[Archived] Global Recession Looming

[broadsword]

What happens if another bank looks like going to the wall, do we bail them out as well? I see banks are winding their necks in now by no longer offering 100% mortgages, but might teh damage already be done?

Northern Rock was lending people mortgages that were 4 or 5 times their income. From what I can tell of teh news, they weren't the only irresponsible lenders.

It does send out a bad signal. Don't worry if you completely screw things up, the BoE will prop you up, and if that doesn't work we'll nationalise you.

[American]

Interesting article about this in the Wall St Journal the other day. It's a pay site, so I can't post a link or quote, but if anyone wants to PM me their email address, I am allowed to email a link.

One of the interesting points was about previous nationalisations of banks that are still on the governments books.

[Bazzanotsogreat]

So it seems that we as a nation may actually be on the cusp of a recession: with some commentators rating the chances as 50/50. Growth is expected to slow to around 1.4-6% and national and government debt is expected to soar.

The budget also confirmed that Mr Darling is about to break several of new Labours Golden fiscal rules: especially the biggie balancing the books during this years financial cycle and the golden rule on national debt which will smash through the governments self-imposed 40 billion mark.

All in all things are looking bleak both globally and particularly within Britain, with noting set-aside to cut interest rates and help fight inflation.

[stuwilky]

Are people still trying to talk us into a recession?

How many successive quarters of negative growth do we need to be in a recession? 3

How many have we had thus far? I'll let someone else figure it out.

[thenodrog]

Well don't leave it to this silly buggger...... or his boss!

http://uk.biz.yahoo.com/12032008/323/uk-bu...n-forecast.html

Just who on earth does he think he is kidding? Unless his figures are based solely on the cost of BRFc season tickets he's cooking the books big time.

[Bazzanotsogreat]

Are people still trying to talk us into a recession?

How many successive quarters of negative growth do we need to be in a recession? 3

How many have we had thus far? I'll let someone else figure it out.

No-one is trying to talk us into a ‘recession’, cold-hard facts indicate that the economy is set for an extremely difficult period.

If you’re talking about predicted growth then I suppose you’re relying on the chancellor’s predicted figures of 2%, virtually every creditable financial commentator or fiscal institution outside of the treasury puts that figure quite considerably lower. It won’t take too much of a dip in the UK economy to slip from 1.5% growth to negative growth. Especially when the UK economy has one of the largest deficits in the Western World.

Remember Labour for the seventh cycle running has had to re-adjust their optimistic growth forecasts, I expect from what ive read and understood that the chancellor will adjust his rosy looking forecast within this run.

[RibbleValleyRover]

The OECD and the Bank of England reckon we are on the verge of a recession and I would tend to agree with them, especially the OECD.

In terms of economic growth Brown and the Labour government inherited the economy that the Conservatives left in a pretty decent condition in 1997. The conservatives started this future growth through their policies and laying down the foundations and Brown reaped it. Though now our economy is beginning to suffer from the massive amount of borrowing he has had to do in order to spend it on their so called "improvements".

We are in such a mess now; we can't cut rates in order to stimulate growth because that will lead to an increase in inflation. Repossessions are on the up, unemployment is set to go up, it definitely looks grim.

[lancastrianrover]

I am age 40 now, been in debt since the age of 19, bankrupt once age 33

a recession is hardly going to affect me is it?

pretty soon, because of globalisation, everyone will have to go self-employed

that does not worry me as I have been self-employed since age 23

I celebrated every labour constituent win in 1997 with a clenched fist

that was before I realised that Blair was a tory

Gordon Brown is socialist, but he has had everyone living in a false economy over the past 11 years

Globalisation means industry floated to places that have the cheapest wages, and the services that Thatcher created will be seen as the pie in the sky that they are

it will be a worrying time for all those house owners who voted tory, I will look after the working classes who do a decent day's work giving some advantage to mankind

but the recession is nothing to do with politicians and big business, it is down to the person on the street...Charity begins at home

[philipl]

Bear Sterns going under shows just how bad this is.

OK it will be rescued on the Too Big To Fail principle but for the 5th biggest investment bank to fail is staggering.

It will be interesting to see the price the Chinese and Arabs place on bailing out Wall Street. I guess we have seen the high watermark of Israeli influence in the US.

The Big Bush Bust- and we have another eight months for the Dubya Presidency to be marked as truly the worst in hostory.

[broadsword]

"hostory" -- was that deliberate?!

[tucker]

It has long been known that Bear Stearns are/were one of the most vulnerable of Wall Streets banks so todays announcement is no suprise.

One of the more unfortunate consequences of todays events is the effect on the libor rates, which had began to settle down after the madness of last autumn, higher rates could drag other exposed banks into deeper water and I would expect the fed will have to get used to increasing their 'cheap money' auctions, which they did yet again earlier this week, and slash the fed funds rate by atleast 50 basis points next Tuesday night.

[jim mk2]

In terms of economic growth Brown and the Labour government inherited the economy that the Conservatives left in a pretty decent condition in 1997. The conservatives started this future growth through their policies and laying down the foundations and Brown reaped it. .

Thank you A J P Taylor.

For the record the Tories government of 1979-1997 was responsible for

1. Boom-bust economy and the two worst recessions since the second world war.

2. Unemployment doubling and hitting 3,000,000 twice

3. Interest rates rising to 15 per cent and inflation to nearly 10 per cent.

4. Mortgage rates averaging over 11 per cent between 1979 and 1997

5. Between 1990 and 1993 alone, 1.5 million households suffering negative equity and 250,000 families having their homes repossessed.

6. National debt doubling with more spent on servicing this debt than on schools.

7. Black Wednesday (16 September 1992) – the Tories’ ERM fiasco – which cost Britain well over £3 billion.

and I haven't even mentioned the devastation that Thatcher's policies caused to manufacturing and the deliberate destruction of large swathes of the north of England in particular.

By contrast Labour's decision on coming to power in 1997 to give the Bank of England independence over setting interest rates has delivered 11 years of steady non-inflationary economic growth.

As MacMillan said, you have never had it so good.

[broadsword]

So, it's all been down to Labour then, nothing to do with riding the wave of global economic prosperity. I was surprised when Labour handed control for setting interest rates has social aspects. But then this is the government that was willing to privatise the Tote, air traffic control.

Will be interesting to see how Labour performs in a global economic downturn.

[blue phil]

By contrast Labour's decision on coming to power in 1997 to give the Bank of England independence over setting interest rates has delivered 11 years of steady non-inflationary economic growth.

As MacMillan said, you have never had it so good.

If Labour can take responsibility for the good years (which they have tried to )then they can damn well suffer the consequences for the present (and future) bad times .

I usually check my pension online every month or so just to see how it's progressing . The past 5 or 6 months haven't made pleasant reading at all .....at this rate It'll be me doing the paying out to the pension company .....

(Oh.....I like the bit about the "non-inflationary economic growth" , jimbo . They sure do isolate you from the outside world at the nursing home !! )

[RibbleValleyRover]

I'm not going to get into a full debate on whether Thatcherism was good for this country as thats a different topic.

I'm not saying the Tories didn't make economic mistakes, because they did particularly pre 1997. However in 1995/96 the economy was showing signs of a major turn around and growth was starting to pick up. Labour will of course claim they were the reason for this growth as they were in the power at the time, but this claim is far from the truth.

Brown has made a real mess of this economy with his excessive borrowing in order to try and meet quite frankly unrealstic Labour pledges. He destroyed the pension system with his raids. The man who has introduced tax after tax to make us one of the most taxed nations on earth. I could go on and on about how much him and his cronies have run this country into the ground.

[Bazzanotsogreat]

Thank you A J P Taylor.

For the record the Tories government of 1979-1997 was responsible for

1. Boom-bust economy and the two worst recessions since the second world war.

2. Unemployment doubling and hitting 3,000,000 twice

3. Interest rates rising to 15 per cent and inflation to nearly 10 per cent.

4. Mortgage rates averaging over 11 per cent between 1979 and 1997

5. Between 1990 and 1993 alone, 1.5 million households suffering negative equity and 250,000 families having their homes repossessed.

6. National debt doubling with more spent on servicing this debt than on schools.

7. Black Wednesday (16 September 1992) – the Tories’ ERM fiasco – which cost Britain well over £3 billion.

and I haven't even mentioned the devastation that Thatcher's policies caused to manufacturing and the deliberate destruction of large swathes of the north of England in particular.

By contrast Labour's decision on coming to power in 1997 to give the Bank of England independence over setting interest rates has delivered 11 years of steady non-inflationary economic growth.

As MacMillan said, you have never had it so good.

Jim – The independence of the Bank of England was actually a Tory scheme not Labour. New labour put in place the work done by the conservatives.

As for moan about national debt – have you checked the latest statistics- minus the 100 billion the treasury have leant for NR? We have the largest deficit in the Western World

Secondly personal debt is at its all time highest level.

As for moans about house-repossesses – id keep my mouth shut on that one; wait until the end of the year you may see some terrible statistics by the end of this year.

Productivity has stagnated over the past ten years

Many of New Labours supposed achievements have been driven by a stable even flourishing global economy, due to rapid growth of the Chinese, Indian, Brazilian and more latterly Russian markets. This supposed success story is pretty much mirrored throughout the Western world over the past ten years.

I realize your getting a bit long in the tooth, but this rosy picture you paint doesn’t reflect reality, I wish it did.

You failed to mention the winter of discontent….memory failing

[jim mk2]

Jim – The independence of the Bank of England was actually a Tory scheme not Labour. New labour put in place the work done by the conservatives.

Really ? Show me evidence to support that statement..

Gordon Brown's Tory predecessor as chancellor, Kenneth Clarke, was expected to put up interest rates before the 1997 election but failed to do so for fear of losing votes. Brown's decision to free the Bank from political control after the election meant that politics would never again get in the way of economics.

Giving the Bank independence has led to the longest period of economic growth since the war ; growth has been steady and stable, averaging 2.8 per cent a year, with none of the wild swings of the Tory boom and bust years. Inflation has been consistently low, averaging 2.4 per cent.

Such economic stability, unimaginable under the Tories, has been achieved despite crises such as the Asian financial turmoil in 1998, the dot.com bubble in 2000 and record energy prices.

Since 1997, and in stark contrast to the Tory years, there has been no recession, no run on the pound, no IMF bail-out, and interest rates have not risen higher than 7.5 per cent and have been much lower than that for most of the time.

And still Daily Mail readers moan ....

[jim mk2]

And another thing....

The collapse of Bear Stearns in New York has cast a shadow over banks across the world as the subprime crisis gets deeper and deeper.

We're not at the bottom yet but UK banks share prices are approaching historical lows and starting to get VERY interesting.

The time is coming to remortgage the house and put it all into the stockmarket : stick to bricks and mortar if you like but there is serious money to be made in banks shares over the next 2 - 3 years.

[grizfoot]

We are amongst one of the leading economies in Europe and have had eleven years of steady economic growth and reduced unemployment. In the long-run recessions are unavoidable and the Government/Bank of England have done well to stop us from having one for so long. We may yet not have a recession, all that's happening at the moment is a slow down in the rate of growth.

[thenodrog]

Brown's decision to free the Bank from political control after the election meant that politics would never again get in the way of economics....

..... Giving the Bank independence has led to the longest period of economic growth since the war ; growth has been steady and stable, averaging 2.8 per cent a year, with none of the wild swings of the Tory boom and bust years. Inflation has been consistently low, averaging 2.4 per cent.

Such economic stability, unimaginable under the Tories, has been achieved despite crises such as the Asian financial turmoil in 1998, the dot.com bubble in 2000 and record energy prices.

Since 1997, and in stark contrast to the Tory years, there has been no recession, no run on the pound, no IMF bail-out, and interest rates have not risen higher than 7.5 per cent and have been much lower than that for most of the time.

So basically your point is that the less the politico's are involved the better for all! Nice to see that you are coming around to my way of thinking cos thats a point I've made many many times on here.

[Neil Weaver]

So basically your point is that the less the politico's are involved the better for all! Nice to see that you are coming around to my way of thinking cos thats a point I've made many many times on here.

Aye, great minds and all that Gord .

[philipl]

Jim – The independence of the Bank of England was actually a Tory scheme not Labour. New labour put in place the work done by the conservatives.

And everything else you write on here is factually accurate, well-researched and dispationately logical.

[den]

Theno, please don't bait people by using names.

and before you all complain, I know jim does his fair bit of baiting as well. Well please leave it out?

[Bazzanotsogreat]

And everything else you write on here is factually accurate, well-researched and dispationately logical.

And this is coming from a poster that makes so many assumptive posts that rarely come to fruition. Take for example your recent boasts about the premiership dominating a European super league, then we have your boasts about the financial muscle of rovers having the scope to ‘go big’ during the transfer window. I could find 100’s of your recent posts that follow a similar unsubstantiated pattern of claims.

Anyhow here are few quotes in regards to the history of BOE independence

An independent Bank of England was seen as an alternative to entering the Exchange Rate Mechanism as an anti-inflation anchor almost a decade before Gordon Brown freed Threadneedle Street to set interest rates, according to Treasury documents released last night. The paper prepared for Mr (now Lord) Lawson in 1988 used many of the arguments deployed by Labour nine years later.

http://www.guardian.co.uk/business/2005/ma...omofinformation

From Tony Blair’s Memoirs

I mean I remember having discussions actually with I think Tory ministers you know when I was a Shadow Treasury spokesman back in the 1980s saying you know the obvious thing is to go for Bank of England independence.

http://www.timesonline.co.uk/tol/news/poli...icle2886548.ece

[philipl]

Good to see you hang on my every word, Jason, you might learn how to be wrong gracefully. Even the quotes you give above show that your original contention was misplaced to say the least.

As it is, I am wrong occaisionally and you are correct very rarely.

FACT, the Tories were in Government and expessly rejected the notion of central bank independence,

FACT, Labour came to power and immediately gave the Bank of England its independence. That single act probably won them the next two elections.