A triple meltdown of the US (debt), Eurozone (debt), and Chinese (inflation) economies is about to usher in a depression that will make the 1930’s look like a mini-recession.

 

Jan 2011

 

Aug 2011

 

 

 

Is this the inevitable consequence of Western economies that have sacrificed productivity for a twenty year spending spree on credit that can never be repaid?

 

No, it's an inevitable consequence of everyone failing to learn the lessons of the First Great Depression - kicking away the crutches when the bones aren't healed yet doesn't work.

No, it's an inevitable consequence of everyone failing to learn the lessons of the First Great Depression - kicking away the crutches when the bones aren't healed yet doesn't work.

 

Crutches alone are a meaningless gesture, if the bone hasn’t been operated on, it will never heal to become a functioning part of the body again.

Strange, I don't ever recall having a broken bone operated on. Anyway, to fit the analogy the actions taken since last year have been equivalent to kicking away the crutch and saying taking a sledgehammer to the leg again is the way forward.

Pretty much totally agree with what is being said here.... The "broken bone" analogy is a good one tbh... Obama has learned absolutely NOTHING from how FDR handled the Great Depression of the 1930s, he's a gutless, fukking coward who tried to appease the bankers and the fascist, idiotic Tea Party and now millions of ordinary Americans have to pay the price for his stupidity... Could you imagine FDR appeasing the likes of Herbert Hoover and the Republicans and the bankers who caused the Wall St Crash???? HELL NO, he put hundreds of bankers in jail and passed strict banking regulations and formed the SEC, who are now practically toothless because of Reagan and the Neo-Libs of the 1980s.....

The difference being that FDR had the public mandate and wasn't dealing with the most extreme right-wing Congress in history! The Americans are paying the price for Murdoch's media dominance and how easily fooled so many of them are...

Strange, I don't ever recall having a broken bone operated on. Anyway, to fit the analogy the actions taken since last year have been equivalent to kicking away the crutch and saying taking a sledgehammer to the leg again is the way forward.

 

 

Pretty much totally agree with what is being said here.... The "broken bone" analogy is a good one tbh... Obama has learned absolutely NOTHING from how FDR handled the Great Depression of the 1930s, he's a gutless, fukking coward who tried to appease the bankers and the fascist, idiotic Tea Party and now millions of ordinary Americans have to pay the price for his stupidity... Could you imagine FDR appeasing the likes of Herbert Hoover and the Republicans and the bankers who caused the Wall St Crash???? HELL NO, he put hundreds of bankers in jail and passed strict banking regulations and formed the SEC, who are now practically toothless because of Reagan and the Neo-Libs of the 1980s.....

 

Not at all financial stimulus has just allowed the spending to go on a bit longer, the underlying economy is stagnant. It can’t grow because it is no longer productive and is now too heavily dependent on consumption which is now permanently hamstrung. The only cure is wholesale CUTS, considerably higher interest rates, and the working classes going back into the factories instead of getting worthless degrees for jobs that simply won’t exist. In short a very painful restructuring of the economy is unavoidable; the only alternative is anarchy or war.

Not at all financial stimulus has just allowed the spending to go on a bit longer, the underlying economy is stagnant. It can’t grow because it is no longer productive and is now too heavily dependent on consumption which is now permanently hamstrung. The only cure is wholesale CUTS, considerably higher interest rates, and the working classes going back into the factories instead of getting worthless degrees for jobs that simply won’t exist. In short a very painful restructuring of the economy is unavoidable; the only alternative is anarchy or war.

What factories?

Well you're right on one part at least, specialised manufacturing is one of the obvious ways out of this, but it's not as if we currently have many factories for the working class to even go back to. I don't particularly see how cuts at a time when demand is stagnant can be said to be helpful - ever tried digging out of a hole? Cuts will be needed at some point soon but now quite definitely isn't the time. Considerably higher interest rates will cripple demand dead and won't particularly boost international investment in British lending given confidence is low worldwide currently - and given most British aren't exactly in a position to take on such lending at far higher interest rates! Clearly if you think high interest rates are a way out of this then you haven't learned the lessons of the last thirty years either...

 

We need an effective stimulus rather than just quantitative easing which, where it has gone to the private sector, has just been squirreled away out of fear and lack of confidence in investment. Immediate temporary tax cuts to VAT (which amongst other things had the economy back on the way to recovery just over a year ago), a proper stimulus that goes straight into people's pockets - a Green New Deal which could work at increasing the energy efficiency of the country as a whole through insulation and double glazing of every building and window in the country - direct government lending to small business start-ups, temporary enterprise zones, the creation of a green investment bank - all things that would get this country moving again, and instead we're being frozen and cut back at the time when we least need it. It's 1937 all over again and the people in charge have learned nothing.

I liked the analogy someone made a while back that cutting now is like panicking about your mortgage, attempting to pay it off in a year and consequently having no money for food or water and having your house repossessed. Economic stimulus is necessary, or at least cuts that aren't so brutal - the civil service saga summed it up perfectly, they were made by the government to apologise for not maintaining standards, when it was the government that made them slash their staff from 70,000 to 60,000. Put simply, how the hell do you expect the same standards when there's 14% less people working there?

Not at all financial stimulus has just allowed the spending to go on a bit longer, the underlying economy is stagnant. It can’t grow because it is no longer productive and is now too heavily dependent on consumption which is now permanently hamstrung. The only cure is wholesale CUTS, considerably higher interest rates, and the working classes going back into the factories instead of getting worthless degrees for jobs that simply won’t exist. In short a very painful restructuring of the economy is unavoidable; the only alternative is anarchy or war.

 

WRONG, WRONG, WRONG..... Austerity is the very thing that will make it worse... It doesn't work, simple as... Austerity Cuts have been tried in Ireland and Greece, and it is a failed policy, because both are in a worse position.... What needs to be done is to STOP BAILING OUT THE F/UCKING BANKS AND LET THEM FAIL...... This situation with taxpayers bailing out banks has to come to an end, at the end of the Wall Street Crash, hundreds of banks failed, and nobody stopped them from failing, thie difference is that now we allow this ridiculous situation where the tax-payer carries all the risk and the banks take all the profit, this is simply unsustainable....

WRONG, WRONG, WRONG..... Austerity is the very thing that will make it worse... It doesn't work, simple as... Austerity Cuts have been tried in Ireland and Greece, and it is a failed policy, because both are in a worse position.... What needs to be done is to STOP BAILING OUT THE F/UCKING BANKS AND LET THEM FAIL...... This situation with taxpayers bailing out banks has to come to an end, at the end of the Wall Street Crash, hundreds of banks failed, and nobody stopped them from failing, thie difference is that now we allow this ridiculous situation where the tax-payer carries all the risk and the banks take all the profit, this is simply unsustainable....

The answer isn't to let them fail (because that would be complete havoc for the average consumer), but wholesale temporary nationalisation and government appointment of bank policy makers. It's clear from the last few years that the banks, despite being bailed out, haven't done a thing to help restimulate the economy and have instead squirreled away money they've been asked to lend. Also, though it's become mildly cliché by now, bonuses really have to bloody stop, ESPECIALLY at banks that have been bailed out...

The answer isn't to let them fail (because that would be complete havoc for the average consumer), but wholesale temporary nationalisation and government appointment of bank policy makers. It's clear from the last few years that the banks, despite being bailed out, haven't done a thing to help restimulate the economy and have instead squirreled away money they've been asked to lend. Also, though it's become mildly cliché by now, bonuses really have to bloody stop, ESPECIALLY at banks that have been bailed out...

 

I wouldn't say the bonus situation is cliche.... Of course, this is what the Bob Diamonds and Ben Bernankes of the world would try to say that the argument about bonuses is though.... Is nationalization going to help...? The taxpayer bailed out Lloyds group and that's just posted losses of over £2billion.... Naaaah, I think the time has come to break up the big banks into retail and investment and let the investment banks who cant make the grade fail.....

 

I was a bit cautious about Ireland defaulting but I think we need to now. No point trying to pay back loans that we can't afford. Bending over backwards for everybody else clearly hasn't worked.

I was a bit cautious about Ireland defaulting but I think we need to now. No point trying to pay back loans that we can't afford. Bending over backwards for everybody else clearly hasn't worked.

 

Agreed.. You guys need to get yourselves out the Euro, go back to the punt and do whatever it is you need to do.... Preferably do an "Iceland" and tell the German and French banks to fukk off......

 

Bailing out is very different from complete nationalisation Scott! The banks do need breaking up, but to properly stimulate the economy the government needs to be put in charge of the investment banks that will drive the lending that will pull the country out of the depths...

 

The bonus situation IS important but it's almost become a shorthand policy that pretty much everyone agrees with really, picking it out isn't bringing up anything new. It needs dealing with for certain at the banks where the government has majority stake...

Bailing out is very different from complete nationalisation Scott! The banks do need breaking up, but to properly stimulate the economy the government needs to be put in charge of the investment banks that will drive the lending that will pull the country out of the depths...

 

I'm very dubious about nationalising banks, that effectively means that the tax-payer is under-writing them..... But I suppose it would ensure that we'd actually get access to a true picture of what their balance sheets actually are and it might actually shatter the Shadow Banking system too (which is the source of a lot of the problems).... So, if that could be a possible outcome, I may be persuaded to go along with fully nationalised banks....

 

The government would actually have a say over who was running the banks and general bank policy, so it'd bring an end to the ignored begging of Project Merlin...

What factories?

 

True, but we’re not talking about months or years, without a World War it will take decades to rebalance the economy so that real economic growth i.e. recovery is possible again. Thus that is the timescale it will take to re-establish the country’s manufacturing base, meanwhile mass unemployment will be the norm post crash.

 

Well you're right on one part at least, specialised manufacturing is one of the obvious ways out of this, but it's not as if we currently have many factories for the working class to even go back to. I don't particularly see how cuts at a time when demand is stagnant can be said to be helpful - ever tried digging out of a hole? Cuts will be needed at some point soon but now quite definitely isn't the time. Considerably higher interest rates will cripple demand dead and won't particularly boost international investment in British lending given confidence is low worldwide currently - and given most British aren't exactly in a position to take on such lending at far higher interest rates! Clearly if you think high interest rates are a way out of this then you haven't learned the lessons of the last thirty years either...

 

We need an effective stimulus rather than just quantitative easing which, where it has gone to the private sector, has just been squirreled away out of fear and lack of confidence in investment. Immediate temporary tax cuts to VAT (which amongst other things had the economy back on the way to recovery just over a year ago), a proper stimulus that goes straight into people's pockets - a Green New Deal which could work at increasing the energy efficiency of the country as a whole through insulation and double glazing of every building and window in the country - direct government lending to small business start-ups, temporary enterprise zones, the creation of a green investment bank - all things that would get this country moving again, and instead we're being frozen and cut back at the time when we least need it. It's 1937 all over again and the people in charge have learned nothing.

 

A service based economy is doomed to failure if there isn’t the demand or basically cash to pay for them. Cutting VAT and the other measures mentioned will only delay the crash and further destroy the underlying economy, thus ensuring the collapse is considerably worse when reality catches up with governments and their economies.

 

We CAN’T avoid the crash; we can only start to repair the damage once the inevitable has happened… You only have to look at the price of gold to see that the money in your pocket is not worth what it was pre-credit crunch, at some point there will be one almighty adjustment - there always is.

 

 

WRONG, WRONG, WRONG..... Austerity is the very thing that will make it worse... It doesn't work, simple as... Austerity Cuts have been tried in Ireland and Greece, and it is a failed policy, because both are in a worse position.... What needs to be done is to STOP BAILING OUT THE F/UCKING BANKS AND LET THEM FAIL...... This situation with taxpayers bailing out banks has to come to an end, at the end of the Wall Street Crash, hundreds of banks failed, and nobody stopped them from failing, thie difference is that now we allow this ridiculous situation where the tax-payer carries all the risk and the banks take all the profit, this is simply unsustainable....

 

CUTS need to include bailouts for banks and corporations, foreign aid, non-essential defence spending; not just government cuts on the thin side of the wedge: departments and services. GROWTH needs to come from the private sector in this country.

WRONG, WRONG, WRONG..... Austerity is the very thing that will make it worse... It doesn't work, simple as... Austerity Cuts have been tried in Ireland and Greece, and it is a failed policy, because both are in a worse position.... What needs to be done is to STOP BAILING OUT THE F/UCKING BANKS AND LET THEM FAIL...... This situation with taxpayers bailing out banks has to come to an end, at the end of the Wall Street Crash, hundreds of banks failed, and nobody stopped them from failing, thie difference is that now we allow this ridiculous situation where the tax-payer carries all the risk and the banks take all the profit, this is simply unsustainable....

Are you serious? You are always quick to have a go at people for their suggestions but this is positively barking. If High Street banks had been allowed to fail, millions of people would have been left unable to access their own money for months while the compensation scheme was sorted out. Are you really saying that people should be punished for failing to spot that some of the most senior people at their chosen bank were dickheads?