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Recession? What recession?

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Stephanie Flanders | 18:17 UK time, Thursday, 26 March 2009

Everyone's been hit by this crisis, but a severe recession for all the emerging market economies isn't a forgone conclusion. That's the surprising lesson which I drew from a special G20 Business Breakfast which I hosted in Canary Wharf on Thursday.

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What was special about this event was that the ´óÏó´«Ã½ had brought together to talk with bankers, economists and others about how the crisis had affected them - and what, if anything, the could do to help.

I wasn't surprised to hear some say that they didn't expect much to come out of the summit that would affect them. Yuri Lirmak, a Russian businessman now struggling to pay a 28% interest rate on standard working capital, said he felt the Russian business was "on its own now".

He agreed that there were some heady boom years for Russia before the crunch, but, "those days aren't coming back. This is the new reality." He didn't think the G20 leaders would deliver anything at all for him.

What I was surprised by was the amount of optimism around the room - not from the crisis-weary British bankers, but from the entrepreneurs.

The participants from Brazil and Turkey said that they had been affected, but so far not as badly as they'd feared. Brazil has been hit by the crisis, but not as badly as many - it has a strong economic policy and a large domestic market on its side.

Turkey's position looks a bit more perilous: much seems to depend on whether a big rescue package from the IMF comes through in the next few weeks.

The news from India was even brighter. One of the Indian entrepreneurs at the meeting, Saurabh Gupta, said he felt there were actually a lot of opportunities in the crisis for people like him. One side of his business had been killed by the credit crunch, but the other, internet marketing, was going strong.

A lot of businessmen I've spoken to say the crisis will be good for them - because it will kill off the weaker competition. When Mr Gupta said it this morning, I actually believed him.

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What was the big "takeaway" from the breakfast? For me, it was that there's still everything to play for in the developing world.

For some parts of Africa, the downturn in the West has already hit them hard. Abdirashid Duale, a Somalian businessmen, told us how remittances to the Horn of Africa had been hit by the loss of construction jobs for foreign workers in countries like Britain and Dubai.

But other countries, like India, aren't necessarily facing a major slump. To avoid one, they need to see G20 leaders next week send the right signals on global stimulus, cough up more funds to the IMF, and stand by their promise to keep global markets open.

Or that's my take, at least.

Comments

  • Comment number 1.

    "What was special about this event was that the ´óÏó´«Ã½ had brought together business-owners from across the G20 economies to talk with bankers, economists and others about how the crisis had affected them - and what, if anything, the G20 could do to help"

    At which point I stopped taking it seriously. The ´óÏó´«Ã½ invited a group of people who saw a publicity/business opportunity? If so, what did you expect to hear from such a self-selecting sample? Was it truly statistically 'representative'? How could it be with N's of 1? Why use the word? Sorry to be critical.

  • Comment number 2.

    Stephanie, whilst you might be right, I would point out that entrepreneurs are by definition going to be optimistic and also that this power business breakfast was presumably very selective

    There is undoubtedly a tendency for the British to be more negative than most as well; the Americans are usually uncontrollably optimistic and most countries I've been to have a tendency to see more of an up side than Britain

    Just as economics is all about human nature (often short-term and daft), feelings of economic well-being are heavily dependent on confidence

    As a result, the British nation seems to start most financial years 1-0 down (if this were a game of football); the US is undoubtedly in a worse fix at the moment but with Obama they don't feel as if they are 1-0 down, whilst our Mr Brown is doing a fair imitation of Steve McClaren at the moment (not that Cameron would be any better)

    Personally I tend to lie halfway between the optimists and pessimists I think; I am trying to spend some money by doing some house reno work both here and in Canada, as we need to help the economy to tick over; and whilst this recession may be long and hard it might to some extent herald some long-term changes towards a more sustainable global economy that are long overdue, though I don't make light of the harshness of unemployment here or, god forbid, in LDCs

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    OF COURSE PEOPLE ARE STILL DOING BUSINESS!!

  • Comment number 5.

    It's not really surprising that you will find individuals and compnies who will do very nicely thank you out of a depression. We tend to think of national economies as cohesive units when that is very far from the truth.

    The national pictur for the UK may look very grim in deed but some sectors are being hit far more than others. In retail, compare and contrast supermarkets with high street fashion! A friend of mine owns a mortgage advice consultancy. His core business is now very flat but he has been able to diversify into other financial services and keep his operation going.

  • Comment number 6.

    Do you think you could invite Sir Howard Davies to your next
    breakfast. I'd like to hear someone on the media ask him.
    Was he pushed, did he jump, or was he weedled out
    in Yes Minister fashion.

    Did Sir Howard Davies do nothing after recognising the problem
    in 2002 - or was he stopped by Gordon and Tony?

    There wouldn' be a crunch at all if toxic instruments has not been
    allowed to infect the system.

    Yet, as far back as 7 years ago, on Tuesday, 26 February, 2002, 08:49
    GMT the ´óÏó´«Ã½ published this article entitled "A scandal waiting
    to happen?"



    in which Sir Howard Davies, then chairman of UK
    regulator the Financial Services Authority, was quoted warning
    about the perils of dealing with toxic financial instruments.
    During a speech on insurance regulation, Sir Howard remarked:

    "One investment banker recently described synthetic CDOs to me
    as 'the most toxic element of the financial markets today'. When
    an investment banker talks of toxicity, a regulator is bound to
    take a heightened interest."

    A year later this inconvenient regulator with "a heightened
    interest" was getting in the way of this new way of pumping up
    the money supply via the backdoor, and had often been reported
    warning of the asset bubble in property in the UK. So, in true
    Yes Minister fashion, Sir Howard Davies was shunted off to a new
    job at the London School of Economics.



    Pumping up the money supply was the way elections were bought in
    the Thatcherite past, and making the Bank of England independent
    was supposed to stop that. But under Tony a more suitable
    regulator was appointed to the FSA, one who would not complain
    about the city and would instead focus on "consumer matters"
    where the government had made it clear that it thinks the
    regulator should concentrate their attentions. Leave the city
    alone was Tony's message. Business as usual for the then Blair
    government. The madness continued unabated.

    When more than a couple of factors like interest rate rises and
    bad debtors started to trigger problems in the system the
    predicted problems arose. Why did our governments, particularly
    in the US and UK deliberately let this happen? Stupidity? Or
    electoral convenience? The governments were warned repeatedly,
    from every direction whether it be by regulators, the media,
    politicians like Vince Cable or businessmen like Warren Buffett.

    Despite governments being warned by the regulators and others,
    (in the UK as far back as 2002 at least), of the dangers of this
    bubble of unregulated funny-money debt, governments didn't do
    anything about it.

    Tony Blair's government having got rid of Howard Davies appoints
    Callum McCarthy the ex BZW Barclays' investment bank man, as
    chairman of the FSA. Callum McCarthy described himself as a
    deregulator rather than a regulator and lived by the mantra of
    the market. Even after having a market man and deregulator
    become chairman of the FSA it didn't stop Tony trying to cramp
    their ability to regulate further by accusing the FSA of 'hugely
    inhibiting business'.

    Quote from the Telegraph:- "McCarthy was knighted years ago,
    soon after Tony Blair publicly claimed that FSA red tape was
    'hugely inhibiting business'. McCarthy fired off a four-page
    letter denying bureaucracy but soon after proposed scrapping 300
    pages of the 700-page Conduct of Business Rules. The knighthood
    suggested he had made up with the PM."

    In Paul Mason's blog post "An Orwellian episode" he writes:- "We
    don't know how the spat ended because Tony Blair's reply to this
    letter has been suppressed under the Freedom of Information
    laws. What we do know is that the FSA was under political
    pressure from the Labour government to be even more hands-off
    than it already was."

    In Lord Turner's Economist's Inaugural City Lecture of 21
    January 2009 he says.... "The far bigger failure - shared by
    bankers, regulators, central banks, finance ministers and
    academics across the world - was the failure to identify that
    the whole system was fraught with market wide, systemic risk."

    It's clear that although Lord Turner is admitting the failure of
    finance ministers which means the team of Brown and Blair, he is
    excusing and muddying the waters in true Yes Minister fashion by
    trying to share the blame out with "academics across the world".

    The truth is that academics warned of the dangers, and any
    regulators who showed any signs of doing anything about it were
    moved and/or criticised. It is clear that it was the politicians
    who failed.

    As Paul Mason, Newsnight´s economics editor, also points out,
    Gordon Brown as Chancellor of the Exchequer said in a June 2007
    in a speech to Mansion House. "I believe it will be said of this
    age, the first decades of the 21st century, that out of the
    greatest restructuring of the global economy, perhaps even
    greater than the industrial revolution, a new world order was
    created."

    I can't help but wonder if Gordon Brown wasn't indicating an
    astonishing degree of prescience for one, who had in Lord
    Turner's words, failed to realise that "the whole system was
    fraught with market wide, systemic risk."

    Or should we conclude Gordon Brown did know all along, but had
    done nothing for electoral reasons, or because he had his eye on
    becoming Prime Minister and First Lord of the Treasury himself?

  • Comment number 7.

    Still taking hours to moderate I see.

    It is a shame that Stephanie failed to actually include any optimistic examples. Instead we got a Somali lamenting the drop in repatriation of overseas earnings (inference that this was the biggest/only earner in Somalia though doubtless piracy is surviving) , an Indian who had been forced to close his content production business and was relying on Internet marketing (is this spam?) and finally a Russian who had been deserted by his customers whilst being stung by his bank. At least the Russian had a tale of a friend who had emigrated to California and, when last heard of, was doing OK; this was in contrast to his wanabe property developer mate who was apparently clicking his heels.

    Sounds like we will soon be back to business as usual c.2007.

  • Comment number 8.

    Piracy in Somalia may be surviving, but the number of (reported) hijackings has reduced in the past few months - and there are more warships on the way.

    I can imagine that there's plenty of businesses doing OK across the globe. But even businesses and sectors that are not directly affected by a recession will lose business (just not as much relatively as others'). It is often stated that McDonalds is an exeption - however, even McDs cannot just increase the price of a BigMac, yet must contend with inflation.

  • Comment number 9.

    Stephanie wrote:

    "a Russian businessman now struggling to pay a 28% interest rate on standard working capital"

    hmm... (and we are at essentially zero.)

    My quick looks about the globe seems to suggest that interest rate differential movements between currencies are not being well reflected in movements in exchange rates and this I think suggests a considerable forward discounting by the market of future exchange rate movements.

    In particular it would seem that the pound is in for a fall, at some point against, the Euro - or the markets are expecting UK interest rates to rise to more reasonable long term levels.

  • Comment number 10.

    #6. John_Gapper wrote:

    I too would like to see previous office holders in the regulatory bodies quizzed on their perceptions of the risk of an asset price bubble bursting.

    I have evidence that they were of the same mind as the present (and as yet un-sacked) office holders in that they believed (without any basis) that asset prices did not matter, and further, that an asset price bubble was 'good' as it permitted the continued growth in consumption to be financed through equity release from inflated asset prices.

    Thus I am convinced that the regulatory errors and endemic and can only be overcome by a wholesale clear out of regualtors - the people must leave as they have been educated, and believe, in the beneficial effects of asset price inflation. The men need to go as they have held erroneous views for so long that it is impossible for them to change - on the well established sociological basis the people tend to continue to hold views, even when there is ample evidence to the contrary, for as long as they have already held those erroneous views.

    There is also a further element that is not being addressed in this whole business - and that is the disadvantages and consequences of not making the bankrupt banks bankrupt.

    The advantage of bankruptcy to society is that the assets and liabilities are crystallised and realized quite quickly. The disadvantage the we are suffering is that we are preventing ourselves from benefiting from this speedy re pricing and the whole problem is dragging on and on and seems to have no end point. This I believe is quite critical to coming out the other end of this whole disaster and we as a society should understand the downside of not declaring the bankrupt banks bankrupt.

    Somehow we need to price and make liquid and tradable the so called toxic assets (by toxic I mean those assets with a market price that is so much lover that the book value of the assets that their present owners will not sell - something that in bankrupcy they would be forced to do.)

  • Comment number 11.

    During the extinction episode that occurred at the end of the Permian, something like 94% of all species were wiped out. Those that survived prospered (many to die out in another extinction event early in the Triassic). What generally characterised these survivors? In a word, luck.

    Yes, there will be some individuals and businesses that have the combination of factors (call it "pre-adaptation" maybe, or call it luck) to benefit from and prosper in this time of crisis. But, just as on the eve of the Permian cisis, the survivors wouldn't be regarded as the biggest or the best.

    However and my point in this discussion is that if we view history from the perspective of the survivors (after all, it is the winners that write history for us), we will end up with a false picture.

    The truth is ever more stark. As a country we are among the worst placed to come out of this recession in prosperity. As individuals (taxpayers and small businesses) we are facing the same problems as the rest of the world, but without the advantages other nations are giving their people: for instance "protectionism" may be good for a globalist agenda, but not for nations and their peoples.

    PS John Gapper, very succinctly put at #6.

  • Comment number 12.

    Was it a bit of a shock to discover that people were still seeing opportunities?

    I had thought that was how we reinvented the economy and got people back into work?

    Plus if the rest of the world is still working, doesn't that mean we need to shine a light on all the doom and gloom, or reflect on Brown's words of being "best placed"?

  • Comment number 13.

    I hope that your guest list for the AM beanfeast included government officials and MP's from UK, EU and other nations.

    If such people were there, they would have been bound to pick up on the problems that business communities face across the G20 spectrum. This would have generated sound, empathetic arguments to best put forward at the G20 get-together.

    Such arguments would be infinitely preferable to the economic and political dogmas and stances put forward by the different factions. These stances are little more than highfalutin' and untested theories.

    PS Remember me, Stephanie, when you're next putting a
    guest list for a matutinal munch. I LOVE a good
    full British breakfast.

  • Comment number 14.

    #9, #10 John from Hendon

    Good comments, as ever (it's worth reading Stephanie for the quality of the responses, Paul Mason for the quality of the blog, and the comments).

    What worries me is that we have a whole raft of toxic assets that need to be valued, but are struggling to do so, not least because we just do know how to grade toxicity now that the shortcomings of the Gaussian-Copula formula have been exposed.

    Secondly, when calculating value, do we measure the underlying market value of the constituent parts or take the "fire sale" value of selling everything at once? (For instance, the value of your home may have fallen by 20% from peak and you could confidently expect to sell at that price; but if everyone in the same street was forced to sell at the same time, market forces (lack of demand) would drive down the sale price. Therefore there are a range of values that could be applied to these assets).

    Then, and I read into your responses, the problem is compounded because we don't really know the intrinsic value of the currencies we are using to value those assets. FX may not be in turmoil yet, but we are approaching (if we haven't already reached) a tipping point towards instability as various untried fiscal stimuli are swung into action.

    Business breakfasts, or a dog's breakfast?

  • Comment number 15.

    On post 6. At 10:33pm on 26 Mar 2009, John_Gapper wrote: 'some very interesting points'.

    It surpises me that the ´óÏó´«Ã½ is not pursuing the reality of the events at the very top, around this financial disaster, as they did over the Iraq war and the 'weapons of mass destruction' bruhaha.

    Did the present and past First Lords of the Treasury dismiss an able gamekeeper FSA regulator and replace him with a poacher, directly leading to this financial disaster? If there is a more important national question at this time, I do not know of it.

    Come on ´óÏó´«Ã½, failed economies too often lead to wars. Please stir your stumps and do your best to discover if Tony and Gordon are innocent or guilty of not managing the Treasury to a required standard of best endeavours. The nation needs all future Prime Ministers to know that this is their first priority and who better than the ´óÏó´«Ã½ to achieve this vital task.

  • Comment number 16.

    A quick look at this morning's papers and the News´óÏó´«Ã½ website unfortunately confirm that there is definitely a continuing recession pretty much everywhere, except at Docklands power breakfasts and the Excel Centre.

    Even Canary Wharf itself is on the verge of defaulting on its borrowings, with several buildings emptying out.

    Lula of Brazil welcomed our Glorious Leader by blaming 'white, blue-eyed people' for the mess and promises a 'spicey' G20; Chinese and in fact all the BRICs building up for a bit of a fight at G20; EU members in near total disagreement etc; then there's the BoE and Treasury distancing themselves from idea of any further stimulus.

    Many people seem to be rallying to an anti-stimulus position, as expounded by Merkel and juveniles like Daryll Hannah. It is understandable that there is a growing backlash against all the no-strings-attached help to the banks, but we still desperately need stimulus (help) for private SME etc.

    If the govt giveaways to the banks have now left the cupboard bare, it could be extremely awkward for keeping the British auto industry and deserving SMEs going over the next year or so. Whilst the car industry may not deserve an unreserved 'bail out' (and who does?) they do need help, especially if France, Germany, US etc help their domestic car manufacturing, otherwise the loss of skilled employment, investment and exports will fall disproportionately on the UK!

    Overall, it is no wonder that Brown is now trying to downplay the importance of the meeting

    I see he is now on his way to Chile, which places him about as far out of the way as possible, and he may not fancy returning for next week's almost certain disappointments. Perhaps he could drop in on the British Antarctic Expedition and try to build up the confidence of the penguins and make some reassuring statements about the value of guano.

    BTW #7 and #8 piracy off the somali coast is still a good business; bagged two tankers earlier this week in fact, though traffic is of course sharply down due to the 'recession'

  • Comment number 17.

    6 John_Gapper
    9 & 10 John_from_Hendon
    14 fairlopian_tubester
    15 stmewan

    Good points from Mr Gapper and well followed by you guys, this is starting to look interesting. Anyone in SE England tomorrow should head down to the Embankment for the PutPeopleFirst March, a chance for those who care about all our futures as well as the sins of the past to "walk the walk" rather than endlessly "talk the talk" on here.

  • Comment number 18.

    #15. stmewan wrote:

    "lease stir your stumps and do your best to discover if Tony and Gordon are innocent or guilty of not managing the Treasury to a required standard of best endeavours"

    Or John and Margaret ...

    Remember that the fundamentally flawed economic philosophy light tough (= No) regulation started some time ago...

  • Comment number 19.

    Stephanie

    I am not very surprised by your findings

    Circumstances around the world are not consistent. For example, the Indian central bank kept much tighter control and India has access to an educated english speaking workforce (in part). Brazil has natural resources and a prgressive leadership. Both these nations and China have large populations that continue to want improved living conditions. Russia has natural resources. Pity poor Somalia.

    Likewise, not every company borrowed ludicrous sums of money and has to service mountains of debt. Some provide goods and services where demand does not vary very much - energy, water, food, healthcare, the businesses that support these too.

    There are even entrepreneurial companies in the UK and the US who are producing microturbines and innovative heating and ventitlation systems that are in demand - of course - because some customers can see the need to reduce energy consumption or believe that it might be wise to be less dependent on the big suppliers. There are companies producing central heating boilers that use 25% of the fuel that older technology uses. There is demand for these things.

    People still need new or replacement underpants and socks and shoes. Capacity might vary but demand won't completely go away. Its unfortunate that there is no manufacturing capacity in Leicester any more but someone somewhere in the world is making these things.

    And then there is what we call the potatoe effect. Basically trading down but creating a different demand.

    I like to think the glass is half full. It infortunate that for the UK, at this time, it might not be.

  • Comment number 20.

    Stephanie,

    Thanks for the report. The most encouraging thing for me is something that you do not say. Apparently, none of your guests were making the case for their industry getting money from the public purse. If you had invited a partly self-selected group from Europe (UK included) or the USA, you certainly would have had some beggars lining up.

  • Comment number 21.

    16 Somail-Pirate
    "Many people seem to be rallying to an anti-stimulus position, as expounded by Merkel and juveniles like Daryll Hannah"

    I'm surprised you like her juvenile roles, she's probaby to old to be cast by Hollywood as a soccer mom these days. Mind you, her years of facing the cameras in her underwear has certainly made her seem more steely than an association with wet and woolly Jackson Browne would suggest. She certainly gave Crash Gordon both barrels. Has she had a severe makeover?

  • Comment number 22.

    #21 thorntonheathen

    I too was surprised to learn that the sultry 50 year-old Hollywood star was our MEP; and for the Tories! Hannah always espoused leftist views; haven't seen her speech but her acting ability would have carried her through; I liked her (him?) in Kill Bill

    At the moment it looks like pretty much anyone would thrash our Glorious Leader with one hand tied behind their back

    PS: strangely enough I have a meeting in the City of London on April 2nd and am wondering how to get there, as G20 Meltdown seem to be planning to block off most of the streets and stations; may sail my pirate ship up the Thames and disembark at the old Billingsgate Fish Market but not sure if I'll fit under Tower Bridge; anyone know it's headroom at high tide?

  • Comment number 23.

    #6. John_Gapper quoted Gordon Browns Mansion House speech

    "I believe it will be said of this
    age, the first decades of the 21st century, that out of the
    greatest restructuring of the global economy, perhaps even
    greater than the industrial revolution, a new world order was
    created."

    I think the key point here is the word 'decades', we are only in 2009.
    Crashing the current system could very well be the first step towards that 'New World Order' and he might just very well know what he is doing.

  • Comment number 24.

    BobRocket # 23

    "Crashing the current system could very well be the first step towards that 'New World Order'"

    If you are referring to the current global monetary system, then I would suggest that this will not be the first step to a 'New World Order', it will be the next step in a series of steps going back to 1914 in which the system collapsed/crashed only to be then resurrected in some other form as the new, 'New World Order'.

    I think the periods/dates 1926-1931, 1931-1945, 1945-1968, 1968-1971 and 1971-1973 are significant in Western World economic history of the 20th century if we are to learn anything from today's crisis. How this, if it is to be yet another, 'New World Order' pans out in a monetary sense is difficult to gauge at the moment. It could mean a return to fixed exchange rates of fiat currencies (and all the problems that go with it) or a single world fiat currency backed by a world central bank (even more scary!). If 'Crash Gordon' had any sense at all (very doubtful!) and recognised the fact that fiat monies are always doomed to failure, he would recommend a return to a true gold standard that would underpin all of the world's currencies.

  • Comment number 25.

    # 24. LibertarianKurt

    I apreciate what you are saying regarding dates but I think that previous downturns have little if any relevance to todays economic problems.

    Due to the interconnectedness of modern global economics, a little local difficulty can rapidly escallate into a global crisis.
    Petrodollars today have a disproportionate effect on local currency valuations/fluctations, in previous times (with less reliance on oil), devaluation of currency made exports cheaper relative to competitors. Today, devaluing currency should make products cheaper but as we are all reliant on oil, this makes costs greater so reducing the effectiveness of one plank of fiscal policy.

    I don't necessarily agree with the One World Currency or the New World Order but Gordon Brown has been following the IMF line since summer last year, questions regarding One World Currency (google acmetal) have surfaced at the IMF and will be raised (again) at the G20 in London.
    (the advantage of GB towing the IMF line is that we are uniquely placed to be first in the queue if it comes to an IMF bailout time)
    I know that he is not the clown that he has been made out to be, he has stuck to the plan so far.
    (as for the future, he doesn't talk to me anymore after that little incident with the ice cream so I can only guess)

    Gordons policies may look quite Torylike at times, this is only for political expediency, in a previous life Gordon could probably have been a member of Militant Tendency.

  • Comment number 26.

    BobRocket # 25

    On the contrary, the dates provided are more relevant today than at any other time. What we can glean from these historical facts is the gradual de-coupling of currencies from the gold standard; a shift from floating exchange rates to fixed exchange rates and back to floating rates again. Each change adding a new layer of currency instability as the changes occurred.

    "...the advantage of GB towing the IMF line is that we are uniquely placed to be first in the queue if it comes to an IMF bailout time."

    It doesn't appear that government has learned much in thirty years, does it? Could it be - as I have already alluded to - a case of history repeating?

    Then again, why should we expect governments to learn anything. They just keep repeating the same mistakes over and over again.

  • Comment number 27.

    Hi Stephanie

    Your breakfast was an interesting idea but of course as other posters have recognised the issue is who turns up and the issue of (self) selection. I also remeber your previous post that 80% or so of people are unaffected by a recession so perhaps these people are in that group...

    One matter that has not been addressed I think by economists is the fact that in this period there has been a wide divergence between official and actual interest rates. For example for a couple of years when interest rates were just below 5% officially it was possible to lock forward money for a year for 7%. This was sustained for some time so presumeably borrowers were having to pay more.

    My point is that a lot of the current slowdown be explained by this i.e an "old-fashioned recession" caused by a tightening of monetary policy which was combined in this instance with a reduction also in the supply of credit as the banking sector hit problems.

    So reductions in interest rates and attempts to improve the supply of credit of which there have been many may lead to a fast improvement in conditions perhaps so fast we get a burst of inflation. Also my concern is that we over-stimulate and in trying to get out of our current problem we create the next one..... I have a feeling that the Governor of the Bank of England might be starting to think this too and he might also be wondering if the electoral cycle is doing us no great favours.

  • Comment number 28.

    #27 redvers35

    I suspect you are aware of the Austrian Business Cycle theory, or, as I prefer to call it, the Stating the Blatantly Obvious theory. The system of fiat money creation and state interference always sows the seeds of the next boom-bust cycle as it panics to deal with each successive bust. This time they are excelling in their panic measures so it is quite likely that we will perceive the concatenation of artificial boom followed by even bigger bust as simply one prolonged depression, much like the 1930s.

    Of course the theory is superciliously derided by the great economists, Keynes, Friedman et al for to accept it would mean abandoning central banking, fractional reserve banking and state interference in economics becomes necessary.

    It is my hope that this crisis will be sufficient to force the collapse of the hitherto mainstream consensus.

  • Comment number 29.

    "24. At 7:32pm on 27 Mar 2009, LibertarianKurt wrote:

    If 'Crash Gordon' had any sense at all (very doubtful!) and recognised the fact that fiat monies are always doomed to failure, he would recommend a return to a true gold standard that would underpin all of the world's currencies."


    Simply not going to happen. To do so would mean giving up the only government control which actually matters. Monetary control.

    Of course you can take yourself off of the fiat system fairly easily by getting rid of all your money, switching to a digital gold currency.You just have to be careful of "capital gains" (isn't that a laugh) when the inflation subsequently makes the fiat currency worthless. The money I have in one of these digital currencies is now apparently worth twice what it was in 2007. The truth? Everyone else just took a 50% loss.

    The other point about a gold or gold backed currency. It doesn't prevent fractional reserve lending.You still get credit based inflationary booms followed by credit crunch busts.

  • Comment number 30.

    true-liberal # 29

    "The other point about a gold or gold backed currency. It doesn't prevent fractional reserve lending.You still get credit based inflationary booms followed by credit crunch busts."

    Yes, I'm perfectly aware of that. Perhaps I should have added the caveats:

    1. Abolish central banking.
    2. Abolish legal tender laws.
    3. Force (under a system of property rights) banks to hold 100% reserves against all demand deposits.

    However, like you say, Gordo and his government or, for that matter, any other government are unlikely to go for that as it would mean giving up the power to monopolise the production of money; the power to inflate (create 'new' money) and the power to borrow/deficit spend via the central bank.

    The only way - I'm sure you'll agree - this fiat money charade can end, is for more individuals to grasp what Mises meant when he said:

    "The era of inflation will come to an end once people realise that inflation is an ongoing process with no end in sight."


  • Comment number 31.

    LibertarianKurt (#30) "Yes, I'm perfectly aware of that. Perhaps I should have added the caveats:
    1. Abolish central banking.
    2. Abolish legal tender laws.
    3. Force (under a system of property rights) banks to hold 100% reserves against all demand deposits."


    Are you not forgetting that something rather substantial is requird in order to ensure that all that happens and is sustained?

    What is that called?

    (Please look up the word scotoma).

  • Comment number 32.

    JadedJean # 31

    "Are you not forgetting that something rather substantial is requird in order to ensure that all that happens and is sustained?"

    Well, of course! Please read again the last two paragraphs at post # 30. Did you not understand it or was it your scotoma?

  • Comment number 33.

    Now Kurt you silly boy, the great JJ has pontificated from his omnipotent position and therefore you must of necessity be both wrong in your opinion and also be in desperate need of his tutorship. If you persist he will only bring forward empirical facts (in reality data subsets) that will prove you to be utterly wrong and then defy you to prove him wrong.

    Don't bother mate he's just a fool

  • Comment number 34.

    George Soros - On the radio news today...

    "the (economics and banking of) last 25 years have been an aberration"

    So he is agreeing with the widely held view that the regulators relaxation verging on no regulation which stared from 25 years ago (i.e. Mrs Thatcher's / Ronald Reagan's regimes) has been wrong.

    It does not solve anything, but at least it demonstrates that there is a widely held view from an arch capitalists through to arch socialists that we will not, and indeed cannot, return to the situation that existed in the recent past. And further that attempting to do so will fail (Mervyn King, Gordon Brown please note).

    So that should put an end to the ideas of reflating the busted balloon and those who argue that all that matters is affordability in asset secured loans and not their price (i.e. asset price inflation is an evil, just as bad, if not more so, than other forms of inflation. -implying the need for asset prices (house prices) to fall substantially and rapidly and until this happens there will be no recovery.)

    This returns to my earlier point that the slump and deflation is sustained and will be longer because of the stickiness and slowness of change in asset prices (compared to, say, share prices.)

  • Comment number 35.

    ANARCHISM BY ANY OTHER NAME...

    LibertarianKurt (#32) 'What is to be done' with you?...

    We are in the current anarchistic state through having enforcement of the state over many years.

    You're calling for abolition of legal tender laws, central banking and and forcing banks to hold 100% reserves against all demand deposits. How would you ever enforce that without Big Government? Would you trust market-forces to do so?

    Here's a not too bad on another 'libertarian' whowas backed by NYC bankers and subsequently by a true ).

    Your sins, I suggest, are sins of omission.

  • Comment number 36.

    foredecksave (#33) " If you persist he will only bring forward empirical facts (in reality data subsets) that will prove you to be utterly wrong and then defy you to prove him wrong."

    Please explicitly articulate the procedures which you use when ascertaining the truth/falsehood of propositions/statements made by yourself and others.

  • Comment number 37.

    #34 John_fron_Hendon

    That Soros interview was quite interesting, I only caught the edited highlights on ´óÏó´«Ã½ World.

    Strange in one way that an individual who appears to have benefited so greatly from the "abhoration" now calls for it to be changed. Having said that, it is siren call to all of us. The question is upon what basis as we going to calculate the true value of assets? In the UK, the focus continues to be upon house prices as the benchmark for asset valuation. We need to fundementally change our whole psychology oh houses and housing in general if we are ever to achieve anything approximating to true value (perhaps the seperation of houses as homes from that of houses as invstmens). Perhaps we need to go a great deal further and attempt to define what we really mean by value in the first place e.g. what value do we place upon a Renior as a society? Is it an aesthetic article or does it have commercial value or both - if both then how do you link the 2 values?

    Some have argued for a return to a gold standard (digital if you must). But why gold? If value is to be related to scarcity then surely a concept such as time has more relevance and flexibility - only because we cannot replace time spent and we all have a finite amount of time at our disposal.

    Returning to Soros. He appeared to imply that he believed that a global solution was probably beyond us. I would agree with that. It is difficult enough to try and find solutions for our national economy but I believe that by concentrating upon what we can influence/control and letting a new international framework emerge we have more hope of effecting beneficial change.

  • Comment number 38.

    #37. foredeckdave wrote:

    about determining "value"

    ah but price and value are different... The utility of a solid roof over one's head, be it a hovel or a palace is only a question of degree, compared to not having any roof. (Also any car is better than no car and the utility value of a posh car compared to a basic car is small in comparison.)

    The numerical representation of this 'value' in currency (the price) has become the problem of course....

    I also do not think that there can be a "a new international framework" as you describe it. Or rather I do not think that it is possible for capitalists to construct such an international framework. A national framework is also most possibly beyond them - particularly in the UK given that it is now, I believe, quite well established that both our permanent government (the civil service) and both political parties subscribe to the present system. I also think it is difficult even to construct a new domestic framework!

    Further, I think it is a waste of our energies looking for or expecting such a framework rather I subscribe to living today for tomorrow we die. This is why I see the liquidation of the bankrupt banks (and in particular their valueless=priceless assets) is a necessary prerequisite to getting the economy (by that I mean trade) going again.

    It also follows from this philosophic position that interest rates must rise to return a proper price to money, and the unfortunate may be rescued in accordance with the equity of their position - that it we as a society will at present not sustain starving women and children homeless on the streets, but neither will we sustain the continued exploitation of the poor by the rich to the present degree (and that includes bankers.)

    I would call the position I describe as a combination pragmatic social realism and related social capitalist economics.

  • Comment number 39.

    Some coments extracted from Geithner's first solo tv interview in the US today:

    "the market will not solve this" while disclosing a bailout fund for battered banks has $135 billion left and might need more.

    "We came through a period where people borrowed too much and we let our financial system take on much too much risk," Geithner said. "And the consequences of those choices, made over years, were a huge boom. And that boom, the air is now coming out of that and that's causing enormous damage."

    "The market will not solve this. And the great risk for us is we do too little, not that we do too much," he said.

    "I would not spend a penny on helping a bank for the purpose of helping a bank," said Geithner, taking care with words that can move the markets. "Everything we're doing is for the people that depend on this financial system. Every time we provide assistance to the financial institutions, it's only because we need them to do a better job of getting credit to help reduce the risk of a deeper recession."

    So he is commitd to using the $135bn bailout fund and then more if the Obama administration thinks it necessary!!

    2 points really interest me. Firstly that there is certainly a major move in Amercian psychology towards Big Government and Secondly that there is no departure from th original strategy of bailout - whatever the cost.

    Will Geithner be succesful? Well recent developments would appear to suggest not - but who knows. Perhaps what we are witnessing are the deathrows of the first non-terrestial empire the world has seen.

  • Comment number 40.

    JOHN, we are not a million miles apart in the outcomes that both seek. For certain there needs to be a real social element in a new economy. So your "combination pragmatic social realism and related social capitalist economics." seems about right to me.

    For too long money has ben the dominant factor within our economy. It must now be put back into its true box as the mere transmittion process for true economic activity. How this can be brought about is really what the debate should be about.

  • Comment number 41.

    Anyone who thinks they will escape the consequences of ALL of the major economies in the world going into deep recession, possibly depression is only fooling themselves. The tsunami is coming, it's only matter of time before every beach is innundated. George Soros says that the G20 meetig may be the last chance the world has to prevent a depression worse than the 1920s while Robin Lustig reports each nation will have 14 1/2 minutes to say its peace there. Going into it, there is sharp disagreement between Europe and the US over the relative importance and priority that should be placed on stimulus now versus better regulation. Leave it to the Europeans to look for the answers in all the wrong places. The patient is dying on the table now and needs a shot of adrenalin this instant while Europe thinks about how to go about developing a vaccine so that the patient won't contract the disease again. There is only one word for this kind of head-in-the-sand thinking and that is stupid. America is not going to wait. Trillions are being pumped in, trillions more probably to come and the possibility of massive inflation and devaluation of the US dollar down the road. If other nations don't follow suit, the US economy will decouple from theirs, exactly what I am hoping for. While the majority of people are focusing on the here and now just as they did before the crisis broke, there are others planning for what the landscape will be like after we emerge from the tunnel. I for one hope and expect to see a re-alignment of the world's economies and economic power based on real world productivity. In that world, Europe will be relegated to a third world status where it belongs. It is the most over self indulgent place on earth, having lavished itself in a social safety net it cannot afford, unwilling to pay for most of its own defense while chastising America which bore the brunt of the burden for it for decades. The party is over. The dream is at an end. Time to wake up and face the music. One way or another, everyone will live within their means no matter what the political fallout due to cutbacks of government services and guarantees. Those who don't recognize that will only dig themselves an even deeper hole to climb out of, probably on their own. The entire thing was inevitable. A smart few saw it coming and planned for it. The others will learn to swim or drown.

  • Comment number 42.

    MarcusAureliusII

    Whilst I agree with you that there is no way of avoiding a deep and prolonged depression I feel that you are missing the point. We cannot save the patient and the US stimulous packages are trying to do just that. GB's actions so far have been trying to do the same.

    Europe, may be trying to produce a vaccine. That too is likely to fail in the short term at least. However, Europe as a whole does have some advantages in comparison with the rest of the world in that it has a structure in the EU which can be used to protect individual states from many of the major effects of the ravages of depression.

    The future that you suggest will not arrive. This is Europe's chance to free itself from the subjugation of the US Euro-Dollars. They have reaped the benefit since the end of WW2 both economically and politically. If you believe that the USA has been philanthropic then I'm afraid that you have ben deceiving yourself. Europe has paid a very heavy price for its so called protection. I for one will be happy to see the back of the 'Special Relationship' which was only bought and not offered freely (just look back at the price the UK had to pay both in gold, investments and 'forced' access for the US to Empire markets).

    I now firmly believe that we are seing the end of Pax Americana. I hope that the period of great stress that we re truly about to enter does not result in conflict but if it does, a strong alliance between France, Germany and the UK would be able to present a formidable presence. I just hope that the Little Englanders can be quoshed.

  • Comment number 43.



    Remember the Flynn and Mackintosh Newsnight interview? I request that you do another, this time, for balance, with Lynn, Murray, Rushton, Jensen, Gottfredson, Coleman, Vanhanen and others, if you really want to comprehensively report what's in the Liberal-Democracies, and why.

    The others are more concerned with social-desirability (e.g. celebrity) and appear to find the evidence aversive (hence the denial/avoidance behaviour). Unless this is faced up to, it will just get worse, as fundamentally, it appears to be an entroptic process.

  • Comment number 44.

    fdd

    You still live in a fantasy world. Your government fought WWI with great eagerness going into it. It wiped out an entire generation of its young men and cost it dearly. Had America not intervened, it might be going o until this very day. It refused to recognize the dire threat Nazi Germany posed to its very survival and was nearly invaded. And it would have been successfully invaded if the US hadn't come along in the nick of time. After WWII, Europe was so broke and shattered, the US not only had to send massive aid just to keep it from starving to death and freezing in the cold, it had to lend it enormous sums at very low interest rates (2%) for the long haul (about 60 years) because nobody knew how long it would take to recover. It altered its tax code to encourage American corporations to invest there to create jobs and wealth, gave it open access to the domestic American market, then the largest in the world at very low tarriff rates while allowing it to protect its own domestic markets with high tarriffs, and bore the brunt of facing down 300 Soviet divisions and 30,000 Soviet nuclear weapons that would have devoured it had the US pulled out. All at high cost to American taxpayers and workers and all this time while Western Europe scoffed at it. And it still does. It did not have the political will to resist the USSR on its own and it does not have the will to resist Islamic terrorism whether from al Qaeda or Iran. I for one would be only too happy to see America just get out of Europe forever and leave it to itself. All Europeans know how to do is talk....that and kill each other. Ultimately, nobody can save Europe from itself. Europe is so smug and thinks it is so smart. Of all the things I hate about Europe, the one I hate most is how perpetually stupid it is and always will be. It's time for America to let go and return to the wise advice of President Washington it forgot startig with President Wilson, stay out of Europe's affairs. Our destinies are not the same.

    BTW, in case you hadn't noticed, France is broke.

  • Comment number 45.

    42 foredeckdave

    I think things are going to hit the buffers fairly soon. Basically the taxpayer money is going to run out to intervene. That is the message starting to come out from the US and the UK. eg 'Not all industries can be saved'(US) and 'another financial stimulus not appropriate' (UK). The figures are just too big. Tax is based on a proportion of income or profit. The idea tax can replace income at a basic level for entire private sectors which is what the clamour is for is ridiculous. Big indebted businesses with collapsing order books have to fail. That is the process. However as I have said before there are businesses that are doing okay and the majority of people remain employed, which is what happened in the 1930s. At that time 85 percent of businesses traded throughout the Depression. The big question is not whether big businesses fail but what is going to happen to public services which have to contract at sometime. Historically total tax burdens have not run above 46 percent in the pound. This has been added to by PFIs, PPPs, the National lottery etc etc which are all off account. The expenditure which remained at 46 percent and expanded as the bubble economy expanded has to fall to the new level. You are looking at a substantial decline around the corner, possibly up to 10 percent in some public service areas due to the general addittional benefit burdens which are unavoidable in a recession. Browns attitude is to shut his eye and plough on with the public sector but it just puts the day of reckoning off. There is virtually no discussion about this problem anywhere. No political party or economist wants to discuss the problem other than as an brief aside.

    41 marcus

    If a dream is dead it is the Americian Dream. RIP.

  • Comment number 46.

    #44

    Good morning, Billious Maximus - can we stick to the subject - just for once... I know it is early in the morning and your peptic ulcer must be playing up, but really...

    e.g. start by substituting the USA for Europe in the follow paragraph (quoted from your contribution #44)and reflect...

    "Ultimately, nobody can save Europe from itself. Europe is so smug and thinks it is so smart. Of all the things I hate about Europe, the one I hate most is how perpetually stupid it is and always will be." becomes

    "Ultimately, nobody can save USA from itself. USA is so smug and thinks it is so smart. Of all the things I hate about USA, the one I hate most is how perpetually stupid it is and always will be."

    Tell me please what this has to do with economics? A lot to do with your specialist subject of 'hate, its propagation and continuance into perpetuity', I grant you, but not much about economics.

    Have some soothing breakfast please and if that fails then, go into your yard and shoot some tin cans. (Go on tell me you are not a member of the NRA!)

  • Comment number 47.

    SPIN OR FACT?

    MarcusAureliusII (#44) "After WWII, Europe was so broke and shattered, the US not only had to send massive aid just to keep it from starving to death and freezing in the cold, it had to lend it enormous sums at very low interest rates (2%) for the long haul (about 60 years) because nobody knew how long it would take to recover. It altered its tax code to encourage American corporations to invest there to create jobs and wealth, gave it open access to the domestic American market,After WWII, Europe was so broke and shattered, the US not only had to send massive aid just to keep it from starving to death and freezing in the cold, it had to lend it enormous sums at very low interest rates (2%) for the long haul (about 60 years) because nobody knew how long it would take to recover. It altered its tax code to encourage American corporations to invest there to create jobs and wealth, gave it open access to the domestic American market....."

    Let's put it another way. The USA stayed out of WWII until after Pearl Habour. Roosevelt was happy to work with Stalin. In fact, initially he authorized the Jewish/Soviet Morgenthau Plan which was designed to starve Germany as a market-garden economy - something which Stalin (via Dexter-White?) allegedly planned would drive Germany (and communist sympathtic Europe, cf France and Labour leaning Britain) into the arms of the USSR through hatred of the vindicative, anti-statist USA. When they saw what they were relaly doing they implemementd the Marshall Plan instead, pouring money into Europe to butress their free-market against the Command Economics of the USSR. This was money which Europe was then 'free' to spend in those opened markets in the USA so as to boost the USA economy whilst they were earning interest on the loans!

    Try again MarcusAureliusII. The USA is interested in promoting the free-market because those who p[rofit form it (namkers etc) do so well through such predatory, pernicious anarchism. Have you not noticed how it now does so in its own nest too? There it has imported those it preys upon.

  • Comment number 48.

    THE GROSS DOMESTIC PRODUCTION OF HUMAN STUPIDITY

    MarcusAureliusII (#44) "Of all the things I hate about Europe, the one I hate most is how perpetually stupid it is and always will be. It's time for America to let go and return to the wise advice of President Washington it forgot startig with President Wilson, stay out of Europe's affairs. "

    Let's hope so. You really should look at the US Census Bureau population projections in conjunction with the economy of Mexico. Sadly, it doesn't look like people are listening here either (viz Pakistan, Bangladesh, Nigeria etc), despite the daily news/pictures.

  • Comment number 49.

    Errata (#47) Sorry about the keyboard errors, the keyboard itself is a product of running-dogs of USA Grey Cardinals manufactured by robots in the glorious Democratic-Centralist People's Republic of China so they can undermine the running-dogs' masters....alas, I am at the mercy of legally destroying this country along with pet 'reporters', it sometimes gets to me...

    Watching Darling with his chums beside him all looking 'sorry' as he made the statement as to what the Treasury (i.e the nation's kids some day hence) was taking on because of their instructions to lightly regulate, was, well, chutzpah incarnate...

  • Comment number 50.

    Now I know that nearly everything is possible as I nearly agree with something that JJ has written!

    Since 1940, the USA has been actively engaged in the building of the world's first non-terrestial empire. During its building phase it has invsted heavilly but it has also tasted fabulous rewards. The ROCE from the Marshall Plan has ben enormous. However, as the UK knows only too well, when you build an empire you cannot expct to be loved for it.

    Even though non-terrestial, the US empire is failing under it's own weight - it is no longer affordable.

    As for MarcusAureliusII's grasp of history then least said the better!

    Glanafon summed it up nicely - THE DREAM IS OVER

  • Comment number 51.

    45.glanafon

    Hi, wondered were you were!

    What exciting times we live in. For the first time ever, we have the possibility of re-defining a nation and its economy. The whole concept of wealth is up for grabs. The old order IS rapidly ageing and the times they are a changing.

    The transition however may be brutal

  • Comment number 52.

    foredeckdave (#50) "Now I know that nearly everything is possible as I nearly agree with something that JJ has written!"

    How do you, or did you (ever) learn to, differentiate between 'agreeing with' and 'comprehending..'?

    Note, both are intensional idioms of propositinal attitude.

  • Comment number 53.

    Marcy #44, others have already corrected you, but I thought I should add the rather obvious fact that the Germans had already given up on an invasion of Great Britain long before the USA got involved. You really need to get yourself a more accurate history book. Maybe try a French supermarket.

  • Comment number 54.

    #52

    No JJ, just being sarcastic. However, I'm sure that you will be good at something one day if you ever find out what it is.

  • Comment number 55.

    #43 A storm in a tea cup

    Let us not forget that our society has deluded itself into thinking that self-interest and wealth disparity is the glue for social cohesion. The American dream is predicated on these contrary assertions, as this appears to have been the driving force of the growth in wealth for the Western world.

    It could be more appropriate to judge our relative social harmony of late as a fortunate consequence of broad prosperity increase in spite of the substantial tensions encouraged beneath the surface. Herein lays a far greater recipe for a perfect storm.

    The free market does not create wealth per se, it merely facilitates it. It is the inventors, innovators and entrepreneurs who created prosperity (with a little nudge from protectionism as acknowledged in #47, and some solid hard work). Regrettably, it is the parasites who will destroy it. And by that I mean almost every one of us - irrespective of gender, race, or education - for we each have it in us to make good for the world, as we each have it in us to take from it.

  • Comment number 56.

    crossseyes, the reason the US didn't let Europe fall into the hands of Nazi Germany but saved it was because it was the lesser of two evils. There is a misconception probably fostered by Americans' naturally amiable and open nature that we actually like you. That could hardly be further from the truth. Regardless of what the polls may say when people don't want to show their true feelings on public record, when most Americans think about Europe, European society, European politics at all and discuss it among themselves, it is invariably with great negativity. You and others can pretend all you want, pretend history didn't happen the way it did, pretend that most Americans view the world more or less the same way Europeans do and are merely misguided in electing the kinds of people they don't like, but that is not how it is. An example of this was public sentiment shortly before the invasion of Iraq. It's easy to forget. Europe was vocally very anti American. That is why Schroeder won in Germany even though he was behind in the polls. He played the "anti-American" card and came from behind. Seeing how well that resonated in Germany, Chirac did the same in France and he also came from behind to win. Europeans always have an excuse for everything and I'm sure that some would say Chirac got in because Jospin lost in the first round because many didn't vote in France that time. In the runoff, they'd claim Chirac was seen as the lesser of the evils between himself and Le Pen but there is no denying that his anti-American strategy resonated all over Europe. 90% in most places, 50% in the UK. The invasion only added fuel to the fire. But in the US, the invasion had widespread support. While European sentiment was driven by hopes that America would be attacked again, American public sentiment only turned against the war years later when the expectation that there would be a quick decisive victory didn't materialize. That was due in part to European refusal to support and participate forcefully.

    If there was an award for the most detestable place on Earth, Europe would win hands down. We can feel the tragedy of Africa, the ignorance and misguided backwardness of Arabia. The desperatation to enter the modern world at great cost to much of Asia, but for sheer loathsomeness, Europe takes the cake. I along with most Americans deplore what Mugabe did to his own people in Zimbabwe but the underlying sentiments to throw European exploiters out has resonance despite the consequences of the methods he used. That is why both other Africans and even Americans are restrained in their criticism of him. His heart was in the right place even if his head was out to lunch.

    Is the American dream really dead poopdeckdave the way Europeans hope? (you are one more proof of what I said) It may be on hold for some for awhile but certainly not for millions who still try to get here any way they can. And why do economic migrants also risk going to Europe the way the hundreds who died leaving Libya tried? Because it is too far and too hard for them to get here, that's the only reason why.

  • Comment number 57.

    #56, Way to go Marcy, you not only proved your inability to respond to a quite basic point, but also showed your impeccable logic.

    I'm under no misconception about the feelings of Americans toward Europeans. I've met and know well many Americans - they have mixed views, many positive (hardly surprising since I've met some in Europe - who'd be so stupid to live and work in a continent they despise eh?!) but I've met plenty more on home ground, where again, their views are mixed.

    You however state:
    "Regardless of what the polls may say when people don't want to show their true feelings on public record, when most Americans think about Europe, European society, European politics at all and discuss it among themselves, it is invariably with great negativity".

    Which translated means:
    Regardless of the only actual source of detailed independent evidence I (a hate-filled, biased, individual) believe that evidence to be wrong, and because I say so, it is.

    You are of course right (!!!!!!!) that anti-American feelings in Europe were running pretty high around the time of Iraq II and (because I'm not a closed-minded biggot like yourself) I can admit that some in Europe undoubtedly used that for their own means (dastardly politicians eh?). What you're ignoring of course is that there was a genuine reason for the anger at the US administration. This is borne out by the fact that a lot of people who had never felt any negative feeling towards your country suddenly found themselves doing so.


  • Comment number 58.

    crosseyes, any American politician today who advocated coming to the defense of Europe in any way, whether economically or militarily would be committing instant political suicide. You will never hear a suggestion of that kind from an American again in our lifetimes.

  • Comment number 59.

    #58 Marcus. Rubbish. Are you planning a particularly short remaining lifetime? I can easily imagine a situation where the US would supply a small European country with cut-price military hardware to bolster its eastern borders. It might of course sell the policy to the US people on the back of the defence jobs it sustains.

    And once again we're back to the same point - in times of crisis, the USA will help Europe, and Europe will help the USA, a little bit because it's the right thing, but mainly because each gains benefit.

    Are you suggesting that those who objected to the US led invasion of Iraq should have kept quiet, in fear that the US withdraws its support?

  • Comment number 60.

    I am that poor Russian businessman "stung" by loanshark banks "deserted" by customers mentioned above by rwolff and Stephanie. My customers are still visiting my shop. The only thing I complain about is high interest rates which make retail business absurd.
    Everybody was interested in my problems but nobody paid attention to what I said about the general mood hanging in the air where people start to admire the words like "regulation","new economic order" etc. I think it is time for the people from the West to read again "1984" by G.Orwell and "The Road To Serfdom" by F.A. Hayek. I lived during the socialism and I live now in the society where people like "stability" and "control". So I know what I am talking about. When I watched protests with brass band playing I suddenly remembered the compalsory demostrations we had to participate in. Even the music was very similar!

    Below is the long quote from "The road to serfdom"

    "There are many features which were then regarded as "typically German" which are now equally familiar in America and England, and many symptoms that point to a further development in the same direction: the increasing veneration for the state, the fatalistic acceptance of "inevitable trends," the enthusiasm for "organization" of everything (we now call it "planning").
    The character of the danger is, if possible, even less understood here than it was in Germany. The supreme tragedy is still not seen that in Germany it was largely people of good will, who, by their socialist policies, prepared the way for the forces which stand for everything they detest".

    B.Mussolini once stated that "We were the first who noticed that there more civilization is sophisticated the less personal freedoms are possible"

    Love for regulation seems even more sinister if we watch closely at the list of G20 countries: the most important of them hate the very concept of democracy and human rights. I wonder if such a "constructive dialog" whould be acceptible with Hitler in 30-s or with Pol Pot if one could imagine for a moment that Cambodia found oil...

    G.Brown mentioned the "New world order". This order will be dictated by G2 - US and China. Let us hope that the new world order will not look like China.

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