Moved from "Politics" because I had a brain cloud.

Now that the US election is over, the news here is dominated by unemployment, deflation/inflation, plummeting stock markets, home foreclosures, etc. This appears not to be just a US phenomenon, but a global event.

The announcement just came a few days ago that the US is officially in a recession (not exactly news to most of us!) and has been for the past year. The question now is how long will this downturn last and how deep will it be. Signs are that it will be long term and painful for most.

How are these events affecting you? What are the other governments saying about it? We have lost 533 thousand jobs so far with more to follow. Unemployment figures are rising daily. Businesses are either downsizing or closing their doors, including some that have been around for decades if now a hundred years or more.

It's the same in England, Pam, and the same all over the world. Although some countries will move into recession slower than others, the real meaning of "globalisation" is that we now have an integrated global economy and when the USA goes into recession everywhere else will follow.

Thousands of job losses are being announced every day in Britain. Big businesses, medium-sized and small businesses are all going under. One of my brothers worked for many years for a large Japanese company, Komatsu, making those big yellow diggers and he's just been made redundant. A nephew working on the line at Nissan has been made redundant. My bother-in-law works for JCB who have just made 400 redundant.

I expect that after xmas there will be enormous redundancies in retailing. There's a bit of a sense of bewilderment amongst many people but also a sense of anger. Several people have said to me " If they can bail out the banks why can't they save my job?".

Yep, I fear for the future of my job too. I don't expect drastic measures yet, but no pay rise either...
Honestly: I truly fear a depression like the big one.... I dunno, maybe it's the doom thinking of the 80s that returns. Or seeing "they shoot horses don't they" at an impressionable age. But the banks failing like they do, the stock market imploding, I dunno, it's scary stuff...

it's what comes of makin' the world 'safe' for capitalism

i worry for our children. 3 out of 4 working in state education but none of them safe.

i retire officially on 1st february next year. My birthday party was going to be paid for by the little pension i accrued when i worked for a global insurance company for a few years. If i had retired in june this year it would have been worth £4k. Fuck knows what it will be worth in february

Me and him worked for BT for a good proportion of our working lives so we theoretically have a safe company pension to augment the state one.. theoretically. However we are noticing the crunch in cost of living so it must be bloddy dire for people with just a basic state pension or benefits.

It's already hit me. I teach in the private sector (but also in adult education). I don't have any formal contracts, my class registers are my contracts. My contracts usually last a maximum 9-10 weeks. I need quite a few of those to build up a full-time schedule which involves a lot of travel all over Greater Copenhagen for a very modest hourly wage. Obviously they don't all start and finish at the same time so sometimes I have lots of work and at others I have very little (like now). I've been doing this for the past 10 years and it has been a very unstable and, therefore, frequently stressful job.

I can already feel that companies are cutting back and there's harder competition amongst my colleagues for jobs. As a result, I've started a postman's round on Saturdays. It pays half my normal hourly rate, so it won't cover my losses. Unfortunately, Mrs Fred works in the same business.

(BtheP: I'm surprised that you mention the 3 out of 4 kids teaching in state sector schools aren't safe. Why is that? From where I'm standing, that looks just about as safe as you can get in teaching at the moment.)

We have a fixed-rate mortgage (thank god!) on a fairly small flat but my reduced hours has meant difficulties meeting all our outgoings for the last few months. We've now claimed all our holiday money for the rest of the year to make ends meet, meaning that we no longer have any paid leave until 1st May next year. The days over Xmas and New Year spent not working mean a loss of earnings for both of us but at least I have a supplementary benefit (which comes at a cost, but that's another story). This accounts for my "bah-humbug" comment on the "It's Chriiiiiiiiiiiistmas" thread. We're giving the kids presents (one each) this year but not each other

I'm not sure how much harder this recession is going to hit us but I'm counting on it being a long haul... Watch this space...

My considered opinion was that Obama's election would offer some stability to hope to the markets, and it did squat. Maybe when he gets in the chair for real that might happen, but I doubt it.

Problem is that after the initial sub-prime issue, the rest of the downturn is based on a lack of confidence - and that is much harder to rebuild than profits.

the great money trick





My daughter is the only one actually teaching (two days a week) in a state school. The others work in Higher or Further Education (SIL in the higher education hierarchy rather than teaching) which is much more volatile.

tgj has been teaching for a couple of years but only qualifies in June next year. They used to offer a cash bonus retainer to keep people in vocational training because they could earn more out in in the industry (car mechanics in tgj's case) but now jobs out in the wide world are scarcer more people want to go into teaching because less money is better than no money .

It's interesting that a graphic in the paper yesterday showed that while manufacturing, IT, and many busines jobs were shrinking in numbers, it appeared that the health related fields and education positions appeared recession proof as their numbers were increasing here.

Yes, it's odd how I once ran screaming from the chance of a career as a school teacher but now (given my present situation) am beginning to be more attracted to it. School teachers in DK aren't paid enough but they earn more than I do (even when I have a full-time schedule) and they have paid holidays, strong trade unions and pension plans. I'd take that right now.

I really should read that book. Until then, I really should resist the temptation to question the assumptions he bases the parable on.

alberr's youngest is involved with uni courses for health workers. She should be ok then

I've been looking at IT jobs across the south of Engand just lately and there seem to be quite a few listed, none that I can immediately apply for, but quite a few don't appear too stable - roles for Business Analysts in companies looking to implement Document Management Systems (which I'd probably apply for) but as these systems are quite costly and don't greatly contribute to the daily running of the company (or in the case of BMA Coal in QLD - contribute to coal coming out of the ground) these roles aren't the kind to pin a career on.

I'm taken by the idea of contracting again....

The Sunday Times gave some monthly job-loss figures:
September 46,250
October 75,575
November 122,748
... At the same time jobs-created are declining and the recession has hardly started yet!

anyone heard this line before?

"we're trying to buy our way out of trouble..."

One of the reasons I hate the free market system so is that it survives through greed. As long as most of the world's economy is based on that premise, then the only way out of trouble is to "buy our way out". Deregulation and lack of oversight got us (the US at least) into the problem and it's going to cost a lot of money to avoid ever worsening financial problems.

That's why I can't understand why the average American can't understand why it is critical to the US economy that their automakers get a short term loan to get them through the crisis. If this industry goes under so do thousands of other businesses (and as a result JOBS). Not just the related businesses such as auto parts manufacturers, but also transportation (railway), textiles, steel -- essentially every manufacturing related business there is. Not to mention the small businesses which rely on the workers to buy their goods but will die because there is no money to buy the little extras.

It's all interrelated, but people keep trying to isolate the issues and pretend that one has nothing to do with the other. Is this the case in other countries, too?

Capitalism? *spits*

It's "spend your way out of trouble" right? The premise that government should spend more in a crisis and cut back on costs when the economy is good. My kinda thinking.

The reason capitalism is bad is that it needs growth. No growth = no profit apparently, and that can't be sustained.

The Automakers were highlighted on Newsnight last night.
Representatives from the main US car builders flying into Washington with their begging caps asking for bailout money, and when whoever they were seeing asked these fellas if they were prepared to either sell or forgo their personal jets in order to help raise cash, to wave their hands over their heads, not one hand went up.

My other thought touching on Pams post, a local distribution company is shedding 450 jobs, I think partly due to the impending closures of other companies that use their services that are no longer operating.

It gets rather depressing when you start linking companies that rely on each other and watch the trickle down job losses.

If you say so

But since the official definition of recession is two quarters of negative growth it seems pretty sure that the recession was well and truly with us in the summer - we just won't know this for sure until the 4th quarter figures come out in January.

How ironic that job losses always seem to trickle down far quicker than wealth ever does

Confidence is an issue.

But is really a small one here - sure people don't spend and try to save what they can - but they CAN'T spend on big ticket items because credit is so hard to get. This is the problem for the car manufacturers - the ability to buy is no longer there.

And countries are quickly discovering that monetary policy is having little effect on the money markets.

The issue is trust - the banks don't trust each other because no-one can work out just how exposed they are to the derivatives market that is the real issue here. US banks invented a Ponzi scheme - packaging up bad debt and selling it as good debt. This is fraud on a massive scale - basically not much better than the pyramid schemes that surface from time to time - and has left most of the world's banks with massive exposure to defaulting home loans in the US.

Until banks can freely lend again we are all totally fucked. Credit is what keeps capitalist economies going - without it the whole thing just falls to pieces - seriously if this is not resolved soon then we are looking at 20-30% drops in countries output - it's not just bad firms that will go to the wall - all firms rely to a certain extent on borrowing - whether it be by issuing bonds or loans from banks. And debt is generally structured in the short term - as debts need restructuring firms already on tight margins will just fold - this is what is happening to the US car makers.

I still say the best idea is for the US government to guarantee the home loans of potential defaultees, but I can't see it happening - which is why the Paulson billions will be frittered away with nothing to show for it but a very big national debt for the US which will mean higher taxes for all. That's if the US (along with the UK) doesn't end up bankrupt. The run on the dollar is just around the corner folks.

Obama may indeed have inherited a poisoned chalice - can't see him being able to achieve much at all in the way of social reform without money.

As for the UK - we are totally screwed.

it doesn't work in my housekeeping budget

That's because you have to save when you have money spare....

oh dear.. i got that wrong then

Rubbish

The economies of the west have been merging since medieval times - pretty much since Marco Polo found his way to China. Later the Italians invented banking and then the discovery of the new world and better shipping routes to Asia massively expanded trade. Add in the British Empire (a global phenomenon if ever there was one), the Industrial revolution etc and you can see this is a centuries old process.

Globalisation has been with us for centuries - it is not a recent phenomena, that's why the Wall Street Crash and the collapse of Amercan banking in 1929 had a knock on effect that ended in WW2.

Yes, capital travels more freely now, and economies are more closely joined, but it's just the continuation of a long process, accelerated of late, but still a long process.

rob.. rubbish ..

inasmuch as paul didn't say it was new.

he was merely saying yes to pam.


you are being tedious.

G Richard Wagoner Jr
Total Compensation: $8.5 mil5 (#159)
5-Year Compensation Total: $22,221 thou

G Richard Wagoner Jr has been CEO of General Motors (GM) for 5 years. Mr. Wagoner Jr has been with the company for 28 years . The 52 year old executive ranks 3 within Consumer Durables

Education
College: Duke University EM ' 75
Graduate School: Harvard MBA ' 77



That was in 05 btw.

These fuckers take home a lotery win every year and whine if they have to pay people more than the minimum wage. Shit! they whine that there is such a things as the minimum wage.

Funny how all the old us and them stuff boils to the surface when a recesion really bites.

Delivering to an engineered lumber plant today. They're big and they're laying off another five people.

The guy I was talking to wanted to know if the building and lumber industry was going to get a bailout.

I know a restauranteur who would like a bailout too. He's halved his staff - just before Christmas FFS! - and thinks it won't be enough to prevent a return to France.

There has to be more oversight of these financial whizz kids. They always say "oooh it's very complicated" and "you wouldn't understand" and "we need to be allowed freedom to..." What?

Gamble with other peoples money, lose it and then get the money back from the tax payers but then not actually give it back to the people on whose behalf you lost it?

I understand completely. Tossers.

So I may be accused of being simplistic (because I should be doing some essential maintenance on a SQL Server that's billowing smoke) but....
If Obama were to pull troops from Iraq after their elections - as Britain plans to - and then maybe scale down the 'War On Terror', how much of that money could be directed back into the economy?

Not as tedious as the pathetic student Marxism going on round here.

Oh I don't know...seemed like a rather pointless point to make in my humble.

Especially considering the context of the original point.

Any way I'm off to Woolies to hand out tea and sympathy to some of the real losers in the stupid game of capitalism.

Quite a lot was made of that and the reps were strongly reprimanded for their lack of a plan and their attitudes. As a result, when they returned to the table, they came with what appears to be a viable plan and one even agreed to accept $1 as his 2009 salary (of course that isn't so difficult when you earned $11 million the previous year! ) At any rate, there is some movement in the right direction. The question now is whether the Republicans in the Senate will go accept.



Very true where the markets are concerned, but increasingly this appears to be the problem with consumers, too. I'm all for reduced consumption and materialism, but when that reduction is based on fear, it too begins to trickle down through the entire economy. The problem arrives when that trickle becomes a flood, which appears to be the current situation.

BTW, most recent predictions show increased unemployment and bad news for other key economic indicators through 2010. Doesn't do much to reinforce confidence does it?

Well since most of the cost of the war and terror and the war in Iraq have been funded by borrowing - er, not a lot....

If anything Obama will have no choice but to pull the troops out of Iraq and scale back on the war on terror because of the recession.

It was unsustainably funded in the first place - but that was in a boom... now with less profits and lower wages to tax we will see if the markets think that the US govt is any longer a good bet for investors. With a $10 trillion national debt I'd say the US is in a whole heap of trouble.



no. he said



If that doesn't imply newness, I don't know what does.

it means we're even more fucked

No. What you'd call (ironically in this case) positive feedback

Congratulations to the workers at Republic Windows and Doors, Chicago who occupied their factory and have now won. As the bosses everywhere try to make workers pay for the recession, this is a small but significant victory.

In the UK, Pam, a lot of manufacturing industry was destroyed in the 1980's: the steel industry, the shipbuilding industry, coal mining and eventually the car industry.

The leaders of the capitalist class, with Thatcher as their political tool, had clearly decided that "finance" was the way forward and "to hell" with manufacturing. For Thatcher and the ruling class, Banking and Tourism were the future of Britain.

The US capitalists are not bothered about jobs in the auto industry. Henry Ford summed it up once when asked about the importance of making cars. He said that he was not in the business of making cars, he was in the business of making profits.

If the bosses threaten to close the car factories the auto workers should do what the Chicago workers did and occupy the factory.

Good on them for fighting for their legally entitled severance pay.

They still lost their jobs, however, whilst the owners have gone bankrupt, closed down the factory, but managed to move the machinery to a new factory in Iowa - new company, same owners.

And of course the new workers are non-union.

A pyrrhic victory sadly.

They only fought for what they believed they had coming. It was a small but important victory. The plant was moved no matter what. I am so proud of what they did.

I can't enter this conversation (aside from the above). It's too personal and scary right now.

If you haven't seen it already, the film by Naomi Klein and Avi Lewis called The Take, talks about an Argentinean factory that not only occupied but continued production in their factory.

It's really very inspiring to watch.

Hugs Barb, we're thinking of you.

Of course 'globalisation' is an ongoing trend, but it has speeded up and increased its scope dramatically over the last twenty years:the economic system we see now is the logical culmination of several centuries of history, but it would also be unrecognisable to most economists of even the 1950s.




I think that you are concentrating on the banking system here to the exclusion of the other key factors: all that 'bad credit' only started to look 'bad' when commodity prices began to rise as an inevitable consequence of economic growth. The sub-prime mortgages and consumer credit were a reasonable investment for banks when their recipients had spare cash. It was only when that spare cash began to get eaten up by rising food and fuel prices that confidence in the ability of debtors to repay started to be eroded.

I think that what this is all showing is that capitalism is not only environmentally unsustainable but also unsustainable economically - which is why I think the student Marxist analysis is right, even if its solutions are unrealistic.

The bad credit was bad credit from the start. Commodities only started rising in price after the credit crunch began (It was a year before Lehman Bros fell), because the billionaires could see there was no more money to be made out of property and hoped to make a quick buck out of oil etc. The price of oil at the end of July 2007 (when the credit crunch began) was $42; it had been floating around $40 for the previous few years.

Sub-prime mortgagees were already defaulting by the time this happened. So you can't just blame inflation for the problem.

They were never a reasonable investment - they were always risky - anyone with a brain (which it turns out was very few people) could see that the types of mortgages being offered (1205, 5-6x multiples of income, self-certified. shared ownership etc) meant that the market was heading for a crash. This was never sensible lending - it was greedy lending.

Which was why in the US they created CDS's. The securitisation of what was effectively high risk debt into low risk derivatives was fraudulent. Think Enron.

The double whammy of falling house prices and lack of cheap credit are the main causes of the slowdown. The economy has been living on credit for the past 15 odd years since it was so cheap - it has dried up. That's put us into a recessionary feedback loop.

Many people think that the so-called "credit-crunch" was the cause of the present recession but that is not so. It was a symptom of the present economic crisis of capitalism not the cause.

In capitalism booms follow slumps and slumps follow booms. The boom/slump cycle is inherent in capitalism because of the unplanned nature of capitalism. In the boom phase the capitalists invest in production to the point of overproduction (as Marx called it 150 years ago, and what bourgeois economists are starting to call "overcapacity"). When this point of overproduction is reached and further profits look unlikely, the capitalists stop investing and the economy goes into a slump until enough productive capacity i.e. businesses, have been destroyed and the capitalists think they can start making profits again. That is when they start investing again and the cycle begins again. So the presen recession will continue until enough productive capacity has been destroyed and the capitalists think they can start making profits again.

But to understand the profound nature of the present recession you need to look back at the last one in the early 1990's.

At the time there was a lot of talk about whether or not the slump would be a "soft landing" or a "hard one". There was frenetic activity among the western imperialist nations, as well as "business" organisations like the "Bilderburg Group", on how to deal with the problem. They came up with a two-fold solution.

Firstly, the superexploitation of the underdeveloped nations of the world: The IMF and the World Bank forced the poorer countries to sell their utilities and infrastructure to western businesses, so-called neo-liberalism. These western businesses then increased prices causing an enormous increase in poverty and a huge wave of economic migration away from the poorer countries.

Secondly, the developed countries went on a binge of credit expansion both internally and externally. Almost all financial regulations were removed and the financiers were told to "get rich". And of course they did, by fair means and foul.

These two methods, of the superexploitation of the third world and the expansion of credit, saved the slump of the 1990's from a hard landing but only piled up the economic problems for later on.

Today is "later on".

Why is it Paulxx that all of your posts are devoid of actual facts. You know, solid evidence that proves your point.

This is all errant conspiracy theory nonsense.

You seem to think that credit was expanded after the last recession (in fact you imply that it was used to get out of the recession). That is simply not true. Interest rates fell but then rose again once the US economy picked up. Interest rates dropped significantly in the early 2000's as the dot.com bubble burst. As inflation was coming down (in part due to the rise of cheap goods from China), monetary policy was eased and money became cheap. They were then raised again when inflation began to rise (that'll be all that extra money being created then...).

Click to view attachment

You seem to think that the IMF/World bank structural readjustments began as a result of the '91 recession as well. Simply not true. They began in the eighties. The term 'Washington Consensus' was termed in 1989. This hardly fits your theory though does it?

Just out of interest - you criticise capitalism for being unplanned? Exactly how on earth do you effectively plan an economic system?

*edited to add graph and expand on interest rate comments.

Just when you think things can't get worse

Global oil supply will peak in 2020, says energy agency

We really are fucked...

Yep, Peak Oil is being largely ignored by all governments but will make our current problems look trivial.

Well done Twopints - you've finally said something. (Although I think you've been cribbing).
But that's OK. We all do that.

Oh dear, chided by Damon, for knowing something and doing my own research. I don't want to get into a battle of wits with someone that is unarmed.

This stuff isn't hard to find: Peak Oil to hit Britain within 5 years

See, I can do links too.


So, possibly something to take seriously.

Possibly. And possibly we should bend one ear towards Jeremy Clarkson when he does a review of the Reva G-Wiz

Just to be ballanced of course.

Do you really think your purchasing of one of these vehicles is going to make a difference?
Or is it about being an ethical citizen - and being an example to others?

With or without a recession.

Trouble is it's hard to get anyone to think past Christmas let alone 5-10 years into the future.

Full ostrich mode.

Or should we rename that full Spiked mode

I've only seen this trailer, but it seems somewhat Socialist Workers Party(ish).
Is that what we get here? Michael Moore stuff - and ethical T shirts and workerist stuff?
I travelled about Argentina a few years ago (when their Peso crashed) and thought it was a great country.
But where does this comment on this film really bring us?
(I have no clue either - but I never brought up the subject of Argentine politics)