Tuesday, Feb 17, 2009
UK Recession Forecast
The Market Oracle: UK Recession Watch- Britain's Great Depression?
UK recession forecast - Depth, Bottom, duration and recovery.
Posted by nadeem walayat @ 09:52 AM (1496 views) Add Comment
42 Comments
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1. flashman said...
All this Britain is finished stuff is a bit exaggerated. The reduction of the pounds’ value has increased the value of the UK’s colossal overseas assets. Why do the doomsters not factor this into their calculations? The French and Germans are furious because we have gained an advantage. They are unhappy because a lower pound and lower wages will eventually make the UK more competitive than they are. They would love to have our problems. We are almost self- sufficient in oil and will be for another 15 years. We have enough coal to last us a 1000 years. Countries all over the world are building a new generation of cleaner coal burning power stations. Coal mining could generate 3 million jobs and provide a new export industry. We have more wind resources than the rest of Europe combined. We are already building some of the biggest wind farms in the world. We are also about to build several new nuclear power plants. Ultimately Britain could become a massive exporter of power. Two thirds of the world’s oil majors are British or part British and we own massive swathes of the worlds mineral operations. We are world leaders in genetic engineering and whether anyone likes it or not, the city will remain a global powerhouse. Not everyone in the city is a banker. Most people in the city work for profitable companies that need no bailout. The doomsters should also remember that we have the capability to be self sufficient in food production.
An abundance of power and food? A disproportionate ownership of worldwide resources and expertise? Doesn’t sound much like a British depression to me.
2. stillthinking said...
Well, I like Nadeem's articles personally. I am not so sure that the capability of the UK to be self-sufficient in food is true. During WW2 additional land was pressed into service, the population used their gardens for plots, the population was lower, and we still depended on imports.
Further, if the banks overseas assets are so large and even larger in sterling, why don't they sell them? Then they wouldn't need so much bailout money.
3. tudorian said...
@flashman
I seriously doubt whether the North Sea could sustain all our oil needs for a year, let alone 15. I do remember seeing somewhere that the North Sea, both British and Norwegian has hit peak production, and further oil yeilds will decline year - on - year.. but I do know that our future power must be generated via renewable sources or through the new nuclear power plants that those nice French engineers are building for us.
agricultural land...thats the stuff, our fallow farms, field upon field of grass, will have to be used to feed our 60 million (more like 70) folk, when the price of winter strawberries and african fine beans becomes prohibitive
4. flashman said...
stillthinking: we supplied armies, not just our own, all over the world in WW2. Since then there have been massive gains in farming productivity (fertilizers, mechanisation, pesticides, GM). It is an established fact that we could be self-sufficient in food, if we decide to do so (there are many parliamentary documents available for public consumption. I looked it up before I wrote - take a look).
We do not sell our overseas assets because they are productive and privately held. Do you want to confiscate them? Didn't you advocate the confiscation of people's savings last week?
5. flashman said...
tudorman: I didn't say it could. I said we are almost self sufficient in oil. Did you read the bit about Coal, nuclear and wind? Do you have the figures on oil to hand or did you just make a wild assumption?
6. flashman said...
All this determined cheering of Britain’s destruction is a bit nihilistic. Be careful what you wish for. Some HPCers may well be cheering an economic event that will turn many of them into modern day serfs. One of the first things they teach you in an economics class, is that a developed, successful economy has a good distribution of wealth. We achieved that (yes, I know it was a credit-fuelled illusion etc) but everything is now hurtling into reverse. Thirty years ago did anyone think that working class people would be playing golf and going on two holidays a year?
Many of this sites' contributors will not be in a position to benefit from the HPC because the HPC is clearly not happening in isolation. People are losing their jobs and taking permanent pay cuts. The government will soon be forced to lay-off many of it's vast army of pencil pushers. Tradesmen will be grateful for £50 a day and Benidorm will become a ghost town. Mortgages will remain forever unavailable to the majority because earnings and job security will be low. A permanent reduction in the income and living standards of the majority of the population will be considered necessary if Britain is to be a competitive supplier of goods and services. Current British salaries are more of a joke than house prices ever were. Did anyone really believe that an Indian civil engineer was worth 10K per annum and a shaven-headed yob in a white van was worth £30K per annum?
So who will buy the housing stock? Rich people, that's who. I have read many times on this site that the government will buy the housing stock. Impossible! The government will be unable to buy housing because they will have a much lower tax base and tons of debt. Rich people will buy up vast swathes of the housing stock and rent it out to the masses. These new Landlords will be feared because you might also be their low paid employee. The 'elite' will have, almost unnoticed, managed to turn the clock back to Bertie Worcester's time. The ultimate irony is that a socialist has presided over this fiasco. A much sadder irony, is that instead of HPCers being rewarded for their foresight, they'll be working their fingers to the bone to afford a Lord Snooty's dingy bedsit
7. jack c said...
@flashman - IMO the reason the is so much negativity floating around (Britain is dooomed scenario) is due to the perception that the people no longer have the heart and appetite for a hard days work and by that I mean a HARD days work. I take your point regarding Coal - "Coal mining could generate 3 million jobs and provide a new export industry" - assuming you & I set up business tommorrow to exploit this "opportunity" how many people do you think would last more than 2 weeks with the phyical and mental pressure of working hundreds of feet underground and 10 miles out under the North Sea. I'll take a bit of convincing at the moment that we are anything other than a nation of tanning studios and dog groomers.
8. flashman said...
I take your point about idleness. However, working conditions in mines have vastly improved and there are still millions of us who work like dogs. These yobs make the headlines but there are plenty of brilliant Brits ready and willing. I'm sure you're one of them
9. cyril said...
@flashman
Talk of self sufficiency in food is a bit simplistic. Britain could be self sufficient in food if we all lived on say potatoes, but that isn't going to happen. Also coal is the worst fuel from a greenhouse gas perspective so we will all be dead soon if we go down this route.
However I agree people should be careful what they wish for, and also it makes a change to hear another point of view. Well done!
10. flashman said...
cyril: Of course you are right. We would have a surplus of some things and a deficit of others but the net effect would be self-sufficiency. These new CCT power stations are remarkable clean. They inject the carbon back into the ground. They are about to start building the world’s largest “clean coal” power station at an old colliery in Yorkshire. The company responsible bought the mines from the government. Thatcher will be so pleased
11. goweresque said...
I'll stick my farming oar in here and say there is no reason why the UK could not be totally self sufficient in food. Yes the range of fruit and veg would be more limited, but there has been great progress in greenhouse production so it wouldn't be too drastic a change. We could still import the tropical fruits such as bananas. Also production of all products is artificially reduced at the moment by all the environmental schemes. If the govt decided to incentivise UK production at the expense of imports, the UK farming industry would respond very quickly. Remember we had food mountains back in the 80s, and the population hasn't increased much since then.
12. tudorian said...
@flashy
I did indeed read the bit you wrote about coal wind etc, and do agree.
I was nat making a wild assumption. I do know that the largest oil reserve discovered in the North sea in the last 30 years will last the world for 1 week of total consumption at today "
Jan Hagland, "Oil & Gas in the North Sea" - ExploreNorth, http://explorenorth.com/library/weekly/aa091500a.htm""
Now, just imagine the mighty UK , worlds 5th biggest economy, maybe we consume 1/100 of oil reserves (not unlikely)
The biggest oil reserve discovered in the last 30 years would in the most optimistic estimate last us for 4 months. I'm afraid we are not Norway, we have sqandered our oil resources, much of the coal we have left is difficult to extract or exists under the north sea.
UK North sea oil production was in decline when I was finishing my Geology degree in 1993.
13. jack c said...
@flashman - I am currently self employed and and work very hard to keep my business profitable and worthwhile but with an eye on the work/life balance scenario. In a former life (employed) British Coal was the largest customer on our books and being based in the North East of England I have spent a lot of time visting coal mines and believe me whilst the conditions are better than those of Nigeria and China they are not pleasant ! - Miners in the Winter months could go several weeks without seeing any natural light and this is why I referred in my previous post to the point about mental as well as physical strength. Have a look at /en.wikipedia.org/wiki/Boulby_Mine
and
www.mine-explorer.co.uk/mines/Boulby_780/Boulby.asp
14. bellwether said...
Flashman, I like your alternative take on things and I particularly liked your winding up the gold issue yesterday. The absence of diversity and much that would pass as thought is a frustration with the site although one you grow used to - kind of. Also most here are masochists of one sort or another, if they are not the victim because house prices are rising, they are the victim because interest rates are falling. They are never happier than when never happy.
Anyway mostly disagree with you on your ideas about the UK but will come back to that another time.
15. flashman said...
tudorman
"The largest oil reserve discovered in the North Sea in the last 30 years will last the world for 1 week".
This is just a jingoistic headline seeker. There are literally a few hundred fields in the North Sea so it’s meaningless to add up the production of just one of them
"Oil production was in decline when I was finishing my Geology degree in 1993"
Oil production didn’t peak until many years later. Some people say 1999, some 2000 and some 2006. Many people accidentally include Norwegian North Sea oil in their figures???
I've cut and pasted the latest industry thoughts on North Sea oil production;
There is growing evidence to show that the proven reserves in the North Sea's oldest fields are, in fact, rising. Professor Peter Odell, of Erasmus University in the Netherlands, believes that supplies of oil will flow for decades to come and that there will be new finds in parts of the UK Continental Shelf that have This view would appear to be supported by the announcement last month that Dana Petroleum, a British independent company, found a new oilfield in the North Sea at West Rinnes. The suggestion that the North Sea could harbor more oil than was previously forecast will cheer the Government.
Industry experts believe that the remaining reserves exceed current estimates by as much as a fifth.
New technology means that it is now economically viable to drill fields once considered too difficult or too remote.
Richard Pike, chief executive of the Royal Society of Chemistry, argued in Petroleum Review this month that true proven reserves for the world may be nearly twice the conventional figure. Mr. Pike said that the current industry practice of reporting proven reserves alone was purely an historic convention that bore little relevance to what was actually produced
16. Flashman said...
jack c: I agree with everything you say. I’ll admit to taking pleasure in the thought that many of our indolent, knife crime tossers will end up having to graft hard.
bellwether: thank you for your kind words. I don't believe half the crap I write either!
17. flashman said...
jack c: I agree with everything you say. I’ll admit to taking pleasure in the thought that many of our indolent, knife crime tossers will end up having to graft hard.
bellwether: thank you for your kind words. I don't believe half the crap I write either!
18. mrmickey said...
I think a lot of this negativity is promoted by our political overlords to make us feel ashamed of our past & destroy our national identity. Did anybody see that programme on Sunday about the Victorians, they put us to shame with their inventiveness, optimism, hard work and shear force of will, although I'm glad I wasn't working class back then.
19. letthemfall said...
flashman: "The government will soon be forced to lay-off many of it's vast army of pencil pushers"
... and the City its army of keyboard tappers?
"The ultimate irony is that a socialist has presided over this fiasco"
Correction: a conservative (small c) who is a member of the Labour party, which has rather few socialists these days.
I don't think the UK is heading for unique disaster either, though if it is we will not be unique but in august company I think. As for wealth redistribution, that has been occurring since the War, but has gone into reverse over the last decade or two, not just recently. Whether this gets worse will depend on the kind of govt we get next, which may well depend on economic events from now on.
20. titaniccaptain said...
@flashman
Thanks for that......im actually looking forward to this depression now......reason being all the aforementioned scenarios involve a sense of community being reignited...as for coal mining there is also opencast mining that doesnot involve going down a pit.......in Merthyr Tydfil there is the Fros y Fran opencast mine.......the sick thing is none of the local coal merchants are allowed to get the coal..it all goes to poer stations.........just a little bit of useless info....ill shut up now....but that is the opinion I have been waiting for, one which pulls hard on the british spirit...................bloody good on you flashman
21. Tudorian said...
Hi flashy
I do agree that there are dozens of oil field in the north sea. Many of them are not functional .
I too can produce graphs and references, many books peer reviewed evidence.
This graph http://www.planetforlife.com/oilcrisis/oilsituation.html supporst the view that North sea oil production peaked before 1995
According to http://dieoff.org/page180.htm Twenty seven of the 54 UK major oil fields peaked before 1994. This information is not profferred by myself as I have no agenda to push.
I do remember reading the daily mail....found it ! ...http://www.dailymail.co.uk/news/article-1024205/North-Sea-oil-half-century.html#comments they said that North Sea oil would last for years more! (before any one says anthing I do not believe anything written in the daily mail.) Here the SNP seem to echo the daily mails numbers (http://www.snp.org/node/13905)
They seem to think that there are 20 - 30 billion barrels or so in the north sea. The world (2007 estimate ) is using at present 85220000 barrels per day. (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2174rank.html)
Bit of maths, one dived by another is 234 days of oil left in the north sea if all other oil disappeared...And yes technology WILL discover more and more oil, we will squeeze every last drop of black blood from every stone bearing it....but still our north sea oil is running out
Apart from this flashy, we see pretty much eye-to-eye
22. tudorian said...
Hi flashy
I do agree that there are dozens of oil field in the north sea. Many of them are not functional .
I too can produce graphs and references, many books peer reviewed evidence.
This graph http://www.planetforlife.com/oilcrisis/oilsituation.html supporst the view that North sea oil production peaked before 1995
According to http://dieoff.org/page180.htm Twenty seven of the 54 UK major oil fields peaked before 1994. This information is not profferred by myself as I have no agenda to push.
I do remember reading the daily mail....found it ! ...http://www.dailymail.co.uk/news/article-1024205/North-Sea-oil-half-century.html#comments they said that North Sea oil would last for years more! (before any one says anthing I do not believe anything written in the daily mail.) Here the SNP seem to echo the daily mails numbers (http://www.snp.org/node/13905)
They seem to think that there are 20 - 30 billion barrels or so in the north sea. The world (2007 estimate ) is using at present 85220000 barrels per day. (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2174rank.html)
Bit of maths, one dived by another is 234 days of oil left in the north sea if all other oil disappeared...And yes technology WILL discover more and more oil, we will squeeze every last drop of black blood from every stone bearing it....but still our north sea oil is running out
Apart from this flashy, we see pretty much eye-to-eye
*bu66er...didnt use password, now posted twice
23. flashman said...
letthemfall: The city employs only a few thousand keyboard tapers. The state employs several million of the buggers. The city is almost entirely in the private sector so it has already got rid of anyone deemed to be incompetent, unprofitable or surplus to requirements. Yes I know some banks have been nationalised but believe it or not most of us in the city are not bankers. My firm has been profitable every year for more than 20 years. We are not that untypical
24. letthemfall said...
flashman:
You are obviously in the company of those who presume that public sector employees do nothing or next to nothing while those of the private sector earn every penny they get. It's a view that's been around for years and years, and has been debated here a fair bit these last few months, but it is really nothing more than old prejudices and received wisdom.
25. flashman said...
letthemfall "You are obviously in the company of those who presume that public sector employees do nothing or next to nothing while those of the private sector earn every penny they get".
There is absolutely nothing in my post that would allow you come to these conclusions. It's true though isn't it? Only joking
26. shipbuilder said...
Funny how those advocating and predicting hard work and pay cuts for the masses generally seem to have relatively well renumerated office jobs. Let's not forget that salaries at the lower end of the scale have declined in real terms while those at the top have increased by multiples. The idea that things have balanced in any way here is suspect - a distribution of credit rather than re-distribution of wealth has led to the holidays, cars and houses. Those that really benefitted from the cheap credit are those that hold their wealth in assets - the rich and of course they will benefit from the bailout from the majority of taxpayers who pay proprtionally much more of their income than the rich. A transfer of wealth from the idle who can increase their wealth by simply watching their assets increase in value to the rest of us who actually provide the labour, innovation and creative drive, will be how Britain can get out of this. Britain is fine, it's just that Britains wealth is less accesible than ever.
27. flashman said...
Very few of the masses provide innovation and creative drive. They provide labour. There is however a large correlation between education/brains/graft and wealth. The idea that most fat cats are lazy and lucky and that most of the masses are brilliant and industrious is very 'sixth form college'
28. shipbuilder said...
The idea that creativity and brains are restricted to a few is a dangerous and naive one. The idea that monetary wealth is distributed in accordance with graft and brains is just naive.
29. letthemfall said...
The aristocracy of the intellect is one of the most pernicious set of attitudes in our society. And maybe that is the biggest cause of our economic problems over the years. We only have to look at the behaviour of bankers to show what a falsehood the idea of the superior wealth-creating mind is. There has never been any correlation shown between brains and wealth; for a start there is no reliable measure of "brains" - certainly not the discredited IQ. But maybe we could come up with a measure of arrogance.
30. titaniccaptain said...
@flashman and shipy
I have always believed that creativity is the highest expression of intelligence........plenty of people who can drive a car yet not many could design one...does that justify a huge gap in pay between a creative inovative individual and the person who stands infront of the lathe everyday hammering into shape the creation of another?............no it doesnt and I am a creative mind...something has been left out here Flashman and shipy.........there is social responsability...sorry I can make myself rich without shareing it with either my local community or some other charity...and I mean SHARE..thats the thing that has to change me me me me will make you the king in your castle but to share in a sharing community gives you a home.........
Another thing as a genius I find it hard to believe that there is a link between brains and qualifications......(Failed your exams did you TC?...yes I was too busy expanding my mind..long story) The most creative genius minds I have ever met have always been unqualified IN THEIR SPECIFIC FIELD OF EXPERTISE they may however have minor qualifications in other areas.........why is this???? could it be when people cross over from one profession to another they bring unique perspective with them?..anyway there we go
31. titaniccaptain said...
That should read I CANT make myself rich............
32. mountain goat said...
Yeah lets use our coal. "For the past decade the world has not warmed. Global warming has stopped. It’s not a viewpoint or a sceptic’s inaccuracy. It’s an observational fact." -New Statesman
33. letthemfall said...
titanic:
Einstein once failed a physics exam.
The lack of fairness and opportunity is far more a hindrance to success than an arbitrary label of intelligence level.
34. titaniccaptain said...
@Letthem fall
Absolutely......although I am going against alot of what I believe here...but..............in the past few years the availability of easy credit (as flawed as it was and unsustainable) should in theory have created an enviroment that would give previously unachievable goals the impetus for the less privileged to achieve them and in some cases im sure it did......BUUUUUUUUUUUUUUUUUUUUUUUTTTTTTTTTT..........in the majority of cases it acted as a catylyst to a now embeded culture of greed.....the trappings of money came within the reach of those who it never did before so prudence went out the window (along with Hilary lol sorry couldnt resist that one) and instead of using the now available credit to a positive regime of a saving and devoloping the initial business model the newly found wealth was wasted..........this is not in all cases......but we have been living in a culture where greed has been king and those who had never had money before were ENCOURAGED by the bombardment of the psyche via the media..this in my opinion was a very well staged method of creating slaves to credit amoungst the underprivileged...so the opportunities that were given to the underprivileged were actually never going to work in most cases because of this socialy structured greed trap that would strip them of their wealth..............this of course wasnt unique to the underprivileged this disease swept through the class system however it did its greatest damage to the poor..............So Gordon Browns dream of using easy credit to bollster british inovation may have run aground due to the poison that he has not payed attention to............GREED..............
35. titaniccaptain said...
I need a ciggie
36. debtfree said...
@ 6. flashman
"So who will buy the housing stock? Rich people, that's who. I have read many times on this site that the government will buy the housing stock. Impossible! The government will be unable to buy housing because they will have a much lower tax base and tons of debt. Rich people will buy up vast swathes of the housing stock and rent it out to the masses. These new Landlords will be feared because you might also be their low paid employee. The 'elite' will have, almost unnoticed, managed to turn the clock back to Bertie Worcester's time. The ultimate irony is that a socialist has presided over this fiasco. A much sadder irony, is that instead of HPCers being rewarded for their foresight, they'll be working their fingers to the bone to afford a Lord Snooty's dingy bedsit"
Quite a few times I've mentioned "Private Home Ownership - A thing of the past" but to no avail.
It would take a few years for this to happen, but the wheels I believe, are already in motion.
37. shipbuilder said...
TC - you're right and a culture is very difficult to go against, even for the already privileged. We live in a culture of wage slavery, for instance, that it is virtually impossible to break out of. Creativity and innovation is not encouraged in school, conformity is and ironically it is those who consider themselves of superior 'intellect' that can be the most conformist and narrow-minded. Societies flourish when we all start from an equal standing and are free to choose our own path and express our natural creativity and abilities, with the support of those around us. These are the principles that we are missing today. The ability to make money is prized above all others, the natural wealth that is our birthright is already in someone else's hands when we are born and at all times during our youth, we are despised by society, forced to conform and shepherded towards a mediocre 'career' so that we can happily slave for those already fortunate, to increase their wealth. As a result we end up in a fractured, unhappy and lonely society.
38. shipbuilder said...
The lie we are fed is that this is a dreamer's utopia, but in reality a few changes here and there are required to make big steps.
39. troy said...
er didn't dickens depict a psychopath by the name of flashman ?
40. jack c said...
@troy - correct in his novel Tom Browns (house price crash) school days
41. debtfree said...
@ 37. shipbuilder
Excellently said shipbuilder.
That is the most truthful and straight to the point statement I've read in ages.
Thanks.
42. letthemfall said...
troy: He was the school bully. But the novel is by Hughes, not Dickens.