Entries from December 2008
A junior manager, a senior manager and their boss are on their way to a meeting. On their way through a park, they come across a wonder lamp.
They rub the lamp and a genie appears.
The genie says, “Normally, one is granted three wishes but as you are three, I will allow one wish each.”
So the eager senior manager shouted, “I want the first wish. I want to be in the Bahamas, on a fast boat and have no worries”. “Pfufffff and he was gone.
Now the junior manager could not keep quiet and shouted, “I want to be in Florida with beautiful girls, plenty of food and cocktails”. Pfufffff, and he was also gone.
The boss calmly said,” I want these two idiots back in the office after lunch at 12.35pm”
Categories: Humour · Leadership
Mr Bean’s Christmas Day. Fast forward the video to about halfway for the hilarious turkey sequence.
Categories: Christmas
The major 5 UK recessions of the 20th Century were 1920-21, 1929-33, 1973-75, 79-82 & 1989-1991. The first chart below shows the historical data for GDP output from 1970 to the 3rdQ 2008 (a recession is technically defined as 2 consecutive quarters of negative GDP growth) & highlights the last 3 recessions.
The second chart superimposes UK unemployment data & illustrates that unemployment continues to rise even after the end of a recession. Click first chart for original Guardian, interactive version.
The 1920-21 & 1929-33 recessions occurred during periods of political coalition and are probably not representative of current times. Each of the last 3 recessions had major political consequences & directly or, indirectly precipitated a change in political leadership. Gordon Brown has an 11 year CV of responsibility during both the boom & the bust!. It seems likely that his fate will be sealed by the need to call an early election (before the recession really bites) and large sections of the community lose huge chunks of their paper wealth, actual wealth (from house repossession and/or bankruptcy) and also future income (through unemployment and/or reduced income from their savings).
1973-75 Recession
The 1973-75 recession was triggered by an oil price shock The Arab-Israeli Yom Kippur war, precipitated a reduction in M. East oil shipments and a quadrupling of oil prices and rocketing commodity prices. This caused queues at petrol stations, rolling cutbacks in electricity production, with accompanying blackouts and the 3 day working week. Inflation rocketed to 23% as the commodity price increases were institutionalised into union wage deals. The Heath Government failed to impose prices & incomes controls which was challenged by widespread union strikes in the public sector, the coal industry and dockyards. Sterling collapsed as the UK economy became uncompetitive. Heath called a general election in 1974 on the issue of “who rules”. He failed to get a majority and Harold Wilson and the Labour Party were returned to power.
1979-80 Recession
Following Harold Wilson’s surprise resignation in 1979, James Callaghan was elected leader of the Labour Party & became Prime Minister and Dennis Healey his Chancellor started to impose tight monetary controls. The resulting widespread cuts in public expenditure in 1978 prompted a wave of strikes in the winter of 1978/79. This caused the worst slump to hit Britain for 40 years. Inflation peaked at more than 20 per cent as prices of basic goods rocketed. Callaghan was forced to go “cap in hand” to the International Monetary Fund and the government’s woes reached their low point in the strike-ridden 1978-79 “Winter of Discontent”, leading to the Labour Party’s electoral defeat in 1979 and the election of Margaret Thatcher.
1990-92 Recession
A combination of factors, including a stock-market crash in the late 1980s and the decision by Margaret Thatcher’s government to let the pound join the European exchange rate mechanism (ERM), led to double-digit inflation and soaring interest rates. The cost of borrowing peaked at about 16 per cent and as a consequence the housing market slumped, with hundreds of thousands of households in negative equity and repossessions on the rise. The Conservative Party ousted Margaret Thatcher & elected John Major as their leader. He became Prime Minister in November 1990. By Black Wednesday, in September 1992, when the pound crashed out of the European Exchange Rate Mechanism (ERM), the economy was beginning to recover and John Major survived until Tony Blair was elected as Prime Minister in 1997.
2008-10??
Watch this space as events unfold. The backdrop will be unremittingly negative & depressing but, it’s likely to be the unforeseen events which determine political change.
Categories: Boom & Bust · Economy · History · Leadership · Politics · Recession
Tagged: Survival, Top Recessions
According to Claire Berlinski (biography of Margaret Thatcher – There Is No Alternative),
It is critical to appreciate that Thatcher’s enthusiasm for free markets can’t be reduced to an enthusiasm for economic efficiency – this is a charge often made, but it simply isn’t so. A moral society, not an efficient one, was her ultimate goal.
J.R. Nyquist, in his column, “Thatcher’s Defense of the Free Market” argues that:
It is my theory that today’s gross materialism is a corollary of our collective sleepwalking. Our political and economic ideas are merely convenient, and adapted to meet the needs of a hedonistic shopping mall regime. Our society has lost its way, forgetting the values that made us strong and prosperous. In 1977 Thatcher noted: “The main issues are moral. In warfare, said Napoleon – the moral is to the material as three to one. You may think that in civil society the ratio is even greater. The economic success of the Western world is a product of its moral philosophy and practice.
Choice is the essence of ethics.” said Thatcher, “If there were no choice, there would be no ethics.” If human beings are free to choose, then man must reap what he sows. This is what is being denied today. Therefore, many financiers and industrialists turn to the government. “Bail us out,” they cry. “If we go down, everything goes down.” In answer to this, precious resources are diverted by the state in support of the worst malpractices of the previous era. 
Here is the essence of socialism, the core of a rotten policy. “The socialists,” said Thatcher, “would take away most or all of [our] choices. A man would do what he was told by the state and his union, work where work was ‘found’ for him, at the rate fixed and degree of effort permitted. He would send his children to school where the education authority decided what the children are taught and the way they are taught, irrespective of his views, he would live in the housing provided, take what he could get, give what he was obliged to give.”
Even if the U.S. government could save Detroit, the banks and Wall Street, consider Thatcher’s warning: “This doesn’t produce a responsible or a moral society. This doesn’t produce a classless society; on the contrary it produces the most stratified of all societies, divided into two classes: the powerful and the powerless; the party-bureaucratic elite and the manipulated masses.” The result is disastrous: economic inefficiency, national demoralization.
H/T Posters: 10 Drowning Street
Categories: Banks · Boom & Bust · Economy · Election · Gordon Brown · Government · National Debt · Politics
Tagged: Demoralisation, J R Nyquist, Margaret Thatcher
A phrase attributed to Benjamin Disraeli and popularised in the United States by Mark Twain is:
There are three kinds of lies: lies, damned lies, and statistics.
Perhaps Disraeli should have qualified his famous quotation by referring to premature, irregular & selective statistics!
Sir Michael Scholar, head of the UK Statistics Authority, said both the Home Office & 10 Downing Street’s release of data, on an initiative to tackle knife attacks, had been “ premature, irregular & selective” and he has formally rebuked the Home Office for misleading the public.
Sir Michael is from the old school, which places facts above quick headlines & political positioning. A culture of political spin and sloppy journalism has diminished our democratic processes over the last decade & we should all applaud Sir Michael for trying to put a clear marker in this quicksand.
If you want to better understand why the Government’s premature, irregular & selective release of the knife crime data was, in all probability, totally misleading, read this excellent article by Chris Dillow at Stumbling & Mumbling.
Any Government which is cynical enough to assume the electorate can be politically massaged with misleading data isn’t fit to be in office! Let’s hope we hear much more from Sir Michael Scholar on his mission to restrain the Government’s cynical abuse of official data.
Categories: Civil Service · Government · Spin
Tagged: Home Office, Knife Crime, Official Data, Statistics, UK Statistics Office
From: Watts Up With That:
Much importance has been ascribed to tracking the change in Arctic sea ice, but what about the global trend? That doesn’t seem to get much press. However there is some important information that needs to be presented related to the global trend of sea ice as measured by satellite since 1979. The results are surprising.
Obviously people cannot make the claim that sea ice is being lost. It isn’t. The data shows that our trend is basically flat during this time of unprecedented temperatures. It’s clear that there has been no significant change in sea ice area.
This is almost enough to make me turn in my Skeptic union card, but increased CO2 warming the earth makes some sense to me, the magnitude is in question. The fact that polar sea ice not melting is not an insignificant point. It is also important to realize that the changes are too small to fit with IPCC statements about the trend. Unlike trees, ice does make a good thermometer. I can’t say this strongly enough— This is a strong indication of substantial errors in the computer models and temperature data which needs to be addressed before we throw what’s left of our global economy to the wind. How would Earth’s total sea ice ignore such substantial warming? It’s a good question which deserves an answer.
Categories: Climate Change · Global Cooling · Global Warming
Tagged: Arctic Ice, Ice Caps, Melting, Polar Ice, Sea Ice
Gordon Brown may not have intended to tell Parliament this week that he had “Saved the World”:
But, he certainly is not telling Parliament or, Britain’s citizens that his policies are causing a run on sterling & could ultimately precipitate having to go begging to the International Monetary Fund for bailout loans. This has happened before under a Labour Government….Jim Callaghan, the Labour Prime Minister in 1976 had to borrow from the IMF (lender of last resort to its 185 sovereign state members).
The current economic crisis is caused by a liquidity crisis in banking which, in turn, is hitting Britain much harder than most other developed countries, except perhaps the USA. There are two main reasons for this. First Britain is much more dependent on the financial sector than other economies (except Switzerland & Iceland). Second, the UK is probably the most indebted, developed country in the world. The Spectator recently published the above chart. It shows an international comparison of “External Debt” (combines all Government, corporate & household debt). This shows that Britain is in a league of its own and by any measure we have a “debt junky” economy. But, what’s even worse is that three quarters of the UK’s debt is short term debt (ie. repayment is due within a year.
So, given we have a global liquidity problem, the UK is uniquely vulnerable.
But of course, we won’t hear any of this from Gordon Brown who. you may remember on his coronation as Prime Minister said “I will always be honest with the British people”.
The international currency markets are making their own judgements about the state of the UK economy. We have already seen sterling depreciate by over 25% since the start of the economic crisis.
Categories: Banks · Boom & Bust · Bubble · Economy · Gordon Brown · House Prices · National Debt · Recession · Sterling
Tagged: Bankrupt Britain
