Wednesday, Feb 11, 2009
Banks losing cash on a scale that nobody believed possible
Independent: 'This is the worst recession for over 100 years'
In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies.
Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."
He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible". [????]
Posted by troy @ 05:07 AM (730 views) Add Comment
7 Comments
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1. paul said...
And so the question is, is this the candid admission of a government insider or the rantings an alarmist twit out of his depth?
Hmmm ... ?
2. tyrellcorporation said...
Constant and relentless reference to the Globality of the financial crisis. YES it's a global problem but some countries are far more vulnerable as a result of bad policies and decisions over the last decade. 'We are uniquely placed to weather the economic downturn'. Lies heaped upon LIES. We are uniquely placed to be decimated by the economic downturn because we saved nothing as a government during the boom years and are economically dependant on consumer spending and the financial services - pathetic!
The switch of tactics is very interesting - denial to all-out soap-box shrieking about how bad it's going to be. I think NL are trying to generate a blitz spirit, 'we're all in it together' type of atmosphere. Judging by the utter capitulation of public sector workers at the first hint of snow, I don't think there is stomach for a fight.
On the subject of the public sector. A good friend of mine and his wife who both work in London are now both seeking employment with a quango or council. She incidentally earns a great wage working for a consultancy but the pay and perks are now so good in the public sector that both are now being drawn into it. I reckon this situation is being repeated en masse across the country. In terms of a structural shift this will be devastating for the UK economy. Looking long-term I think UK productivity will nose-dive. Like the fall of the Ottoman empire, all the best brains are being attracted into non-productive 'easy-street' positions. With the tax tsunami probably just a year or two away, the prospects for a UK recovery in the next decade are slim to nil IMO.
3. Crunchy said...
2. tyrellcorporation
Spot on. Welcome to the flip-side of the sinking ship.
THE GOVERNMENT TAXATION ARMY. The last to go down!
4. wiltshire said...
If this is going to be the worst recession for 100 years then as far as I am concerned it's time for some 'out of the box' thinking. Namely, time to suspend party politics with relation to the economy because, simply put, Labour are not up to the job. If we do not get the best brains in this country on this subject (Vince Cable for instance) then this problem is just going to get worse and worse and worse.........
5. icarus said...
Did they HAVE global crises 100 years ago? I thought globalisation was more recent than that. Or is Balls thinking of the British empire? Taken literally he's saying this crisis is worse than the Great Depression.
What's this about banks losing cash on a scale nobody believed possible? I think quite a few people were aware of the probability, never mind possibility, that this would happen given the grotesque leverage with which politicians and regulators in the US/UK allowed banks to operate.
6. troy said...
icarus re ""on a "scale that nobody believed possible". [????]"
the ???? were intended to suggest it's not just the banks, it's the taxpayer
it's not just the capital sums involved, it's the interest future generations will pay
7. letthemfall said...
tyrellcorp: "pay and perks are now so good in the public sector....non-productive 'easy-street' positions"
These fantasies about the public sector are as bad as those of the politicians you refer to. You'll be telling us bankers deserve their bonuses next.
wiltshire
I wouldn't mind seeing a national coalition govt. too, though I suspect things will have to get very bad indeed before there is any hope of seeing one.