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A note of caution

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Stephanie Flanders | 12:30 UK time, Tuesday, 30 June 2009

It's like that old joke about Soviet propaganda - "The future is certain. It's the past that's so unpredictable."

We don't tend to get too excited about revisions to the GDP figures. But today's are worth pondering, even for the non-nerdy.

Building siteWe had new data a few weeks showing the truly dire state of the construction industry. That was always going to make this a chunky revision. But that headline decline in GDP of 2.4% in the first three months of 2009 is even worse than expected - there hasn't been a larger fall in output since 1958.

New data on the service sector is partly to blame: it shows the sharpest quarterly decline in output on record.

There's plenty more in this mountain of new data, which basically shows the economy has been growing slower than we thought for most of the past two years.

A tiny revision to the growth figure for the second quarter of last year also means that the recession also started earlier than thought. Of course that has pyschological significance, but given that you're comparing zero growth to a decline of 0.1%, I wouldn't make too much of it by itself.

We may yet get a positive surprise when the first estimate for the second quarter comes out on 24 July. Indeed, the sheer scale of this decline in the first three months must make a sharp improvement more likely.

But if you thought that any recovery was resting on shaky foundations, you will see plenty of support for that view in today's news.

We like to say the UK consumer has been surprisingly resilient in this recession, yet today we learned that consumer spending in the first quarter suffered the sharpest fall in decades.

As I have said before, if that underlying weakness remains, it is quite possible that the recovery will peter out later in the year, as it did in 1981.

That note of caution about the recovery is the main message of today's news. But there is, I suppose, a bright side. If the economy is that much smaller than we thought, the amount of slack - or spare capacity - ought to be that much greater, and the chances of a rapid pick-up in inflation that much smaller.

Inflation hawks can sleep a little more soundly in their beds.

Comments

  • Comment number 1.

    An anagram of 'Stephanomics'...is 'machine stops!'

  • Comment number 2.

    So what if a sharper decline allows a faster recovery - the question is when will a recovery begin and will it be sustained. These are known unknowns. There is the little matter if the vast accumulation of personal debt to work through in the context of job uncertainty, wage cuts and unemployment. I go for the low or no recovery position after all little chance of exporting our way out of recession when the globe starts spending given the governments exclusive interest in the finance and banking sector. New Laboutr - this is your forthcoming electoral nemisis

  • Comment number 3.

    Consumers don't have any money so can't help the economy revive and expors won't be of much use either. That means the Govt needs to prop the economy up. If only there were some money left to be able to do that...

  • Comment number 4.

    I know it's a bit 'Taliban' to bang on with the same theme...but 'the official figures' never seem to match common sense and everyday experience UNTIL they get revised down....

    Instead of leading the debate as evidence one wonders whether sometimes the 'figures' aren't simply another class of opinion.

    Simply listening to lots of people's anecdotes from the real world sounds hopelessly naive, but it works better than relying on 'economic data'.

    For what it's worth in the real world most people feel the economy dropped off a ledge between late autumn and winter and hasn't looked like getting back since.

    The 'new reality ' is bumping along the bottom----- and whilst 'bumping along' worried that if this is all quantative easing and 0.5% interest rates can produce, what will it be like when the 'easing' stops and even more, when the tightening begins??

  • Comment number 5.

    Lets not lose sight of the fact we are now at the start of quarter three whereas these figures relate to quarter one. Unemployment of course lags growth and we will see rises for the forseeaable future.

    The danger is that continued negative reporting of events now long past will undermine any sense of growing confidence, which has actually started in my own sector of the economy - the housing market, reflected in more sales and increased mortgage lending. Lets hope it doesn't.

  • Comment number 6.

    Given that neither Government nor the City appears to have learned any lessons at all from the crunch, and the spectre of inflation looming towards us, I'm expecting any recovery to be very short lived.

    The FTSE is sinking again, and there are rumours of sterling being avoided by overseas US agencies in expectation of something happening to the currency in the next 6-9 months.

    We may very well be starting to leave the frying pan, but let's hope it doesn't lead to the fire.

  • Comment number 7.

    "even for the non-nerdy"
    We don't want intelligent people who know what they are doing; they're so boring.....

    "the UK consumer has been surprisingly resilient in this recession"
    They keep spending too much, even though their future earnings are highly uncertain.....

    "yet today we learned that consumer spending in the first quarter suffered the sharpest fall in decades".
    The consumer is not so stupid afterall. Consumers may even be learning to be a little "nerdy"......

    "As I have said before, if that underlying weakness remains...."
    You need to insert the word "permanent" here. Britain will suffer from a permanent reduction in economic activity.....

    .....at least until we learn to make the planet's scarce resources go further and at a price we can affordable to pay.

  • Comment number 8.

    The figures for the past two years were intentionally inaccurate because if the government had given actual figures someone would have wanted to know what was going on. Apparently the economist couldn't figure it out. What was going on was the beginnings of the financial meltdown. All the insiders knew it was coming but no one would step forward to address the issue, mainly because of governmental culability and we all know that governments run from accountability. When back-sliding opportuntist decribes most of the elected officials one should not expect ledership. A more honest approach would be to actually sell shares in Parliment and the U.S. Congress, atleast then we could track the ownership.

  • Comment number 9.

    This is now all irrelevant, as the world and the economy has moved on!
    What happened in the first quarter is not what is happening now.

    I am bored of all the gloom and doom, we will all sound like that Scottish bloke out of Dad's Army if we are not careful.

    If you want to see the change then drive up and down the motorway network. You will see more lorries and perhaps more importantly, more white vans than three or six months ago.

    The recession is over but the the media wont report this as its not an exciting story.

  • Comment number 10.

    If you are cutting off your own leg, and then you finish, the improvement is that you have stopped cutting off your leg.

    Unfortunately, you will be permanently without one leg......it's unlikely to grow back again to its former strength.

    The British economy will stop contracting, and will eventually improve, but it won't be as strong as it was before........

  • Comment number 11.

    5. At 1:30pm on 30 Jun 2009, Robert1808 wrote:

    --"The danger is that continued negative reporting of events now long past will undermine any sense of growing confidence, which has actually started in my own sector of the economy - the housing market, reflected in more sales and increased mortgage lending. Lets hope it doesn't."--

    I'd like to draw you attention to Miles Shipside and the Rightmove house price index report for June:

    "Its a mistake to confuse the upturn in enquiries and sales with a return to a more normal market. While conditions are much improved on the darkest days of last year, we are now starting to see some big distortions and wild swings due to the combined effects of recession and restricted mortgage availability. As the best deals on property and mortgages are only open to the equity-rich, the new stock that agents are looking to attract has to match what these purchasers want to buy and can afford. Perennially popular areas with good schooling are in, while flats in large blocks and terraces
    requiring major works are out, meaning new sellers are having to adjust prices accordingly."

    Three months on from period in which those statistics are compiled, we aren't seeing a return to a normal market. What we are seeing is the return of the 'equity rich' house buyer to the market - and they are a product of pent up demand. People who sold their houses and rented; the recently divorced; people with investments or inhheritencs - they are currently the majority of active buyers whereas they would normally be the minority.

    More worryingly - and of particular interest to me as it mimics my current situation:

    "Interest rates for fixed-rate mortgages are now increasing, in line with money-market expectations of higher medium-term interest rates. Property deals appear within the grasp of cashstrapped first time buyers, but every rise in fixed rates frustratingly nudges them a bit further out of reach."

  • Comment number 12.

    4. At 1:18pm on 30 Jun 2009, e2toe4 wrote:
    --" I know it's a bit 'Taliban' to bang on with the same theme...but 'the official figures' never seem to match common sense and everyday experience UNTIL they get revised down....

    Instead of leading the debate as evidence one wonders whether sometimes the 'figures' aren't simply another class of opinion.

    Simply listening to lots of people's anecdotes from the real world sounds hopelessly naive, but it works better than relying on 'economic data'. "--

    Micahel Blastland, in his exceptionally good book "The Tiger That Isn't" (which is excellent except the point where he completely failed to foresee the scale and pace of the housing price drop) reminds us that most early GDP figures have a very large uncertainty attached to them, as most of the time they are using incomplete or inadequate data. The public are never told of this uncertainty, lest it frighten them (or make our leaders look like they don't know what they are talking about). Of course, it is politically desirable to use the most 'positive' looking statistics.

    3 months data the data has all been collected and analysed rigorously, and almost inevitably the initial figure is revised. Which is understandable, becase an an extreme value at either end of the uncertainty is usually a statistical outlier value.

    The moral of this story? You can trust statistics. You just can't trust the people who tell you what the statistics mean.

  • Comment number 13.

    Having studied at the LSE and been in and around economics all my life, there is one fundamental thing you learn about government involvement in economic activity. It is that it is INEFFICIENT in creating wealth and prosperity. Although, this is not to say that govt. does not have a role in economic governance.

    But think about the nature of government bureacracy v. private enterprise. Think about the motivational power of the profit motive. Or think about the level of taxation; when there is big government then there are big taxes, and taxes leave us with less to invest in wealth creation. We won't even mention the freedom aspects. Surely it's a no-brainer: big government = negative prosperity.

  • Comment number 14.

    We import more than we export.
    As a nation we spend more than we make.
    It has been this way for at least 12 years.
    The expersts said we were fine but it turns out that you need to have some underlying productivity to "service" after all - and that the last decade of growth was an elaborate hoax based on massive government and private debt to create the illusion of wealth. UK is a shop in the world and you can't stay in business if you don't sell more than you buy.
    One way or another we're all going to have to get poorer before we get richer. And contrary to a prior comment, the recession is not over- in a technical sense the economy will grow - but we'll be a long time in the doldrums before it's "business as usual". The national debt "UK suicide pact" that Brown-Darling have hatched with the US will see to that with high taxes and public sector cuts.
    Still, as one person said before, people are nicer to each other in a recession.
    Donald

  • Comment number 15.

    #9 apublicsectorpension
    "This is now all irrelevant, as the world and the economy has moved on!
    What happened in the first quarter is not what is happening now."

    No no no! It certainly isn't irrelevant and it does impact on what is (or should be) happening now and certainly on what will happen in the future.
    Because lower growth means the tax take is going to be lower and the budget deficit even worse than the nightmare it already is. It will mean bigger cuts in public spending and probably higher taxes in the future, and could well impact the gilt markets (which set the rates at which the government borrows) given the amount that the government is going to have to borrow, and put the pound under pressure - which affects anyone who still has the cash to travel abroad, or who buys things that are made abroad (they'll be more expensive).
    This affects us all now and in the future too, and not in a good way. That's another fine mess you've got us into Gordo! But hey, lets spend spend spend and scorch this earth for the next government.

  • Comment number 16.

    With the severe redundancies in architect's and engineering practices still going on, the downturn in the construction industry so far is just the tip of the iceberg. Projects take a long time from design to construction and very little new design is being done.

    There will be tens of thousands yet to be made jobless in construction and related industries in the coming year.

  • Comment number 17.

    I wonder how independent these GDP figures actually are. After all, the past is gone, and it would help a government to transfer today's bad news back into the past by overstating historic decline. That way, of course, the present is made to look better than it actually is.

    But then, a govenment led by someone of great integrity would never get involved in such a thing, would they?

  • Comment number 18.

    "A note of caution"... but can we trust the figures anyway!

    The statisticians have fiddled the figures to such an extent I would recommend that we should take them with a very large pinch of salt.

    Further, the idea that UK spare capacity has much impact on inflation is mythical, as we import most of what appears in the figures that form the basis for the vague estimate of inflation that the Bank of England uses.

    The pound Dollar and Euro rates has far more impact as does the oil price. I can't see the Yuan being revalued upwards any time soon for imported Chinese deflation being an issue (in reverse).

    I am sorry Stephanie, you, and your fellow, 'trained' Harvard and Balliol economists did not even have sufficient understanding of asset price inflation to see that it would inevitably lead to a collapse in the credit markets as the burst bubble so I would take anything that you call a fact or even relevant as just of passing interest, particularly the last throw away sentence of your piece "Inflation hawks can sleep a little more soundly in their beds"!!!!

    The so called 'facts' that you outline are fundamentally flawed and not linked to real inflation. In the final analysis it is the impact on the economy that matters and or course whilst it is possible to have a fake recovery by encouraging asset price inflation this will not be a real recovery! It will just be yet another fraud by the economists against the people!!!!

  • Comment number 19.

    At 1:53pm on 30 Jun 2009, LostInBlues wrote:...etc

    Yes, agreed, but if you re-read my comment, I was not saying the increase in sales volumes represented a return to a normal market. I think I used the phrase "increasing confidence".

    The market will respond to the basic laws of supply and demand. Supply of affordable property, supply of affordable mortgage finance, and demand from would-be purchasers. I would point out that there is bound to be a small surge from pent-up demand in the system as mortgage liquidity frees up. This could peter out or it may provide a gentle stimulus that the market needs. We shall see in due course, and as a Chartered Surveyor who has suffered more than most from this recession, I can assure you I remain circumspect.

    My general point remains. Economic data lags events. Unemployment lags growth. So if the economy was by some chance growing as of 1st July 2009 we would still be seeing unemployment rises until the end of the year, and these would be still hitting the headlines next spring. Hence the negative impact on confidence that I was highlighting of these statistics.

    The pendulum effect......

  • Comment number 20.

    I have never seen Stephanie addressing the UK's export performance over the past 10 years or so under the labour government,especially how it compares to other countries.

  • Comment number 21.

    #13

    "government involvement in economic activity. It is that it is INEFFICIENT in creating wealth and prosperity"

    Ah, that old debate. Alas, I am fast coming to the conclusion that the debate over Gvt versus the markets has been nothing but a smokescreen for the last 30-40 years.

    The real shock to economic efficiencies came in the form of the 1970s energy crisis, when the world should have realised that the dramatic post-War industrial growth could not go on forever. Fortunately for some, Reaganomics arrived like a knight in shining armour, and the fictitious boom years were under way (thanks in no small part to Nixon's "temporary" closing of the gold window).

    The developed economies mortgaged themselves up to their eyeballs deluded in the dream of infinite growth. This was a calculated political strategy that brought down the USSR, but at a very heavy (and more importantly, hidden) cost. In reality, real economic inefficiencies have been endemic for the last 10-20 years, it's just that fiat paper money has colluded to mask it.

    Until so-called economists have read and understood the likes of Herman Daly, then they are nothing more than practising Chremastisticians:

    http://www.gaianeconomics.org/chrematistics.htm

  • Comment number 22.

    The last Labour government came to its close after we'd gone cap in hand to the IMF.

    This Labour government won't be any different.

  • Comment number 23.

    When Germany starts coming out of its recession it will still have the huge industrial capability it had before the Anglo Saxon economies dragged it down.

    The USA is even now investing in new technologies and in particular starting and growing new clean tech type companies.

    The UK will have some very iffy banks and nothing else.....

    All engineers and scientists need to leave - now!

  • Comment number 24.

    " 22. At 3:14pm on 30 Jun 2009, chrisbowie wrote:
    The last Labour government came to its close after we'd gone cap in hand to the IMF.

    This Labour government won't be any different."

    How true, but this time they will be gone before they have time to try and inflate the debt away at the expense of higher long term interest rates (already kicking in) and punitive taxes.

    And the next Conservative Government will come to an end when people get fed up with austerity and want a spending splurge again.

    The wheel turns....

    (sorry, my last comment had a pendulum and this has a wheel - I must be in metaphor mood)


  • Comment number 25.

    So the next lot of figures might be better? Right! Gordon the liar would have already issued those figures if they were, so I suspect they're worse than the ones he did issue. That's the unfortunate thing about this Labour regime, nothing it says can be taken at face value, every statement it makes is carefully manipulated and contains little that bears any relationship to the truth. This philosophy carries on into the behaviour and rhetoric of every government minister and every ministerial statement where truth has now become a " no go " area.

  • Comment number 26.

    " That note of caution about the recovery is the main message of today's news. But there is, I suppose, a bright side. If the economy is that much smaller than we thought, the amount of slack - or spare capacity - ought to be that much greater, and the chances of a rapid pick-up in inflation that much smaller. "

    Are you sure this is right - is there really this "bright side"? Arent you assuming here that there are no impairments to supply? What about access to credit? Tight credit limiting output / no incentives to reduce prices. What about liquidations and permanently lost capacity? What about permanent redundancies leaving ability to increase output degraded?

  • Comment number 27.

    @13 - so, following your "market always knows best" logic, presumably you are incensed that the government has spent hundreds of billions of taxpayer's money propping up failed businesses like Northern Rock and RBS et al?

    You must be enraged at the full-on "socialist" revival going on in the US - General Motors nationalised! - free health care planned for all! - I bet you're panicking that the red contagion could spread to the UK - the US does things big, they do big government big and what they do, we tend to follow - scared now?

    ... or is this global recession just one of those quirky little instances where the markets got a little distracted and wandered off down a blind alley for a while?

    Let me ask you something - if you think untrammeled free markets are such a great thing, why have all civilised nations since about the dawn of time found it necessary to enforce rigorous anti-monopoly legislation?

    You must be incandescent about what the EU has done to poor old lovely huggable Microsoft - fining those good folks billions merely for trying to blot out any possibility of competition ...

    Funny isn't it, when you think about it - what's the difference between a global corporation trying to blot out any competition and a command economy run by "big government" .... ?

  • Comment number 28.

    " We may yet get a positive surprise when the first estimate for the second quarter comes out on 24 July."

    Do you mean that 100 billion sterling's worth of QE should be feeding through? Is this what you mean? OR, are you relying on re-stocking or increases in demand? Can you expand.

  • Comment number 29.

    Is there any evidence that the quantitative easing has had any effect? I cant see any. Did the reduction in VAT have any material effect? In fact is there any evidence that the governments attempts to stop the recession has had any effect at all, apart from increasing UK's debt levels to unsupportable levels........

  • Comment number 30.

    "That note of caution about the recovery is the main message of today's news. But there is, I suppose, a bright side. If the economy is that much smaller than we thought, the amount of slack - or spare capacity - ought to be that much greater, and the chances of a rapid pick-up in inflation that much smaller."

    I accept the note of caution about recovery, but sadly, that's not where the inflation is going to come from. It will partly have been stoked by holding interest rates too low, flooding the cash (that would otherwise have gone on mortgage interest) into the economy.

    Maintaining the low base rate situation for so long is madness. Because I have a flexible tracker mortgage, I am paying 1.45% and I can take money out of the mortgage account and invest it for 4.25%. Even taking tax into account, that leaves me with a substantial margin for profit - so it is clearly an unsustainable, lunatic scenario and even now, the real interest rates out there are on the rise.

    But no, the real source of inflation will be when other parts of the world start coming out of the recession, demand picks up and the pound tanks, causing food, power and petrol prices in the UK to leap. Interest rates will rise to try and support the pound and the UK debt mountain will become unserviceable. Also consumer spending will disappear on everything but essentials because people have to go back to higher mortgage payments. Then we will get to the real 2009 UK recession - this is just the phoney war so far.

    A bright side for the UK? - I don't think so.

  • Comment number 31.

    The thing that fascinates me is that everyone I speak to says that sometime around mid-March business conditions began to improve. This seems to have started about the same time as quantative easing began. There is a nice economics essay task here to see how the two things might be connected.

    Then we have also got to understand that late last year the government chucked everything including the kitchen sink complete with expensed plug at the prospect of deflation, including cutting interest rates not just to the bone but to the marrow. The effect of those policies may have begun to play through by mid-March.

    So it is reasonable to say that the current so-called recovery could well be on the back of these two policy initiatives.

    However, so far all that we can reasonably say is that there has been a small improvement of sorts. This was inevitable once the banks began to lend again.

    So what sort of economic environment are we currently looking at? Whichever way you may like to slice your bread we all have to agree that the loaf is smaller than before. I have direct evidence that the building trade has perked up a bit, but that is from the worst state I have ever seen it with entire businesses on short-working after large scale redundancies. The level of unemployment is dire: there are many applicants for each vacancy. The number of applications is higher than it was in the last recession which was itself pretty awful. Yet despite that there are some businesses which are doing quite well. Consumers are evidently paying down debt and adopting austerity lifestyles. So there is a really mixed picture with the actual value added areas which make things doing far less well than ever before. I think this sustains the view that the numbers are the worst for fifty years.

    So we can expect the next quarter figures to show some improvement; but is this sustainable? I am putting my money on a run on the pound this autumn due to the governments reluctance to tackle the prevailing level of fiscal debt. Hopefully, if the numbers come up showing that there is an economic recovery similar to that in the Treasury forecasts this might be minimsed. However if the pound reverts to the levels of late December 2008 this will squash any recovery and push us all back into a recession possibly worse than the one we have just clambered out from.

    The ball is still in play. Whether the economy will be showing some growth or not the degree of instability will be chronic making confidence weak. If anything we need a government that knows what it is doing. I have no idea where you find such things......

  • Comment number 32.

    Taxtwitter in number 14 above sums it up for me. House markets and prices don't matter at all. What matters is what we sell overseas and what we import, currently we import far more than we export and this is getting bigger all the time as the foreign companies that own most of the UK manufacturing close everything down. Try buying a british made washing machine....you can't now the last two factories have closed. Most chocolate and sweets are going to Poland. We will get a lot poorer and not even feel rich again...it is downhill all the way from here.

  • Comment number 33.

    Stephanie, your initial comment about Soviet propaganda is brilliant. Maybe deliberate or not. However it sums up Mr Brown and his party, Labour. Surely a euphemism for Soviet.

    He is a disaster and single handedly ruined this country, economicaly.

    Single handedly apart from the Labour MPs who are too weak, cowardly
    or I guess just holding on to his leadership for personal gain as they know a change would mean, they will be out on their ears sooner.


  • Comment number 34.

    18. At 2:37pm on 30 Jun 2009, John_from_Hendon wrote:


    -------------------------------------

    Anything else you want to cut and paste from every post you've made over the last 6 months?

    The fascists all congregate on Pestons blog... you might want to try your brand of John-from-Hendon whining on there.

    Your insulting of respected economists from the confort of your armchair and from behind the anonymity of your screen name is cowardly and disgraceful.

    I just love this new economic reality - everyone professes to have seen the this coming, everyone seems to be an economist... only their version of economics deals in insults and an agenda to suite their view.

    If you were so insightful why did you not make a bundle off this crash John_from_Hendon?
    If you're so bright why arent you sunning yourself on yuor yacht in the Med... I mean if you saw this crash with so much clarity you must've made an absolute fortune... oh, I forgot, somebody else's fault? Some statistician lie to you?

    Cry me a river.

  • Comment number 35.

    Post 15 thanks for answering post 9's points as it saved me the job.

    This does all matter re Q1 2009 being a disaster because for one it blows yet another hole in the rosy picture that Alistair Darling tried to sell us in his budget.

    The tax income will be a lot less than the government hoped for and expenditure will be higher than they told us. Thus making our actual position a lot worse that Gordon, Alistair and "green shoots" Shriti keep trying to claim to us.

    Only when you know how truly bad the position is can you start to act rationally.

    At the moment the government is merely paying off the very minimum on our credit cards and applying for as many new ones as it can.

    This will all end in tears! I know it, Stephanie knows it even Nick Robinson must be beginning to realise it.

    There are some very big and very awkward decisions to be made over the next five to ten years. As such it is critical we have a rational and informed debate over options available to us before the next election rather than the crude playground antics the government seem to prefer.

  • Comment number 36.

    Post 31 a very good and cogent argument. I wouldn't disagree with much of what you say.

    I am not so sure re the run on the pound this autumn as I expect Germany in particular and France less so to have a poor Q2. Spain and Italy are possibly in the doo doo as much as if not more than we are so I don't expect the Euro to rise much before year end.

    The American economy is in a mess but I think that their throwing money at the problem has been better managed than ours.

    My money is on a run on the pound three to six months later than you probably in Q1 2010. The next election will decide whether we become an economic basket case under Labour or a recovering country under the Conservatives.

    The adjusted Q2 GWP, inflation, unemployment and growth figures due out in August or September for the UK, US and Eurozones will be key in how this plays out.

    If we see the USA and Europe coming out of the recession earlier and stronger than us then sterling could be in real trouble.

  • Comment number 37.

    30. At 4:39pm on 30 Jun 2009, croydo wrote:

    Pretty spot-on in my opinion.


    Quantative easing is great and all but it is such a dangerous tool and I doubt the ability of King or Bernanke to discern when it has been going on long enough.

    Too much quantative easing will inevitably lead to inflation irrespective of how shoddy the economy is looking.

    Further to the above I think with the lag in economic data the powers-that-be will only realise too late that they should be easing off the printing presses.

    With quantative easing you automatically devalue the currency, meaning that imported inflation via fx will further drive this.

    I really, really hope I'm wrong.

  • Comment number 38.

    Just so you have an idea as to how old I am..I was building up a leisure business in the 70s and we had to get through the 3 day week, hyper inflation and trade unions restricting business to inefficiency

    But we got through it and along came Mrs T and the rest is history until the economic benefits we all worked to create we wasted without us realising by Mr B

    The figures from government have always been wrong and are just estimates but the recovery will come and it has no chance to start to get going until we have an election

    Until then there is the uncertainty on top of everything else

    Politicians and economists can project as much as they like, but in my lifetime [so far] reality from long term observation is that we will just plod on until we know who will run us for the next 5 years

    In simplistic terms, we need an to remove uncertainty and allow those in the economy to plan their lives and business decisions

    Whoever wins we will all know the playing field , for better or worse, start to regain confidence and move ahead

    Now if one party wins my experience over many years instinctively tells me that it will be slow, sluggish and we will all have and more restrictions imposed on us

    If the other wins, then they may be new to government, but there will be a pragmatic approach to reality

    And about time to!!!

    It will be a fresh start in difficult times

  • Comment number 39.

    Stephanie,

    The remark that 'the economy has been growing less than we (economists) thought in the previous two years' is frightening, but very noble of you to admit on behalf of all your professions incompetents.

    One thing that must come out of this recession is a more accurate measure of the state of all things economic.

    When ever there are two economists gathered together there are at least seven opinions, this has to stop and reality has to be invented.

  • Comment number 40.

    #12 Lost in Blues.... thanks for the response... the last sentence in your piece sums it up....

    The problem is they (Politicians) all KNOW something the rest of us don't know well enough---- that 'really' there is no such thing as any reality to 'lose touch' from--------------

    I blame Schrodinger's cat and Heisenberg, myself.... and Tweedle dum and Tweedle Dee, as well, they started it -----and now every Politician is programmed with the idea that ANY statement about ANY fact is infinitely frangible.

    And infinite space allows an infinite amount of wiggle room ....


    This leaves us where we are now; where Grown up Politicial debate means being told 'WE have decided not to hold a spending review because the forecasting involved is too difficult in the present economic climate'......

    However thanks to Schrodinger's cat and the rest there's no point even asking Politicians; upon what bases the decision was made that it is 'officially' now too difficult to forecast... AS, given that the Rumsfeldian 'Known knowns' are all exactly as known as they ever are known, or have been known, in previous forecasting efforts.

    Saying it's too hard to do, in itself, involves making a forecast based upon given assumptions.

    The statement by Lord M actually implies, that by using common sense, (Yep! That naive and discredited way of viewing the world) one arrives at the conclusion that the forecasting is probably as easy (or hard) as ever.... the problem may be that however wide the data range fed in; the wrong answers keep coming out----- So it's the answers that are really hard for the Politicians , not the forecasting.

    The usual device in these cases involves getting the answer you want to see FIRST (Tweedle Dee's 1st Law of Political thermodynamics) and then just using the intrepretations of figures and assumptions that one has to hand to work backwards from it.

    Unfortunately this has broken down as not even an Albert Hall full of Lewis Carrolls, imaginary cats and wrangling Tuetonic Physicists could come up with any remotely believeable set of inputs to produce the desired forecast outputs----- hence the sudden appearance of the 'new correct answer' (Tweedledum's 2nd Law of Political Thermodynamics---when all answers produced logically are wrong, delete logic and produce the correct answer that way) in the epochal discovery that forecasting is too hard do anymore.



  • Comment number 41.

    bagehott (#33) "Stephanie, your initial comment about Soviet propaganda is brilliant. Maybe deliberate or not. However it sums up Mr Brown and his party, Labour. Surely a euphemism for Soviet."

    Yes, the original Labour Party people (e.g. The Fabians like George Bernard Shaw and the Webbs) thought of the 1930s USSR as the model new civilization. They saw Stalinism as Fabianism. Others aw their roots in Owen. In the end, they all wanted the same thing, just without bloody revolution. That was the only difference. Don't believe all the Orwellian propaganda. He was a Trotskyite - he would have loved New Labour probably.

    VinChainSaw (#34) "If you're so bright why arent you sunning yourself on yuor yacht in the Med... I mean if you saw this crash with so much clarity you must've made an absolute fortune... oh, I forgot, somebody else's fault? Some statistician lie to you?"

    Why do you think that the application of sound economics requires that one persinally gets very rich? Good thieves and drug dealers can do that, as do those who financially prey upon others - see Madoff etc.

  • Comment number 42.

    Well if we are talking about notes of caution, in case it got missed last time...

    http://www.voxeu.org/index.php?q=node/3421

  • Comment number 43.

    #34. VinChainSaw wrote:

    Had a pop at me because I pointed out that the respected economists (his words not mine) are still revered when they got it so wrong.

    Look VinChainSaw, I did alert those in charge of the problems that they were ignoring on many occasions over the last decade and I did as it happens follow my own advice and make a modest amount of money out of it (as against losing a packet). But that is hardly the point.

    "respected economists" - Where have you been! Have you not just lived through the most destructive failure of economic theory ever! And you have the gall the call them "respected"!!!!!

    These same fools are still in change and for some reason I do not really understand, you and others still seem to think they know what they are talking about. They did not. They do not. And unless we alert everyone they will just re-inflate the property market, which caused these economic problems and tell us - lie to us that all is well and call it a recovery. Their economic models are wrong. They and their professors right from Milton Friedman onwards are wrong and are still wrong.

    If you bother to look over my post postings please notice my citing of my letters to the Treasury and the Governor warning of the flaws in the economic model over the last decade and the inevitable crash. So please wake up and smell the caudite these men and women are charlatans!

  • Comment number 44.

    Its all well and good to talk of tentative green shoots, but after the billions we have borrowed and printed it would be amazing if we didn't see a pretty strong bounce back in the next few months. The real story comes when interest rates rise again in the next year or so, as they will have to in the end. What happens then to the 'recovery' in the housing market when buyers in the future are faced with reinflated house prices plus higher interest rates? What happens to High Street spending when peoples wages are eaten up by increased interest payments? What about when oil prices rise higher?

  • Comment number 45.

    Thank-you BankSlickerminustheR (Post 1) ... for helping me to understand what Stephanomics is all about! ... An anagram of 'Stephanomics'...is 'machine stops!'

    This blog (and many of its comments) should not come as a surprise. Personally I think anyone going 'back to basics' will quickly realise the real state our economy is in ... and trying to 'spin our way out', rather than 'work our way out', is doomed to fail I'm afraid.

    The 'Kings' (Brown, Darling, Mandy and Mervyn!) have 'no clothes on' and they're becoming a 'laughing stock', except no-one (in the UK at least) is 'laughing' ... because they are continuing to systematically bankrupt the country whilst trying to save their own skins ...

    Trust, Honor, Responsibility, Respect ? ... Real values, proper values - absolutely, but don't hold your breath waiting to see if any of these 'leaders' will ever apply them.

  • Comment number 46.

    #45

    Really I don't know what you are blathering about.

    Take a look at this: http://www.economist.com/displayStory.cfm?story_id=7281145

    This is a fascinating example of two important points:
    a) Despite the same incentives, people respond differently
    b) The leadership from country to country differs according to the incentives that put them there. Countries with high levels of corruption, where leaders are motivated by privileges, violated regulations more.

    British diplomats accumulated zero parking violations in 5 years, despite a total of 150000 by the 2000 diplomats from different nations. British politicians, the police, and the establishment in general, are respected throughout Europe for their integrity. This is a fact, I see it in different countries often.

    You need to distinguish between cultures and countries. The British establishment has plenty of honor, responsibility and respect thank you very much.

  • Comment number 47.

    Some economic 'home' truths...

    All inflation is bad.

    There is no distinction between inflation of one good or another they are all bad.

    I think we all understand the disruptive consequences of inflation, so I will not go on about it. This has been an economics maxim since Adam Smith (and earlier). However some set of fools decided to perpetrate and enormous confidence trick on us by deciding that some inflation is good. There people were supposedly well educated so called economists and this segmentation of inflation suited the short term needs of bankers and politicians.

    However most economists knew that inflation in any good is bad, but they kept their mouths shut. They became the worst of so called professionals - the charlatan. This asset price inflation allowed bankers to siphon wealth from the common people which suited the bankers. Any economic halfwit knew it had to end in tears. It has but the same conmen who perpetrated this con trick are still being listened to!

    Now they tell us that because house prices are going up that they are 'recovering' when what they should be saying is that the unacceptable face of inflation has restarted in house prices. They have leant nothing from the last two years and they are setting about stealing more of the people's wealth for their masters the bankers and the politicians.

    What do they take the people for idiots! (If they get away with it they will have proved that we are idiots!) Mervyn King is still the Governor of the Bank, and to regain any shred of respect he must get interest rates up now to fight inflation. (But given his past performance I doubt he has the guts to do so, but, forever the optimist, I hope he does.)

  • Comment number 48.

    43. At 6:27pm on 30 Jun 2009, John_from_Hendon wrote:

    Nope I didnt take a pop at you because of your views, I took a pop because of your continual, daily, unabated criticism of anything any economist says.

    Yes, I agree with you that many got it wrong. Yes, I agree with you much of the current actions are unlikely to solve the situation and yes, I agree we're in a world of trouble.

    I just wonder whom you think should sort this out if the current generation of economists are so incapable. Should we entrust it to 12 yearolds? School leavers? Yourself? High school teachers?

    Fact is the only hope we have of getting through this is by best-guess economics using the best information, experience and minds available.

    Your continual musings that all statistics and economists are liars, imposters and charlatans offers absolutely nothing to the debate and does nothing to solve the current situation.

    Does nothing and simply writing off every piece of statistical information is not an option - you do the best with the info to hand. Play what is in front of you, to coin a sports analogy.

    Writing off all economists and every piece of statistical evidence based on the fact that a few hundred investment bankers pulled off a spectacular scam is foolhardy.

  • Comment number 49.

    Sorry and just to add to my previous post - economics and statistics is not an exact science - that's why it is called forecasting...

    Not perfect but the best we have... a bit like democracy in that respect actually.

  • Comment number 50.

    12 lost in blues said...

    "The moral of this story? You can trust statistics. You just can't trust the people who tell you what the statistics mean"

    We need to be careful about categories here. You and I might be willing to trust data put before us, if we knew how it was collected and what the underlying assumptions are about category, populations, measurement etc. I differentiate Statistics as being the presentation of data, the point being that it is trying to tell you something about significance, trend, pattern etc. Or trying to hide something..

    Thats why Disraeli's maxim has never been more valuable in our "if it moves, measure it" society.

  • Comment number 51.

    #47 John From Hendon

    "All inflation is bad."

    I know what you mean but it is not true.

    Search around for endogenous money creation...it is possible to have a permanent inflating money supply, so long as direct credit cannot be used to invest in assets that do not produce anything.


    This kind of thing:

    http://books.google.com/books?id=9nmNUN0R6PgC&pg=PA119&lpg=PA119&dq=economy+endogenous+credit+creation&source=bl&ots=HuEk5wmW_R&sig=wBbisMqjLXVNkWQSdBRT_Cxcsj0&hl=en&ei=FmNKSrj0K4qH_AadxOmFCQ&sa=X&oi=book_result&ct=result&resnum=2

  • Comment number 52.

    46 - so who, out of Brown, Darling, Mandy and King, in your view has demonstrated to us values such as Trust, Honor, Responsibility and Respect? and Why? Answers on a post-card, or just the postage stamp, if you want to save paper ...

    PS I personally found your reference more abstract than fascinating.

  • Comment number 53.

    #49

    "Not perfect but the best we have... a bit like democracy in that respect actually"

    Oh for crying out loud.

  • Comment number 54.

    i don't really understand all the high powered finance. other than those in high financial places seem to have screwed our economy AND our country up big time.

    but i will say this.the signs local to me are, in my view, showing signs of recovery. Just today i was speaking to an estate agent who was telling me that they are, in some cases, selling property that has been on the market for just one week. I have noticed more for sale boards going up and yes in a matter of a few weeks being changed for Sold boards.

    I am electrican working by myself for myself. The building trade is dead but by diversifing I have kept going. Its hard work yes but being self employed is thats the nature of the game. but I am seeing more enquies each month and those are showing a 90% acceptance rate. Nothing major but its placing me just right for the time when we level out on the good side of this recession.

    But who really is to blame? easy! spin doctors and the media. Lighten up be positive with the few little shoots that can be seen and lets talk the country out of this so-called financial mess. GO BACK TO BASICS look after the pennies and the pounds will look after themselves.

    All the big businesses get help from the government The one-man-bands loose out everytime. We cant get funding to help us, but are still expected to pay our taxes so our money can bail out the big guns. But when things turn round and the government want to get people back to work in time for a general election WE , the established sole traders, will miss out again as my tax again goes to the start ups to get people off the unemployed list to improve figures so Mr Brown and co reign in glory.

    In Short Lightern up and get the media to talk us out of this mess !

  • Comment number 55.

    #52

    You do not have a clue what you are talking about. If you want to know about Honour, take a look at Japanese imperial wartime behaviour. If you want to know about Trust, look at banks and funds all over the world (who blew our savings). If you want to know about Responsibility, take a look at China's ban on multiple children. If you want to know about Respect, take example from Russia's response to those fools in Georgia.

    Values?

  • Comment number 56.

    54 - talking up assets (ie house prices) again does not help UK exports, trade deficits or borrowing - though it would obviously help to feed self interest and property speculation again (which would clearly be good for UK banks, builders, electricians, and plumbers), but would result in more tears/pain again (e.g. another boom and bust) ... what we really need is an export led recovery (cf consumer led) to create jobs and reducing our trade deficit & borrowing ... to much to expect? ... hey ho

  • Comment number 57.

    31 Stanilic
    "I am putting my money on a run on the pound this autumn due to the governments reluctance to tackle the prevailing level of fiscal debt."
    Had it good authority it is the level of credit card debt that is spooking the banks at the moment - why are they not lending? there is too much debt out there already on credit cards/retail.
    On the fiscal debt, I expect the markets have already priced in a Tory government after next election and swingeing Government spending cuts very soon thereafter.
    I'll repeat my tip for a significant hike in VAT and or fuel duty within weeks of the election.
    The statistics are of passing interest but I would expect the unwinding of the UK economy to be variable paced - especially as some firms hold out to try and keep their skilled employees, hoping they will not have to lay off valuable trained employees assuming a 2 year recovery - then realising this is in for the long term and be forced to let them all go as working capital is eventually squeezed.
    Through random information received from friends /relatives made redundant, any jobs on offer seem to be 6 month contracts and no-one is hiring permanent staff at present.
    Anybody else receiving similar information on the ground? I prefer to base my outlook on such information as at least you know the source, and can interpret that based on sector.

  • Comment number 58.

    VinChainSaw (#48) John_from_Hendon has, over a long period, posted consistent sense throughout this entire mess. The one thing that he can be legimimately criticised for (and it's basically a trivial error) is his expectation that the incumbents (he singles out King without seeming to appreciate that King fills a post in the deregulated system) have the power to behave truly independently/fundamentally differently. They are all slaves to the markets - i.e. banks.

    To make this economy work now demands a return to statism, i.e. a command economy - something anathema to all three parties and the EU/USA in general. In the end, the PRC and SCO will demand it.

    Alas, there are those who will fight this tooth and claw, there being a very long history to this game :-(

  • Comment number 59.

    P55 - You didn't answer the question - are you a politician too? hey ho

  • Comment number 60.

    #51. FrankSz wrote:

    "Search around for endogenous money creation."

    I repeat "All inflation is bad".

    If a school of the fake pseudo science that calls itself economics has developed a theory that says inflation is good it proves my point about economists being charlatans, I think! (and yes I do know about all of the so called theories!)

    JJ in # 58 makes the point that the regulators are the slaves of the banks (like the FSA) - banks do not pay all of them. We the people pay Mervyn King and we pay him handsomely to be professional and to deploy his independent critical capacity - he has failed in this and we also pay Nick Macpherson the Permanent Secretary of the Treasury (recently awarded a Knighthood for destroying the Nation's economy) to be similarly acting for the good of all the country, not just bankers. If either have acted for the sole benefit of bankers against the interest of the country and the people they deserve to be sacked! Vox populi!!!!!

  • Comment number 61.

    The multinational I work for decided to cut its workforce by 20% back in December. Those working in the US were handed their notices in January, but due to the more complex labour laws in Europe and the UK, the redundancies over here have only just come through this month. I'm sure this sort of thing must be going on throughout the economy.

    The point I'm making is that we are only just seeing the beginnings of the rise in unemployment resulting from the banking crash, so I would expect unemployment to rise rapidly in the next six months or so. That seems an unlikely backdrop for a sustained recovery. Personally I'd say everything is set for a duble-dip recession.

    The trouble with GDP statistics is that so much or the wealth that was supposed to have been generated over that past decade by the financial sector turned out to be nothing more than fraud. They won't all get prosecuted like Madoff but the principal is the same. Perhaps we should not just re-evaluate last quarter's GDP, but the GDP for the whole of the last decade, removing most of the wealth that the banks and the rest of the financial sector claimed they were generating. Did we really have a boom in the first place? Working in manufacturing I didn't really notice one.

  • Comment number 62.

    #60 John_from_Hendon

    I agree with much that you have posted on these blogs. On the subject of inflation though I'm not so sure.

    Imagine a situation where the Pound was linked at purchasing-power-parity to the Euro and that all time-related financial transactions (annuities, loan repayment terms, etc) were calculated in Euros and then just translated back to Pounds. Would the inflation rate of the Pound matter in such a scenario? Not at all. Only the inflation rate of the Euro.

    OK - that's all very hypothetical. But it is important to bear in mind that the damage done by inflation is only a result of the detailed mechanics of the financial system. It would be quite possible to redesign the financial system (index linking pensions, mortgage repayment terms, etc) such that consumer price inflation was rendered pretty much harmless.

    At least that's true as far as consumer inflation is concerned. Asset price inflation is I think much worse for the economy and cannot be worked around. Preventing asset price inflation should be a central tenet of economic policy - and that really does mean getting house prices down to affordable levels and keeping them there. Permanently.

  • Comment number 63.

    My goodness what tosh from you on the 10 o'clock BBC TV news.

    I set matters out at post 23 at

    http://www.bbc.co.uk/blogs/pm/2009/06/the_am_glass_box_38.shtml

    prior to hearing BBC coverage.

    The central point, here, is the way you, too, accepted as fact assertions that were 55 per cent wishful thinking.



    As I point out here, at posts 47 and 52:

    http://www.bbc.co.uk/blogs/pm/2009/06/the_wimbledon_pm_glass_box_5.shtml

    the double dip account is another piece of fantasy. YOU cannot even know whether the economy has stopped the acceleration in its fall.

    Anyway I invited you to reply there.

    Personally I don't think you've got an answer for the PM blog readers.


  • Comment number 64.

    I heard you say tonight that an increase in house prices was a good thing. No it's not.. It's a very bad thing.

  • Comment number 65.

    hmm well I usually prefer Stephanie's posts to Peston's but IMO this one is pretty sub-standard

    as far as I can tell, QE hasn't had much impact and the banks are still not really lending much at all to SME; as for the housing market, it is badly distorted and the stats can't be trusted; most stats don't even differentiate between asking prices and actual sale prices! S'truth!

    it's good to try to be positive, but we're clutching at straws here I fear

    the govt's priorities remain all wrong; and the general public are weighed down by debt and only a fool would carry on ratcheting up their debts at the moment; most are trying to pay it down

    so no strong recovery; bumping along the bottom for the next 4 to 6 quarters would be my guess; and it is a guess, same as it is for the Harvard economists

  • Comment number 66.

    Well then a lively debate. Who is right and who is wrong - as per usual nobody and everybody.

    If any recovery does occur then it will probably be an 'acounting recovery' i.e. the figures will appear to improve but the real economy will either have stagnated or declined. We kep refering to this mess in silly ways - first it was a Credit Crunch, then it was a Slowdown, after that a Downturn, now a Recession. However, for over a year some of us where prepared to declare it as a DEPRESSION and I have no reason to change my opinion. We are in this period of depression for the best part of a decade. Hence, the economists, politicians and bankers should stop focusing on the short term and start planning for long term survival and re-generation. If we don't do it then this depession will ultimately come to a close in the same way that the Great Depression reolved itself.

    I don't know how we do this but we MUST take our focus away from Money. or too long money has been seen to be an indicator of economic progress and power. In the UK this has resolved itself by the open availability for sale of any economic asset that we have/had. We now have no way of economically appreciating who we are, what we are or what we have except for its cost/profit value.

    We are constantly warned that we must continue to maintain the 'global economy'. There is no such thing as a global economy. It is merely the aggregate of transactions completed by indivivual national economies. Therefore, it is our duty to build up our economy to the best of our ability and let other states do the same. If this means protectionism then so be it.

    It is generally accepted that our econony is imbalanced. That being the case then every effort must be made to re-balance it.

  • Comment number 67.

    10. At 1:51pm on 30 Jun 2009, MrTweedy wrote:

    "If you are cutting off your own leg, and then you finish, the improvement is that you have stopped cutting off your leg."

    Great analogy, unfortunately, some people on here just keep whittling at that leg. never wanting to see the improvements in the economy. They want to keep the recession going just to see Brown fail. their opinions cannot allow for any improvement so they are just like nelson looking through their blind eye and claiming "I see no recovery"
    As for the guy talking about schroedingers cat, the point of that experiment was to postulate that the act of observing something has an effect on the outcome of the observed event, just like when we observe the news that we are all going to lose our jobs, we then stop buying things to conserve our cash, we then lose our jobs because nobody is buying what we make. other people without the Quantum Physics training(or maybe, just a little less pretentious) call it "A self fulfilling prophesy".

  • Comment number 68.

    #9 "I am bored of all the gloom and doom, we will all sound like that Scottish bloke out of Dad's Army if we are not careful."

    That's Corporal Fraser,to you, sir !! :-)

  • Comment number 69.

    #25 "This philosophy carries on into the behaviour and rhetoric of every government minister and every ministerial statement where truth has now become a " no go " area."

    Truth is what the Ministry of Truth says it is !! No more, no less. In this case, it's the NuLabour's spin-doctors !! Please read "1984" by George Orwell !! :-)

  • Comment number 70.

    64. At 00:07am on 01 Jul 2009, Wee-Scamp wrote:

    "I heard you say tonight that an increase in house prices was a good thing. No it's not.. It's a very bad thing."

    That surely depends on whether you happen to be buying or selling a house.
    Obviously you are buying, or going to buy when you have grown up. once you have bought one you may feel a bit different.

  • Comment number 71.

    #27 "...why have all civilised nations since about the dawn of time found it necessary to enforce rigorous anti-monopoly legislation?"

    WOW !! I didn't know civilisation start *AFTER* WW2 !! That was when anti-monopoly legislations first began !! Prior to that it had always been *pro-monopoly* legislations !! The British Empire was one of the biggest culprits in this !! British goods were tax-free within the Empire whilst foreign good had taxes levied on them !!

    So we can't have been civilised until very recently !! Perhaps we were still painted in woad ??

  • Comment number 72.

    #36 "If we see the USA and Europe coming out of the recession earlier and stronger than us then sterling could be in real trouble."

    I seriously doubt that the US will recover any time soon. Especially in light of the latest BRIC meeting where there were calls from many attendees to move away from the dollar as a reserve currency !! This will put a serious damper on any US quantitative easing as any such will badly devalue the old greenback !! Under pressure from all sides, the old greenback may be in deeper doo-doo that the Sterling !!

    The jury is still out on the Euro, especially if the BRIC countries decide to dump dollars in favour of Euros !!

  • Comment number 73.

    #39 "When ever there are two economists gathered together there are at least seven opinions, this has to stop and reality has to be invented."

    You forgot to mention the bloodbath as they lash each other with their pet theories !! :-)

  • Comment number 74.

    VinChainSaw

    In my day the banter on Sidgwick Avenue was that PPE stood for Pretty Paltry in the way of Economics, so perhaps John from Hendon is just indulging in a bit of retro inter-blue rivalry.

    But, more seriously, I think that a serious criticism of the current high and mighty is that they have applied a drawstring to the bag of "acceptable" beliefs, so that anyone wishing to argue from the mainstream has been left with an unbelievably narrow range of viable positions. Those objecting to being constrained in this way have been put down as mavericks or extremists - in denial - flat-earthers so out of touch with the newly discovered certainties as to, quite rightly, be totally discredited and not worthy of inclusion in academic discussion.

    This development has not just been in the field of economics. It's riddled society all the way through. It's the cause of politics having been narrowed down to two and a half main parties squabbling about who should have the right to do the same as the others would do. And entry to the man-made global warming "debate" requires one to carry a badge proclaiming "it must be happening".

    Too many clever people, and not enough wise ones. That's our problem. Too many people who think that winning an argument is more important than getting it right, and who have used their cleverness to create an armoury of argumentative strategies designed first and foremost to stymie the alternative view. Really, genuinely useful intellects never set out their stall in a way that it cannot be turned over, because they realise that however strongly they believe their case, there are no certainties in this world. And also that by denying others the platform, they deny themselves the chance of reaching a more advanced level of understanding.

  • Comment number 75.

    #55 "If you want to know about Responsibility, take a look at China's ban on multiple children."

    If China had not banned multiple children back then, one third of the world's population will be Chinese by now, instead of "just" a quarter !! Already one-sixth, and rising, of them are Indians !! And that does *not* include the Pakistanis and Bangladeshis !!

    Sorry about the fractions but I'm an unreconstructed anti-decimalist !! None of this 0.33333....recurring, for me !! :-)

  • Comment number 76.

    Since Mr. Peston first drew my attention to it I have been watching the Baltic Dry Index (BDI). The charts show that Ocean Freight rates bottomed out, due to lack of demand for raw materials and cargo ships to carry them, at the end of 2008. Since then the rates (or the index that represents rates) has increased fivefold. This indicates that the demand for ships has increased.

    now... these ships are bulk carriers and unless the filthy rich have decided to slum it on their yearly cruise, it follows that the global demand for raw materials has increased.

    It is universally accepted that nobody hires a cargo ship unless they want to move cargo, (with the possible exception of Al Quaeda and if they are responsible for the rising BDI then we really do have problems).

    Additionally, nobody moves cargo without a buyer waiting, so the index is free of political influence and "Expert" opinions, as such it is a reliable leading indicator of economic conditions.

    Looking again at the chart, a massive drop in the BDI occurred just before the global economy fell over. it is logical to assume that a strong uptrend will occur when the economy is recovering.

    Global recovery is underway because the ships are under weigh.

    all you Labour haters, read the charts for yourselves, then come back on and explain how and why Gordon Brown was responsible for the current Global economic problems. Could it be that if the Torygraph had gotten hold of the 2007 expenses, instead of 2008, we might have seen that G.Brown claimed for the shipping of 800 trillion tonnes of Iron Ore in 2007, but he didn't claim it in 2008?


  • Comment number 77.

    #74 ".....because they realise that however strongly they believe their case, there are no certainties in this world."

    Oh yes, there are !! At least two !! DEATH and TAXES !! Absolutely guaranteed to certainly exist !! :-)

  • Comment number 78.

    Comment 70 : Rhubidium

    "64. At 00:07am on 01 Jul 2009, Wee-Scamp wrote:

    "I heard you say tonight that an increase in house prices was a good thing. No it's not.. It's a very bad thing."

    That surely depends on whether you happen to be buying or selling a house.
    Obviously you are buying, or going to buy when you have grown up. once you have bought one you may feel a bit different.


    Well it doesn't depend on whether you are buying or selling a house if you are expressing an objective opinion, does it? You might say that for the well-being of the economy and the country as a whole, a regime of continually rising house price expectation is a bad thing. And you could say this from a position of being either a buyer or a seller, or neither.

    Despite it seeming to be the case, there is actually no human law that says that all opinions must be decided by self-interest but then communicated as though you have actually made them on the basis of the common good. You could just decide on the basis of what you reckon the common good to be, and then, when this becomes the standard, have confidence that you will actually be far better off than you would have been when everyone behaved selfishly - as now.

  • Comment number 79.

    Comment 76 : Rhubidium

    "all you Labour haters, read the charts for yourselves, then come back on and explain how and why Gordon Brown was responsible for the current Global economic problems."

    Don't misrepresent your opponents. Labour-hater or not, no one is saying that Gordon Brown "was responsible for the current Global economic problems". What you've done is a very New Labour trick of putting words into your opponents' mouths - words specifically designed, by you, to appear repulsive to those who don't actually know what "Labour-haters" are actually saying. This isn't political debate - it's deception for advantage. In commerce it would be called fraud.

  • Comment number 80.

    John_from_Hendon (#60) "We the people pay Mervyn King and we pay him handsomely to be professional and to deploy his independent critical capacity - he has failed in this and we also pay Nick Macpherson the Permanent Secretary of the Treasury (recently awarded a Knighthood for destroying the Nation's economy) to be similarly acting for the good of all the country, not just bankers."

    These Civil Servants and quasi Civil Servants are in post to fullfil a function which, since 1979, has dramatically changed from running the country on bealf of its people, to devolving state power to the front line and ultimately to the markets. In the process, a good Civil Servant became someone who effectively pulled the rug from under her/his own feet and did not do what used to be called a good job. Those who wanted to sustain the old infrastructure/ways were simply not doing what was required and were thus deemed incompetent, 'empire builders' or most paradoxiclaly of all, 'subversive'!.

    Try and see what I am saying here as it really does accrately described what was going on in the Public Sector (I assure you...). Thatcher and her Conservative Party were anarchists it's just that most peole don't understand the nature of anarchism - it's Hayekian/Austrian School free-marketeerism a form of piracy - with a PR makeover. It's why the fled Germany in the 1930s! This is why there was a boom after Thatcher (look into who her idologues were). It was the boom of people behaving in unprincipled ways as the assets locked up in the state on hehalf of the people were stripped and 'sold' off to the Private Sector. They were, one could say, literally stolen from the people, but the latter were either too stupid, too drug crazed or too indoctrinated with Trotskyism at university (or fear of the statist USSR or Vietman etc) to see this and stop it. In fact, they would have been regarded as dangerous enmies of the eroding 'state'....

    Now the state is all but gone because of massive national debt and some are crying over spilled assets....

    ..already. :-(

  • Comment number 81.

    #80 and others...

    I have mentioned this idea before in passing, but it begins to grow a little louder in my mind..

    If these are the problems as presented:
    - Worrying demographic trends - increasing populations of those less likely to be economically productive, to have birth defects, &c
    - Increasing unemployment, deflation
    - Increasing potential for social unrest, decreasing sense of direction, purpose, aim
    - Trade imbalances, capital shifts

    Hasn't the traditional solution been war?

    Is it not actually part of our economic framework, part of human behaviour, a necessary part of human activity, that the populace should purge itself of its baggage, send the Herberts off as cannon fodder, all in the name of king/queen/council chairman and country, while turning inwards to concentrate on national interests, to reduce social instability, provide a sense of purpose, and re-take what was lost to trade imbalances?


  • Comment number 82.

    #80. JadedJean wrote:

    About the nature of the civil service and how it has change since Margaret Thatcher.

    I know what you are saying, but that does not mean we have to accept the current status quo... And I don't, as you know.

    I do not believe that it is beneficial to adopt the position that all that can be done is to wring ones hands. I prefer to go down fighting and stirring up the pot in my own little way. (Indeed I deem it a duty to do so.)

    Professionalism and intellectual honesty really does matter in this country. (and indeed everywhere!) It matters more than almost anything else. We, the pot stirrers, have a duty to shine the light of logic and common sense on the stupidities of the modern state.

  • Comment number 83.

    Rhubidium (#76) "all you Labour haters",

    All you NEW Labour haters surely? This was Labour. It had policies very much like Stalinist USSR, which Fabians like the Webbs and George Bernard Shaw much admired. Do you recognise it in the incumbents or do you see the slayers of Labour? Is it any surprise given our subsequent foreign policy. We are constantly told that such systems are evil and oppressive. Like spoiled children we have been induced to destroy our own best interests. The incumbents are entryists.

  • Comment number 84.

    #81

    Or is it that integration - Asean, European, North American, NATO, globalisation - has progressed so far that the traditional exit of war is no longer an option?

  • Comment number 85.

    #84

    War presumes that we still have a nation state ourselves (see #80), and we have a cohesive geographical (i.e. nation state) enemy. Instead, the communal assets of the world have been raped and pillaged by corporate gluttony, all in the name of individualistic prosperity.

    I suspect that our fate is going to be more in keeping with that which befell the Roman Empire:

    http://en.wikipedia.org/wiki/Decline_of_the_Roman_Empire

    Does another Dark Age beckon?

  • Comment number 86.

    ishkandar (#69) "Truth is what the Ministry of Truth says it is !! No more, no less. In this case, it's the NuLabour's spin-doctors !! Please read "1984" by George Orwell !! :-)"

    Please take on board the significance of George Orwell (nee Blair) being an anti Statist Trotskyite/Anarchist. Before the 1917 revolution there just were anarchists aka 'aliens'. These people are great bed-fellows of free-marketeers, in fact, I don't think there's any substantial difference. Orwell seduced a damaged generation into fearing Old Labour and to long for the likes of Thatcher, the libertarian 'mom' which they'd never had!

  • Comment number 87.

    Hawkeye_Pierce (#85) "I suspect that our fate is going to be more in keeping with that which befell the Roman Empire:

    http://en.wikipedia.org/wiki/Decline_of_the_Roman_Empire

    Does another Dark Age beckon?"


    It's dysgenesis - see Fisher, Cattell, Lynn etc, far too much scaremongering about Hitler, and far too little studying of the history of biometrics/eugenics (good breeding).

  • Comment number 88.

    #87 JJ

    Never attribute to conspiracy what sheer incompetence can achieve on its own.

    My own view is that modern society has over-adapted to the 20th Century model of rapid economic growth. An over-adaptation that is systemic, in that it is self-reinforcing / self-perpetuating. Dysgenics may be playing one small part, but the problem is more holistic.

    Our over-adaptation has rested on the following widely held beliefs:

    1) that we can all make money from money (e.g. property rights from land):
    http://www.gaianeconomics.org/chrematistics.htm

    Although plausible in the short-run it in fact is little more than a Ponzi scheme; as long as there is compound growth in the scheme, all investors are better off, but as the growth stops the scheme is exposed for what it is.

    2) that science can keep economic growth going by supplying endless cheap energy. Yet we are reaching diminishing returns:

    http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/06/were_all_longtermists_now.html

    Regrettably this leaves us with Hawkeyes paradox:

    A genius is someone who solves major problems for mankind in a spectacular and positive way. We all eagerly await the next genius to solve the sole concern we should all have at the moment, and that is our future supply of energy resources. If the true answer is that there is no superior supply of energy beyond oil (owing to natural resources being the most abundant and efficient way of creating low entropy energy), and that consumption reduction is the answer, then anyone who firmly puts forward this notion is not (by definition above) an accepted genius.

    Therefore, our current predicament is not solvable within the accepted wisdom of the day: we are awaiting the messiah, yet anyone who claims to be our saviour will be stoned at a moments notice.

  • Comment number 89.

    Hawkeye_Pierce (#88) Conspiracies are by definition illegal. What I am talking about is legal, just venal. It is promoted as free-enterprise. It is promoted as freedom, but of what? People forget that groups or parties work together in their common interest. Why do you think there is all the politically correct pressure against nationalism and 'racism', and why has the one group which pressed for such legislation and its social derivatives (like anti-hate laws) been such a statistically salient financial and hegemonic beneficiacy?

  • Comment number 90.

    78. At 08:30am on 01 Jul 2009, ExcellenceFirst wrote:

    "Well it doesn't depend on whether you are buying or selling a house if you are expressing an objective opinion, does it?"

    Sorry but the guy was clearly stating a Subjective opinion. I believe that my point was the objective opinion.
    "Grass is green", an objective opinion, there is no alternative opinion possible.
    "Grass is nice" is purely subjective because some subjects like it and some subjects (i.e. hay fever sufferers) do not.

    buyers want low prices, sellers want high prices, therefore it is purely subjective(i.e dependent on the subject not the object). are you telling us that some people are happy to take a %30 loss on their house price and that others are saddened by their house increasing in value??? if so can you please confirm that the sun always shines on your planet?.

    I love it when people criticise me and get it wrong. thank you that really cheered me up.

  • Comment number 91.

    The lack of cash in peoples pockets is causing this sharp decline. It just shows how much of the UK economy is built on weak foundations, the credit money dries up the economy stops!
    The housing market deserves to fail, the greed that fed the housing price spiral needs to be stopped. How about limiting the number of homes a person of business can buy. Then the genuine home owners would have a chance at buying them rather than speculators gobbling up every house in sight.The phrase killing the goose that lays the golden egg springs to mind, greed will always do that but the mess the UK economy is in now is down to greed.
    The recession began in Jan 2008 and here we are in Jun 2009 and still no pick up in consumer spending.The banking sector with its bonus inspired remuneration packages is were the problem originated but it has now spread out in to the real economy. And the impact has been devastating a slump in every sector from housing, retailing, car industry.Somebody should be held accountable for this and it should include criminal action on the culprits. After all these were supposed to be smart intelligent guys, anybody with half a brain could see the credit pumped up economy was bound to burst and it did big time.

  • Comment number 92.

    83. At 10:21am on 01 Jul 2009, JadedJean wrote:

    Rhubidium (#76) "all you Labour haters",

    "All you NEW Labour haters surely?"

    No, I know what I meant, there are people on this board that firmly believe Gordon Brown and Tony Blair before him were responsible for the current economic woes, the economic issues are Global, as in worldwide.
    These people believe that "NuLab", or "Liebour" or "ZanuLab" or any of a number of colourful epithets( as if they remember "Old Labour with a wistful fondness), have actually got the Global influence to cause a worldwide recession, against all the evidence to the contrary.
    The British government has led the way throughout the crisis, with all other major economies following suit shortly thereafter. The situation seems to be improving, earlier than the 2014 predicted timeline, because of these policy decisions. still these people are looking for disaster, they would rather see the economy nosedive than see Labour remain in power. A recovery will damage Camerons chances at the next election, so they try to talk down the recovery, and then they have the brass neck to accuse Labour of putting party before country.

    Not "New" Labour haters but "Any" Labour haters.

  • Comment number 93.

    #92 "The British government has led the way throughout the crisis, with all other major economies following suit shortly thereafter."

    Isn't it here that you say Gordon Brown went on to save the world ?? Didn't he wear a cape, too and his knickers on the outside of his pants ?? Did he have a big "G" on his chest ??

  • Comment number 94.

    "Don't believe all the Orwellian propaganda. He was a Trotskyite - he would have loved New Labour probably. "

    He would have detested them because of their murder of the English language through use of cliche, euphemism and other linguistic torture designed to obscure everything they say - read "Politics and the English Language".

    Most sensible people knew that what Brown was doing to our economy would eventually explode in all our faces. What none of us know was when it would happen, how it would happen or that it would coincide or be triggered by a global credit crunch. Many of us commented about some of the issues that led to this mess, but I don't think anyone foresaw the whole horror. And in reality we all got caught up in the extraordinary delusions and madness of crowds.

  • Comment number 95.

    cromer46 (#94) 'Oh no we didn't' ;-)

    My point about Orwell was just that he was another anti-Statist. He just spun it the other way. Most people are still refusing to face up to what's really been driving these problems. See Balls and his extra tuition 'entitlements'.

  • Comment number 96.

    #90

    Your comment that grass is green reminds me of a conversation from about 12 years ago.

    It went a bit like this....

    Grass is not green at night under a cloudy sky.
    Grass is not green under a sodium lamp.
    Grass is not green when viewed through a coloured filter.
    Grass is not green when its a purple/black variety.

    Anyway, my point is this ... most of our 'measurements' or interpretations are subjective. They depend on our 'personal' measuring devices, situatins and our personal prior knowledge.

    As individuals we can always update our knowledge or models with the latest data (I use this in the widest sense not just the adjusted stats).

    Some of the posters on this blog enable broader contemplation and investigation whether you agree with them or not.

    Thank you to excellencefirst. I completely agree that the potential for real debate is limited. I was saying something similar on Tuesday.

  • Comment number 97.

    mrsbloggs13c2 (#96) "As individuals we can always update our knowledge or models with the latest data (I use this in the widest sense not just the adjusted stats)."

    Excellent. That's about all we can do, and the more that actively strive to do that in the common interest, the better.

 

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