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THE WORST SINCE WW2…

By ATWadmin On January 9th, 2009

Parts of the European economy are in meltdown and we must await the consequences as the news come in that German exports and industrial orders have both plunged at the steepest rate since modern records began and Spain’s unemployment has surged above three million, capping one of the most disastrous days for Europe’s economy since the Second World War.

Joaquin Almunia, the European economics commissioner, warned that the picture would turn “dramatically worse” this year. The eurozone’s confidence index collapsed from 74.9 to 67.1, the lowest since Brussels started collecting the data in 1985. “It makes truly dismal reading,” said Julian Callow, Europe economist at Barclays Capital. “Industrial sentiment has never experienced such a rapid slump. There is an implosion of demand.”

Spain lost almost 140,000 jobs in December, pushing unemployment to 3.1m or 13.4pc. The Labour Office said the country had shed a million in jobs in 2008 as the building boom collapsed. This is equivalent to 7m job losses in the United States. The Labour Secretary Maravillas Rojo said she could not rule out a rise in unemployment to 4m this year. “We are in an unprecedented situation, and 2009 is going to be very difficult,” she said. Madrid now has its hands tied under the constraints of monetary union. It cannot slash interest rates or devalue, and it has already exhausted its scope for fiscal stimulus under the EU’s Stability Pact.

Spain is now in company with Germany, where exports plummeted 10.6pc in November. The German economy is highly-geared to the global industrial cycle and is suddenly facing a vicious downturn as demand for machinery slumps in China, Russia, the Mid-East, and equally important as car sales crash in Italy, Spain, and Britain. The country’s trade surplus has shrivelled by a third in one month.

The fantasy that all these diverse economies can manage the strains of national economic depression via a central monetary policy is being relentlessly exposed by the day. Thank God Britain has remained outside this Union of economic disaster!

Interestingly, the European Central Bank appears to be in open conflict with the International Monetary Fund, which has slashed its eurozone growth forecast to 1.4pc this year and 1.2pc in 2009. The fund said Italy will be trapped near recession levels for the next two years, while Spain’s property boom is deflating fast. “In the context of an increasingly negative outlook for activity, the ECB can afford some easing of the policy stance,” it said, dismissing the inflation scare as a one-off spike from food and oil – likely to subside. The IMF warned that Europe’s banks are in as much trouble as their US counterparts, facing losses of at least $120bn (£60bn) from asset-backed securities, structured investment vehicles, and other arcana from the credit bubble. The ECB denies this.

Time will tell and I trust neither the ECB or the IMF!


19 Responses to “THE WORST SINCE WW2…”

  1. You could not make it up.

    Spain lost almost 140,000 jobs in December, pushing unemployment to 3.1m or 13.4pc. The Labour Office said the country had shed a million in jobs in 2008 as the building boom collapsed. This is equivalent to 7m job losses in the United States.

    The Labour Secretary Maravillas Rojo …

    Ought to go, along with his job. Countries do not need ‘Labour Secretaries’. The only useful thing government can do is get out of our lives.

    And yes, David, this does of course leap out:

    Madrid now has its hands tied under the constraints of monetary union.

    But it’s the ordinary Spaniard who will suffer because of it. The traitors and criminals who imposed this ridiculous currency on Spain are long padded with the spoils of public office.

  2. Meanwhile ‘our Gordon’ and ‘little Darling’ continue to try to reinflate the burts bubble.

    This morning, on Gordon’s futile walkabout he said ‘we aim is to get back to 2007 levels of bank and economic activity!’ – Was a man ever born so stupid that he will walk off the same cliff twice?

  3. ‘burst’ — ?

  4. >>Thank God Britain has remained outside this Union of economic disaster!<<

    Well, it hasn’t. And as far as I can see, the EU average is still lagging behind Britain on the downward slide.

  5. Noel,

    The EU curse is the Euro. Ours in Mr Brown.

  6. I agree Noel. Britian is in no shape to cast aspersions on the Euro bloc. Especially since we dont have an industrial base. Plus Britians role in the entire debacle is, as usual, completely downplayed. It was front and centre of the scam, and the Peacock display of hapless victim is laughable

  7. Daytripper,

    I totally agree, the part played by Blair and Brown in the so-called deregulation of the City, had much to do with the current situation as anything that happened in the US.

    Whether it was done by design, or by stupidity is a moot point, I personally feel that there was a degree of malice aforethought, but am reluctant to credit them with the intelligence to mastermind such a plan of destruction.

    More than likely they conspired for a small bubble, to enhance their reputations, but as with most political intentions, the unintended consequences were more severe than they ever imagined, and got totally out of control.

    They had a tiger by the tail and dare not let go!

    If it was possible, Brown is even more of an egotist than Blair…

  8. the part played by Blair and Brown in the so-called deregulation of the City, had much to do with the current situation as anything that happened in the US.

    For me the names are irrelevant. It would have happened anyway, regardless of the personalities involved. We can safely assume that the bankers gave Blair and Brown their jobs, seeing how they handed over the control in Interest rates within days of taking office. One of the most important tasks in the Chancellors portfolio and he gives it away? Sounds more like a deal breaker than an honest trade in hindsight. We also need look no further than Blairs new job after leaving office. A high paid cushy job with Morgan. If that doesnt scream ‘Cheerio and thanks for all the fish’ then Im a dolphin in dire need of an Aquarium.

    Whether it was done by design, or by stupidity is a moot point, I personally feel that there was a degree of malice aforethought, but am reluctant to credit them with the intelligence to mastermind such a plan of destruction.

    Their part in the heist was done the minute they signed the deregulation in to effect and handed power to the BoE. Everything after that lies squarely at the feet of the City. The media too must take responsibility too, for promoting the speculative fever, especially in the housing arena. Credit them with intelligence? NO. They were played by the players. Was it by design? Absolutely. To claim that nobody saw what was on the horizon is quite simply ridiculous. Especially when senior people at the likes of Citi admit it was all ‘musical chairs’ but they would continue to ‘play until the music stopped’, knowing full well that they could call upon their lackeys to bail them out.

    And where are we now? Completely and utterly screwed. A bankrupt nation. And still few people understand that Madoff wasnt the only fraudster in the world of finance. Thye whole financial system is a giant Ponzi scheme of debt.

    More than likely they conspired for a small bubble, to enhance their reputations, but as with most political intentions, the unintended consequences were more severe than they ever imagined, and got totally out of control.

    Couldnt agree more. They would reap the benefits of a miracle boom economy, and in Blairs case make a dash for the exit when the turds being banking on to a fan bound trajectory. Worst of all, every one of them probably sleeps like babies, completely aware that they wont lose their jobs or their houses. Sometimes i wish their was a heaven just so I could witness the Gates being slammed in their faces, because in this upside-down world they are only rewarded for such acts.

  9. DT –

    Their part in the heist was done the minute they signed the deregulation in to effect and handed power to the BoE. Everything after that lies squarely at the feet of the City.

    What?

    You mean the power to set interests rates, yes? The power to set interest rates by the Bank of England’s Monetary Policy Committee?

    Who do you think appoints the MPC? Section 13 of the Bank of England Act 1998 will tell you that it’s the Chancellor of the Exchequor who appoints the Committee. Even its monthly meetings are attended by the Treasury officials.

    The Bank of England was never given independence to set interest rates. It’s drivel to say so. Since May 1997 Gordon Brown has set interest rates. The Bank of England Act even allows the government to tell the Bank what rate to set.

    The whole premise of anyone setting interest rates is a nonsense. We’re in this hole because interest rates here, in the US and elsewhere were held artificially low. That is the very foundation of this wholly government-concocted disaster.

    How can any body set interest rates since the point of a rate is to balance savings and loans? The endlessly complicated actions of millions of individuals and firms will set interest rates naturally.

    It’s as sensible for the Bank of England (the State) to set interest rates as it is for the State to price your shopping in Tesco.

  10. By the way, Gordon Brown did remove one responsibility from the Bank of England – regulation and oversight.

    He gave these duties to his own Financial Services Authority.

    What a great day’s work that was. Under the Bank of England not a single British bank bit the dust in 200 years.

    A decade of socialist government crashed the whole damned industry.

    Why, despite the torrent of evidence to the contrary, does anyone still believe that government is capable of doing anything right?

  11. Daytripper: " We can safely assume that the bankers gave Blair and Brown their jobs,"

    Uh, stop tripping, tripper. There was the matter of a General election. Why would the bankers give Blair & Brown their jobs when they were doing very well thank you under Major?

    Daytripper: "… one of the most important tasks in the Chancellors portfolio and he gives it away?"

    I think you have fallen for the flim flam there. What they got with the so called ‘independence’ of the BoE was plausable denyability. Seeing what happened with Lamont, Brown never wanted to be blamed for raising rates in such circumstances. The hallmark of the whole last decade of UK governance is when you do something, make sure there is someone else standing by to blame.

    Daytripper: "A high paid cushy job with Morgan."

    Yea, but remember he got the job of overseeing Peace in the middle east first. SNAFU there too.

    Look! Blair & Brown are nasty little socialists, actually facists (which is the same thing really), they thought they could jump into bed with the financiers and spread the moolah around to their particular constituency. Everyone would be eternally grateful and presto! permanent power. Well now we see the outcome of that particular strategy.

    In all your post you never once mention the FSA, the organisation charged with regulating the financial sector. Given the magnitude of the screw up, it is extraordinary the pass that organisation has been given! [Not just in your post, but in the media at large].

  12. Pete Moore: "He gave these duties to his own Financial Services Authority."

    Yep, spot on Pete. Brown is to blame for the magnitude of the problem in the UK.

    His creature, the SFA supposedly charged with regulating the financial services industry was far more concerned with raising its revenue.

    Lets not forget the monumental incompetance of Gordon Brown, he destroyed the UK private pension funds and he sold a chunk of the UK gold reserves at £190/Oz. Note: spot price of gold today £560/Oz

  13. "His creature, the SFA"

    The job of regulating the financial services industry would have better been done by the Scottish Football association than the FSA.

  14. Pete,

    You mean the power to set interests rates, yes? The power to set interest rates by the Bank of England’s Monetary Policy Committee?

    Who do you think appoints the MPC? Section 13 of the Bank of England Act 1998 will tell you that it’s the Chancellor of the Exchequor who appoints the Committee. Even its monthly meetings are attended by the Treasury officials.

    And in reality, the Government is handed a list, which they then approve. Its is mere rubber stamp work. If they had a choice, and were really the Socialists demons you think they are, then why are all those appointed City insiders and not Labour insiders? Ill take a shot at it. They dont have a choice in the selection.

    The Bank of England Act even allows the government to tell the Bank what rate to set.

    If you believe that you will believe …… oh wait…….. hold on,

    Bank of England (the State)

    Sorry, its just been confirmed, you will believe anything.

    He gave these duties to his own Financial Services Authority.

    Who cares? We can assume they performed their task diligently, as nobody is asking for a shake up of the FSA. BTW their task IMHO was to, well, look the other way. Or in otherwords, give the BoE, ‘plausible deniability’.

    APL

    Uh, stop tripping, tripper. There was the matter of a General election. Why would the bankers give Blair & Brown their jobs when they were doing very well thank you under Major?

    It was a light hearted remark, not to be taken too seriously. Though I have no doubt that the City weilds enormous power in the corridors of Whitehall (and has done for centuries).

    for the rest see above.

  15. DT –

    At least stay within the bounds of reality, discussion does become pointless otherwise.

    The Bank of England Act 1998 gives the Treasury reserve powers to direct monetary policy. Yes, I believe it’s true because it’s there, in plain view, in the Act.

    Yes, of course the FSA performed their task diligently. Every piece of paper, every paper clip and every waste paper recycling bin is in order.

    Who gives a damn that the British banking system was brought down? The boxes were ticked and the VCUs conform with helth and safety rules.

    We can look the other way, blame the ‘greedy’ bankers and continue to delude ourselves that government is capable of anything but disaster despite the overwhelming evidence to the contrary.

    Now, since it’s Friday, let’s have a laugh:

    The Bill, which establishes the Bank of England Monetary Policy Committee and transfers banking supervision from the Bank of England to the Financial Services Authority received Royal Assent today. The Bank of England Act 1998, gives effect to the policy changes announced by the Chancellor Gordon Brown in May 1997 when he announced a new framework for monetary policy and the transfer of banking supervision. The Act also puts in place a new accountability framework for the Bank, and greater transparency in the Bank’s operations. Welcoming the swift passage of the legislation, the Chief Secretary Alistair Darling said:

    "Less than a year after taking office, the Government has put in place the most far reaching changes the Bank has seen in centuries. "The Bank of England Act is a keystone in modernising Britain’s economy and creating a modern bank ready for the 21st century. "The Act puts in place a new framework which will promote economic stability and give a long-term focus to monetary policy. "It maximises openness and transparency and ensures that the Bank is fully accountable and that its conduct of monetary policy meets the economic needs of the nation.

    – HM Treasury, 23 April 1998

    http://www.hm-treasury.gov.uk/press_58_98.htm

  16. At least stay within the bounds of reality, discussion does become pointless otherwise.

    Which bit is not reality? That the BoE is not part of the state?

    The Bank of England Act 1998 gives the Treasury reserve powers to direct monetary policy.

    Does it? Yes. Did they? No.

    The Act puts in place a new framework which will promote economic stability and give a long-term focus to monetary policy.

    Pete I agree with you, almost completely that this is a shambles of the highest proportion. We just differ on where ultimate responsibility lies. All im arguing is that it would have hapenned under any government. Did it provide economic stability? For a while we had the illusion of it. Was their a long term focus on monetary policy? Yes, for the benefit of Bankers and the large scale investor class. Everyone else be damned.

    As for transparency, dont make me laugh. Transparency is to Britian what Womens education is to the Taliban,

  17. DT –

    You leave reality when you say that Gordon Brown had no choice in who sat on the Bank of England’s MPC, that he was handed a list in some fait accompli that he merely rubber stamped.

    This is Gordon Brown, the control freak’s control freak.

    The entire apparatus of monetary policy was his design from 1997. He decided that the MPC would set interest rates, he drafted the Bank of England Act, he appointed the committee.

    Who this was done for is irrelevent – Gordon Brown was (and still is, really) the Chancellor of the Exchequor. He is responsible.

  18. US unemployment now at 7.2%.

  19. A first class debate from you lads. Well done. Most enjoyable.