The Great Depression Ii?

[Joushag]

Marx was correct, time for a reassment, OK communism was wrong, but capitalism is inherently unstable and the booms and busts get larger. We have had a period of extended "bought" boom, since WW2, with the welfare state and increasing reclassification of people as middle class, ie haves. That has kept the majority of people "on side" and played down the proletarian "threat".

 

Now there is a serious risk that the current bust will expose the "gentrification" of that middle class as an unsustainable sham, they will start to suffer and will start to reidintify as the have not proletariat.

 

That, given the oppressive laws re terrorism, which can be subverted to be used domestically, could give rise to revolution.

 

Capitalism is broks, fewer and fewer people work to produce.

 

Well its a simplified version of one take going round in academic and philosophical circles wehere Marxist philosophy, economic theory etc is undergoing rehabilitation.

Interesting post. Is communism wrong though? What do you mean by it? It seems to be more a word of abuse than anything with meaning about how society is ran.

 

I think you using 'middle class' in the sense of well-education and having a professional term and not what Marx defines it as. It's a problematic term. But in doing this, 'middle class' has no useful meaning as part of the subject of class politics that you wish to discuss when you speak of Marx and a proletariat. Only the people who own the means of production are the middle class. They are the 'haves'. All others are working class.

[spook]

This time it's new.

 

The 1929 depression came about as a result of money becoming disconnected with the real wealth of the nation but recovery was possible because there was a market for American goods, especially when WW2 started and the whole nation profiteered from it.

 

This time there is no similar market for American goods because that market is being served by the industrialisation of The East.

 

Where the US could find a market for what they have that is "better" than anyone else would be in another war, and I wouldn't put it past US Big Business to promote such a thing.

 

Also the US debt is greater than GDP. On the upside the underlying strength of western economies is far, far higher than in 1929 so although it'll not be pleasant it'll also not be the disaster of 80 years ago.

 

It must be me.

 

Let's take the UK.

 

#1. The UK real economy includes many years of import bills exceeding export bills resulting in a growing debt that for the most part does NOT show as part of the UK National Debt.

 

#2. On top of that most mortgages are actually provided from non-UK sources, and yet must be paid by people living and working in the UK.

 

#3. In the UK most people work in jobs that do NOT achieve overseas earnings because they are one way or another in the UK domestic service sector. Tourism is a pimple on an elephant in this regard.

 

#4. Successive governments, especially the last one, borrowed to the hilt in order to pay for their lunatic ideas as well as feed money into the economy as “benefits” much of which ended up being used to buy imported goods making a bad situation even worse.

 

 

So given that the UK economy is based on smoke and mirrors, that GDP does NOT indicate the health of the economy of a nation but just economic activity, how on earth can anyone other than a currency speculator possibly claim that the UK economy is strong when it's just very active but only because of an increasingly large debt mountain buoying it up, and no sign that exports will grow to the extent needed to just pay the interest on the debt let alone start to work it down?

[Cambon]

 

So given that the UK economy is based on smoke and mirrors, that GDP does NOT indicate the health of the economy of a nation but just economic activity, how on earth can anyone other than a currency speculator possibly claim that the UK economy is strong when it's just very active but only because of an increasingly large debt mountain buoying it up, and no sign that exports will grow to the extent needed to just pay the interest on the debt let alone start to work it down?

 

Although I (for once) agree with what you have written, there is one aspect you have missed. Since the UK set their own interest rates, they can control their own economy, unlike Spain, Italy, Greece, etc. If you look in the financial media today you will see that NS&I have withdrawn the Index Linked Savings Certificates. These became very popular as interest rates were low, at 0.5% and inflation was meant to be 2.0%, therefore four times the return. The only reason they would withdraw these bonds is if inflation was going to rise significantly in the long term. Inflation is another way of paying down national debt by devaluing it. Most people don't understand it, they just see the price of aloaf go up and blame the shopkeeper, where in reality it is economics at government and international level. that causes it.

 

As I said a few days ago in the housing thread, I no longer expect to see house prices plummet by 30% - 10% maybe - However, the UK government is going to let inflation take it's toll. It has to, otherwise the uk will become like Greece - bankrupt.

[GD4ELI]

I no longer expect to see house prices plummet by 30% - 10% maybe - However, the UK government is going to let inflation take it's toll. It has to, otherwise the uk will become like Greece - bankrupt.

 

What else could the UK gov do though?

 

I agree with your assessment - prices may drop a bit but otherwise will stay more-or-less stable as inflation gently eats away at the real value over the next 10 years.

 

With changing demographics I see no gains being made in housing in the foreseeable future.

 

I know of two properties in the north of the island which were purchased in 2007 / 2008, had ~ 150k+ spent on them and are now worth exactly what the present owners paid.

[woolley]

 

It must be me.

 

Let's take the UK.

 

#1. The UK real economy includes many years of import bills exceeding export bills resulting in a growing debt that for the most part does NOT show as part of the UK National Debt.

 

#2. On top of that most mortgages are actually provided from non-UK sources, and yet must be paid by people living and working in the UK.

 

#3. In the UK most people work in jobs that do NOT achieve overseas earnings because they are one way or another in the UK domestic service sector. Tourism is a pimple on an elephant in this regard.

 

#4. Successive governments, especially the last one, borrowed to the hilt in order to pay for their lunatic ideas as well as feed money into the economy as “benefits” much of which ended up being used to buy imported goods making a bad situation even worse.

 

 

So given that the UK economy is based on smoke and mirrors, that GDP does NOT indicate the health of the economy of a nation but just economic activity, how on earth can anyone other than a currency speculator possibly claim that the UK economy is strong when it's just very active but only because of an increasingly large debt mountain buoying it up, and no sign that exports will grow to the extent needed to just pay the interest on the debt let alone start to work it down?

 

Spot on Spook. How someone could compare the UK economy to China and say we are more "productive" simply shows how deluded so many people are. Even much of the UK car industry is simply assembling stuff designed and made elsewhere, mainly in the far east - a bit like doing a jigsaw and claiming to have manufactured it. We truly have lived beyond our means on past glories for decades, borrowing from the future to fund it. It's come to a head and we have to get used to things being a lot tougher. I know people say that this is doom mongering but it is a fact. Powerhouse empires inevitably come and go in cycles. They grow, become great for a while and then they become soft and comfortable and fall into decline. We are well advanced in that process.

[pongo]

[i know of two properties in the north of the island which were purchased in 2007 / 2008, had ~ 150k+ spent on them and are now worth exactly what the present owners paid.

 

Even in a rising market, money put into a property very often adds little to the price which a property will sell on for. The exception would be when the property is very inexpensive to begin with (eg an inherited barn for conversion or a tumbledown sold at auction which is then dropped). Even less expensive simple renovations are often a waste of money - especially DIY.

 

The reason to do up a property is to make it how you want to live in it.

[Albert Tatlock]

Spot on Spook. How someone could compare the UK economy to China and say we are more "productive" simply shows how deluded so many people are. Even much of the UK car industry is simply assembling stuff designed and made elsewhere, mainly in the far east - a bit like doing a jigsaw and claiming to have manufactured it. We truly have lived beyond our means on past glories for decades, borrowing from the future to fund it. It's come to a head and we have to get used to things being a lot tougher. I know people say that this is doom mongering but it is a fact. Powerhouse empires inevitably come and go in cycles. They grow, become great for a while and then they become soft and comfortable and fall into decline. We are well advanced in that process.

Excellent summary post there IMO.

[pongo]

Even much of the UK car industry is simply assembling stuff designed and made elsewhere, mainly in the far east - a bit like doing a jigsaw and claiming to have manufactured it.

 

but that makes no difference. It's still wealth creating trade and industry.

 

We truly have lived beyond our means on past glories for decades, borrowing from the future to fund it. It's come to a head and we have to get used to things being a lot tougher. I know people say that this is doom mongering but it is a fact. Powerhouse empires inevitably come and go in cycles. They grow, become great for a while and then they become soft and comfortable and fall into decline. We are well advanced in that process.

 

This idea of "we" is less and less significant today since our personal economies are no longer necessarily so tied to geography.

[woolley]

Quoting

 

This idea of "we" is less and less significant today since our personal economies are no longer necessarily so tied to geography.

 

That is an illusion. Are you saying that the relative finances of nations are not important? We are a declining force in the world ecomomy and there are no nice benefactors out there. If we are perceived as a bad risk our interest rates on our borrowing addiction will rise. If we are seen as a basket case we will be cut loose and go bankrupt.

[pongo]

. If we are seen as a basket case we will be cut loose and go bankrupt.

 

you might. I am not expecting to. So "we" won't

 

I don't care about nations anyhow TBH so I'm not worried about them declining if they are. And these kinds of rumours come and go whatever. In the 80s everyone was babbling on about Japan. Now it's China. Next it will be some place else. The economy is global and cyclical/tidal.

[woolley]

Quoting Pongo - you might. I am not expecting to. So "we" won't

 

But the thread is "Great Depression". We are talking about national economies here, not your personal situation. And don't kid yourself. If your country's currency goes down the pan it will affect your own situation. Not only that; any form of investment is a lottery right now. Nobody knows what to do for the best and that is why the markets are all over the place. I'm not being judgemental though. Perhaps you have found the panacea that the rest of them have missed.

[pongo]

Perhaps you have found the panacea that the rest of them have missed.

 

it's not so much that. Just that I'm more fascinated than worried. And I have to trust myself to try to deal positively with whatever happens and to treat it as an interesting opportunity.

[pauld]

And thats the reason you will live longer than most of these "fretters" pongo.

[woolley]

And thats the reason you will live longer than most of these "fretters" pongo.

Not fretting pauld. Not a bit of it. But not oblivious either.

[pauld]

Its quite simple woolly, anyone can make money in times of good, but only clever peeople can make money when times are hard, pongo is wise enough to see a depression as an opportunity.