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A √ Recovery?

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Stephanie Flanders | 12:10 UK time, Tuesday, 12 May 2009

Things are getting better. A clutch of encouraging numbers this morning confirm what many have been saying for several weeks: the worst of this stage of the economic crisis is over.

V, square root symbol, L and W Things may even improve quite quickly over the rest of this year. What we don't know is what happens next.

Here's the key nugget from this morning's statistics: the ONS thinks that manufacturing production fell just 0.1% between February and March. That's the smallest fall in more than a year. This comes alongside other encouraging news from the productive side of the economy, including the slight narrowing in Britain's trade gap in March which was also announced today.

It's not time to bring out the brass bands. (The trade figures are particularly unreliable month to month.) But, it is looking more likely that that awful 1.9% estimated fall in GDP in the first three months of the year will be revised upwards slightly when the ONS produces a new estimate next week.

As I noted when that first figure came out, the sheer scale of that decline early in the year makes a sharp improvement over the next few months more likely.

Think about it: if you have stopped production altogether, as many industrial firms have done, there's nowhere to go but up.

Even if you're still producing nothing in the second quarter, that's a recipe for 0.0% growth in the second quarter not a further decline.

Of course, that's the extreme case, but you can see how the sheer pace of de-stocking and layoffs in the past six months limits the scope for further sharp declines.

So, assume things do get better over the next few quarters - maybe dramatically so. What happens next?

That's when things get sticky. Because even the most bullish of real economy bulls, when pushed, have a difficult time explaining where a full throttled, private sector-led recovery is going to come from, especially in the US or UK.

You will be bored of my repeating it but I will do it again, banks and companies may have shed a lot of debt in the past year or so but for consumers, that "deleveraging" has barely got started, especially here in Britain.

Unless something very strange happens, the rise in Britain's personal savings rate in the last few months of 2008 is only the beginning. At a time when the government also has to retrench, it is difficult to see how that amounts to rapid growth.

So what could this recovery look like? It's not a "V". But it's not quite an "L". In the absence of another global financial meltdown, a "W" shaped recession looks a bit less likely as well - the dreaded double-dipper.

That could happen: the world is still a fragile place. But if the banking crisis is over, as Robert Peston has said, there's a search on for the appropriate symbol, and it's left the standard keyboard behind.

Enter the "square root" scenario. Microsoft doesn't do justice to it, but the square root allows for the possibility of a fairly rapid early recovery, with slow or stagnant growth after that.

Or, if you think that's too gloomy, economists from Moody's, the ratings agency, have a less subtle alternative: the "hook". That's a steep downturn followed by a recovery that's neither one thing nor the other.

You might say that economists should have better things to do with their time than trawl their "symbols" menus. But the shape of the recovery is the multi-billion dollar question and it will be some time before we have an answer.

Comments

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  • Comment number 1.

    I work as an estate agent. People are bored of recession now and are confident that the worst of the house price falls are behind us. Also speaking to other businesses - for example a local hair salon - the consumers are convinced that the world is not going to end and are back out spending money. As many pundits have said from the start, at the end of the recession more people will have been unaffected by unemployment than made unemployed and that means the economy will pick up again. People have a natural desire to consume and I think you will see them doing just that from now on. Less extravagently, more sensibly and with a view to getting a fair return for their pounds worth of expenditure. That is no bad thing for any of us!

  • Comment number 2.

    Recovery? With a public sector debt this year of GBP 225 billion, an assumption of future economic growth which is unrealistic and absolutely no sign of any public policy to redress these matters. I think not.

    The worst is not happening so fast now but there is little evidence of green shoots except in my vegetable patch.

    We are only just over nine months into a process which on previous occasions has taken up to five years for a full recovery. Those previous occasions were a lot less disruptive than this one so please do not be deluded that recovery is just around the corner.

    In my view one shoe has dropped. The other shoe, namely the public sector, has not even begun to look unstable although we all know it too will drop in good time. That will be the nasty one.

  • Comment number 3.

    What's the Japanese symbol for 'lost decade'?

  • Comment number 4.

    You say "banks and companies may have shed a lot of debt in the past year or so but for consumers, that "deleveraging" has barely got started".
    Let me help you with the basics here : If I am business and I pay you, a worker, 1p to make 1 widget then I try to sell the widget to you, a customer, at the weekend for 2p, as I want to make a profit, then you can't afford it. So either companies go into debt or consumers - via credit cards or mortgages, or governments go into debt... given the silly financial system we have someone somewhere needs to go into hock to get the extra numbers (money) to get the 'economy' to go round - you say banks have shed a lot of debt - you mean that their debt has been taken on by governments. You cannot have a situation its mathematically impossible for no-one to be in debt - it's the way the game is set up - it's musical chairs - too many people not enough chairs instead it's too many prices not enough money so perpetual and ever rising debt here we come - there is an alternative NEFS Net Export Financial Simulation see www.worldnews.blog-city.com - this creates extra numbers without someone somewhere having to go into debt

  • Comment number 5.

    I agree with the idea (if the shape of a square root sigh is a bit diffent) - a period of low economic growth is ok - we need to restructure the debt; get to grips with global warming and sort out the daft debt-led lives people have been living.

    Having a sensible approach to life will help us create a healthier, more equal and safer society - perhaps with people improving their values.

    Economic growth isn't the be-all and end-all of life. Rampant consumption isn't the panacia of life.

    So a period of reasonable growth as re-stocking takes place (and people stop being so scared) followed by a period of low ecomonic growth - but positive social change would be great.

  • Comment number 6.

    A ten pound note represents no more than its share of the economy; it has no other intrinsic value. If the economy is growing it is safe to issue more of them but if the economy is contracting, as it is now then its value must fall: It's that simple.

    What we see today however is that not only is the economy contracting but, thanks to 'quantitive easing' more tenners are being pumped into the system. While the US and the rest of Europe are practicing their own version of this there is no immediate problem but this will be reversed once their own economies start to come out of recession; which is when our real problems will begin.

    Because the UK is expected to be the last major economy to come out of recession (e.g. IMF, World Bank), other currencies will be gaining value against ours and crucially the US dollar is likely to be the first of these. That will be when we see a return of Labour's two traditional contributions to life in this country; a run on the pound and inflation with a capital 'I'.

  • Comment number 7.


    Absolutely agree with #2 stalinic.

  • Comment number 8.

    "...even the most bullish of real economy bulls, when pushed, have a difficult time explaining where a full throttled, private sector-led recovery is going to come from, especially in the US or UK."

    I read on....but there isn't even the slightest of suggestions, is there?

  • Comment number 9.

    I still feel that an "L" shape recession will be the best fit for this economy. Just because things aren't getting worse doesn't automatically mean things will get better. And Robert Preston is wildly optimistic about the banking crisis being over. Those so-called profits are due to cute accounting tricks. The US "stress test" were mild to say the least and still half of the banks failed.

    So we have a insecure banking system, a global credit famine (as the IMF describes it), a huge tax hike awaiting the UK economy after the election, continuing business failures in the real world, a trillion pounds of taxpayers money used to underwrite the banking system, a global decline in exports, increased protectionist pressures across the globe, a constriction of the money supply, personal debt at £1.4trn. Tell me, why should I feel optimistic?

    We'll be bouncing along the bottom of the curve for quite a while yet.

  • Comment number 10.

    Aren't we all happy that the wealthly are starting to recover. Of course the continued decline only means that working people are losing their jobs, but who really cares about them. Individual retirement and investment accounts are just lost, where is your partiortism, it is wealth that we must assist in these difficult times. The public has assumed all their bad debts and given them billions and without a single vote or even opinion poll. The governments are wringing their hands at the potential loss of tax dollars will impact the bureaucrats and their abilities to meddle in affairs of citizens. Let us not look at alternatives or better organizational structures, we must prop up the system that failed. Apparently their is a belief that Government and Banking will be the two dead horses we will be betting on in this race. Put me down for a pound, mate...it's all I have.

  • Comment number 11.

    There may be a recovery of sorts but there is also the time-lag of reduced spending by those made unemployed and the reduced spending from those who fear unemployment. This reduced spending, will probably keep us in the gloom for some time to come, regardless of what people say or hope....

  • Comment number 12.

    #1

    Top Hint : When you're trying a bit of mindless ramping, don't admit in sentence 1 that you have a vested interest.

  • Comment number 13.

    "People have a natural desire to consume and I think you will see them doing just that from now on."

    The natural desire is exaggerated by the media peddling the myth that we must consume to be happy. If we are to move into a more austere society where spending is villified and saving promoted, surely consumption will decline.

  • Comment number 14.

    People have to look more positively, simply because the speed of decline was so rapid that to continue at that rate would have been armagedon.

    What we now have are backward thinking sSocialist thinking you can diffuse one bubble with another bubble and all will be o k on their patch.

    Well that is just adolescent spin organised by government hacks who have never run a business or possibly never experienced previous recessions - I understand 60% of HM Treasury employees are in that position.

    So lets look at the facts we have carreer politicians lining their pockets who have never done a proper days work supported by Regulator in teh form of the FSA who has brought a new meaning to the word incompetent and a B of E who like most FSA staff have never exprerienced anything like this before running teh show and we think its al going to get better??!!

    Yo have to be get cynical simply because these muppets have lost the plot, and we are meant to believe the world is loosing rosier.

    Come of Stephanie you can teach them all a lesson in economics so adopt a more Plaxman-lie apporach and hit where it will stop this madness early. Whilst all eth afore mentioned are short dated, at least we can but hope you will be there doing and saying the right thing, exposing the peurile and facile comments made by these experts.....not, and tell us what is really going on.

  • Comment number 15.

    Steph,

    None of the above but more like the Greek letter PHI (FEE) which as you will know, is the zero with a vertical line through it - as in
    'Well that one didn't work, let's start again'

    Meanwhile the MPC follow the Saint Theresa Economic Management Process as the latest recommendation from the LSE and CASS Profs

    'Three Hail Marys and God will provide'

    And still further meanwhile. Brown keeps pushing Merv to print even more money to trash the Pound
    'If you don't produce any more money we will have a crisis of not being able to pay the Quangos or the MP's expenses claims.
    Finger out Merv, think of the false economy based on the production of nothingness'

    One could almost be forgiven for thinking
    'Never in the history of man, has so much nothingness been produced by so few at so great a cost to so many'

    At such times, I always recommend taking a cup of tea and then thinking twice to establish a clarity of purpose, before indulging in any further QE.
    The Great British cuppa could yet save what is left of the economy.

  • Comment number 16.

    Given that you were only in your early twenties, no doubt fresh from Harvard - when the last recession occurred - I'm astonished that you can possibly assert with such confidence:

    "Things are getting better. A clutch of encouraging numbers this morning confirm what many have been saying for several weeks: the worst of this stage of the economic crisis is over".

    This recession hasn't even STARTED yet. You won't see the signs from where you sit.

    GC

  • Comment number 17.

    As Jeremy Paxman pointed out on Budget day Newsnight, the present British government has admitted it needs to borrow more money than all the previous governments of the past 300 years combined.
    That's a lot of borrowing.....

    So, the next question is whether the government can indeed borrow all the money it needs to underpin the slowing pace of economic decline. If the government struggles to raise the cash, then another stage of the crisis will ensue.

    Even if it can borrow the wherewithal, the government must then raise taxes and cut spending in order to meet the interest payments and stand any chance of repaying its borrowing. This will act to stifle economic growth.

    The bad debts of the banks have still not been fully written off. The move away from mark to market will not prevent the banks having to guard their liquidity as their cash flow declines because their customers can't afford to make their loan repayments.

    The rate of decline may be slowing, but that doesn't mean growth is now on the menu. Given the issues mentioned above, sustainable growth is still a long way off.

  • Comment number 18.

    This is all fine and dandy, but however upbeat we all become there is nothing that can be done to repay the massive national debt.

    The illusion of normality is only maintained by the huge ongoing government borrowing which is keeping the public sector employed.

    When the government can borrow no more there will be public sector job losses and difficulty even meeting monthly pension and benefits bills. This will further reduce spending, cause more businesses to close and put yet more burden on the state, as well as banks as debts are foreclosed.

    The correct symbol for this should probably be an 'S' rotated by 45 degrees anticlockwise. Once the government money runs out the only way is South.

  • Comment number 19.

    So we've solved this recession by slurping up all the debt and throwing it to future tax-payers ? I'm supposed to feel happy to spend, when my pension fund is in tatters, my savings have declined in value, I have huge tax-rises to look forward to, and my children are supposed to slave away to pay for the excesses of the current generation of slackers (who will happily vote Labour again to avoid actually working for a living) ?

  • Comment number 20.

    I'm unconvinced of real economic recovery because I think we have only addressed half the problem, namely the bankers who loaned too much to people who could not afford it. On the other side have consumers learned to live within their means?

    We spend so much of our money on rubbish rather than saving and investing it. The media say we should do this because we are worth it (apparently by the time we hit 65 and have no pension we are worth-less?) and the economists say consuming grows the economy (as long as there is credit available to spend beyond our means apparently).

    Lets stop buying rubbish (mostly imported from China), drive our cars a few years longer, watch the same TV's rather than getting a flat screen. The economy will take another hit as real demand shrinks (i.e. the UK people selling you the TV imported from China will make less money), we will be in an L shape for a few years as national savings steadily increases and then one day we will find we have manageable debt and an economy making real growth through, among other things, a good current account surplus (because we aren't buying rubbish from China anymore).

    Then we can start talking about real recovery. Until then I'm voting for a double dip.

  • Comment number 21.

    Other powerful indicators are that financial markets in North America and the UK are betting heavily, and across a broad spectrum, that the end of the recession is in sight. The Dow is up around 35+% since the beginning of March because traders and investors are keen to buy now whilst stocks are over-sold. So that pessimism is now being replaced by a less gloomy realism: there had been a severe over-reaction of gloom. Now, huge and timely government interventions here and in the US & China are more than enough to bring us back from the brink.

    Maybe prompt actions taken in the UK last October will now be seen as the trigger for actions by other governments? Maybe the G20 in London helped galvanise the worldwide policy actions? Maybe too, we've been too critical of Brown and his talks with governments all over the world? Maybe too, those UK bank shares we've had to buy are really worth much more than we ever thought?

  • Comment number 22.

    Not sure the 2.1 million unemployed would agree with you!

  • Comment number 23.

    The winners so far of the credit crunch is obviously those who have kept their jobs and have large mortgages many multiples of their salary and are no quids in certainly in contrast to thoes with large savings. Is this an unitended consequence law in operation?

    Neverthless there may be a shock in store for this group as the next wave of deflation rolls in from rapid increase in unemployment and reduced disposal incomes.

  • Comment number 24.

    Note how most commentators referring to 'recovery' completely ignore the point at #8.

  • Comment number 25.

    This will be an ampersand-shaped recession ; Lord Mandelson will have us travel back in time and loop-the-loop before we impale him and the rest of the discredited lot in Westminster on the green shoots of their non-existent recovery.

    By the way, those Tamils really know how to create chaos outside Parliament. When things get really desperate, the desperate really get going. Our turn is comingg, I reckon.

  • Comment number 26.

    Comment 18 - "S" is a new one on me - a nifty contribution to the recession alphabet. But surely it doesn't matter which way you rotate it?

  • Comment number 27.

    I find this latest blog entry rather disturbing and clearly reflects that you seem to have mot quite "got it". A multi-decade gluttonous orgy in distorted global economy financed by the biggest credit bubble of all time ended less than 12 months ago and you think the right question is to argue about the shape of the recovery? Pain, and severe pain, has to be taken post these sorts of excesses and the only real question is who takes it. Surely you should be addressing this question? Surely it is incumbent up on you to highlight to the general public this fact? Surely it must be the right thing for you to do to highlight that a "recovery" based upon printing money and taking on more mountains of public debt is not a recovery, but a transfer of wealth from those who did to the right thing to those who did not? Surely you could highlight how the self interest of those in power would appear to be at odds with doing the right thing? As economics editor of the bbc, you have a duty.

  • Comment number 28.

    StephanieFlanders (#26) Maybe that (roller-coaster?) should have been 90 degrees or 270? Still, it fits #8. I guess we could try exporting spin and corruption?

  • Comment number 29.

    Also agree with #2 stalinic.
    The printing presses are working overtime easing the flow of money so one would expect slight improvement in green shoot waffle.
    The unemployment queue is on the way up and so are bankrupcies.
    My money is on the economy staying in the L position for quite a while longer.


  • Comment number 30.

    Now that the Politicians can no longer mis-appropriate public money. The least they can expect is a sacking if any of they do it again. I fully expect the state of the public finances to improve. At least very slightly.

  • Comment number 31.

    #21

    Four 'maybes' to describe prospects under Brown's policies ?

    Yes that appears to sum it up - 'maybe'.
    Try taking a 'maybe' to the Bank Manager.

    Perhaps the certainty is that he and his advisers have no idea, not a clue, blanker than a quantum of the extremely blank, without a sausage, sausageless, in fact they are in negative sausage so churn out more devalued sausages quickly to cover up the idea sausage deficit.

    But you are welcome to keep pumping up the Brown 'maybes' as it helps us to see the realities.

    The economy is not driven by the vapour of words but by realities such as jobs, wages, bottom lines, interest income, and a multiplicity of other tangibles.
    Plenty of the former in Brown's diminishing arsenal of Bullocks.
    Little of the latter.

  • Comment number 32.

    Agree post 2 from Stanilic--EXCEPT

    I don't think the 'first shoe' has fallen completely yet as manufacturing I can't speak for, and the detailed reasons why the upturn (such as it is) is happening are beyond me to comment on.

    But the service sector is still car crashing.

    220,000 job losses in a lagging indicator at the early stage of the falls...are bad!

    So, completely agreeing his highlighting the Public Sector as the next place where the turmoil will start; I think the Recession shape may well be something like a diving board sticking out at the base of a badly made series of steps, down which the diver walks.... and at the end of the board , bouncing gently, is the invisible man's 20 stone brother..


    (The board is horizontal after a series of juddering falls interspersed with short lived recoveries , but the trend is gently down although the unseen diver makes judging the exact angle difficult as it constantly blurs between less sharp and very sharp angles of fall.... to extend the metaphor way too far .... the unseen heavy guy is just imprecise or flawed statistics.... and when he jumps off it'll go 'recovery angled' for a while ...but basically it's flat lined at best...)

  • Comment number 33.

    This is an interesting moemnt in this process. correct me if I'm wrong, but practitioners of the dark arts of accounting legerdemain have miraculously turned their bad debts into paper profits - singalling that "the banking crisis is over". And the markets (see #21) are calling a recovery on the back of data which shows, not a recovery but, that things are not getting worse as quickly as they were.

    Meanwhile the three headlines on the BBC "Economy" front page are (a)UK jobless hits 2,2 million (b) UK manufacturing continues to fall and (c) oil above $60 on economic hopes.

    Are the markets really confident that there will be a recovery; or are they busy unwinding various positions on the back of the modest gains to date?

  • Comment number 34.

    No.8 JadedJean

    All that's needed is a leap of faith.

    We can all make a good living by speculating on currency fluctuations and the price of assets. The whole of Britain will simply become one giant hedge fund, with the whole UK population employed in speculating on the price of the rest of the world's productive output.....

  • Comment number 35.

    Stephanie,
    I dont think Robert Peston said the " banking crisis is over" did he? He might have said the risk that banks will go bust might have passed but the negartive feedback loop remains - what I dont understand is why the IMF are saying that our banks could need 125-250bn dollars more of capital - what's your view?

  • Comment number 36.

    Does the shape of the letter really matter when the shape is symbolising the wrong thing?

    The letter is supposed to represent the shape of a Recession whereas what we are experiencing is a Depression. If we continue to base our polcies on past experiences of Recession then we are going to be sadly surprised when those policies continue to fail and produce unintended consequences.

    Therefore, if we must adopt a letter then let it be strategycall's PHI.

  • Comment number 37.

    Well, by halving the size of the civil service and the BBC. Ten, breaking any link between public sector pay (and the enormous pensions) and private sector pay (which is also massively inflated and has no link to calibre, as we've justed proved: correlation is not equal to causation) we can -begin- to climb out of the current black hole.

    I'm a little surprised at all the venom currently vented on our hapless MPs, they're stupid and venal but also quite badly paid by the standards of Jonathan Ross. Adam Crozier, Mark Thompson et al. Oh, and add the multiplier effect of monies wasted on failed computer systems, the Olympics etc. etc.

    There's actually quite a bit of fat to be cut without hurting anyone normal or any impact on the 'real' economy.

  • Comment number 38.

    Ms Flanders, the reason why the most bullish of bulls are not confident of a private sector led recovery is because private sector investment will just get "crowded out" by a government led borrowing and spending frenzy.

    This is still and will continue to be a "bear-market economy" for quite some time to come. We may see rallies here and there, but this what I call the "mirage effect" or a "head-fake".

    Green shoots around the corner? Was that an oasis I saw?

  • Comment number 39.

    There is simply no way to understand the current crisis without at least a reasonably detailed knowledge of how Fractional Reserve Banking works.

    I am willing to bet that over 99% of the country do not have a clue. I am willing to further bet that 95% of your blog respondents also do not have a clue.

    I have seen not a single mention of Fractional Reserve Banking and how it works on the BBC website since the beginning of the current situation.

    Therefore: the BBC's economic coverage is about as informative as a Spot The Dog book, only written in a slightly less intelligent fashion.

    Discuss.

  • Comment number 40.

    MrTweedy (#34) After the softened implemention of The 25 Points (point 18) and our acceptance as an overseas territory of the PRC, there won't be any of those left surely (I'm sure you could could be redeployed/rehabilitated ;-)?

    In the meantime, I'm pretty sure we could do a roaring trade in the export of narcissists, psychopaths, mis-reporters, and 'deferred-developers'.

  • Comment number 41.

    I think that #33 chris-w has hit the nail on the head, there is bound to be some kind of a rise in the amount of credit available to all us consumers because of all the QEasing thats happening, but are any of us really in the mood to get even further into debt when there are tax rises and inflation just round the corner? They can sort out the banks but any recovery depends on all of us having collective amnesia and going out on the kind of credit fueled spending bonanza that got us into this mess in the first place. Remember that this all started a year or so before the banks went bust, when rising inflation led to interest rates going up to 5 percent, hardly that high really, and consumer spending slowing down because even a modest increase like that was enough to push the mass of our debt ridden population over the edge into reposession and ruin!

  • Comment number 42.

    No.35. shireblogger wrote:
    "....what I dont understand is why the IMF are saying that our banks could need 125-250bn dollars more of capital...."

    Capital is a polite way of saying cash.

    The banks will have to write off their bad debts, which will cause them paper losses. These paper losses will manifest themselves as a lack of incoming cash to the banks, when the households and businesses the banks lent money to can no longer make loan repayments.

    Bad debts = drop in cash receipts for the banks.

    The banks must cover these losses by issuing more equity.

    This is all pre-empted by the need to "strengthen their capital base now" which is a polite way of saying "you banks are going to make more losses; so go out and get cash now while the stock markets are moving upwards; and don't leave it until the last minute when it will look like a whole new banking crisis".

    A negative is therefore presented as a positive.


  • Comment number 43.

    I still tend towards a type of 'L' with a 60 degree down-slope and a wobbly 3 to 7 degree up-slope for the economy as a whole. It is highly probable that the stock market will ripple up and down quite violently for the foreseeable future.

    The one big imponderable, the elephant in the room, is the nature of the increased regulation - if all we are going to get is what we have seen to-date (i.e. essentially nothing) then the 'recovery' will collapse quite quickly into the-on-its-side 'S' and all bets are off. If we get too much regulation there will be a considerable damping effect on growth due to the regulation and I would guess the lower end of the 3 degree 'L' growth.

    The debt numbers are so horrific that it is numerically impossible to a speedy exit from the debt burden (short of hyperinflation and even the highly incompetent Bank of England, we must hope, can avoid this!) Simply to get back to where we were a couple of years ago on reasonably positive assumptions takes until 2015 or so.

    We might return to growth again soonish, but this is not a 'recovery' as long as interest rates are at 315 year low of zero only when interest rates are up to 4 to 6 percent can any economic condition be properly described as a 'recovery' and that will not be for a year or so (most likely several years if not towards a decade). (The most positive banking sector economic estimates, I am aware of, are interest rates at 1 to 1.25 percent by this time next year.)

  • Comment number 44.

  • Comment number 45.

    No.40. JadedJean wrote:
    "In the meantime, I'm pretty sure we could do a roaring trade in the export of narcissists, psychopaths, mis-reporters, and 'deferred-developers'."

    I'm guessing they would be exported to work in the salt mines for very little wages......either that or a one way appointment with Madam Guillotine.
    A bit extreme perhaps?

    The British way is to simply pension them off to somewhere quiet, where they can live at the taxpayers' expense. Much more civilised.

  • Comment number 46.

    No.44. LibertarianKurt
    No.39 SoxSexSax

    Ah, the endless abstract theory of the differences between money and wealth, and the fractionally unreserved credit system, and the mutuum theory of lending, and the theory of talking a hind leg off a donkey.....

  • Comment number 47.

    MtTweedy (#45) "The British way is to simply pension them off to somewhere quiet, where they can live at the taxpayers' expense. Much more civilised."

    Exactly, how do you think we ended up with so much dysgenic fertility in the first place? No, JadedJean's approach would be to engineer a 'brain-drain' directly to NY and California.

  • Comment number 48.

    MrTweedy # 46

    A better "theory" than the ostrich/sand/head one, I believe.

  • Comment number 49.

    What is this virtual economic analysis to describe a virtual economic world?

    How can you have an economic recovery if no-one is able to identify any sectors that will lead the recovery?

    So Robert Peston says the banking crisis is over, well he is obviously better placed than the IMF who think there is a further $3 trillion of global losses still to come.

    If everything is so cushty why were the US stress tests anything but stressful and why are we still pumping money into this system?

    How is all the debt goig to be repaid? What are the implications for the bond markets, inflation and interest rates.

    what is going to happen to the US$ and by logical connection what is going to happen to the real price of oil.

    Unemployment continues to rise, and a lot of the big manufacturing employers are yet to close - cars and steel for example. What are these people going to do? - Frank Field thinks they are going to riot!

    How can the BBC publish such drivel about economic recovery and reference substantially no facts at all.

    This is not analysis - this is propoganda. Has the BBC been captured by JadedJean?








  • Comment number 50.

    armagediontimes (#49) "This is not analysis - this is propoganda. Has the BBC been captured by JadedJean?"

    Still wrapped up in the anarchists'/Trots' dream-world?

    You really should try taking the wake-up advice ;-)

  • Comment number 51.

    The intersting ratio is the difference between claimants and jobless.

    The number of people out of work in the UK rose 244,000 in the first three months of 2009 - Office for National Statistics (ONS)

    Unemployment benefit claimants in April rose 57,100.

    In other words they are probably living on savings or redundancy money which will run out shortly. In other words they are long time serving rather than short time serving - previously valued and skilled in all likelyhood. So you are looking in all probability at mainstream job collapse. This bizarrely is seemn by McNulty as a good sign. It is almost certainly a bad sign.

  • Comment number 52.

    armagedionimes,

    Don't be too hard on the poor old Beeb. The rest of the media are desperate for 'signs of recovery', the market analyists are desperate for some 'signs of recovery, the politicians are desperate for 'some signs of recovery'. In the absence of real facts to support their hopes then they will always fall back upon expectation, confidence and interpretation to justify their comments.

  • Comment number 53.

    3 vagueofgodalming

    What's the Japanese symbol for 'lost decade'?


    Japanese pictogram of bathtub?



  • Comment number 54.

    LibertarianKurt (#48) "MrTweedy # 46 A better "theory" than the ostrich/sand/head one, I believe."

    Perhaps only because Austrian school theories are not conditioned by empirical evidence. They may read well, but so do Hollywood scripts.

    That is precisely because they leave out the inconvenient facts of reality.

    Grasp that, and you'll grasp the awful truth about anarchism, and why so much has gone so wrong in the Liberal-Democracies - although, you really won't like it very much.

  • Comment number 55.

    #50 Jadedjean - Nah I´m wide awake, just waiting to dodge the next phase of meltdown - ain´t no "-isms" or "-ists" can save any of us.

    #51 glanafon - I recall you telling us all that unemployment numbers were meaningless, why the change of heart?





  • Comment number 56.

    Hmm - something which could be described as vaugely a sort of agreement (apart from the estate agent). Sorry guys but that means almost certainly that things have moved on somewhere else. Whether it is up or down I don't know, but chances are if everybody is agreeing, sort of, then the direction is elsewhere. On the basis that if everybody is going one way the real way to go is in the other direction.

    : ) or : (

    depending on what the direction is.

  • Comment number 57.

    foredeckdave (#52) "Don't be too hard on the poor old Beeb. The rest of the media are desperate for 'signs of recovery', the market analyists are desperate for some 'signs of recovery, the politicians are desperate for 'some signs of recovery'. In the absence of real facts to support their hopes then they will always fall back upon expectation, confidence and interpretation to justify their comments."

    In other words: 'don't tell it as it is; spin it as you want the clients to believe it to be'.

    Now where have we heard that before? And what was the cost?


  • Comment number 58.

    #52 foredeckdave. The problem is real facts are available - they just don´t report them, because they lead to an answer that they don´t like. When their fantasy doesn´t make sense they just gloss over the issues and hope no-one notices.

    The BBC have a certain image and respectability - people in general are disposed to more or less believe what they publish. At the moment they are acting as a siren voice enticing us all onto the rocks - and the people that write this stuff are perfectly aware of its intellectual inadequacy.

    Google Money is the Way - Michael Fowke is more rational than the stuff on the BBC. Then tell me would you form your opinions on the basis of his writings?

  • Comment number 59.

    Imagine the scenario, someone you know who was in serious financial trouble comes to see you, all smiles. Problems sorted, disaster averted, phew! they say. Then you probe a little, and realise that they have come to a financial arrangement with creditors whereby for 20 years practically everything they earn above a meagre cost of living is being taken to pay off the debt.

    How happy can you be for that person? Although you are glad they haven't been thrown on the street, can you really be happy for them?

    That is how I feel about all this reporting we are getting along the lines of "phew, Armageddon avoided". The future cost has been so great, how can there be any rejoicing about it.

    This country is going to be increasing split between the "have jobs" and those without. Plenty will now feel safe enough to start spending again, but millions will suffer years of painful job hunting as large employers will have gone, never to return.

    Those who report "good news" need to be careful they acknowledge the pain also being suffered by millions whose lives are being turned upside down by events outside their control.

  • Comment number 60.

    55 arm n leg times

    It is the differences which are telling, not the total, ie movement. Or in this case the stats tell you what type of person is being junked. I agree with your comment about commentators I am afraid.

  • Comment number 61.

    Dont KID youselves there's a LONG way to go with this ONE.

  • Comment number 62.

    59 jonearle

    I fear an economic based caste system, no good will come of it. The damage will be carried in the resultant generations.

  • Comment number 63.

    I Just wonder if the BEEB have been told to TaLk it AlL uP?

    Barely a mention of the extra 250,000 who got added to the UneMplOYMeNT

    CounT sInCE 1st jANuary.

  • Comment number 64.

    63 AC

    Comes back to the fear of being accused of talking it down. Bannanas in pyjamas are coming down the stairs. Going well, lookin' good. Opps, slipped. : )

  • Comment number 65.

    armagediontimes (#58) "#52 foredeckdave. The problem is real facts are available - they just don't report them, because they lead to an answer that they don't like. When their fantasy doesn't make sense they just gloss over the issues and hope no-one notices."

    !! (irony) ;-)

    glanafon (#62) "59 jonearle I fear an economic based caste system, no good will come of it."

    Read 'The Bell Curve' (1994), and Google Michael Young's criticism of Blair (shortly before Young died) on the latter's abuse of the term 'meritocracy'. Young drafted the 1945 Labour manifesto.

  • Comment number 66.

    #63 Alexander Curzon - You could be right, because it is evident that the people that write this tripe do not themselves believe it. But I don´t pay my licence fee to be egregiously lied to.

  • Comment number 67.

    Someone mentioned that the media is looking for signs of recovery. Funny, they were never looking for signs before the collapse.
    The price of oil going up is not a sign of recovery, it is the same greedy scum testing the waters to see what people will take.
    It is amazing that everyone, all over the world, has just sat down and allowed this all to play out. Not so long ago this was the stuff revolutions were made of. Maybe they can move the date of the Wold Cup up as a gift to the people. Invest in drug companies, sedation will be the wave of the future.

  • Comment number 68.

    JadedJean # 54

    "Perhaps only because Austrian school theories are not conditioned by empirical evidence."

    Oooh! The Empire strikes back!

    Try reading Economics in One Lesson (1946) by Hazlitt for starters to get acquainted with Austrian School economics.

    Grasp that (I know it will be difficult but I have faith in you), and then you will come to realise the terrible reality of statism/welfareism.

    Thatcher once said, "The problem with Socialism is that eventually you run out of other people's money."

    I think some people are beginning to find that out now.

  • Comment number 69.

    To me this is a "Blackpool shaped recesssion" down the vertiginous roller coaster then a shallow slope down the beach into the mud.

    Admire the lights on the way through!

  • Comment number 70.

    GOOD NEWS WEEK

    SOMEONE'S DROPPED A BOMB SOMEWHERE

    CONTAMINATING ATMOSPHERE

    AND DARKENING THE SKY


    Whilst I accept that the 'green shoots' mentality is not going to save us, I have to say "you ain't seen nothing yet!". TV over here is dominated by US stations. Listening to their reporting it's all going to be over next week - well from the 'serious' stations eg CNN the week after!

    There does have to be a more balanced approach to economic reporting. Journalists have grown lazy. They will use 'experts' to offer opinion without challenging their particular slant on the problem e.g the Chief Economist of Barclays on banking issues or the head of a Right Wing think tank on the public sector.

    I tend to agree with glanafon, if we are all sort of agreeing then somethingelse is going on.

    BTW the Hedgehoppers Anonymous lyrics were a black reference to one way out of the mess. ):

  • Comment number 71.

    LibertarianKurt (#68) "Oooh! The Empire strikes back!

    Try reading Economics in One Lesson (1946) by Hazlitt for starters to get acquainted with Austrian School economics."


    I'm all too familiar with the Austrian and Chicago Schools. They are not what they appear to some.

    I've suggested this before, but I'll do so again:- read this article. Spend a few days doing so. It made many bright people realise that outside of empiricism (science basically) there is nothing but dogmatic prejudice and self-delusion. For some, it ended their careers in philosophy etc.

  • Comment number 72.

    JJ

    It was so earth shattering that all of the Faculties of Philosophy around the world closed. That Quine rarely appears on the syllabus of any of them. That modern empiricists attack the 'Two Dogmas" as not being empiricist enough.

    LSD also made some people think that they could expand their minds.

    Life, it's meaning and structure are far more than just science. If you can't appresciate that then you are indeed a very sad person.

    Yours narcisistically,

    Dave

  • Comment number 73.

    " Think about it: if you have stopped production altogether, as many industrial firms have done, there's nowhere to go but up. "


    ...UP AND AWAY to India and China in crates ,EXACTLY!!

    Plant will get taken to where the market is, on half empty container ships .

    You are an optimist Stephanie ,but at least you have proved their is life after countdown Carol

  • Comment number 74.

    #65 Jadedjean. No irony here. I am talking about economics and indisputable facts that are available in the public domain - for example the US stress tests that assume as an adverse case an aggregate 2009 decline in US GDP of 3.3% and the fact that the US economy is curreently contracting at an annualised rate of 6.1%. These same tests assume as an adverse case a 2009 US unemployment rate of 8.9%. It is therefore indisputable that if US unemployment rises further through the balance of 2009 then these tests will not be stressful.

    You, on the contrary, are talking about completely different things. Things that have only a tangential relevance to economics - and even then, and if at all, only over the long term.

  • Comment number 75.

    foredeckdave (#72) "It was so earth shattering that all of the Faculties of Philosophy around the world closed. That Quine rarely appears on the syllabus of any of them."

    You have to try to see it in the context of the subversive dumbing down of the liberal-democracies, and the effect this has had on their economies.

    I know it's hard, but try to make the effort (see #8 too).

  • Comment number 76.

    JJ YOU ARE INCORRIGIBLE

  • Comment number 77.

    JadedJean # 71

    "It made many bright people realise that outside of empiricism (science basically) there is nothing but dogmatic prejudice and self-delusion."

    What a presumptive and arrogant statement to make!

    Of course, Kant would be wrong according to your empiricist buddy Quine, wouldn't he?

    Poor old "dogmatically-prejudiced" and "self-deluded" Kant, his career never really got going (sarcasm emphasised!), did it?

    Yours VERY anarchistically

    LK

  • Comment number 78.

    John moulton thinks we are going for an L shape recession/recovery.

    Come on Stephanie where it the analyst.

    The public debt that has been built up to save one man jobs is going to have to be paid back by 60million over the next 20 years.

    All he has done is try a "buy" time with his "mad on borrowing" economic agenda to call an election after he bottle the last one at a time when he thinks he can win. He may have only just stemmed the rate of decline but at huge future cost

    This is casino economic not of the City but No 10 and we are all going to lose.

    When the public debt issue is tackled and it will have to be that when the real "report" will have to start.

    Peter Hitch BBC4 R4 Monday at 9am was right the Reporters are part of the problem. For not reporting or doing any analyst of the REAL facts.

  • Comment number 79.

    armagediontimes (#58) "When their fantasy doesn't make sense they just gloss over the issues and hope no-one notices."

    See #8.

  • Comment number 80.

    LibertarianKurt (#77) "Of course, Kant would be wrong according to your empiricist buddy Quine, wouldn't he?"

    Basically, yes.

  • Comment number 81.

    foredeckdave (#76) "JJ YOU ARE INCORRIGIBLE"

    'But in a nice way' - It's the available evidence, and lure of Pursuit of Truth"> that does it.

    You should try it ;-).

  • Comment number 82.

    armagediontimes (#74) "I am talking about economics and indisputable facts that are available in the public domain - for example the US stress tests that assume as an adverse case an aggregate 2009 decline in US GDP of 3.3% and the fact that the US economy is curreently contracting at an annualised rate of 6.1%. These same tests assume as an adverse case a 2009 US unemployment rate of 8.9%. It is therefore indisputable that if US unemployment rises further through the balance of 2009 then these tests will not be stressful."

    You appear to be obsessed with the rate of change in velocity of the roller-coaster wheels. Is it a male thing?

    [Meanwhile Stephanie muses over the overall track feng-shui] ;-)

  • Comment number 83.

    There's lies, damn lies and then there's statistics !!

    "the ONS thinks that manufacturing production fell just 0.1% between February and March."

    What they did *NOT* say is - just what percentage of the National economy does manufacturing make up !! If it was Germany or Japan or China, that would make up a significant part of their economy but Britain .... ??

    Personally, I would pop the champagne when the National Debt falls !! Until then, the recession is here to stay as everyone is squeezed to pay for and service that horrendous debt, which seems to grow daily even as we speak !!

    Looked at in another way, this economy had been propped up by the services industries, financial and others !! Now that those have been decimated, if not slaughtered, we are looking to manufacturing to take up the slack. Now, even manufacturing is *FALLING* instead of increasing to take up the slack !! So, how can this be good news ??

    As for the balance of trade, if exports remain at its previous level or just below but imports fall massively, it does not mean that the recession is over. It just means that everyone is in such deep doo-doo that they cannot to buy more for their lavish lifestyles and that they are digging in to try and survive this recession !! This means more jobs will be lost in the distribution, retail and services sectors !! Large numbers of the Merchant Marine will be beached and ships will be mothballed of scrapped !!

  • Comment number 84.

    A recovery in which sector? The banking sector will look nothing like it used to, and a significant portion of GDP came from there. As for manufacturing.........

  • Comment number 85.

    BBC Headline: "Oil above $60 on economy hopes"

    But forgets to say, price of oil goes up as the dollar depreciates....

    It's balanced reporting, that what it is. It's balanced by what they forget to mention.


  • Comment number 86.

    #1. Strange how Estate Agents were telling us for most of last year that nothing was wrong with the housing market. Now youre telling us its ok...

  • Comment number 87.

    JadedJean

    Have you been invited to tomorrow's meeting at the Nafsika Astir Palace Hotel in Vouliagmeni, Greece?


  • Comment number 88.

    OOOO AHHHHH

    foredeckdave (#81) plus ca change eh?

  • Comment number 89.

    83 ishkandar

    ''... if exports remain at its previous level or just below but imports fall massively, it does not mean that the recession is over. It just means that everyone is in such deep doo-doo that they cannot to buy more for their lavish lifestyles and that they are digging in to try and survive this recession !! This means more jobs will be lost in the distribution, retail and services sectors !! Large numbers of the Merchant Marine will be beached and ships will be mothballed of scrapped !!''

    You talk as though this is a bad thing. To some extent or other it is inevitable this happens.

    In what way is it sensible to have badly paid workers on the otherside of the planet ripping huge holes in the ground with massive heavy industrial plant to remove a small percentage of usable material, creating literally mountains of spoil. To then run grossly polluting manufacturing units and ship the products using a finite resource, fossil fuel, products often manufactured down to a cost, and therefore not fit for long term use. For the purchase of these products to be funded by seepage from long term debt on domestic housing. The purchase being clearly funded by such debt, because as soon as the debt is frozen, purchase volumes drop sharply, ie people can do without them. For these products to be sent to landfill in short order, to be replace by more.

    This is not just a recession, it is tied up with other issues, sustainablility, ethics, total life costs, manipulation of debt. Sooner or later you run out of places to exploit at the start of the process, and places to landfill at the end of the process. It is all part of the madness which leads to herring being caught in Scottish coastal waters, driven down to the SW of England for smoking to produce kippers, to be driven back up to Scotland, to then be distributed again to England. Chauffering dead fish around. Or raw prawns being flown chilled to the far east for shelling, to be returned chilled by air to England for distribution. Can anybody defend this sort of action other than an accountant exploiting tax loopholes.

    Meanwhile species and environments and biospheres are disappearing at a phenomenal rate, in some cases it is likely happening before they have been identitified by man. The current culture has been to destroy the value of money, to make it an easy accessable abstract via debt, to then destroy the value of products bought with the debt.

    You are looking at the implosion of a culture which has been living beyond it's means in every direction. The whole culture has been fueled by the creation of debt and when the debt creation is gone then the culture is gone. It cannot return untill the debt opportunity returns and that thankfully is not due to be for some time.

  • Comment number 90.

    Saying our financial crisis is over is like saying World War Two was over when we won the Battle of Britain.

  • Comment number 91.

    #82 Jadedjean. If you make changes to short term policies then you can change the long term. Nobody wants to buy what you are selling - and in such a situation most rational sellers change their product. Even if people did want to buy what you are selling - it would make no difference.

    Try something less esoteric, like this;

    "The voices in your head are calling
    Stop wasting your time, theres nothing coming
    Only a fool would think someone could save you
    The men at the factory are old and cunning
    You dont owe nothing, so boy get runnin
    Its the best years of your life they want to steal"

  • Comment number 92.

    The BBC Economy front page says "Bank sees slow economic recovery" and underneath that, it has the headline "Recession worse than 1929".

    Upon clicking on "Recession worse than 1929" the underlying article states "UK recession less bad than 1929"....


  • Comment number 93.

    #89 glanafon - Yeah you got it - "the implosion of a culture" Nobody wants any more chauffers for dead fish.

    Problem is too many people are locked into the culture - they will not go quietly into that long good night, and they will rage against the dying of the light.

  • Comment number 94.

    #90 laugh out loud we still in the battle of britain or at the start maybe that phase will not be over until after the election and the real job at hand begins

    We are still in the fooney war, not sure even if dunkirk has yet happened ?

    it seems that many reporters do not have the basic grip facts or deeper analysis beyond the initial head line that is released.

    Like the cocaine issue well if the Dollor / pound rate changes then the price is going to change, it does not mean that the SOCA are doing a top job , maybe they have helped a bit

    but here we are looking at the creme of the creame BBC reporting,

    agian I go back to peter hitchin arugement that the "media" as part of the porblem, as they seem to be not up to the job ?

  • Comment number 95.

    'I'll SCREAM AND I'LL SCREAM TIll I'M SICK'

    armagediontimes (#91) "#82 Jadedjean. If you make changes to short term policies then you can change the long term. Nobody wants to buy what you are selling - and in such a situation most rational sellers change their product. Even if people did want to buy what you are selling - it would make no difference."

    Nobody?

    It may have escaped your notice, but I am no fan of a neo-liberal, free-market anarchism. You really should try to think and write outside the language of anarchists. If you keep buying and selling their drugs of your destruction, you'll have nobody but yourself to blame.

    As to rational buyers and sellers.

    [I would have preferred to link to Herrnstein, Rachlin etc, but never mind, like Simon, they're all Jewish and all took a dim view of human 'rationality' as a model for economic behaviour] ;-).

  • Comment number 96.

    ONE SHOULDN'T MAKE IT UP

    MrTweedy (#92) "The BBC Economy front page says "Bank sees slow economic recovery" and underneath that, it has the headline "Recession worse than 1929".

    Upon clicking on "Recession worse than 1929" the underlying article states "UK recession less bad than 1929"...."


    I hope you saw/heard what they 'reported' the Pope said on Monday.

    Is there a special training-camp for these journalists?

  • Comment number 97.

    armagediontimes # 91

    Beware! JJ and her behaviourist soul-mates Kahneman et al will want to have that human value-scale hard wired to your brain just so you don't do anything stupid like think and act for yourself.

    You are far too individualistic/anarchistic for her liking!

  • Comment number 98.

    #89 glanafon - I agree with what you say about the debt culture and the implosion thereof !! What I was pointing out earlier was about the statistics and the use of them to make points that suit the view of the author. As you say, until this culture is wiped out and the debt that went with it, there will be no recovery.

    The statistics from the ONS was used selectively to point out that there are signs of the "green shoots of recovery" when other factors/facts that significantly affect the economy are conveniently ignored !!

    Linked to this is the culture that people are "entitled" to as high a pay as they can get regardless of the real-world situation in order to fund a lavish lifestyle !! All it does is to cause spiraling inflation that can only be funded by debt or bankruptcy !!

  • Comment number 99.

    LibertarianKurt (#97) "You are far too individualistic/anarchistic for her liking!"

    Individualism is used as a tool of subversion by those who wish to break up the solidarity of the state (family). It is typical of a narcissistic adolescent's vindictive struggle as they grow up before contributing to wider society. It's abused by colonists/settlers in order to facilitate collapse of indigenous nuclear families to gain socio-economic hegemony. Look into the statistics, look for disproportonalities - i.e. differences between observed and expected rates by group (cf. NYC).

    Austrian School subversives eschew empiricism because this exposes their egregious, predatory, game. The only defence they turn to is political correctness and mass deception/propaganda.

  • Comment number 100.

    JadedJean # 99

    Two can play at this game, I think.

    Statist conditioners shun synthetic a priori propositions because they are anathematic to their empiricist worldview and runs counter to what they ultimately want to achieve; that is, totalitarianism.

 

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