Friday, November 28, 2008

Long Live the Recession

We seem to be gambling in a V-shaped recession, that it will all be over by Christmas '09. I see no basis for this hope. We have emerged from a credit-fed boom. It is certain that credit will not return to previous levels, so even if we do emerge from the recession, growth will be slow or non-existent. In addition, people are giving up spending on a large scale. Stephen S. Roache points out that the decline in US retail spending has been the sharpest ever. This is not a bad thing- consumer spending was accounting for 72 per cent of the economy, which is absurd. In fact, I'm not sure any of this is a bad thing. London became a nastier place during the boom. Funny money corrupts and depraves. But present policies seem designed to restore a climate of easy credit and high consumer spending. They will, if people have any sense, fail. A longer recession will give us more time to root out delusions.


  1. Our parents and grandparents grew up with the mantra ''wait until Christmas''. We're raising our own children in a society where Instant Gratification and HP have supplanted Christmas, or indeed any waiting at all. Perhaps a little austerity check is timely.

  2. Curious that you say London became nastier during the boom. In what way? It is a much more pleasant city than it was twenty five years ago (if you watch old episodes of minder it looks rather sleazy). Drugs have grown in prominence - they have made much behaviour nastier in cerain circles. But Blair/Brown showered cash on regeneration, health and education and there were lots of jobs on offer - plus there are very many pleasant places in our capital. So why nastier?

  3. Some words of wisdom from a seasoned recessionite.
    Stock up with...Carnation milk, firelighters, bogroll, Heinz (or Aldi) beans, Campbells soup, tinned salmon, pilchards, sugar and tea. Save all old magazines, to be used inside of shoes when the soles wear out.
    Any spare dosh do the following..
    Buy shares in Funeral parlours, Asda, ladbrokes and Harry Ramsdens.
    Join the TGWU or Boilermakers union.
    Use a Guinness label as your next tax disc.
    Get to know personally, your local butcher, the ladies may want to flutter their eyelids in an erotic manner, it worked for Capt Mainwairings missus.
    When standing in line down the dole, refrain from obscenities and spitting.
    Cancel all of your subscriptions, golf club, strip club, whatever.
    It won't last forever, will it?

  4. Funny money hey? we could have dealt with that in the first place and got rid of our social construction fiat currency and had something harder, like gold or some sort of paper gold?

    I think you are right to point out the morality issue, civilizations fail when morality fails. In the wider world I think the economics of this, credit boom to future generational debt, are just reflections of the wider moral failure.

  5. Dunno about the sharp decline -- you should be at the mall near my house today. My daughter works in a resto there and can't find anywhere to park -- so many "Black Friday" shoppers. Couldn't get me to go near the place today with a ten-foot pole, not even one named Thaddeus Kosciusko.

  6. Delusions are rooted out only to come flooding back in again at a later date, and not that much later either. 'Mankind cannot bear very much reality' as old Tommy Stearns once wrote.