I was returning from holiday this morning through Miami airport expecting to report on the end of the British recession.
In the US, the economic situation is now commonly referred to as “The Great Recession”. I think on that basis, following today’s third quarter GDP numbers our own quagnmire can confidently be termed “The Greatest Recession”.
Indeed leading economist John Philpott refloated the D-word – depression. We are not there yet. But today’s number, showing that between June and September the economy shrunk by 0.4 per cent thus making this recession the joint longest on record, is a significant moment.
First, this recession is dreadful even given the unprecedented stimulus actions mainly from the Bank of England but also the Treasury. Where do the critics of quantitative easing, for example, believe the economy would be in the absence of these supports?
Second, this is bad news for the government. The days of “No more return to boom and bust” are long gone of course. A small bust could have been written off as a small accident in a world financial collapse. The most enduring economic recession in the major European nations asks serious questions about how the economy was run over the past decade.
But don’t think that this offers a free pass to the Conservatives. George Osborne’s betting the farm on becoming Britain’s Big Cutter is beginning to look a little perilous.
If the economy continues like this for another quarter, it is perfectly possible that the economic argument will be aeons away from a competition over cuts. Expect the Conservatives to start to tone down the rhetoric on cuts.
Thirdly, when not one of the City economists polled by Reuters or Bloomberg expected today’s GDP number, we know we are in strange times indeed. The conventional relationships, formula and equations that describe an economy are not working. Those with the best magnifying glass on our economy are troublingly blind.
The data may be bad, but even given that the diagnosis is difficult, and the medicine as unproven and experimental as it’s ever been. The English patient is back in intensive care.
- Get new posts from Faisal Islam’s blog emailed to you. Sign up here for free (link takes you to Google’s Feedburner service). An email is sent daily when new blog posts have been added.
Commentsoldest first
The supposed abolition of boom and bust was the ideological lie, the rotten foundation which underpinned the entire New Labour project.
Boom and bust is inherent in the capitalist system; the world economy will recover again, and crash again, and continue to cycle in this fashion while the market is given free reign.
Alan Greenspan has already admitted that the world recession was caused by his misjudgement. Fairness requires that we all admit that we went along with his judgement that US & other bankers would not lend their Asian depositors’ vast funds irresponsibly. It happened before in the early ’70s when oil surpluses were deposited into US & Euro banks, and then lent on without proper pricing of the risk that the loans might not be repaid.
So everyone’s to blame! We all saw that interest rates were being pushed lower by vast deposits into US & UK banks and none of us warned that would lead to trouble!
Despite the UK’s exceptionally dominant financial industries, our economy has lower unemployment than either Euroland or USA, and the costs of servicing government & household debts are well below 1997 levels. Because interest rates are less than half levels 12 years ago. That debt was manageable now, and will be over the next five years.
What’s needed now is patience whilst the stimuli work through into growing consumer demand, extra borrowing by businesses and general expansion. Vicious cuts in spending next year would raise unemployment and bankruptcies.
It’s no surprise that this recession continues. Even when it’s ‘over’ it’s not really over. It’s just the start of the ‘healing’ proccess that’ll no doubt turn into another resession, before any benefit starts to show. But, whether the media like it or not, there are millions of people out of work with no benefits or money with lives of absolute misery, to the point that they may as well be dead or, drink, take drugs & commit crime to blank out their existence.
The true state of the UK is a Dickensian nightmare and continues with a divide in society only matched by the great depression. All this is caused by Unrestrained Capitalism, political corruption, media indifference, spin, lies, and the rich scum perpertrating their evil ways with the help of the government.
It may be a global recession but the UK if hit far worse than comparable countries where they had a better regulatory system in place. For example, for years France controls its banks far better than the UK’s lack of regulation. For example, for years France has stopped its banks lending money to people who cannot afford to pay it back (e.g mortgages). Whilst the other countries were affected by the recession it was nothing like as bad as the UK.
And whilst this government goes on about how our unemployment rate is “not too bad”,other countries started with a higher rate but their un-employment has increased by less than the UK.
Basically Gordon’s “light touch regulation” (i.e. allowing the banks to do what they want, when they want with who they want, etc.) has ensured that we are suffering far worse than we need to.
It is the Rich Capitalists who are to blame – a criminal class – but since they or rather treir lapdogs make the law – they have nothing to fear . It is the ordinary people who pay – no use balming ”Labour ” – blame the people who voted for them when it became apparent that they were just a rotten capitalist party . Capitaism is a sick system – Socailism – well I am not into Isms ” any more – just a fair deal for every citizen – and that will never happen under Capitalism .
It is about time we all got real on the true impact of this recession; With a half decent job, supporting a son at uni and credit card debt, which was kept level in that I replaced what I spent religiously until Christmas of course, a week before which I lost my job.
The last year has seen me homeless, now lucky enough to be residing in a tiny, soaking damp ridden flat which the landlord charges over the odds for, meaning I have to find a top up each month while wearing coats and sitting on the floor with no furniture.
The cost of this recession to me: my job, my health, I have lost over a stone due to having so little money for food, my self esteem and slowly but surely all hope. All I want to do is to work and pay off my debts, as Yosa Hughs said gius a job.
I am one of too many! This recession once it started was a golden opportunity for any half a brained politician to be creative and possibly go down in history as being the man or woman that the brought the people of this Great land together in pulling through.
I’ve got lots of ideas that would really make a difference, the tenacity to carry them out and unlike those we place so blindly in charge morality.
People with debt are benefitting from low interest rates, but a lot of that extra cash is clearly going to pay of the capital and clear the debt. People with savings are getting pathetic returns from the Banks, so are less inclined to spend. That’s morally wrong.
So its no wonder the recession is dragging on. Government and BoE have been doing all the wrong things.
Instead of trying to reflate the old discredited system (pun intended) and re-fuel the same old problems, what the should really have done was i) push interest rates up a bit, to reward anybody who had genuinely been prudent ii) find a way of stopping people from losing their homes, but still leave them responsible for the debt..
That would have encouraged a transition to the brave new world that we need, where saving/investment is rewarded whilst massive debt is discouraged, i.e the opposite to what have had for the last few decades.
Such a new system would be inherently stable..
What we have actually had for last 30 years obviously isn’t stable and has been proven to be a fools paradise.
The Government are even bigger fools though, for reflating the old burst balloon…
How can one not blame a goverment that praised prudence but was profligate.
That cured boom and bust and has led us to the greatest bust ever.That lied at every opportunity to obtain their way.Lied on Iraq,Lied on the economy.Lied on Europe.Promised and reneged.To try and blame capitalism is to take away the fact that a labour government used the riches generated by a banking boom with no regard for how those riches were obtained.Lax regulation .Offering the world without thought,spending without thought.Now we are reaping the benefits of that profligacy
I think “Worst” would be a better word than “Greatest” to use in your headline. There’s nothing “great” about the Recession from where I am:
I haven’t worked since March 2009 and there appear to be an average of 200 applicants for every job advertised on line (Quick Advert: I’m looking for contract roles as Programme Test Manager or Head of Test).
I’ve been hit by piratical increases in interest rate charges on credit cards and remain appalled by the activities of the Parliamentarians.
I’m stuck with a fixed rate mortgage until August – so no drop in interest rates there either.
I feel deep sympathy and compassion for those who are worse off than me, but greatly fear things will be dire when our money runs out.
I retain my sense of humour and hope to survive, but I do want retribution against people like Fred the Shred and the piggies in the Public Purse trough.
I reject all political parties, preferring to put my faith in people of integrity and compassion.
” I reject all political parties, preferring to put my faith in people of integrity and compassion”
I too feel there is no one worthy of my vote and cannot believe that we are not taking to the streets to march on London.
It seems as though the stuffing has been knocked out of us. So greatly have we been manipulated!
I think if the political factions do not get real there will be a march to London similar to the Yarrow march. I think it will take some of the deaths that are going to happen this winter as people freeze, starve or commit suicide before we finally become angry enough. I wonder just how much the media is keeping from us in terms of related suicides. I used to think people who did this were ridiculously warped in terms of what is important in life, now I know is simply a case of living with dignity and hope, take away those and there is nothing left but despair.
I am educated, experienced and damn good at my job, it will be people like me who know the power of collectivism that being to change things for the better, where everyone is of value, and where the silly banker boy who waved money – from the bank – at protesters was instantly sacked!
Remember these words, are they spoken a fool?
There is still time Mr Brown gius a job
I know of one recent suicide where there’s the possibility of credit card debt tipping the person over the edge.
Ressesion depression recovery stimuls growth economy consumer spending what ever. What do you think we are spending. dont you realise that you nare spending Monopoly money, debt currency,Legal Counterfeit Notes. designed by the Banksters and the Government to steal and drain our lives from cradle to grave, through their Fraud and continious Deception. However, Fraud and Deception is not a CRIME. for these Parasites. If we did what they are doing nwe would be in Jail. Wake up. Your life will depend on it. It is only an Illusion that we believe in, you are making it appears True. Peace Love and Truth will Reign.
Leave a comment
* Required field.