The longest recession and slowest recovery

Graham_Devon

....that Britian has ever seen.

Read this (the title) in an article. And it made me wonder....is this also the "easiest" recession in british history?

Now, I have to state something here, to hopefully stop any easy attacks. It's obviously been difficult on anyone who has been a victim by any measure.

But for the majority, it's actually been quite rewarding, has it not?

Therefore, do these two things go hand in hand? Longest recession and recovery, but also easiest on the majority? If so, does this prove that sticking plasters only prolong the effects?

HAMISH_MCTAVISH

Graham_Devon wrote: »

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Therefore, do these two things go hand in hand? Longest recession and recovery, but also easiest on the majority? If so, does this prove that sticking plasters only prolong the effects?

Ah, finally you seem to be understanding.

Interventions do not "delay the inevitable falls", or "kick the can down the road".... what they do is prevent those falls from ever happening at the cost of a longer period of restrained growth.

"Sticking plasters" or "props" or as the rest of us call them "market interventions" do (obviously) have an effect.

They prevent a deeper recession and then steeper recovery, and instead you get a smaller fall, a slightly longer period of relative stagnation, and then more gentle rises.

Is this better for the majority? Yes, clearly. Fewer people lose jobs, fewer people lose homes, fewer people go bankrupt, fewer businesses fail, etc.

Is this good for vultures who want to see an almighty crash so they can then scavenge amongst the wreckage? No, obviously not. Which is why so many people on house price boards are against it.

The easiest way to think of it is like this.....

If 2007 represents "peak economy" then today, 5 years on, we are at 96% of peak and holding relatively steady. At current (very slow) growth rates we will return to economic output levels matching the previous 2007 peak some time around 2015 or 2016.

Had we not intervened, then we would have seen much bigger falls, and potentially then much faster rises, but from a much worse place.

If your economy is sitting at 80% of it's previous high, and unemployment is 6 million, then even 5% growth a year is a pretty miserable place to be for most.

Whereas if your economy is sitting at 96% of it's previous high, and unemployment is only 2.5 million, then slow growth of 1% a year is an acceptable price to pay for preventing the larger falls and more widespread misery from ever happening.

Graham_Devon

Were still to implement most of the policies that have been bought about due to the problems.

We have only implemented (Was is 13%? - a very small number whatever the percentage) of the total cuts planned.

We still have emergency stimulus in place thats still got to be unwound.

How does that fit in with everything you state above Hamish? How long would you wish for this to be implemented over? A few decades?

HAMISH_MCTAVISH

Graham_Devon wrote: »

We have only implemented (Was is 13%? - a very small number whatever the percentage) of the total cuts planned.

Actually, most of the cuts were frontloaded, and have already been implemented. We have only so far received around 20% of the total savings such cuts will make, but that's a function of time rather than depth of cuts.

The UK's annual budget will continue to increase in nominal terms every year of this parliament. Just by an amount less than inflation, so all of the cuts are achieved in "real terms" simply by maintaining lower levels of expenditure than we would otherwise have done.

homelessskilledworker

HAMISH_MCTAVISH wrote: »

Ah, finally you seem to be understanding.

Interventions do not "delay the inevitable falls", or "kick the can down the road".... what they do is prevent those falls from ever happening at the cost of a longer period of restrained growth.

"Sticking plasters" or "props" or as the rest of us call them "market interventions" do (obviously) have an effect.

They prevent a deeper recession and then steeper recovery, and instead you get a smaller fall, a slightly longer period of relative stagnation, and then more gentle rises.

Is this better for the majority? Yes, clearly. Fewer people lose jobs, fewer people lose homes, fewer people go bankrupt, fewer businesses fail, etc.

Is this good for vultures who want to see an almighty crash so they can then scavenge amongst the wreckage? No, obviously not. Which is why so many people on house price boards are against it.

The easiest way to think of it is like this.....

If 2007 represents "peak economy" then today, 5 years on, we are at 96% of peak and holding relatively steady. At current (very slow) growth rates we will return to economic output levels matching the previous 2007 peak some time around 2015 or 2016.

Had we not intervened, then we would have seen much bigger falls, and potentially then much faster rises, but from a much worse place.

If your economy is sitting at 80% of it's previous high, and unemployment is 6 million, then even 5% growth a year is a pretty miserable place to be for most.

Whereas if your economy is sitting at 96% of it's previous high, and unemployment is only 2.5 million, then slow growth of 1% a year is an acceptable price to pay for preventing the larger falls and more widespread misery from ever happening.

What a complete load of delusional rubbish!!

Where do you get the 96% figure from?

And you are totally ignoring the fact that we still

* Have a huge debt burden(personal and government)
* The state owned Banks problem has not gone
*Have you ever considered that Growth is not a God given right, it may never return to the levels it once was.

crash123

HAMISH_MCTAVISH wrote: »

If 2007 represents "peak economy" then today, 5 years on, we are at 96% of peak and holding relatively steady. At current (very slow) growth rates we will return to economic output levels matching the previous 2007 peak some time around 2015 or 2016.

I think it will be a lot later than 2015 or 2016.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Actually, most of the cuts were frontloaded, and have already been implemented. We have only so far received around 20% of the total savings such cuts will make, but that's a function of time rather than depth of cuts.

The UK's annual budget will continue to increase in nominal terms every year of this parliament. Just by an amount less than inflation, so all of the cuts are achieved in "real terms" simply by maintaining lower levels of expenditure than we would otherwise have done.

Are you seriously suggesting most of the government cuts have been implemented?

Good lord Hamish you are in denial.

HAMISH_MCTAVISH

homelessskilledworker wrote: »

What a complete load of delusional rubbish!!

Where do you get the 96% figure from?

.

RenovationMan

homelessskilledworker wrote: »

What a complete load of delusional rubbish!!

Where do you get the 96% figure from?

And you are totally ignoring the fact that we still

* Have a huge debt burden(personal and government)
* The state owned Banks problem has not gone
*Have you ever considered that Growth is not a God given right, it may never return to the levels it once was.

Erm, you do realise that Hamish didn't cause the recession?

It's just that you seem to be shouting at the internet again. I'm sure that, as a group, we're all hoping you're not about to descend into another one of your breakdowns.

crash123

It will be interesting to see if this goes on longer( in months and years) than the great depression(1930-1934).

chucknorris

homelessskilledworker wrote: »

What a complete load of delusional rubbish!!

Where do you get the 96% figure from?

4% down after over 4 years is significant, it isn't just about being down 4%, it is also the number of years without any growth, why are you so dismissive of it?