The post-World War II economy has experienced its share of crises, from the oil shocks and "stagflation" of the 1970s to the Asian financial crisis and "dot-com" bust of more recent memory. Each time the economy has rebounded and gone on to bigger and faster global growth.

But something different happened last summer. Global economic and energy trends started changing faster and more worryingly than even most pessimists expected. Framed by an oil price spike to nearly $150 in July and the beginning of the Wall Street collapse in September, the Summer of 2008 was a major turning point. Few in government, business, or at the community level, however, seem to fully understand its significance.

References to the Great Depression aside, most analysis of the current crisis seems to assume that we're merely in the downward part (albeit a particularly deep one) of a curve of economic activity that will inevitably go back up if only we can keep the economy from slowing down too much. Listen to recent debate about the $800+ billion federal stimulus package and you hear two strong underlying assumptions: the economy will recover within a few years, and it will function pretty much the same as today (except perhaps for some more wind turbines, more solar panels, and a dazzling new selection of fuel-efficient family cars).

And yet, the same leaders and pundits that purport to solve the economic crisis with more spending and tax cuts increasingly acknowledge that we face immediate energy and climate crises of monumental proportions. That is, the problems at hand require not a few trillion dollars thrown at them but fundamental changes in how the modern industrial world works.

I think what's happening is a mental disconnect; it's a failure to put three things together:

1. Our immediate experience of the current economic crisis. Companies are going out of business, public budgets are being slashed -- something needs to be done and soon.

2. Our awareness of impending energy shortages and climate changes. The basic debates about both climate change and peak oil are essentially over, even in the mainstream media.

3. The reality that business-as-usual economic growth completely depends on affordable and available fossil fuels. This is rarely discussed, but it's hardly debatable.

This mental disconnect means we're not diagnosing the problem correctly, and we're not pursuing the correct solutions. We've essentially failed to recognize that the game has changed.

I've started to think of the Summer of 2008 as signaling for the American economy what events like Pearl Harbor or the collapse of the Soviet Union signaled for American foreign policy. They were big turning points that occurred outside our frame of what we thought possible. They signaled that the world was no longer working the way we expected, and the old way of doing things no longer applied.

This had enormous implications: in January 1942 and in January 1992 so much of previous decades' thought about how the world worked had to be thrown out. We had to not just learn the new rules of the game, but also figure out which new game it was that we were even playing (and hopefully in time to write some of our own rules).

Today we are a few months and many hundreds of billions of dollars into the new new game, a game that -- this time -- is not about geopolitics but about energy and economics. I happen to think the new game is called something along the lines of "World Without Cheap Oil" or "Beyond the Limits to Growth." Most decision-makers in Washington, state capitals and board rooms, however, seem to feel we're still playing "Global Resource and Capital Bonanza."

We need only to look to the last seven years in Afghanistan and six years in Iraq to see what happens when we flub our first response to a major turning point. Unfortunately, with the new crisis that announced itself last summer we will probably only get one try. As Richard Heinberg has said: "Because we've run out of time, natural resources, and capital, this is our only chance to get things right."

Photo credit: Bindaas Madhavi