If The UK Goes Down, We All Go Down

[Big Orange]

Anyone who thinks joining the euro would avert this problem needs to look long and hard at the RoI, France, Spain and Germany now. A strong currency can't stop sub-prime mess like in Ireland, nor prevent industrial decline like in Germany.

Industrial decline in Germany? Eh?

While your country was wise in keeping and modernizing its industrial base, unlike Britain thirty years ago, it is still going to suffer from the knock on effect emanating in America and the UK, and besides the automobile market has been grossly oversaturated in the last twenty years anyway.

[Thanas]

^Yes, I agree with that. But Admiral Valdemar's post made it sound like there was a general industrial decline in Germany, which is what I am wondering about.

[Ender]

Let's check those claims about the greatness of the Euro here. It is a currency a decade old. Less, if you go by the physical banknotes. Treating it as the greatest thing since sliced bread is very premature here.

C'mon Ender. Name one currency that is harder than the Euro.

Ok: all of them. You guys are solid now. But you have had a 10 year run. If you look at currency to find the hardest, you would be a statistical outlier due to your brevity, and wouldn't even appear on the end assessment. Being the strongest now doesn't mean anything on the scale of world economies, and the Euro has zero track record to evaluate it on. This is the first major crisis it has seen. Holding this up like it is some kind of standard is faulty thinking.

[Admiral Valdemar]

^Yes, I agree with that. But Admiral Valdemar's post made it sound like there was a general industrial decline in Germany, which is what I am wondering about.

Your growth is being cut away now, along with France's. The currency may be doing better than others, but this does not preclude you from being hurt by a global slump. Look, if China is going from 10% growth down to 6% (and that's being conservative given the Party's manipulation of figures which need to be at least 8% to stave off massive civil unrest), then Germany is going to get hurt too. No ifs, no buts. The only thing that matters is how fast, and how far it goes.

[Balrog]

^Yes, I agree with that. But Admiral Valdemar's post made it sound like there was a general industrial decline in Germany, which is what I am wondering about.

According to the BBC at least, 2009 is not going to be a nice year for the German economy, which probably will have an effect on its industries.

[Thanas]

^Yes, I agree with that. But Admiral Valdemar's post made it sound like there was a general industrial decline in Germany, which is what I am wondering about.

Your growth is being cut away now, along with France's. The currency may be doing better than others, but this does not preclude you from being hurt by a global slump. Look, if China is going from 10% growth down to 6% (and that's being conservative given the Party's manipulation of figures which need to be at least 8% to stave off massive civil unrest), then Germany is going to get hurt too. No ifs, no buts. The only thing that matters is how fast, and how far it goes.

I agree with all of that. I simply took your sentence to mean that there was a past history of industrial decline, which given your clarification was obviously a wrong interpretation.

Of course germany will be hit. A 2% recession sounds likely.

Let's check those claims about the greatness of the Euro here. It is a currency a decade old. Less, if you go by the physical banknotes. Treating it as the greatest thing since sliced bread is very premature here.

C'mon Ender. Name one currency that is harder than the Euro.

Ok: all of them. You guys are solid now. But you have had a 10 year run. If you look at currency to find the hardest, you would be a statistical outlier due to your brevity, and wouldn't even appear on the end assessment. Being the strongest now doesn't mean anything on the scale of world economies, and the Euro has zero track record to evaluate it on. This is the first major crisis it has seen. Holding this up like it is some kind of standard is faulty thinking.

Obviously, your claim that every currency currently in circulation is stronger is hyperbole, so I won't bother with it. As for for major crisis, don't be so quick to discount the millenium dotcom bust. So while the scale of this one certainly is bigger, the Euro has weathered a large crisis before. Finally, it is the largest currency currently in circulation.

[Ender]

C'mon Ender. Name one currency that is harder than the Euro.

Ok: all of them. You guys are solid now. But you have had a 10 year run. If you look at currency to find the hardest, you would be a statistical outlier due to your brevity, and wouldn't even appear on the end assessment. Being the strongest now doesn't mean anything on the scale of world economies, and the Euro has zero track record to evaluate it on. This is the first major crisis it has seen. Holding this up like it is some kind of standard is faulty thinking.

Obviously, your claim that every currency currently in circulation is stronger is hyperbole, so I won't bother with it. As for for major crisis, don't be so quick to discount the millenium dotcom bust. So while the scale of this one certainly is bigger, the Euro has weathered a large crisis before. Finally, it is the largest currency currently in circulation.

You're an idiot. Let's examine your argument

1) the Euro is the hardest currency
2) the UK made a foolish decision on not wedding itself to the Euro because of 1.

I didn't challenge 1, I challenged 2. Your rebuttal was to repeat 1 and reinforce 2 by citing point 3

3) Being the hardest currency makes it the best

Which is an absurd point to make, surpassed only by your next post, with points 4 and 5

4) One minor burst provides sufficient data to evaluate the strength of a currency, long term analysis is irrelevant
5) Another indicator of the strength of a currency is the amount in circulation.

I could cap this here and have your foolishness evident to everyone else, but I expect I'm going to have to explain all of this to you. This all comes back to point 2, which itself hinges on the fact that you have no grasp of what makes a currency good. It is not its hardness at any arbitrary time. It damn sure isn't how much of it is in circulation. The strength of a currency is a reflection of the economic and fiscal policies of the issuer and regulating bodies, considered over the long term. THAT is what the UK needs to consider when deciding whether to wed their economy to it.

By this evaluation, yes, the Euro is an inferior choice to everything else out there. You have 10 years of data to build from. That's it. Ten years of plenty, mind you, with few domestic problems, no foreign problems worth speaking of. Hell, they didn't even have that at the beginning, which is when you think they should have started using it. But consider making that decision. Those ten years are all the data you have to go by when you decide to whether to upturn a system that has worked well since the middle ages, a system that has or the bulk of modern times been home to the economic capital of the world. To make the decision to turn over that to an unproven group. Not only that, an unproven group in a constant rotating state of control, so you can't even consider historical track records. How are they to know which country in the EU will be in charge when the next crisis hits? If they don't know, how can they predict the response? If they don't know the response, how can they be sure it is the best thing for their citizens? The UK would essentially be playing roulette and hoping that they don't get screwed when the next calamity came to pass. And by the way, like AV pointed out, how well is that decision working out for a heap of EU countries? Yeah.

That's why the UK was smart to dodge the Euro. Unlike most of the countries begging to get in, they were already sitting pretty. And the risks outweighed the reward. They may see less growth during the good times, but during the bad they can take actions to protect themselves and not worry about those in charge looking out for number 1 instead of them. They may wish to join in the future, but at the time, and arguably even now, remaining the masters of their own destiny was the best course of action.

[Thanas]

By this evaluation, yes, the Euro is an inferior choice to everything else out there.

Not only did you say "any currency" would be stronger before, you continue to perpetuate this claim. Yes, obviously, the Euro is an inferior choice to the Rubel. Or to whatever currency they use in [insert third world state here]. You are claiming that "any" currency that has been in existence longer than the Euro would be stronger than the Euro just...because there is more data to go on. Nevermind the countries making up the Euro. Let's just ignore the economical power of the EU.

You have 10 years of data to build from. That's it.

...and of course the 50+ years of the countries making up the Euro. Yes, let's just ignore those.

Ten years of plenty, mind you, with few domestic problems, no foreign problems worth speaking of. Hell, they didn't even have that at the beginning, which is when you think they should have started using it. But consider making that decision. Those ten years are all the data you have to go by when you decide to whether to upturn a system that has worked well since the middle ages, a system that has or the bulk of modern times been home to the economic capital of the world. To make the decision to turn over that to an unproven group. Not only that, an unproven group in a constant rotating state of control, so you can't even consider historical track records. How are they to know which country in the EU will be in charge when the next crisis hits? If they don't know, how can they predict the response? If they don't know the response, how can they be sure it is the best thing for their citizens? The UK would essentially be playing roulette and hoping that they don't get screwed when the next calamity came to pass.

The rotation schedule is known until 2020, so one can evaluate the possible responses of the current country in charge until then. Besides, the European Central Bank is responsible for the monetary policy of the members of the Eurozone and their presidents have five-year terms. There is as much a basis to go on as is the case with the Fed, who can also change every four years. Or in any democracy, which changes the government according to a schedule.

And by the way, like AV pointed out, how well is that decision working out for a heap of EU countries? Yeah.

What "heap of EU countries?" Ireland? Spain? Please show that their current financial woes are caused by their decision to join the Euro.

That's why the UK was smart to dodge the Euro. Unlike most of the countries begging to get in, they were already sitting pretty.

Let's consider that claim for a second. These are the countries that were let in in 1999:
Austria
Belgium
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain.

Now, the only ones who are unstable of that list are (assuming the worst) Ireland, Italy and Spain. Hardly "most of the countries" that tried to get in in 1999. Now, even if we add Malta, Cyprus, Greece, Slovakia and Slovenia to that list, you still have 8 stable countries who outnumber the unstable ones. And considering those to be on the same level as Germany or France is quite generous to the economies of those countries. In fact, compared to the stable countries, their economies are very, very small. By that same argument, France and Germany were wrong in choosing the Euro. Fact is, you have to start somewhere when you want to build a currency.

And the risks outweighed the reward. They may see less growth during the good times, but during the bad they can take actions to protect themselves and not worry about those in charge looking out for number 1 instead of them. They may wish to join in the future, but at the time, and arguably even now, remaining the masters of their own destiny was the best course of action.

Joining the Euro does not remove countries of the ability to control their own destiny. Note that the various countries still have formulated individual responses to the current crisis. Your claim that joining the Euro makes a nation beholden to Brussels is simply with no basis in reality. What the Euro provides is the strength of the currency, a strength that would not have put Britain in such a dire situation when considering foreign debt. Or are you honestly arguing that the pound is in better shape now than the Euro is?

[Kane Starkiller]

C'mon Ender. Name one currency that is harder than the Euro.

The dollar. And just as with pound the dollar was gaining on Euro in recent months although not as rapidly. I think it's still too soon to decide that Sterling will be worse off during the recession than Euro.

[Ender]

By this evaluation, yes, the Euro is an inferior choice to everything else out there.

Not only did you say "any currency" would be stronger before, you continue to perpetuate this claim. Yes, obviously, the Euro is an inferior choice to the Rubel. Or to whatever currency they use in [insert third world state here]. You are claiming that "any" currency that has been in existence longer than the Euro would be stronger than the Euro just...because there is more data to go on.

Absolutely. The issue at hand is whether or not England should have adopted it. From that contention historic displays

Nevermind the countries making up the Euro. Let's just ignore the economical power of the EU.

Enlighten me, exactly what was the demonstrated economic power of France when directed by Germany? Oh yeah, it didn't exist. The previous evidence of independent economic power is fairly useless because it represented different industries, different education levels, different trade policies, and different populations. Or do you seriously think you can extrapolate future conditions from wildly divergent data sets for unrelated past trends?

...and of course the 50+ years of the countries making up the Euro. Yes, let's just ignore those.

And here we get the wonderful wall of ignorance. See, I already explained in the very post you are responding to, why this was irrelevant. The economic direction of individual countries is wildly different from those of the aggregate.

The rotation schedule is known until 2020, so one can evaluate the possible responses of the current country in charge until then.

But not when the calamity will befall. So you might as well be guessing wildly. See again the roulette comparison.

Besides, the European Central Bank is responsible for the monetary policy of the members of the Eurozone and their presidents have five-year terms. There is as much a basis to go on as is the case with the Fed, who can also change every four years. Or in any democracy, which changes the government according to a schedule.

And we select those leaders based on evaluations of past performance to select those who we think will serve us the best. And as I stated, you have nothing indicating past performance for this situation.

What "heap of EU countries?" Ireland? Spain? Please show that their current financial woes are caused by their decision to join the Euro.

Given that it is your claim that the UK deserves this for not joining in the Euro, the implicit assertion is that joining it would have protected them from it. So fuck you and your pathetic attempt to shift the burden of proof on me.

Let's consider that claim for a second. These are the countries that were let in in 1999:
Austria
Belgium
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain.

Now, the only ones who are unstable of that list are (assuming the worst) Ireland, Italy and Spain. Hardly "most of the countries" that tried to get in in 1999. Now, even if we add Malta, Cyprus, Greece, Slovakia and Slovenia to that list, you still have 8 stable countries who outnumber the unstable ones. And considering those to be on the same level as Germany or France is quite generous to the economies of those countries. In fact, compared to the stable countries, their economies are very, very small. By that same argument, France and Germany were wrong in choosing the Euro. Fact is, you have to start somewhere when you want to build a currency.

And thus we see that Thanas is so fucking stupid he cannot read proper tense in the English language. My comparison was to England's economic standing in 1999 with those currently seeking entry like Albania, Turkey, Serbia, Macedonia, etc.

Joining the Euro does not remove countries of the ability to control their own destiny. Note that the various countries still have formulated individual responses to the current crisis. Your claim that joining the Euro makes a nation beholden to Brussels is simply with no basis in reality. What the Euro provides is the strength of the currency, a strength that would not have put Britain in such a dire situation when considering foreign debt. Or are you honestly arguing that the pound is in better shape now than the Euro is?

Wheee, strawman. And and misunderstanding of how the economy works to boot. Various states have operated their own bailout packages, this is true. But because they use a unified currency and are locked into formalized trade treaties, they have removed a number of tools from their bag, such as manipulation of lending rates, varying of printing, and other currency manipulation techniques.

[J]

Let's consider that claim for a second. These are the countries that were let in in 1999:
Austria
Belgium
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain.

Now, the only ones who are unstable of that list are (assuming the worst) Ireland, Italy and Spain. Hardly "most of the countries" that tried to get in in 1999.

Austria, Spain, Portugal, Ireland, Italy, Luxumbourg and Belgium will all be in trouble. They all have serious debt & credit problems of their own or heavy exposure to the emerging markets in Eastern Europe, Russia, and elsewhere which are going to crater in the near future if they're not already doing so as in the case of Romania. When those emerging market countries implode, the countries mentioned above will have most of their banks and financials wiped out with a high likelyhood of following the Iceland model. France's AAA credit rating is being threatened by the extra debt they've been forced to take on along with the numerous revisions to its projected debts & deficits. Germany may soon be in the same boat as they've seen an increasing number of government bond auction failures.

I used to believe Europe would be a lot better off than North America in the coming depression, and in some ways they will. However, the events of the last couple months together with what I've learned leads me to believe that Europe is just as vulnerable, if not more so to a big kaboom as the US & Canada. I'm beginning to come around to the thesis that the US is screwed, but everyone else is screwed worse.

[Kane Starkiller]

When the trouble in US began the press was full of talk about how US is loosing it's position as global economic center and of de-coupling of the emerging markets but in the end when US sneezes world catches a pneumonia.

[mr friendly guy]

If the world economy has pneumonia, I would hardly call what the US has just a sneeze. Its looking like the world is going to be in a bit of pain at the moment, although from memory AV did say those countries with a good manufacturing base can at least fall back on that.

As for over here, the mining boom in my state seems over now that China has cut back on buying. I hear the Chinese steel mills are getting revenge on our suppliers (the bigger ones anyway, the smaller ones are not ordering), after all lets face it, we did jack up the price of iron ore to the Asian steel mills (PRC, Japan, SK) but left the same price for the Europeans. Hopefully it won't be too bad for me, I still have a job and with housing prices finally dropping it will become a buyers market. Especially those with 6 figure worth of savings.

[Colonel Olrik]

Austria, Spain, Portugal, Ireland, Italy, Luxumbourg and Belgium will all be in trouble. They all have serious debt & credit problems of their own or heavy exposure to the emerging markets in Eastern Europe, Russia, and elsewhere which are going to crater in the near future if they're not already doing so as in the case of Romania. When those emerging market countries implode, the countries mentioned above will have most of their banks and financials wiped out with a high likelyhood of following the Iceland model. France's AAA credit rating is being threatened by the extra debt they've been forced to take on along with the numerous revisions to its projected debts & deficits. Germany may soon be in the same boat as they've seen an increasing number of government bond auction failures.

If Portugal implodes I'll eat my hat. It has been largely absent from the bubble that made the UK, Iceland, Ireland and Spain feel and look filthy rich in the last years (there have to be so many distinguished, right wing opinion makers revisioning their last half a decade of "we must copy the Irish model!1!!11" right now). Portugal also has on of the most unified states and a society with strong family ties (30 and living with the parents? What's the problem?) and with people that are used to live with less than others.

Germany is a country where you shouldn't count on being possible to buy a TV with a credit card, buying your own place before you're in your forties and where the favorite way of buying even a car is in cash. Despite being made fun of due to it's slow growth in the last decade and a half by apparently rich Brits, it's a country with a solid and constantly renewed infrastructure and stable society, I doubt it'll be in heavy trouble before the rest of the World implodes. If others stop buying their cars the factories will be retooled to manufacture wind mills and solar power stations, lots to build when nuclear is not an option.

ANYWAY, yesterday I did my economic duty and injected a good slice of my money reserves in the economy by buying a shiny, new Audi A3 for a great price. I kind of hope that even in a crisis people will still want to kill other people with advanced missiles.

[Norseman]

The Finance Minister tells us to relax, the Norwegian banks appear to be rock solid. Moreover we have projected budget surpluses up to 2048, combined with all the money we've been saving we can weather this storm. See we actually do what Keynes suggested: Save up a ton of money during good times, and spend some of it during the bad. Combined with sane financial management, and there's no real reason to worry.

[J]

Speaking of a UK collapse, it seems we were just hours away from one last year.

AP link

Minister says UK banks came close to collapse

1 day ago

LONDON (AP) — Britain's banking system was on the verge of collapse before the government stepped in with a multibillion-pound (dollar) bailout in the autumn, a government minister was quoted as saying Saturday.

Financial services minister Paul Myners was quoted by The Times of London as saying that "we were very close on Friday, Oct. 10."

"There were two or three hours when things felt very bad, nervous and fragile. Major depositors were trying to withdraw — and willing to pay penalties for early withdrawal — from a number of large banks," he was quoted as saying.

On Oct. 13 the government announced a 37 billion-pound government bailout — the first in a series of emergency measures to shore up banks' balance sheets and unblock the flow of credit to customers.

The measures have had limited success. British bank shares have plunged over the past week amid speculation they will require further help or could even be nationalized.

Official figures released Friday confirmed that Britain is in recession, with output falling 1.5 percent in the fourth quarter of last year after a 0.6 percent fall in the third quarter. It was the biggest decline since the early days of Margaret Thatcher's government nearly 30 years ago.

Myners said the greed and mismanagement of some senior bankers had led Britain into its financial crisis. He said many top bankers "were grossly over-rewarded and did not recognize that."

"They are people who have no sense of the broader society around them," Myners was quoted as saying. "There is quite a lot of annoyance and much of that is justified.

"Let us be quite clear: there has been mismanagement of our banks."

Finance Markets link

Britain’s banking system was hours from collapse says minister
by Kay Murchie
”Britain’s

One of Gordon Brown’s Ministers has revealed that the British banking system was just hours from collapse, just before the Government’s £500 billion bailout of the British bank system last October.

In an interview with the Times, Lord Myners, who was appointed Financial Services Secretary to the Treasury in October to help rescue the banking system, said that the country was three hours away from a complete banking collapse after ‘major depositors’ were ready to withdraw their money from a number of large banks.

According to the Mail on Sunday, behind-the-scenes attempts prevented financial meltdown.

However, Lord Myners has been criticised for admitting the sheer scale of the crisis at a time when major British banks are seeing their share price fall amid rumours of nationalisation.

Angela Knight, chief executive of the British Bankers Association, said that it was only HBOS and RBS that these issues related to. To suggest that all banks would have collapsed is wrong, said Ms Knight.

Meanwhile, Lord Myners has also revealed that some bank executives have been “grossly over-rewarded” and have no sense of the society around them.

The revelation comes despite Gordon Brown’s assurance that the days of huge bonuses are over after top execs are set to receive bonuses and shares worth up to £5 million each.

Last week, it was announced that nationalised Northern Rock has paid almost all of its 4,500 employees a 10% bonus - an average of £2,000 each.

[Big Orange]

Barclays shares soar 73pc to lift feeble bank sector

Barclays led a fightback by Britain's banks yesterday, with its shares surging a record amount and recovering almost all the ground lost last week after reassuring investors that trading has been strong despite £8bn of writedowns.


The stock enjoyed its biggest one-day gain, rising 73pc to close up 37½ at 88.7p. Barclays' rise helped lift the banking sector and led the FTSE 100 up 156 – or 3.9pc – to 4,209 points.

Royal Bank of Scotland climbed 20pc to 14½p and Lloyds Banking Group rose 32pc to 65.2p.

Banks were also buoyed by the Dutch government's decision to guarantee 80pc of ING's mortgage exposure on Alt-A mortgages, the second-worst category after sub-prime.

Despite the recovery, Barclays shares remain lower than the 98p at which they were trading last Monday before the Government unveiled its second bail-out and RBS reported a record loss of up to £28bn – prompting fears that all three face nationalisation.

Its resurgence was sparked by an open letter from Barclays chairman Marcus Agius and chief executive John Varley stating the bank made "record income" last year and "profit before tax [was] well ahead of the estimate of £5.3bn".

In a spirit of "clarity and transparency", they revealed the number was achieved after £8bn of structured credit writedowns – a figure many in the City had feared would be far lower and not fully reflective of the market problems.

Instead, the writedowns, which netted off at £5bn after hedging and gains on Barclays' own debt, were significantly higher than the "£3.3bn gross and £2bn net" reported at the half-year and roughly in line with the £9.7bn gross and £8bn net reported by RBS.

Barclays added that the group's £36bn capital is sufficiently robust, and "exceeds the regulatory minimum required by some £17bn in profit before tax". "We confirm that we are not seeking further capital – either from the private sector or from the Government," Mr Agius and Mr Varley wrote.

Mark Phin, banks analyst at Keefe, Bruyette & Woods, said: "Confirmation that it is not seeking a capital increase should provide some reassurance." Ian Gordon, of Exane BNP Paribas, added: "There will still be scepticism but it's a very powerful statement."

On current trading, the letter said: "We are well-funded and we are profitable. Customer and client activity levels have been high. As a result, we have had a good start to 2009."

Although reassured, Mr Phin said he still awaited the results, which have been brought forward eight days to February 9, "before assessing the underlying performance".

Excluding the writedowns, the numbers suggest Barclays made about £11bn in profit – far higher than its £7.1bn record in 2006 before sub-prime problems emerged.

Meanwhile, there was speculation Lloyds may perform an about-turn over its £4bn of preference shares and convert them into ordinary equity. The move would see the Government's stake rise from 43pc to over 50pc. While Lloyds has said it wanted to remain majority-owned by the private sector, it would save £500m a year in dividend payments, and would also be able to bolster its core tier one capital. Lloyds would not comment.

Link

At least one UK bank is hanging on in there...

[aerius]

On current trading, the letter said: "We are well-funded and we are profitable. Customer and client activity levels have been high. As a result, we have had a good start to 2009."

You know, I seem to recall Northern Rock, Bear Stearns, WaMu, Indymac, Wachovia, and Lehman's saying the exact same thing. Didn't end too well for them did it?

[Illuminatus Primus]

It isn't evidence they're about to fail, either. It just means you cannot trust the bank on its own survivability.

[Ryan Thunder]

I'm no economist, so please bear with me here if I write anything grieviously wrong.

If I understand the problem correctly, companies are dying because of a lack of investment. This in turn puts people out of work, which in turn reduces investment even further. However, the money didn't just dissappear, right? It went somewhere. There are probably some retardedly rich people that a sizeable chunk of it went to who don't need it.

If it would stave off a depression long enough for us to fix the underlying problems and prevent another one, I think we should retrieve it from them and re-invest it intelligently, with strings attached.

[Starglider]

However, the money didn't just dissappear, right? It went somewhere.

Actually yes it did dissappear, at least some of it did, as a result of unwinding and deleveraging. This is why central banks have been able to sustain massive liquidity injections (i.e. money creation) without creating massive inflation (yet).

If it would stave off a depression long enough for us to fix the underlying problems and prevent another one, I think we should retrieve it from them and re-invest it intelligently, with strings attached.

Aside from being a massive civil liberties issue, investments by high-net-worth individuals constitute a relatively small fraction of the available investment base. Good luck dictating where pension funds, day traders, foreign nationals and foreign governments invest their money.

[Ryan Thunder]

So, we're pretty much fucked, and there's no way out of it? Even if we toss ethics out the window?

Fuck that system.

[Big Orange]

In some ways I'm glad there is a recession to prompt TPTB to reverse most of their boneheaded economic policies that got us to this state in the first place and bring Britain away from the funny money, making the economy serve us not the other way around, but I don't want it to go deep enough to permanently damage Britain's economy and affect basic standards of living. And Germany seems to be having problems (and triumphs) as well, when VolksWagen has been bought out by the much smaller Porsche (who are making more money through hedge funds and shortselling, than through actually selling cars which have drastically gone out of demand factory fresh).

[Big Orange]

Here's is an update on Great Britain's economic freefall (The International Labour Organisation predicts that 50 million jobs will be lost around the world this year):

January 29, 2009
British slump will be worst in developed world, says IMF
Gary Duncan, Economics Editor, in Davos and Philip Webster, Political Editor

Britain will be hit harder than any other advanced nation in the worst recession for more than 60 years, world economists warned last night.

In the bleakest assessment yet of British prospects, the International Monetary Fund (IMF) forecast that the economy would shrink by 2.8 per cent this year, twice as much as it previously thought and far more than the 2 per cent average drop for developed nations in 2009.

The stark figures are a severe blow to Gordon Brown, who has continually insisted that Britain is better placed than most countries to weather the downturn. The IMF outlook suggests that the recession in Britain will be deeper than that in the United States, Italy, France and elsewhere.

Alistair Darling, the Chancellor, predicted in November that growth in Britain would rebound to at least 1.5 per cent in 2010, the likely election year, but the IMF points to a far more meagre recovery of only 0.2 per cent.

It expects world growth to rise at no more than 0.5 per cent this year as the “scale and scope of the current financial crisis have taken the global economy into uncharted waters”. This would mean the weakest annual growth since the Second World War.

In another downbeat view, the Institute for Fiscal Studies said that Britain would be saddled with government debt for more than 20 years. Regardless of which party wins the next election, tax increases and spending cuts totalling £20 billion are inevitable by the end of the next Parliament.

The International Labour Organisation predicts that 50 million jobs will be lost around the world this year, taking unemployment to 7.1 per cent, compared with 6 per cent last year.

A recovery will not be possible until the financial sector begins to function again, the IMF said. “Despite wideranging policy actions, financial strains remain acute, pulling down the real economy.” It now predicts that the US will suffer a 1.6 per cent contraction this year, while Germany and Japan will see output fall by 2.5 per cent and 2.6 per cent. But it forecast a gradual recovery for world output in 2010, with growth rising to 3 per cent.

George Osborne, the Shadow Chancellor, said: “This is the day when the British people were confronted with the true cost of Gordon Brown’s failures. It may be a bad day for him, but it’s an even worse day for the country.”

Vince Cable, the Liberal Democrat spokesman, said: “This exposes Gordon Brown’s lie that Britain is well placed to deal with the recession.”

Mr Brown’s spokesman said that the Prime Minister remained “absolutely confident” that the Government was taking the right action to get Britain through the global recession.

Link