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British Economy Is WORSE than During the Great Depression
Leading British newspaper the Telegraph reports today:
Ministers today admitted Britain is facing “very, very grave difficulties” after figures showed the economy did not grow at all in 2012.
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Economists from the Royal Bank of Scotland said the last four years have produced the worst economic performance in a non post-war period since records started being collected in the 1830s.
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“It’s the worst economic performance since at least 1830, outside of post-war demobilisations,” he told The Daily Telegraph. “It’s worse than the 1920s, it’s worse than the Great Depression.”
He said the economy has been “heading this way for a long time” because of the scale of the problems that came to a head in the 2008 financial crash.
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The top economist at RBS, which is mostly owned by the Government, said it is difficult to recover when much of the world is facing similar problems.
“It’s the scale of what happened in 2008 but also the build-up to that,” he said. “Compared with other recessions [like in the 1980s and 1990s], this is happening all over the world. There’s not a quick and easy way to export your way out of this.”
(In a separate article, the Telegraph notes that the UK is heading for an unprecedented triple dip, as its economy shrunk .3 percent in the fourth quarter of 2012).
We’ve repeatedly warned that this is worse than the Great Depression …
What Do Economic Indicators Say?
We’ve repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:
- The housing slump
- The level of inequality between rich and poor (too much inequality destroys economies)
- The interconnectedness of financial systems and economies worldwide (interconnectedness leads to financial instability)
- Runaway spending and greed
Mark McHugh reports:
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:
In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.
(As we’ve previously explained, the Fed has intentionally squashed money multipliers and money velocity as a way to battle inflation. And see this)
Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression. The only reason we don’t see “soup lines” like we did in the 30s is because of the massive food stamp program.
And while apologists for government and bank policy point to unemployment as being better than during the 1930s, even that claim is debatable.
What Do Economists Say?
Indeed, many economists agree that this could be worse than the Great Depression, including:
- Fed Chairman Ben Bernanke
- Former Fed Chairman Alan Greenspan (and see this and this)
- Former Fed Chairman Paul Volcker
- Economics scholar and former Federal Reserve Governor Frederic Mishkin
- The head of the Bank of England Mervyn King (and see this)
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- Former Goldman Sachs chairman John Whitehead
- Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)
- Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
- Well-known PhD economist Marc Faber
- Morgan Stanley’s UK equity strategist Graham Secker
- Former chief credit officer at Fannie Mae Edward J. Pinto
- Billionaire investor George Soros
- Senior British minister Ed Balls
Bad Policy Has Us Stuck
We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.
Instead of bringing in new legs, we keep on recycling the same old re-treads who caused the problem in the first place.
For example:
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
- Government policies send manufacturing jobs and dollars abroad
- Quantitative easing won't help ... it will only make things worse.
This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the people.
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She's no more German than a 1/6 bastard cross German Shepherd.
What's your point?
http://en.wikipedia.org/wiki/Ancestry_of_Elizabeth_II
She's British as can be under the circumstances. That whole nation is a poor derivative of Saxons and Normans if you want to discuss lineage.
Sure she is German,she is of the House of:Saxe-Coburg and Ghotha.
George(not W) 5th,just changed the name to House of Windsor in 17-07.1917,they are all Germans!Angels Saxos.
I'm not so sure about that. The US has obama and from what I heard we spend 10 time more on his entertainment maintenance then the Q.
Are you implying Obama is an American? When you make a wild assertion please give a web link to support your assertion.
Perhaps "The Inauguration Coronation" was costly but in no way shape or form does Obama personally blow so much money like the Q and her ragtag family. Do you have any idea how many mansions the Queen has and maintains? How many staff are employed by the Royals to look after their shit, feed them, clothe them, protect them and on and on it goes? Why? Because she and her family are from a blood line of inbreds who in the not too distant past proclaimed themselves as Kings and Queens over the lands? Throw the London banking cabal in the mix and how they grew stronger and more influential with every war and every colonialization over centuries.
The Queen doesn't give a rats ass about the UK's finances because she sits on top of the whole financial shit pile and pulls all the strings from her London banking midgets directly to Wall Street. The UK is bankrupter than bankrupt but it doesn't matter because it's their game, they are the biggest beneficiaries and they will crash it when they please.
US - UK - Israel is the unholiest alliance in the history of mankind. Ancient Egypt, Greece or Rome had nothing on this Empire in terms of reach, control, oppression and exploitation.
And yet our queenie still needs to ask permission from the city of london to enter the sq mile or obama to set foot on american airbase, Fyllingdales radar/Echelon HQ, etc, etc, etc....
Without adding that the queen is Vatican's serf all your points (valid) are a tad short of the mark.
The Vatican? How so?
The office of the President costs the US taxpayer over $1billion every year.
The Crown Estate covers the cost of the monarchy and more.
Not to mention everyone thinks she and her family are figureheads with no real power. Ha.
Not only do you describe in reality what her and her cronies have in regards to her economic system ruling the world, she also controls our military endeavors (iraq, afghan, anything with north Africa/middle east), launches terrorist attacks against us (see 9/11 and who funded it BAE [their terrorist slush fund]+ Saudi's), and controls UK legislation.
People here in the states don't understand the implications of the Chilcott inquiry, and how it revolves around how they gave Bush the rationale of WMD's he used to justify the Iraq war through falsifying the intelligence for their own gain. Then murdered the whistleblower.
Some are aware of the Opium war aka Afghan war but don't understand the linkages to the banking system...cough...HSBC..cough.
But very few people understand that recently under the British Freedom of Information Act it has been revealed that the fantasy land scammers (aka as the concept of royalty) not only HAVE a veto over legislation (and thus power to shape and mold beyond vetoing it) but ACTUALLY use it quite regularly. It's their prerogative powers.
Hell Psycho Charles alone has used it a dozen times just since 2005. Who knows how many times in total it's been used throughout the family. For British invented green fascism, to war mongering, to terrorism, to their economic scams.
No matter how many Bernanke's we spend on defense of 'terrorism', with the Brits in charge and directing terrorism such as the WTC/Pentagon attack, more are certainly on their way. It's their policy. It wasn't a one-off operation against us, it was merely the next incarnation of the plan levied against us since 1776.
We aren't partners with them, no matter how many politicians and corporations may think and act like we are. We're still their bitch.
Or else what do you call America in the context of an alliance where the other members launch terrorist attacks against us, lie and goad us into numerous wars, control-indebt and demolish our economy...and no one dares mention it to the American people...shh it's secret. We can't know we're their bitch, we have to pretend we're dominating the world and merely have a special relationship with a country that is supposed to be our 'closet ally'.
Well if our closest ally basically is in control of everything that ails us (except our resolve to ask questions, demand answers, and fix it) then who needs enemies?
Fantastic summary.
+100 for the humble insight and calling us "her royal bitches"
There's a reason why THAT monarchy has not been abolished and others have. Revolutions financed by them and the cabal to dethrone everyone else, then use the same financial tools to installing puppet governments including their own.
http://hidhist.wordpress.com/churchill/the-greatest-story-never-told-win...
[KR398] Plunderers Pumping Pelf
We discuss the American legal system that authorizes plunder, a moral code that glorifies it and a financial system that profits from it. In the second half of the show, Max Keiser talks to Professor Steven A. Ramirez, a former Enforcement Attorney at the US Securities and Exchange Commission, about the broken social contract, when that contract got broken and how to mend it.
http://maxkeiser.com/
There is no social contract...in the sense of one with any validity
There is a panoply of ad-hoc adhesion contracts (constitution, amendments, statutes, regulations, licenses etc.) - the other side of which we are not party to - with penalties for non-performance (but not so much for non-compliance, as of yet)
As to the article - its an expected follow up to "Call me Daves" Davos speech calling for more taxes and more transparency (for the third estate only of course). In an economy based on "animal spirits" perception management is a central policy tool. Expectation setting is crucial, as it redefines the choice architecture and presents events as being as natural as the weather. The song of pied-piper politicos to lead their constituency to their carefully planned fate.
The government purse is always empty, while its coffers brim.
"With this moderate surplus Her Majesty's Government do not propose to part; and for many reasons we trust that the House of Commons will support us in resisting any efforts, however well they may be meant, and from whatever quarter they may proceed, with a view to destroy or diminish it. We look to the state of the country, to the balance-sheets of past years, to the scale of our expenditure, and to the condition of the world:—with all this before us, we feel that it would be inconsistent with our duty to acquiesce in the withdrawal of any of the resources which we have retained in order to constitute our surplus, and we confidently and earnestly appeal to the Committee for its unequivocal support against any attempt to wrench it out of our hands." (Hansard, 1863)
The casino (high finance through its government minions) is prepping the decks for the next round.. what would you like to play Mr. Mark?
When I read untested Bank/Gov pronouncements here I feel ZH is falling for/playing into it too easily nowadays...but we all have a point where we have to stop digging.
This was a great explanation for the analysis past money supply to velocity. It is also right on about why government policy, especially FED, is wrong. These two are linked. This article helps to unravel a truly complex series of new secular effects contibuting to a disfunctional version of chrony capitalism.
I cant beleive some of the simple minded comments in the face of this article.
How about an article that explains why Spain can or cannot make any headway and why it must pull down the Euro zone - or not?
If the worst is ineviable then what are the domino effects on GB, China (their largest market) and the US.
The velocity of money always increases on the 1st and 15th of every month when the SNAP cards are recharged. Not sure of the dates for other countries.
So be a trooper and sign up today, the global economy depends upon it.
Regarding the UK economy... The largest part of the UK economy is the financial services industry. Only a politician would belive the financial services industry would bring prosperity to a country.
Successive UK governments have allowed the country, England, to attain an offshore status ( off shore to non UK) through the city of London, de-regulated via legislation and maintained financial serices friendly regulatory bodies (eg. FSA), which in some, if not many, cases have cast a blind eye to fraud, bad banking practices and money laundering ( Libor fixing ,Barclays et all., HBOS fraud, Standard Charter Bank and HBSC money laundering, . . . and more).
Edit to add : and a deregulated environment for non UK banks to practice as they would not be allowed in their country of origin ( USA for example ). Many of the corrupt practices of USA financial services and banks occured in the UK. (Goldmans Sachs, MFGlobal . .)
With the future of these profit making exercises in question and the huge burden on the UK government to bail out these banks, and the burden of compensation lies with the goverment which now owns a number of the corrupt entities, is now understandable that there is little chance of future growth.
Not surprising the Scotland wants to go their own way.
Monarchs love banksters. Especially when they can tell the banksters to put their faces on all the fancy colorful paper money. Royalties, dear please and thank you.
Lord Blankfein can't buy new mansions if they break up the big banks. Along with 99% of the other eins.
The wealthy do not know how to work. Most don't even know how to hold a hammer, let alone fix a sink. This fraud of an economy is the only way they know to exist.
Imagine anyone in finance applying for any real job.
What skills do you have?
I can make worthless paper appear to have value.
Uh ok, anything relevant to the position?
For a bonus, the top google suggestions for the word applying:
Applying for a Passport
Applying for Food Stamps
Applying for Medicaid
Applying for Disability
Applying for Medicare
Applying for Social Security
One would think applying for a job would be on the list close to the top, actually didn't see it. NEW NORMAL!!!!
Interesting theory on how the Fed is intentionally creating the decline in the money multiplier by paying interest on excess reserves. I certainly agree to the link between the huge amount of excess reserves and the declining velocity of money.
However, you seem to assume that the Fed is doing this just to check inflation that would otherwise be expected with how much they've added to the money supply and thus, eventually the excess reserves will enter a more stabilized economy and then be highly inflationary. But I wonder if paying interest on excess reserves doesn't have more purposes like:
- adding an extra protection against deflation as the Fed could stop paying interest or even charge, pay negative interest, on excess reserves, forcing this money into the real economy if needed
- giving the banks one more stream of income as they work to over hidden bad liabilities
- giving the banks a bigger buffer to look better as they slowly use the excess reserves to cover writing of the hidden liabilities as they bring a little on balance sheet at a time
If so, then the excess reserves could be drawn down over the years it takes the banks to slowly use then to cover their off-balance sheet liabilities - the banks manage to show profitability through this whole time - the end result is their bad bets are gone and the reserves are drawn down before they ever enter the economy and create inflation. So the big banks end up bigger and on a more secure footing and the economy trudges through a painfully slow recovery where at the end the banks own a greater then ever share of it....can someone tell me why I'm wrong? This seems preferable to the banks - in your scenario, they still manage to stay alive and huge but are still on much shakier footing in an environment where real loans aren't profitable after inflation so they have to stay and put more money in risky investments when they still have a huge overhang of off balance sheet weakness - if it's better for the banks, why wouldn't the Fed be doing s I suggest?
Thanks for the downvote, buit I'm asking a real question - if you disagree with my assirtion feel free to actually say why it wouldn't work...as that's what I asked.
IOER is immaterial.
Banks would rather have loan demand. Banks earn a minimum 12 times the reserve rate when they make a loan. The IOER rate has nothing to do with keeping money out of the system.
There is no loan demand because we are on the backside of a credit bubble. When credit declines to its equilibrium then loans will grow again.
Our present government policies fight credit contraction and prolong the time till credit will again be distributed to its most economic use. Credit is now improperly steered to the public sector, housing, and student loans where it has a multiplier effect below 1.
Government has become such a large percent of GDP that it has hogged all the resources needed to create self sustaining returns in new business formation.
More Keynsian folly till socialism collapses...
where's the beef? and no, horse won't do.
The reason for this is very simple: OIL.
Without an abundance of North Sea Oil, UK is finished. THis hypothesis was advanced in 2006 by the peak oil crowd, including Mike Ruppert, but it was scoffed at , at the time. Well, who's having the last laugh now.The same fate awaits the world. No cheap oil. And for those religious fuck-cased out there, crying to Jesus won't help either.
http://www.youtube.com/movie?v=uxWpxQXMcp4&feature=mv_sr
Find a graph of human population.
Find a graph of oil consumption.
Compare.
We eat oil, We wear oil, we use oil to move around what we use, we use oll get around.
What happens whenit gets scarce?
Just think about it.
At least Germany had the Energiewende.
They invested heavily in renewable energy sources and asked the german people to accept a higher energy bill for years in return for much needed investment in this field, and with the promise of gratitude from future generations. Not only did this create jobs in highly competetive fields but it actually helps the country withstand rising fossile energy prices. My country the Netherlands used to be ahead of the curve but now Germany firmly took the lead.
Interesting program from VPRO television regarding this and other challenges facing us in the future (if you want to brush up on your Dutch ;): http://www.uitzendinggemist.nl/afleveringen/1304201
and regarding renewable energy specifically (quite a lot of it spoken in English):
http://www.uitzendinggemist.nl/afleveringen/1274030
We tried a sort of the same idea here in the USA. Unfortunately, all it got us was a couple dozen Solyndras and a handful of A123s.
Seems like you Americans don´t give a crap about future generations anyway, judging by the downvotes (for what I wonder).
Apres nous, le fucking deluge bitches.
if you lose mass production manufacturing, you lose most of what you have. services industry is bullshit in the long run.
More and more production is being done by robots. Even low cost Chinese and third world workers are having trouble competing with them. And robots are just going to keep getting cheaper, more capable and more reliable. Likewise, service jobs are not immune. Artificial Intelligence technologies (voice recognition. natural langauge understand, complex Q/A systems like IBM's Watson, etc), software and low cost, mobile computers are going to continue to replace more jobs. If it can be boiled down to a routine, it can be programmed. Even truckers might be in danger from self driving cars being developed by Google. Of course, if you're a barber, plumber, or hotel maid, you job is safe--for now In short, the human race can produce more increasing more+better goods & services with fewer and fewer people. In some ways, this is a nice problem to have. On the other hand, who pays for all the surplus (redundant) people? Its a tough question with no easy answers.
The long term solution is to keep the masses fed and distracted. When they figure out how to pump high quality, interactive porn directly into our neurons, that will solve a lot of the problem.
I have long ranted about the refusal of posters to picture the massive changes technology will bring. In the end, (IMHO), our basic needs will be fulfilled, various alternative energies will slowly replace fossil fuels and we will look back on this era much as we view the Dark Ages. Despite the wishes of many posters, it is extremely unlikely that we will revert to "Old West" / Middle Ages status. Instead it is very likely that after the financial crash we will find ourselves in a new world that will be not only better but also sustainable.
How long was the duration of the previous period known as the Dark Ages, and to what degree did the countries regress from the social levels prior to those centuries ? From the level of the Roman Empire which had occupied them the medieval.
http://en.wikipedia.org/wiki/Dark_Ages_%28historiography%29
"We" might see a new dark ages and yet "we" may well not be around to see the light at the end of the dark.
Perhaps, but I think in this New World, work as we know it will be radically changed. Many more people will be on the Dole, and not all by choice.
Regarding the UK economy...
The current UK coalition govt (Tories & LibDems) are essentially following the same policies started by the Marxist buffoon Gordon Brown back in late 2007-2008, these being QE, Zirp and rolling over to the banksters with £billions of taxpayer funded bailouts. Essentially all Keynesian garbage.
Despite endless political rhetoric from Cameron & Osborne et al about "austerity" and repeated by MSM, in practice there is very little of it. Government continues to spend regardless. And very few cuts have been made to state spending, especially money spent on itself and its giant Establishment cratocracy.
IMO a number of things need to happen before the UK economy bottoms out and shows real signs of recovery:
- rounding up and prosecuting every person who played a part in the collapse (mostly bankers but a lot of government officials eg Bank of England Governor, Head of the Financial Regulatory Authority and members of the last government including Tony Blair). "I was only doing my job" would not be an acceptable defence. Add to that, criminal prosecutions for Libor rigging and this will almost certainly implicate the BoE again. These are the only actions that will restore confidence in government, the Rule of Law and the banks. Without confidence, people will not begin spending again for a long time.
- effective regulatory actions in the City.
- interest rates normalised.
- ending QE.
- end the culture of "crime pays".
- similar actions in the US & EU.
But instead of these actions, opposite ones are being followed. The incoming BoE governor in June/2013 - Mark Carney - intends to run the money printing machines even more.
Welcome to madness.
But don't the voters who elected these idiots over and over despite knowing exactly what they did deserve some blame? We get this reaction in the US - all those bankers and politicians should be shot. They leave out the little fact that these politicians were the choice of the people.
Anyone with an atom of sense knows that prosperity built on credit is not real and that one cannot borrow forever yet they (the voter) chose to ignore that and elect these folks election after election. There is enough blame to go around.
I agree that voters have a lot to answer for, both in the UK & US.
But what we are seeing in both countries is that the fraudsters and criminals in public life are simply not being rounded up and held to account. It is not the voters who have decided this but law enforcement. I have to say that I wonder why LE are not arresting the criminals because the crimes are often blatant and not difficult to identify. Libor rigging for example.
why the gloom? Indices are making new highs, new all time highs are not far off. MAKE HAY WHILE THE SUN IS SHINING
Well then, things are looking up. But seriously folks, there's no soup lines, or ramshackle shanty-towns that I can see--and we simply aren't hard enough to survive the 1930s anymore--we'd melt like pig shit if and when it comes.
Well then, things are looking up. But seriously folks, there's no soup lines, or ramshackle shanty-towns that I can see--and we simply aren't hard enough to survive the 1930s anymore--we'd melt like pig shit if and when it comes.
There is only one reason for the FREEBIES, and that is too keep the natives calm, until they are 100% ready to pull the plug, and then the natives will not have the means to start a Revolution.
Freebies,extended welfare/unemployment=NO Revolution.Empathy,sympathy?, NO way.
Had the people(like during the last Great Dep), been treated the same, we would not have a government in D.C.
With food stamps soup lines are obsolete. And there are many tent cities in the US. You just don't see them on TV, the sheeple don't want to see that, they want to see rich and famous people.
I'll agree Tango, but the idea that this is the 30s hardship wise on national populations in the West is nonsense--in the US there was actual geographic patches of starvation in the South, the dustbowl in the midwest, but ever since we get articles saying "worst since the Depression." Maybe some economic numbers look similar, but there's still social programs giving people bare sustenance at the very least and in many cases considerably more. Spain is the closest to 30's suffering, and I do not think the US is up for that without some real trouble in the streets.
Based on snowfall this year, the drought will be upon us this year as well.
The USA has the most numerous, nicest, cleanest, well-stocked, and heavily-filled bread lines in the history of civilization.
Goerge Washington: NB:
Ed Balls is NOT a "Senior British Minister". He is the socialist Labour Party's 'Shadow Chancellor' and a Marxist idiot. He played a major role in getting Britain into the economic mess it now finds itself in when he was in the last government as Gordon "Jonah" Brown's right-hand-man in the Treasury. Between them, they plotted to destroy Britain's economy by creating the giant credit bubble and sweeping away financial sector regulation.
Anglo & hooli...
Agree with both of your comments. I too fear that Ed Balls will be a senior minister after the next election. Time to make exit plans methinks!
You beat me to it. I was going to say that he is not a senior minister, he is just a very naughty boy. If there was ever a face I really wanted to smack hard, he owns it.
And, he may be a senior minister following the next election in 2015. Kee-errr-ist...
bravo, well said...there's only one thing scarier than a con lib coalition and thats a lib lab packed (sic) with fools
Why havent they turned on the hyper hypothecated financial products money making machine?
This will solve all their problems.
Oh its coming
BoE and BoJ got a hand me down one from the Bernank
Theyre waiting on a plug adaptor from eBay