- Time to fasten our seatbelts
- The Guardian UK
- 23/10/2008 Make a Comment
- Contributed by: The Rooster ( 264 articles in 2008 )
Although there is a danger of overestimating these things, it seems fair to say that the world order is being recast
Comments (5)
Let's put Yachtgate and tiffs within the Bullingdon Club aside for now and talk about something trivial for a spot of light relief: global recession and the recasting of the world's economic and political hierarchy.
Overnight Mervyn King, ultra-cautious governor of the Bank of England, conceded that it "now seems likely" Britain is entering a recession. Or to put it in under-nuanced John Humphrys-speak: "It's official; we are in recession now. You can't argue with the governor of the Bank of England," declared the country's most argumentative man.
That's not all. We also learned this morning that India has launched a satellite on a moon mission, another chastening reminder in the year of the Beijing Olympics that the world order is changing.
Yes, I know that the west overestimated the significance of the Soviet Union's launch of its pioneering Sputnik satellite. Most oldies can remember hearing that distinctive signal… "bleep, bleep, bleep" and wondering what it meant.
All sorts of leftwingers who should have known better by 1957 joined in smug triumph-of-central-economic-planning rejoicing: even clever Denis Healey was reluctant to drop this one. Some things are best done by the state, space rockets, being one, bank rescues another. Most things aren't.
A confident America, soon to be personified by JFK, took up the challenge and put a man on the moon by 1969: quite what for, we are still deciding. But Nikita Khruschev's "we will bury you" boast proved wide of the mark.
Instead, the old USSR, exhausted by its Hitler war (so were we), was actually edging towards collapse, though it took 30 years (we are taking longer). China and India learned the right lessons and are developing more managed forms of capitalism than our own over-exuberant model of recent years, currently in receivership.
If we want to be really miserable about the decline of the west – a recurring theme for 150 years - we could note in passing Ewen MacAskill's report in today's Guardian that the respected Pew research centre in the US is saying that America can no longer run an election for which 130 million voters turn up, hoping to exercise that most basic civic right.
Inadequate and partisan electoral rolls, voter challenges, electronic but unreliable ballot boxes (remember those hanging Florida chads), all seem likely to contribute to potential mayhem on November 4-5. Just to complicate what should be a simple on-the-day act Americans are already being allowed to vote - have been for weeks regardless of the fast-changing political picture, which may change their decision.
Dumb or what? Soon we will be asking ourselves: "Did these people really send men to the moon once?"
Never mind, we have more urgent worries. Governor King's concern for inflationary pressures and for "moral hazard" (let the errant banks go bust) made him slow to acknowledge the enormity of the crisis. During a speech in Leeds last night he conceded that the system was closer to collapse than at any time since – wait for it – not 1929-31, but 1918.
The Brown/Darling recapitalisation of the banks may have turned that particular corner. But the crisis is feeding through the system. Bankruptcies, corporate and personal (the two guinea word is "deleveraging"), will hit jobs in the wider economy. The virtuous cycle of the last 15 years is going into reverse.
Oh yes, and global savings are leaving Britain, putting pressure on sterling. Off 6% overnight, it now trades around $1.63, compared with almost $2 when I was in the US in July.
That will feed into inflation and hurt our over-lax trade imbalance, though – in theory – exports will also be cheaper. What exports?
There will also be less credit around in our credit-dependent economy, where we have been busy borrowing Asian savings.
What can King do? Lower interest rates, which he will belatedly agree to do. What can the government do? Speed up job-boosting public spending, as ministers promise to do, hastily polishing their busts of John Maynard Keynes. Actually, it's harder to do that than it looks: ministries are always underspending their budgets.
As I type, expensive economists are disagreeing on the radio about the nature of the coming recession, its depth and length.
It will hit the middle class south hardest, but skilled people are easier to re-employ, so it will be shallow, says jolly LSE brain, Lord Desai, a touch airily. One of his ex-pupils politely disagrees: it will be deep and nasty.
There's always an upside to the downside, so we would do best to wish the Indians luck with their satellite and the Americans with their election, fasten our seat belts and hope for the best. In recession we may be kinder to each other, as nice John Harris suggests in today's paper: the Morrison spirit!
Did someone say that oil prices, now around $70 a barrel, have already fallen by half from their spot price peak a few months ago? Break open that last bottle of Asti Spumante? Not yet. Today's City pages report that Russia, Iran and Qatar, who control 60% of the world's gas deposits, are setting up a cartel.
Comments (5)
Let's put Yachtgate and tiffs within the Bullingdon Club aside for now and talk about something trivial for a spot of light relief: global recession and the recasting of the world's economic and political hierarchy.
Overnight Mervyn King, ultra-cautious governor of the Bank of England, conceded that it "now seems likely" Britain is entering a recession. Or to put it in under-nuanced John Humphrys-speak: "It's official; we are in recession now. You can't argue with the governor of the Bank of England," declared the country's most argumentative man.
That's not all. We also learned this morning that India has launched a satellite on a moon mission, another chastening reminder in the year of the Beijing Olympics that the world order is changing.
Yes, I know that the west overestimated the significance of the Soviet Union's launch of its pioneering Sputnik satellite. Most oldies can remember hearing that distinctive signal… "bleep, bleep, bleep" and wondering what it meant.
All sorts of leftwingers who should have known better by 1957 joined in smug triumph-of-central-economic-planning rejoicing: even clever Denis Healey was reluctant to drop this one. Some things are best done by the state, space rockets, being one, bank rescues another. Most things aren't.
A confident America, soon to be personified by JFK, took up the challenge and put a man on the moon by 1969: quite what for, we are still deciding. But Nikita Khruschev's "we will bury you" boast proved wide of the mark.
Instead, the old USSR, exhausted by its Hitler war (so were we), was actually edging towards collapse, though it took 30 years (we are taking longer). China and India learned the right lessons and are developing more managed forms of capitalism than our own over-exuberant model of recent years, currently in receivership.
If we want to be really miserable about the decline of the west – a recurring theme for 150 years - we could note in passing Ewen MacAskill's report in today's Guardian that the respected Pew research centre in the US is saying that America can no longer run an election for which 130 million voters turn up, hoping to exercise that most basic civic right.
Inadequate and partisan electoral rolls, voter challenges, electronic but unreliable ballot boxes (remember those hanging Florida chads), all seem likely to contribute to potential mayhem on November 4-5. Just to complicate what should be a simple on-the-day act Americans are already being allowed to vote - have been for weeks regardless of the fast-changing political picture, which may change their decision.
Dumb or what? Soon we will be asking ourselves: "Did these people really send men to the moon once?"
Never mind, we have more urgent worries. Governor King's concern for inflationary pressures and for "moral hazard" (let the errant banks go bust) made him slow to acknowledge the enormity of the crisis. During a speech in Leeds last night he conceded that the system was closer to collapse than at any time since – wait for it – not 1929-31, but 1918.
The Brown/Darling recapitalisation of the banks may have turned that particular corner. But the crisis is feeding through the system. Bankruptcies, corporate and personal (the two guinea word is "deleveraging"), will hit jobs in the wider economy. The virtuous cycle of the last 15 years is going into reverse.
Oh yes, and global savings are leaving Britain, putting pressure on sterling. Off 6% overnight, it now trades around $1.63, compared with almost $2 when I was in the US in July.
That will feed into inflation and hurt our over-lax trade imbalance, though – in theory – exports will also be cheaper. What exports?
There will also be less credit around in our credit-dependent economy, where we have been busy borrowing Asian savings.
What can King do? Lower interest rates, which he will belatedly agree to do. What can the government do? Speed up job-boosting public spending, as ministers promise to do, hastily polishing their busts of John Maynard Keynes. Actually, it's harder to do that than it looks: ministries are always underspending their budgets.
As I type, expensive economists are disagreeing on the radio about the nature of the coming recession, its depth and length.
It will hit the middle class south hardest, but skilled people are easier to re-employ, so it will be shallow, says jolly LSE brain, Lord Desai, a touch airily. One of his ex-pupils politely disagrees: it will be deep and nasty.
There's always an upside to the downside, so we would do best to wish the Indians luck with their satellite and the Americans with their election, fasten our seat belts and hope for the best. In recession we may be kinder to each other, as nice John Harris suggests in today's paper: the Morrison spirit!
Did someone say that oil prices, now around $70 a barrel, have already fallen by half from their spot price peak a few months ago? Break open that last bottle of Asti Spumante? Not yet. Today's City pages report that Russia, Iran and Qatar, who control 60% of the world's gas deposits, are setting up a cartel.
Source: https://www.guardian.co.uk/politics/blog/2008/oct/22/economy
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