Monday, Jul 14, 2008
William Rees-Mogg: sharpest mind at the Times
Times: This recession could easily tip into a depression
"I was born in 1928; I remember the later stages of the Depression. This recession is producing a series of nasty surprises. Things are always proving to be worse than anyone had expected. Fannie Mae and Freddie Mac, created by President Roosevelt in 1938, are far bigger than Bear Stearns and Northern Rock put together. The debt crisis, the banking crisis, the property crisis, the oil crisis, the shift to Asia, the bear market in stocks, are huge global adjustments that have all come together at the same time. There is now a momentum of negative events sweeping away financial flood defences; in the 1930s that force overturned democratic governments as easily as it overturned banks. Before we get back to balance, we may see dramatic changes in politics, as well as in business and finance."
17 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. Landedgentry said...
This would probably go over Anne Ashworth's head as it doesn't mention location, young professionals and adding value by neutral decor, cafe proximity etc. It just simply would not compute!
2. malct said...
Well cherry picked and presented Drewster. Perhaps this article will broaden the perspectives of some people who question what is 'on topic' for discussion here. I'm sure it will broaden the perspectives of those with an open mind who are perhaps seeing (or taking seriously) the bigger picture for the first time.
quote "The Great Depression can be regarded as lasting for ten years from 1929 to 1939;" oh dear.
comment:- finally people are openly talking of a possible recession - but is it a depression? They're are still talking of illiquidity when they really mean insolvency. US treasury seems determined to keep fmfm afloat.
3. malct said...
just had a quick look at the comments by times readers.
an odd mixture of fear, ignorance, arrogance and apathy - no hope there then!
4. paul said...
"This recession has produced a succession of nasty surprises. Things are always proving to be worse than anyone had expected."
Good lawd. There's the problem in a nutshell - the "shocks" are persistently being answered in some sections of the media with Smithesque denials and weak but bullish counterarguments. Not here though.
Hope I'm that sharp when I'm 80.
5. lierbag said...
The 30s depression Rees-Mogg recollects, was a period of economic dislocation caused by speculation. The real sources of wealth - oil, coal, gas, minerals - were all still in place to help kickstart the recovery.
Our situation is radically different. We're going through the same turmoil caused by misbehaviour in the markets - but the real sources of wealth have now largely been exhausted. There is no historical precedent for this. The outlook is truly grim.
6. whiteknight said...
No development thus far has been surprising. It has all been predictable.
It will continue to be predictable.
The fact that it continues to shock and surprise those with the the logical deductive powers of a vegatable is of no real interest.
7. drewster said...
This is one of the finest articles I have read in a long time.
@malct,
Thank you. I'm surprised that the Times saw fit to print two such diametrically opposed viewpoints on the same day.
@lierbag,
You're quite right. As Rees-Mogg points out, it's not just the credit crunch: it's "the debt crisis, the banking crisis, the property crisis, the oil crisis, the shift to Asia, the bear market in stocks". The debt bubble alone could cause a 1930s-style depression, but when you factor in peak oil and the emerging economies of Asia then you truly have the seeds for disaster. The next few years look rather worrying. I just hope I still have a job by the time house prices have fallen.
8. drewster said...
I particularly like his closing line: "Before we get back to balance, we may see dramatic changes in politics..."
In recent years the peace process in Northern Ireland has been greatly assisted by vast wads of cash transfused from Westminster to Belfast. Some 60% of NI's economy now depends on the public sector, and keeping people employed has maintained the peace. If we are in for a re-run of the 1930s and a "dramatic change in politics", we would see the warning signs in Northern Ireland first. Later we could expect to see creeping Scottish and Welsh nationalism. Alex Salmond and Rhodri Morgan are obviously no Hitlers, but if the tide turns against globalisation then a degree of increased nationalism is a possible response.
Alternatively, the whole thing might just blow over by Christmas....
9. sold 2 rent 1 said...
There's the D word again.
I was talking about a depression in April 2007
see posting
http://www.housepricecrash.co.uk/newsblog/2007/04/blog-be-careful-what-you-wish-for-3697.php
Oil is going to play centre stage in this crash - but it aint gonna be peak oil.
When the oil bubble bursts it will be like another sub-prime (before the banks have even got over the current financial crisis)
10. shipbuilder said...
Weren't we all agreeing that the Times was heading down the toilet only in the article below? Couldn't the praises for this article be just a wee bit influenced by the fact that Mr Rees-Mogg is agreeing with the general sentiment of this website?
Just trying to put things in a bit of perspective here. I've seen enough bullsh*t talked by the 'experts' on the way up not to take it with a pinch of salt on the way down. To me the only thing that makes an expert an expert is the fact that we only remember the one time they were lucky as opposed to the unseen thousands of times they got it wrong.
11. shipbuilder said...
s2r1 - in light of your response about oil, i'm interested to hear your views on this post a few days ago -
http://www.housepricecrash.co.uk/newsblog/2008/07/blog-the-response-to-the-premise-that-speculation-and-short-selling-in-particular-is-evil-15244.php
12. sold 2 rent 1 said...
shipbuilder,
I am not against speculators.
What I dislike is the deliberate creation of bubbles by the power elite by spreading misinformation through the mass media and the deliberate deregulation/manipulation of markets. These 2 factors create the problem. Speculators are not the problem but are merely the tool used to create a problem.
The problem is the power elite.
They understand a system and know how to manipulate it.
The system I refer to includes human emotions such as fear and greed.
13. sold 2 rent 1 said...
The pubic are beginning to awaken to the flawed debt-based banking system
Look at the top 10 videos on Google Video
http://video.google.com/videorankings?type=viewed&cr=usa&hl=en&start=0
Money As Debt (at no. 10)
The Money Masters - How International Bankers Gained Control of America (at no. 25)
14. shipbuilder said...
s2r1 - If i'm right, though, what you're saying is that the speculators aren't the problem, but that the act of speculating is, as it is used by the power elite?
15. sold 2 rent 1 said...
ship,
"that the act of speculating is the problem"
No. The problem is deregulation, market manipulation, and misinformation.
If the mass media starts going on about peak oil then you can expect speculators to be buying lots of oil.
And when hedge funds can buy oil on margin ($8 down and $135 from the bank) they will buy it in huge amounts.
You need to sort out your causes from your symptons.
16. shipbuilder said...
So is it perfectly acceptable to profit from such speculation even if you know that it furthers the aims of the elite?
17. sold 2 rent 1 said...
I would imagine that very few speculators would even realise what is really going on behind the scenes.
Those that do are either very smart or part of the conspiracy.
All will be revealed soon enough.