Economic analysis
Can we really say that the recession is over?
Growth may be returning, but unemployment isn't going away. Sean O'Grady reports
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Independent Minds
While economists may agree that the recession is over and the recovery under way, albeit modestly, the pain of the downturn seems set to continue, with companies still shedding labour and few employers feeling confident enough to begin hiring permanent or temporary staff.
What's more, that pain is being spread almost arbitrarily across regions and class, with surprising results; research by the Local Government Association (LGA) reveals that education and training are less of a defence against the dole queue than might be assumed, as is living in a part of the country traditionally thought to be immune from economic hardships.
Some of the steepest rises in unemployment are being seen among golf-playing, Mercedes-driving executive types in "nice" places such as Windsor and Wokingham.
"The turmoil in financial services has had an effect in the South, especially the London commuter belt," the LGA says, but less-skilled workers in the South-east do not seem to have suffered the same impact. "Places which have recorded the highest increases in manager unemployment, like Runnymede, have some of the lowest increases in unemployment for those in 'elementary', ie unskilled, occupations." The LGA's research reveals that, in proportional terms, it is managerial staff in the South-east who have seen some of the largest rises in unemployment – up 162 per cent over the past year, with professionals (142 per cent) and skilled workers (140 per cent) not far behind. The unemployment rate of skilled and unskilled staff has risen by 58.3 per cent, though, being more numerous, the overall numbers and the absolute rate of joblessness they suffer remains much higher, and their financial ability to weather a period of enforced idleness is usually weaker.
The LGA warns that "a national, blanket policy to stimulate economic recovery doesn't work because each area of the country has been affected markedly differently by the recession".
Taking them together, the number of managers and professionals seeking job seekers allowance has risen over the past 12 months from 46,700 to 118,700, but the unskilled seeking benefits are up from 332,400 to 589,000.
The figures may understate the extent of white-collar unemployment, as they track the claimant count: many unemployed executives and professionals will be ineligible for job seekers allowance because of their savings.
Managerial unemployment shows a predictable bias towards the Home Counties – Windsor, Wokingham and Wycombe are black spots for executives – but there has also been a steep rise in managers going to Job Centres in places as diverse as Market Harborough, Redditch and Runnymede.
Jobless professionals are widely dispersed though London seems to be home to many. The two largest proportional rises have been recorded in the boroughs of Hackney and Islington, often caricatured as the last redoubts of the public sector professional.
Lambeth, Barnet, Hammersmith & Fulham and Brent are also represented at the top of the list of job losses but they all rank below St Albans, for example. Coventry, Woking and High Wycombe also have plenty of professionals thrown on to the dole.
Overall, the LGA concedes that unemployment rates have risen most quickly in the areas that might be predicted – the West Midlands, Yorkshire and south Wales, though less so in the North-west and North-east, which were already suffering.
Joblessness has hardly risen in some areas historically associated with long dole queues, such as rural Wales (Ceredigion), Cumbria (Barrow-in-Furness, South Lakeland, Eden) and the Derbyshire Dales.
Big rises in unemployment have also hit centres as varied as Torbay, Leicester and Gloucester, though not so of their closest neighbours. Some of the newer industrial zones are starting to suffer as much as the more established; the most substantial rises in unemployment among the skilled and unskilled have been witnessed in slightly less traditional locations, such as Swindon (home of Honda's UK manufacturing operations), Wellingborough, and Harlow.
By the same token, while qualified tradespeople in the Merseyside-Manchester corridor and engineers in Darlington, for example, have been affected by the recession, as would be anticipated, in some of those places benefit claims from the unskilled have barely risen. Corby and Swindon are among the areas experiencing the biggest increase in job seekers allowance claims.
Sir Jeremy Beecham, the vice-chairman of the LGA, said: "The needs of leafy middle-class suburbs are poles apart from the action that needs to be taken in more deprived inner-city areas. An unemployed factory worker from Barnsley or Birmingham needs to be retrained very differently from a City financial analyst.
"While the north of the country and the Midlands has borne the brunt of blue-collar job losses, it's the south that has seen a sharp rise in the number of managerial job losses."
Expert view: Prospects for UK plc
The financier
Jon Moulton, founder, Alchemy Partners
We're definitely getting worse much more slowly, and we might be somewhere near the bottom. We've dropped an enormous amount of money into the economy – all of which will, of course, be paid for by later generations – and the economy will probably respond to that and provide some minor upturn before the weight of that spending is going to push it back again. We'll have more debt relative to GDP than before, and that is at the expense of future growth. So, the most optimistic scenario is some alcohol-to-alcoholic effect, but the morning after will occur. It doesn't look very optimistic, and I sincerely hope I'm wrong.
The entrepreneur
Simon Tucker, managing director of Aim-listed Software Radio Technologies
Any notion that the recession is over will prove to be a false dawn. We are still facing a huge debt overhang that does not appear to be shifting any time soon and there are various industries that still have significant structural problems. For example, a recent report from IATA (the international body that represents airlines) said that airlines will lose over $9bn this year and I presume that some will fail. Coupled with increased unemployment, which further reduces spend in the economy, I see that we still have serious problems to overcome before this economic perfect storm is over.
The retailer
Terry Duddy, chief executive of Home Retail Group, which owns Argos and Homebase
I don't think the recession is over, not at all. I would need to see a lot more evidence than in just one quarter. Argos is still in negative like-for-like sales. I would like to see both Argos and Homebase in positive territory before I would think it has got through to the consumer. We would like to see a fantastic Christmas happen first and that would convince us. Above all, it is the disposable income and lower mortgage payments that is helping people. What people have not seen yet is the circumstance where unemployment is really starting to bite, which would impact on consumer confidence.
The investor
Simon Murphy, Fund Manager, Old Mutual Asset Managers
The equity market probably bottomed in March and, as the market cycle typically leads the economy by a few months, we should be able to look forward to better economic times ahead. Activity fell rapidly following the collapse of Lehman and as excess inventory was worked through it is difficult to see levels staying so low for long. The economy is very sensitive to movements in interest rates – currently at historic lows – while sterling weakness benefits exporters. Manufacturing, housing and consumer confidence are improving. Fiscal stimulus plans will provide a boost later in the year when money gets spent.
The academic
Dr Danny Dorling, Professor oF Human Geography, University of Sheffield
It makes no sense at this point to talk about the end of the recession. We won't know for another six months whether this is going to be a short recession like those in the 70s, 80s or early 90s or a fully-blown depression like that in the 1930s in which there were many moments where people thought they saw green shoots and predicted the start of a recovery. There were lots of false-start "recoveries" in the early 1930s. We won't know till the end of the year whether this one is going to be longer and deeper than anything since the 1930s. This is uncharted territory.
The adviser
Peter Sargent, president of R3, the association of business recovery professionals
I am not sure about these so-called green shoots. Between 1 October and the end of March our telephone was red hot, but then it started to get quiet and this continued in April and the first half of May. It was as if the economy had fallen off a cliff, but had landed on a ledge and was deciding what to do next. But in the last few weeks we have been busy. It is a lot of small and medium-sized businesses. We are still seeing a lot of construction and anything related to property. The problem comes when businesses are over-geared and they cannot cope with a slight decline in sales.
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Firozali A. Mulla
So what is the difference? Not a lot, just different names for the same plagues.
Unemployemnt, (the people's recession), is a lagging indicator. There are many reasons why this is so, but one of the reasons that appears to have been overlooked relates to the attitudes of employers. When times are tough, it is easy to blame a fall off in business on "the recession". Because staff are expensive to recruit and train, most employers will try to hang on to their existing staff. However, once the economists' recession is over, (i.e. when output starts to rise again), many employers will find that their business has gone down, full stop, and that this had nothing to do with the recession. This is when they will have to engage in redundancy exercises. Meanwhile, employers who have seen an increase in their business may be reluctant to hire becuase they fear that the recovery may be only a temporary blip.
Isn't that what they said in 1931 and 1932 and 1933 ....
The Second Great Depression has hardly got started yet. Just wait for constrained oil supply, higher energy prices and the continuing meltdown of the US economy to take their toll.
The reality is the consumption party that has raged in western societies for the past 40 years is over. But no mainstream economist or newspaper will ever admit that. Well, not until it plainly obvious to everyone.
Pall bearers prepare to take the coffin carrying the body of 46 year old Anthony Visage, to his funeral service. It is as always a sombre and respectful occasion and in instances like this attended by virtually nobody. Mr Visage died homeless and alone. There are no family nor friends at the service. The only person paying her final respects, the only person to care at all is council officer Kerry Cosgrove.
Miss Cosgrove is a Funerals Officer; her job to identify and trace the families of the increasing number of people in Britain who die alone.
She is part investigator and part professional mourner. If she cannot find the families she arranges the funerals and she always attends.
Her job seems strange to most of us but to Kerry it has become a work of remarkable personal significance.
"I sometimes feel that I am the last person to care. But it is important. It is interesting tracing the identity and finding the families of these people and if I can't them I feel it important that I mark their lives. That all of us matter," she told me.
Lorry Driver Jailed For Sex With Girl, 15
A lorry driver who had sex with a 15-year-old girl he met in an internet chatroom and then took her to France has been jailed for five years.
Robert Williams, of Whitburn, Scotland, was sentenced at Grimsby Crown Court after earlier pleading guilty to child abduction and sexual activity with a child.
The court heard the 49-year-old was on bail at the time of the incident in January this year after a complaint about a similar incident involving another teenage girl.
The father-of-three was arrested in late 2008 after he met a 16-year-old girl on the internet and travelled from Scotland to Sussex to meet her, the court was told.
'Child Sex' Nursery Worker Jail Van Attacked
An angry mob has attacked a prison van carrying a nursery worker charged with sex attacks on children as it drove away from court. Vanessa George was remanded into custody after appearing in the dock accused of sexual assault and the distribution of indecent images of minors.
A crowd that had gathered outside Plymouth Magistrates Court screamed abuse as the vehicle carrying her drove past.
A missile that seemed to contain flour was thrown and at least one member of the public was led away by police.
George, 39, was arrested on Monday after police swooped on her home in Efford, Plymouth, and at the nearby Little Teds nursery.
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Firozali A. Mulla
One in 10 home-owners was in negative equity during the first quarter of the year, according to the Bank of England.
The Bank estimates that between 7% and 11% of people with a mortgage owed more to their lender than their property was worth, the equivalent of between 700,000 and 1.1m households.
In addition, around 200,000 buy-to-let investors are also estimated to have owed more on their mortgage than their property was worth.
One in 10 home-owners was in negative equity during the first quarter of the year, according to the Bank of England.
The Bank estimates that between 7% and 11% of people with a mortgage owed more to their lender than their property was worth, the equivalent of between 700,000 and 1.1m households. In addition, around 200,000 buy-to-let investors are also estimated to have owed more on their mortgage than their property was worth.
Osama Bin Laden Is In Pakistan: CIA Chief
The CIA director has said he believes al Qaeda leader Osama bin Laden is hiding in Pakistan. US intelligence chief Leon Panetta was asked by reporters whether he was sure that Bin Laden was in Pakistan.
Ben was stabbed 11 times in a north London street, once through the heart, on June 29 last year.
A jury at the Old Bailey convicted 20-year-old Jade Braithwaite, 19-year-old Juress Kika and Micheal Alleyne, 18, of the murder.
After the verdicts, it emerged Kika had been on the run from police for 10 days following a robbery in which a man was knifed on June 19.
Alleyne was being supervised by the local youth offending team as part of an 18-month detention and training order for drug dealing.
The court's decision was greeted with shouts of "yes" from members of the Kinsella family.
Gordon Brown?s Communications Minister, who was made a peer after a brief period in Number 10, is to leave the Government,
I thank you
Firozali A. Mulla
His concerns are that exports drove japan out of their decade and the world cannot rely on that.Most interesting were and i'm afraid not on the link the charts showing paths of recovery.He clearly is worried about the liquidity trap and it is interesting to see how difficult a way out of this is.My own view is it will be inflation devaluing debt .He also made interesting points about the Uk/us getting away more lightly even though we were the causes, the moral problem of the good being hurt more.I am not a Krugman fan usually as he often shoots from the hip but I guess when you are at the LSE you have to think it through better
Ray Barrell, director of forecasting at the National Institute of Economic and Social Research (NIESR) is about the only observer that thinks quantitative easing is working, or at least that it is demonstratably seen to be working. Last week the Bank of England produced figures showing a fall of nearly 5 billion in private nonfinancial corporations. Half the gilts bought in by the BoE has come from overseas, so it is not surprising that the effects are yet to be observed. Agreed interest rates at historical low levels will start to stimulate the economy, but the increase in car production mentioned in the article possibly stimulated by the low value of sterling and the Germany car scrappage scheme are probably more hopeful signs. I still think we are just close to the end of the de-stocking phase of a W shaped recession, at best.
http://www.youtube.com/watch?v=Zo7GOsXp
There is no point looking at local indicators of recovery.
In a global economy, the rest of the world (USA, China) need to show signs of recovery - then we can say that there are signs of recovery. Many feel that there are signs in the USA and China, so it seems so.
Here's what we can look forward to, a summer recess, maybe some fine weather, in October Brown will declare the recovery in full swing at the party conference, the media will follow suit cheering all the way, the markets will boom.......
....And at this point I would get out if I were you if you wanted to play ultra safe. Sell the lot, buy gold and sit tight. If you want to play to the wire then hang on in there until after Christmas and as optimism reaches ridiculous heights during the Spring election campaign sell up.
Post election will be hangover time, either raging inflation or a market collapse or both as the recovery loses steam rapidly. Because the only recovery Britain can experience is debt based, manufacturing accounting for only 12% of the economy is harldy worth bothering with. It's a bit like cheering for Bolton Wanderers.
Cameron will lose his nerve and not make any cuts in spending. So where the economy then heads is anyone's guess, but at least you can watch the gold price rise.
A gentleman I know started a small software company based on his skill as a programmer. He has a real talent for programming languages, a good feel for what the market wants, and the resultant ability to produce specialty applications for select large companies. He also has keen business sense, an excellent ability to market his company's capabilities, and has earned an enviable reputation for quality and innovation. He has built a network of contacts among the top levels of his biggest customers. He has been able to see new trends coming and has been agile enough to adjust to take advantage of them. As his company started to grow beyond the "three guys in a garage" stage, he found himself spending more time running the business than writing programs. So he hired a friend to manage the company so he could continue programming. He quickly learned that managing a growing company requires more skill than just friendship with the founder. He took the unpleasant, but necessary, step of eliminating the manager and resuming those duties. I met him several (no growth) years later. He was continuing to struggle with his dilemma of running the company or continuing to program. He was doing both, but was concerned that he just didn't have the time or energy to do both of them well. In under a year, I had helped him more than double the size of the company. It was a move that provided new possibilities at the same time as a watershed change in the industry provided new opportunities. He chose to retake full control of the business himself.
A couple of years later, after turning the company to a dramatically new course, he again stepped aside and again brought in professional management. The company has been very successful in their new market. And the founder again may find himself facing the decision of how much control he is willing to sacrifice to continue to grow. Will this be the time he surrenders majority control of the voting stock in exchange for a top-caliber management team? Or will he decide that his current reward from the company is adequate for his needs?
That is the division of labour. From making the head of the pin. A seminal work: an often misinterpreted work: and an indipensable source of administrative theory."
He who postpones the hour of living is like the rustic who waits for the river to run out before he crosses. -Horace, poet and satirist (65-8 BCE)
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Firozali A Mulla
http://www.alternet.org/bloggers/http:/
Sen. McCain Joins us again to announce another in a series of his secret plans to improve upon Our Leader's greatest achievements.
Thank you, General. I'm finding that this electrical typing pamphlet thingy is one of my most effective methods of communication. It even beats the hell out of the Hannity show I do on the Marconi wireless thingy.
Yesterday, I announced my plan to fix the economy by the end of my first term. I didn't release much in the way of details, because it's a secret plan, just like my secret plan to capture Osama bin Laden by eradicating the immoral salmon. The reason my plan is so secret is because it doesn't use numbers. People don't like that. They say it's insane not to use numbers as the basis of an economic plan. I disagree. I think of it as being a bold gambit, a demonstration of the kind of strong leadership I will exercise as your president. Much like the leadership the current president demonstrated when he invaded Iraq to show a handful of Saudi terrorists and his father that he means business. A successful CEO...
1. Understands the vision -- and can articulate it to shareholders, management, employees, and customers.
2. Macro manages -- is not embroiled in operational details.
3. Follows industry trends -- an avid reader who knows what is happening outside the company.
4. Hires a strong team -- and lets them do their job.
5. Always has the customer in mind -- and regularly keeps in touch with them
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Firozali A Mulla
The timing of the announcement, made before the markets opened in Asia, was meant to warn broker-dealers, hedge funds and investment advisers to quell any spreading of rumors before trading started Monday.
The S.E.C. has been engaged in an internal debate over what kind of investigation to mount with respect to rumors. The turbulence in the markets last week, with rumors adding to concerns about fundamentals affecting commercial banks, investment banks and the government-sponsored enterprises Fannie Mae and Freddie Mac, sped the decision to begin the examination and make it public.
Americans' retirement plans have lost as much as $2 trillion ? or about 20 percent overall ? in the past 15 months, Congress' top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.
"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."
martinet
PRONUNCIATION:
(mar-ti-NET, MAR-ti-net)
MEANING:
noun: A strict disciplinarian.
ETYMOLOGY:
After Jean Martinet, an army officer during the reign of Louis XIV in France. He was a tough drill master known for his strict adherence to rules and discipline. He was killed by friendly fire during the siege of Duisburg in 1672.
USAGE:
"Many people believe the agency acts like a martinet. They say the agency is hard-headed and hard-hearted. They say it is dictatorial and unyielding."
APA Motives Commendable; Press-Republican (Plattsburgh, New York); May 11, 2009.
A THOUGHT FOR TODAY:
Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. -Elie Wiesel, writer, Nobel laureate (b. 1928)
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Firozali A Mulla
The money is stashed with the family.
Madoff fraud losses led to suicide, inquest told
A former soldier shot himself in the head because he could not face the shame of going bankrupt after becoming a victim of the multibillion-dollar Bernard Madoff fraud, an inquest heard.
William Foxton, 65, was found with gunshot wounds to his head in a park next to the magistrates' court in Southampton on 10 February. His body was found on a bench with a 9mm Browning pistol in his lap.
The Southampton coroner recorded a verdict of suicide.
END THE KAPUT SE GONE
WUTH THE FACE CREAM THAT MAKES YOU FAIR MERCURY IN IT DO YOU KNOW? Military-style operation is to hold the person, tie him/her and do the face lifting. Is that what is for £19.75 No7 Protect & Perfect Intense Beauty Serum can be found on the shelves of Boots? And as of today, it becomes the first anti-ageing cream scientifically proven to eliminate wrinkles. To call this scientifically proven to eliminate wrinkles. You reporters need to verify, see the old women of 54 turn to 25 then report. I think you are as barmy as this man and Boots advertisement. The Indian Ayurvedic does the same for one Rupee and it never works. You are to buy the jar and apply for 40 days and go to the medicine man who gives your skin clolour back. Is Boots giving that sort of guarantee? No. Do not venture into fat busters and the new age cream they do not work I swear.Room for Debate: Where Does the Fish Come From? - A Running
Commentary on the News
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Firozali A. Mulla
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Russia ...Mongolia ..
Aside from plunging wool prices, the economic slowdown in countries such as South Korea means that the tens of thousands of Mongolians working there are sending less money back home to their families, or even returning home after losing jobs.
Born in 1856, Taylor began work at age eighteen as an apprentice to a pattern-maker and as a machinist. A few years later he joined the Midvale Steel Company as a laborer, and in eight years rose to chief engineer. During this time he developed and tested what he called the "task system," which became known as the Taylor System and eventually as scientific management. He made careful experiments to determine the best way of performing each operation and the amount of time it required, analyzing the materials, tools, and work sequence, and establishing a clear division of labor between management and workers. His experiments laid the groundwork for the principles that are expounded in this essay, which was first published in 1911.
prisoner in jail receives a letter from his wife: "Dear husband, I have decided to plant some lettuce in the back garden. When is the best time to plant them?"
The prisoner, knowing that the prison guards read all mail, replies in a letter: "Dear wife, whatever you do, do not touch the back garden. That is where I hid all the money."
A week or so later, he receives another letter from his wife. "Dear husband, you wouldn't believe what happened. Some men came with shovels to the house and dug up the back garden."
The prisoner writes back: "Dear wife, now is the best time to plant the lettuce."
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Firozali A. Mulla
Group of Eight finance ministers avoided a reference to bank stress tests in an initial draft of their meeting communique on Saturday despite calls for Europe to follow North America's lead and publish test results.
The issue was one of the more controversial subjects going into Saturday's meeting in southern Italy and officials said deputies preparing the communique debated the issue late into the night.
But officials said Europe resisted demands from Canada and the United States to commit to publishing results of the tests, aimed at verifying how ready a bank is to resist major shocks, saying they needed first to reach agreement amongst themselves.
"It's this whole debate now that we're having at the moment, and we're not going to reach a decision tomorrow (Saturday) on it," Lagarde told a briefing at a meeting of finance ministers of the Group of Eight countries.
"That's what we're going to explain nicely to the Americans."
Results of "stress tests" have already been published in the United States and Canada -- a step seen as giving greater clarity to investors on the extent of underfunding at banks.
But Europe's leading powers are divided on publishing results of tests that vary and are run by different regulators and processes.
"There is more to be done in Europe (on stress testing), they should publish at least their systemic results," Canadian Finance Minister Jim Flaherty said on Friday.
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Firozali A. Mulla