The Economy Is Recovering Already

come on Fingered and doom and gloomers.....tell them this time it is different..... it's all based on credit and overblown house prices and we are heading toward 1930's style poverty...... the roads are full of bicycles as no-one can afford to run their cars anymore.......

oh dear...... then hopefully we can look forward to less congested roads and with unemployment levels so high that someone can be bothered to knock on my door and see if I want my windows cleaned...... depression? just go and read the Grapes of Wrath before you start using words like that..... we are miles away from that

Supasup, I've noticed you comment on the number of cars on the road before. You've not worked it out in the mean time (nor how to write sentences) so I'll tell you now: a depression is not something filmed in black and white, with urchins in the street wearing shorts whilst mangy horses pull rag and bone carts past. That was the 1930s and this is now, so to get back to there we'd need to lose 7 decades of wealth and technology. There are still cars on the road because people still have jobs, just like the vast majority did in the 1930s, and rather than still being able to afford to run their cars it would be better to state that they cannot afford not to. Have you tried getting to an out-of-town business park on public transport for 8.30am?

Here are some pretty charts for you to ignore (you shouldn't, but you will, because they're more difficult than counting cars). Whilst global output is only as bad as GD1 the stockmarkets and trade levels are much worse.
http://www.voxeu.org/index.php?q=node/3421

Globally we're still 2 years away from the equivalent point where you'd be eating your shoes last time round. Will the UK pick up from here soon? I doubt it. We're among the least prepared and the global downturn still has further to go. It won't be over until the misallocations of capital have been written off and the world economy is geared towards producing for those who have money and not just credit. By the end of this we might not be using those inefficient out-of-town business parks any more, so you could see fewer cars on the road.

Oh look! A car! A black one with wooden wheels and a rubber horn on the outside!

When people say it's worse than the 30s they mean the severity of the recession, not the absolute level of technology. And they don't mean that it's worse already for everyone than the worst day was for the worst affected person during the many years of the Great Depression. We're still at the beginning.


As Ambrose Evans Pritchard says,

"The reason why this does not "feel" like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath"

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5742937/The-unemployment-timebomb-is-quietly-ticking.html


We don't have to dig up George V for it to be the same.

I didn't say hardship is round the corner. I'm not a doomer. You're making it up. In fact I posted on here to tell you that what people mean when they compare this recession to the 30s is not the doom and gloom you assume they mean. Has anyone said we're doomed other than the permabulls in their ad hominem attacks?

Do you know the unemployment level of the 30s? How many cars do you think would be on the road then if they had the same level of ownership as we do? How many people gave up smoking in the 30s? How many were fat even before the depression? By how much did their calorie intake fall? How has the non-business revenues of the mobile phone companies been affected since 2007?

Whilst we have a welfare state you might not see any of your measures of hardship but if you check the crime rate, the divorce rate and the number of repossessions you'll know it's happening.

Bimber so you agree we are not heading for hardship ...... I agree that unemployment will rise during the period of transition but this will not reach the 1930's levels ie 20% to 25% in certain areas..... as you say we have welfare state so to a certain extent the economic problem is solved for all UK citizens..... we certainly do not worry about getting a decent meal or keeping warm, in fact obesity levels suggest food is too cheap.... as for reposessions they are not on the scale some feared and these work their way through the system ie bargains for others lower rents etc so the level of homelessness does not increase...so we are talking about relative poverty and relative to 1930's even the poor are miles better off materially.... so I think you are in some ways agreeing with my point that in a rich society a little dip matters little for most of us... hence the persistence of the signs of affluence
as for Letsgoa you seem more in the doom and gloom camp..... but the things you mention specifically ..... yes the well off middle classes will still purchase new cars and send kids to private schools and have foreign holidays because they are better off and they need to express their lifestyle statements.... similarly the young will still spend loads on mobile telephony equipment and calls because of their lifestyle pressures..... do you see these things declining? I don't and casual observations of the real world confirm this..... and no one in the doom and gloom camp give a date when these things will change but they've been predicting it for a while now

Jazzyalec. I like your comments except for the building site. Where was this spotted?? Where there any Building Site Spotters outside??
Oh yea who think it is all over!! The fat lady is still eating and has not yet started her singing practice. 2012 is my prediction.

heatingman
They may have been re-possessed!!

Downturns invariably occur in a pattern of a 3 leg movement. Supasap has proclaimed in multiple posts that the recession is phoney, a blip and has declared the recession as over. From year 2000, I contend that these 3 legs have not completed.

sorry, invariably=most frequently in it's simplest form.

The immediate banking crisis may be over but the aftermath remains. This will prove to be what happens to QE which will either ultimately lead to high inflation if left unchecked or very much higher interest rates than we have seen for years if it is not. A colossal and as yet unaddressed balance of payments deficit is adding to the dangers here.

Also economic activity from 2001 to 2007 was almost entirely driven by easy credit secured on steadily rising house prices. Consumer credit (mortgages, loans and credit card debt) doubled in those years but net disposable rose by only 29%. So where is the cash for a new and sustained bounce coming from then?

As for the stock markets, given that QE must one day be reversed and with little prospect of a return to the credit boom of the last few years, so where will corporate growth be coming from? Selling goods and services overseas is one, perhaps the only answer but the City is on its knees and our manufacturing sector has long since been shot to pieces.

if there is no hardship around the corner perhaps we can all now agree that recessions even deep ones don't matter in the west because, apart from a higher level of unemployment cushioned (quite rightly from a moral and Keynsian perspective) by benefits and a slightly higher rate of house reposessions (to those who weren't safe bets in first place), everything remains the same in the real world with the signs of affluence persisting. This is why you have young ones still spending a fortune on mobile telephony and designer clothes and drinking coffee in Starbucks at inflated prices. Annoying in one sense that they don't understand hardship but comforting on the other that our unbelievable wealthy society keeps coming up trumps.

Has the national average income declined by 10%? Disposable income for employees has risen because of falls in mortgage payments. Redundancies are perfectly natural and ultimately efficient means of human resource re-allocation to where labour is required so I expect Vodafone to now be more efficient. So now you are saying on the one hand it is difficult to notice the change (slight concession to me) but then on the other hand the change is going to be so big that we will have to change the way we live. In what ways exactly as I see no evidence of it, but are you like Fingered, covering yourself by stating rather vaguely it will be sometime in the future.

Supasap, you have an amazing ability for missing the point. I'm not saying that the reason you've not seen a drop in traffic is that we've not had 10% income loss across the board. I'm saying that this huge level of contraction will go unnoticed by you (no concessions here, you wrongly saw me as a doomer and gloomer from the off) because you're looking in the wrong place. You see people in cars but you don't know if they're going to work or to a job interview and you don't know if they got a pay rise this year. You look at people in coffee shops but you don't know if they have foregone the pastry they usually have. You see people on the phone but you don't know if they're paying the bill from their income or their savings. You're looking in the wrong place.

Redundancies are natural etc but they have a reason - the economy is contracting and Vodafone has debts to pay so it lays people off and will take longer to get back to the level it previously was. This is like the UK as a whole. The fact that people still use phones does not stop the contraction in Vodafone; the fact that we still go to work does not affect the contraction in the UK.

We may have to change the way we live but this does not necessarily equate to hardship. In fact, I welcome it. If there is any hardship on the scale of the 30s it will be experienced, or more likely merely perceived, by those who could not accept that change could be forced upon them and so refused to prepare for it (unfortunately the government is in this camp). We will be less competitive globally so will not be able to buy as much stuff and will pay relatively more for food and fuel - and any remaining debt. That is the essence of the change, which is obvious if your income suddenly drops, whether or not you still drive your car. On the plus side we will pay relatively less for houses. It could be much worse of course, but I believe this is the most likely outcome. This is the scenario some people call Doom And Gloom, because they don't listen and they think that anyone expecting a downturn is expecting a rerun of the 30s. Often because they don't want to listen they simply don't get told. Your first post here is a prime example.

There is no shame in not knowing the future. Anyone who suggests a precise time is asking for trouble. Anyone who demands one is an idiot.

I remember Chernobyl if that's what you mean.... didn't take a bath in goats milk for yonks

The point was specifically about counting cars to gauge the depth of recession when you don't know why they're on the road and don't know the economic circumstances of the driver. Cars are necessities not luxuries. If everyone lost 10% of their income they will be a LOT less happy but you won't notice a change on the roads.

So, you missed the point again but at least you now think you might notice a recession, even if you don't care about your standard of living falling. Paying too much for a house today and wasting 10 years' worth of savings is no biggie because you can always work until 80. Expensive fuel is no problem because you can move the beds into the living room. Why worry about food prices when people in Ethiopia seem to get by on a grain of rice a week? Recession...meh. Still better off than a caveman!

For most people the pain comes from the wealth and opportunities they lost and the gains that have been made over generations do not outweigh this feeling.

Acceptance and preparation is the key. You don't have to get poorer along with everyone else, unless you want to. It sounds like you can't be bothered making any changes and will happily give up your excess wealth. The people who sold their houses and rented something with a big vegetable garden and plenty of insulation don't need to pretend that a recession is nothing!

"the pain comes from the wealth and opportunities lost". Not sure what wealth we have lost, the scale of the house price drops has been very small compared to the rises in previous years. Even if it was dramatic then it means it's easier for the kids to get a house. House prices don't matter that much. What else is there to fear, a 10% drop in disposable income, that won't matter much either as competition drives down prices further. You said it though, cars are luxuries and independent of the reason for the journey there is no sign of journeys falling off yet. Do you really know people who sold houses to rent properties with a big garden to grow vegetables? Mind you the extra supply should drive prices down even further. As for Ethiopia yes it is very sad for those suffering real hardship as a result of our awful inegalitarian set up so compared to those genuinely poor souls we are indeed rich despite what some indices may say.

Ah etiquette, ok. Let me re-phrase: I don't mean anything by "meltdown". It's what you mean Supasap. Your words not mine. You missed the point again.

I thought that was what you meant as it was such a fundamental error which I can't believe you're gifting me. If cars were only invented around 100 years ago how can they be necessities? They are one means of transport and then there is a big question mark over why we travel so much in the west. Luxuries they are, perhaps you ought to look at Maslov's hierarchy of needs but in terms of needs you have access to fresh air, food and shelter to give you an idea. But the fact that their use in our rich society is hardly impacted by a downturn endorses my "recession so what" perspective. Fingered glad you spelt my name correct and used lower case.

agree if your comments cannot contain more specific points. The nearest point you made is that something may change in the future which may impact upon our standard of living. But in the meantime we can reconcile the persistence of affluence in our midst with the reduction in the level of effective demand by redefining luxuries (eg cars and journeys) as necessities. A mere blip. QED

It explains your responses - you've not bothered to read what people wrote. (Yet another point missed by you).

I doubt many people would see a collapse to the base of Maslow's pyramid as nothing to be concerned about. The internet is a "luxury" so if you're serious then turn it off and see how you get on. Imagine how your bank would cope without it. How would your supermarket cope without the luxury of the internal combustion engine? What if the very recent luxury of the national electricity grid didn't exist?

What you might consider to be luxuries are the things we rely on to support our needs. That's why cars remain a necessity and remain on the road. Cars being on the road indicates that people are meeting their basic needs. Counting the cars and thereby discounting the recession is moronic.

We are soo rich that the rating agencies threatened to lower our debt ratings.

We are soo rich why did we printed money to buy back are own debt. QE

We are making the same mistakes again borrowing from the future to pay for now. turning what could have been a bad recession into a Deppresion.

As a wannabe investor I have to read indicies and articles so I Don't make stupid mistakes.

so when can we see the signs of affluence that I have cited reducing?

bimber under your definition of necessities, the term luxury has no meaning for as soon as electricity or the plasma tv or the MP3 becomes part of the mainstream basket of things we take for granted and we become accustomed to it then it becomes a necessity. So what are luxuries in your definition and more to the point which things will we be forced to forego as a result of the economic downturn.

Being a polite person I will be restrained. Never have I read as much twaddle as that posted here. We do not have a government capable of ensuring the security of our energy supplies. Until we do, we are basically stuffed. North sea oil is running out and the rest of the world has 'found out' that our 'economy and wealth creation' is a lie. So you tell me where we go from here.