Friday, Jul 24, 2009
You know it.
Telegraph: British economic collapse rivals Great Depression
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged.
Posted by devo @ 11:17 PM (1531 views) Add Comment
21 Comments
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1. Billybob said...
Good article except too optimistic. It will be 2020 at least before you see economic activity back to pre crash levels.It took World War 2 to get us out of the 1930s depression and that was followed by the collapse of empire and 50 years of decline. There is also the little matter of oil supplies drying up and huge over population!!!!! Plan for the worst.
2. symo said...
but what about the green shoots and the recovereh.
3. brickormortis said...
So given all of the massive stimulus, we are still witnessing a near 1% contraction for the quarter? And when the stimulus stops and the summer spenders but their wallets away, and the banks lose patience with the non-payers of mortgages, what happens then? Tourism seems to be down, factory output is shocking and I can't see how it gets any better.
And what about those graduates everyone keeps forgettgin about? It is not just that they have now graduated or are graduating but that their average debt is somewhere in the region of £20,000. I mean, that is crazy. How do these guys ever start thinking about buying houses when they can't even get a job? I graduated in 2002 with somewhere in the region of £17,000 of debt and it has taken me until now to repay a big chunk of that and coupled with pension contributions, rent and tax and the like, I have managed to still be unable to afford a house. In fact, I could have clearly bought one but have always refused to go beyond 4 times income and hence my conclusion that prices are ridiculuous. These graduates needed Gordon's silly economy to keep them happy about accruing debts and when tehre were jobs it wasn't too bad. Now imagine having to pay to go through Uni and not having a reasonable chance of a job at the end of it - which of course is improved if you went to Ox or Cambridge, which in turn is improved if you went to private school, which in turn is improved if you are financially well endowed.
So any predictions for the next quarter? I would have thought -0.3% it just seems to fit. Imagine how that would be spun! UK's economic powerhouse resumes as Growth slows for last two quarters. Go and buy yourself a house!!!??? LoL
4. mdmick said...
Can a graduate declare himself bankrupt? I heard it is not too long before you can start fresh.
Ideally, one could then leave the country and work abroad for a while so as not to miss out on work experience.
Or is that immoral?
5. uncle tom said...
"So any predictions for the next quarter? "
Some GDP factors might show a little recovery from previous lows - for example, it is possible that the clearance of unsold stock will breathe a tiny bit of life back into the motor sector. For that reason a slighly positive stat is not impossible.
However, I believe that the sustainable economic growth since the turn of the millennium has been no more than 1% p.a., and the rest has been borne of the debt boom; now transferred from the consumer to the government.
Excess debt was responsible at least 15% of UK GDP, and probably closer to 20%, so we are less than half way to closing the gap.
The rampant combination of state borrowing amd money printing can only go on for a limited period before coming back to haunt us in the form of inflation and raised interest rates. Ultimately, the government's borrowing of £7k p.a. per household will have to be replaced with a combination of tax rises and reduced state spending - the notion that the economy will grow to plug the gap is pure fantasy..
So while UK GDP may return fleetingly into the black, it seems inevitable that it will then head south again..
~~~
Yes, graduates can go bankrupt - and a fashion for doing so might kick off..
6. Jessica Rabbit said...
Even if you go bankrupt as a student or graduate, your student loan is exempt from the bankruptcy. So you will still owe the money. GB's got them bang to rights.
7. iguana said...
md & UT, a student loan cannot be avoided by bankruptcy, it was the case initially but when the NUS started to advise this course of action, HMG legislated to ring fence these loans.
8. str 2007 said...
So are these stock market rises and house price recoveries down to artificial stimulus that will collapse again when stimulus stops, or will they simply continue the stimulus come what may.
As a side thought there was alot of interesting views yesterday from Bellwether, Flashman, Techieman etc.
Could this stock market rally be a Bank orchestrated suck in before the holiday season, only to collapse when approx 1/3 of private investors are on holiday and can't do anything about their positions or won't be aware of a collapse.
Another Bank theft so to speak.
Just a thought, just struggling to believe this strong recovery with this bad news still around.
9. ketha said...
a student loan is only payable after income reaches a certain level so it's not a liability if you can't get a job.
10. fubar said...
So soup kitchens and shanty towns of corrugated metal for the 'middle class' coming soon.
11. uncle tom said...
Watch the markets next week guys - it's a toss of a coin which way it will go..
The tedious outcome is that investors think the rally has gone far enough, and start looking to bank profits.
But if they don't, we could see a re-run of what happened in the mid seventies, when the stock market powered ahead, even though the economy was still in deep trouble.
A few more days of further stockmarket gains could see a gathering rush to pull money out of deposits and fixed income, and pile into equities.
That in turn would force down Gilt prices and force up interest rates..
12. bleakhouse said...
What uncle tom said, and when all the money is in the market, the shorts are squeezed out, and the Gilt prices are down, a reversal of the hang on to your hat roller coaster variety? Timing is everything, possibly after the summer, rather than next week? Reasons for reversal, bankruptcies affecting corporate bonds(the flavour of the month investment) commercial real estate (Bernanke's big fear) swine flu decimates GDP maybe.
13. bluebeach said...
Just come back from the Greyhound Retail Park in Chester.... You just couldn't move there!...the garages along Sealand Road were choca too... Doesn't seem to be much of a Great Depression here.. only mine.. houses are flying off the shelfs between Wrexham and Chester...Please tell me the HPC is not over!!!!?
14. uncle tom said...
"Please tell me the HPC is not over!!!!?"
It's not.
Prices are not remotely sustainable. Remember that houses have to be affordable to the great majority of households; and as the economics of renting property does not present any substantial saving in housing costs (after management costs and void periods are accounted for) so rents will ultimately find a level that is not much less than the cost of paying mortgage interest on the same property.
So in practice, house prices must be compatible with the incomes of all save those who qualify for housing benefit.
Put another way, if you study the household income statistics, it's a struggle to justify even 50% of the UK housing stock maintaining a value of £100k or more.
Currently, over 85% are changing hands for more than that amount..
15. enuii said...
Bluebeach; The Great Crash 1929 by J.K. Galbraith. The book was written in 1954 and has been reprinted ever since and should clear up any doubt's over where we are going.
16. cyril said...
I think all this talk of depression is greatly exaggerated. It may be statistically the same as the 1930s but I can't see any evidence of hardship where I live (SW London).
17. uncle tom said...
Cyril,
The government has said it will borrow £7,000 for every household, this financial year - the difference between what it wants to spend, and what it dares raise in taxation.
The BOE has printed nearly £5,000 for every household, since the spring
- how long can that continue?
18. devo said...
14. cyril said.. I can't see any evidence of hardship
Let's define 'hardship'. You first:
19. inbreda said...
cyril - you haven't even started paying for the bailout yet. The hardship hasn't even begun. Interest rates are artificially low, and when that changes...
..basically there is only one way this thing can go.
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