have seen in the past few years.

The bleating from the financial markets is a different thing altogether. The financial markets have decoupled from these real issues in recent years, becoming a casino for a parallel global economy which could be termed the paper economy.

The basis of the paper economy — where people bought and sold assets to each other in return for paper money — was/is a great illusion where the key is not to question the value of things.

So Irish “investors” bought apartments from other Irish investors in Bulgaria for €150,000 — a country where the average wage is €350 a month.

This is obviously silly and the price put on the asset by the Irish investor bore no relation to the value of the property based on proper benchmarks such as local wages/land prices or rents.

The nub of the issue is that there is simply too much cash and debt around because the global banking system was prepared to use all sorts of makey uppey derivatives as collateral in order to lend money.

So all we have in the financial markets is a huge system of IOUs where the value of the IOUs is dependent on confidence in the system.

Because the banks tried to hide their losses initially, no one believes anyone anymore and all integrity of the system is now shot.

No-one has any reason to believe anything that anyone promises so the key is to get out of the IOU game and get back into money and if you can get out of paper money and put it into something that has a logical reason to be valuable.

The only assets that are now logically valuable are the resources we mentioned earlier or technologies which might postpone a Malthusian shock for some time.

And these are old-fashioned things like gold, oil, commodities and, most notably, uranium — the key to the world’s only viable energy option, nuclear power.

Also, technologies which affect human health are bound to boom as people who are alive want to stay alive. So brain power, research and development opportunities will also become more valuable.

Notwithstanding turbulence from the fallout of the paper economy, these are the areas that Ireland should focus on.

The paper economy will recover in time, but people who invested in inflated assets like property will be so burned that they will be shy next time out.

The liquidity crunch might cause a recession here — it is now quite likely simply because we turned ourselves into an economic Tir na nOg, embellished by the very cheap credit which is now evaporating.

This will be painful but will give us time to really plan for the future. And the future patterns are becoming clear. It’s not “the economy, stupid”. It’s “the resources, stupid”.

So forget all the noise of the past few weeks in the stock markets and look to real global trends. This is where the action will be.

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