Tuesday, 9 March 2010

We are heading into the unknown


Following a chat with In the Box (Brian Hopper) yesterday evening, I learnt that many of the young steelworkers that his son works with, seem to think that the so-called recession is somehow over, and I must say like the many others I’ve met over the last year, who have swallowed up the propaganda that’s churned-out from time to time; that the recession is over, that things will start to get back to normality very soon. And if you have a young family a mortgage, well it’s understandable that you’d like to see the light at the end of this particular tunnel.

So let’s consider the recession and look at some of the possibilities, but I would make it clear that I don’t think anyone can predict or tell in advance what will happen in the future or hereafter, capitalism is a very complicated and unpredictable system that even eminent economists often get it wrong, that’s why I don’t take any heed or pay close attention to any of them, capitalism simply put is about making a profit, and it will do whatever to achieve those ends for the few that own and control the means of production.

Recessions generally start because of a loss of confidence in the financial system. People hold on to the money that they have, rather than spend it, and that means there is less money in circulation.

It's hard to predict how long a recession will last. Statistics released at the end of 2009 suggest that, in technical terms at least, the recession is over and lasted 18 months. However, most agree that many people will continue to experience financial hardship and that economic growth will be slow for a few years to come. The previous UK recession - from 1990 to 1992 - was followed by a long period of economic growth up to 2008.

However yesterday’s Guardian reported that the UK’s trade deficit with the rest of the world widened in January to its highest level since August 2008 as exports suffered their sharpest drop in three years. The pound, which had clawed back some ground lost last week amid market fears of a hung parliament, sank back below 1.50 US dollars and 1.10 euros at one point as markets sold off the currency.

I get a very unconformable feeling when the Liberal Democrat Treasury spokesman Vince Cable (respected commentator) calls the trade figures "deeply alarming" as British exporters failed to benefit from sterling's fall over the past year, and the so-called Experts warned the poor trade figures would continue to act as a drag on recovery during the first quarter of 2010, having knocked off 0.2 percentage points from the UK's 0.3 per cent growth in the final three months of 2009.

Now what all this means, well, your guess is as go as mine, but I think it’s an indication that some very rough times lie ahead?
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