'This is the worst recession for over 100 years'
Ed Balls, the PM's closest ally, warns that downturn is ferocious and says impact will last 15 years
Digg
del.icio.us
Facebook
Reddit
Google
Stumble Upon
Fark
Newsvine
YahooBuzz
Bebo
Twitter
Independent Minds
Britain is facing its worst financial crisis for more than a century, surpassing even the Great Depression of the 1930s, one of Gordon Brown's most senior ministers and confidants has admitted.
In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies.
Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."
He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible".
The minister stunned his audience at a Labour conference in Yorkshire by forecasting that times could be tougher than in the depression of the 1930s, when male unemployment in some cities reached 70 per cent. He also appeared to hint that the recession could play into the hands of the far right.
"The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years," Mr Balls said. "These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy."
Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls's predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown's closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict."
The minister's comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today's Independent, Mr Darling said his plans for shoring up Britain's finances included "measures to insure against extreme losses" as well as separating out impaired assets into a "parallel financial vehicle". Unemployment figures out tomorrow are expected to show the number of people out of work has passed two million. The Bank of England's quarterly inflation report, also released tomorrow, is expected to include a gloomy forecast for economic growth.
Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years".
Speaking to Labour activists in Sheffield, Mr Balls conceded that the Government must share some of the blame because it had failed properly to control the banks. But he accused the Tories of blocking Labour's attempts to tighten financial rules.
He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks of the dangers being run in our financial institutions – absolutely right."
The other great depressions
*Long Depression, 1873–96
Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz's first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In Britain, it was the rural south rather than the rich cities of the north that suffered. The UK ceased to be a nation that relied in any way on farming for its livelihood.
*Great Depression, 1930s
The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.
View all comments that have been posted about this article.
Offensive or abusive comments will be removed and your IP logged and may be used to prevent further submission. In submitting a comment to the site, you agree to be bound by the Independent Minds Terms of Service.
- Print Article
- Email Article
-
Click here for copyright permissions
Copyright 2009 Independent News and Media Limited
Comments
We need George Bailey to rescue us from these devils.
Don't forget Labour, historically, have always performed dreadfully when it comes to the bad times. In the good times they are considered successful, but once the bad times come along....
I'll take the Tory way over the numpties we've got in charge of economy any day! :)
Roll on the General Election.
Perhaps Ed's working on the principal that no one believes this government any more, so we'll actually believe the opposite and start spending again, today!
What is coming is akin to a reversal of the Industrial Revolution, but will be much more traumatic, since it will come at lightning speed. Unfortunately, most people are still oblivious to the all the fundamantals and still think the system has a future and will provide for their needs.
Needless to say, the 'solutions' to this mess -permaculture and powerdown- are not even on the rader for most people.
I do believe the system is showing itself to be defunct, and I further agree that very, very few of us are considering
the idea that the kind of life we have taken for granted for decades is now under serious threat.
Whether permaculture & powerdown are the answers, I'm not qualfied to say. All I can tell you that as this
'recession' grows deeper by the day, I have a deep foreboding feeling in the pit of my stomach.
Get ready for the changes.
Search for 'Revolution, flashmobs, and brain chips. A grim vision of the future' on Google and you'll find the article The Guardian published about this.
Now we've arrived at that point: student fees, huge fuel and food bills, job losses, house price crash, bank bailout that has put us all in debt for 50 years... Squeezed like never before.
Brown and friends aren't stupid. So the idea that they didn't see this coming won't wash. Particularly when so many us ordinary citizens were saying that the house price madness and greed couldn't and wouldn't continue indefinitely.
His Cancellor removed regulatory powers from the Bank of England thus immobilizing their power to monitor use and abuse of financial instruments such as , collateralised loan obligations involving sub-prime markets and securitisations operating outside the banking code.
The country is watching a drowning Government unable to swim, has no life preservers and quickly floundering. Meanwhile, thousands upon thousands are losing their jobs and businesses collapsing.
How much longer do we have to wait before Brown resigns. This is the most incompetent Government of all time and confidence will only return with a General Election.
I guess everyone will 'get it' eventually, but at this point of time it seems that about 0.1% of the population understands, so i'll say it again. Peak oil = declining energy supply = the end of current living arangements.
Research powerdown and permaculture if you want 'soliutions'.
We don't need doom and gloom or panic from our leaders. We need them to get their heads down and work out how we're going to come out the other side. We have a pretty clear idea now about what went wrong. We need to put it right and try to ensure we don't make the same mistakes again.
So let's not have another property bubble and credit binge. And let's forget unsustainable shopping habits. As a country we lost the knack of paying our way in the world. We mortgaged the family silver for a lifestyle we couldn't really afford. Now we're paying the price.
What's going to earn our living as a nation in the future? Certainly doesn't look like banking and financial services does it? Will all the bright sparks who purport to run this country please come up with some ideas. Those who want to spread doom, gloom and depression are prime candidates for the "funny farm".
Let's have some positive mental waves people!
The World is in the worst recession for 100 hundred years is a smart arsed way of stating a depression is or has engulfed us all.
Still Mr & Mrs Balls along with many many thousands of Public Service dignitaries will have ensured they will not suffer the indignity of the modern day worldwide soup kitchen, this honour will go to the millions who have catered for their every whim through pernicious back door taxation NuLabour imposed on us all.
Oh man.
Firozali A.Mulla
Ah ! the good ole days, we miss them.
The Reagan Era is definitely over for sure now. 25 years of illusionary wealth and spending have fooled us all into thinking that we were better off than we truly are in reality. When so many in the Western world used the credit system to better their lives and now that is gone, good luck trying to live off of stagnant wages and salaries that have not improved with the overall cost of living in Britain and especially America. Greed, corruption, easy money, easy credit, arrogance, incompetence, short-sightedness, ignoring the enforcement of regulations, politics before people, irresponsible behavior, evasion of accountability, white collar criminality, all play a part in the downfall of the Western world ladies and gentlemen that we finally see today. I am glad I had the last 25 years to enjoy though. Then next 10 years are going to hurt us all.
To think that we thought we could have everything in the world. What a joke. So many people I know now in America have been laid off from their jobs just in the past three months. Unreal but true. They are out of work.
Somebody needs to go to jail for all of this folks, right? Maybe we should have an international inquiry into the white collar criminal corporate politicians that put us all in this mess that unfortunately really did start in America this time around I am so sad and ashamed to say as an American.
But Revolution is a must. Governments have to start representing the people and not corporate interests or banking interests first and foremost as they have done......forever. But then again, the people must rise up and sustain this rise to force those from political office who betrayed us all. The Fall of the Western World is upon us ladies and gentlemen and Osama bin Laden is sitting back laughing at all of us my friends from across the Pond. The Third World and Developing World and the Muslim World are all laughing at the big bad and arrogant Western world right now who use to tell all of these people "lesser" than us, what to do to have a great free market system like ours..... We did not tell them though, that we all live on credit for the most part with stagnated wages and salaries....right? We did not tell them that the corruption we tell them to avoid is what we have always had in the Western world between our corporate politicians and their masters in the corporate interest sector of true Capitalism. We did not tell these lesser folks, how morally hypocritical we all are now, did we? Who is looking down on who now my friends? We are heading to be just as poor as they are now. How smart then do we look to finally be heading in their direction that they have always been in with their corrupt politicians keeping the people poor and struggling???
I just turned 43 years old and that is still young in America for the most part. However, I don't see a future for myself and I have TWO master degrees and have just lost my job three months ago. I am out of work with no prospects.... I am super angry at my government in America. Livid actually. Maybe Obama will fix everything, maybe he won't. I hate this time we are all in now and my heart goes out to those suffering in Britain too. Because in America, we are suffering, mates, like never before, trust me!
God bless the good souls of the world who get harmed by the wicked.
Sincerely,
Dan Brinkman/USA
Or not. Maybe we should just continue complaining, get a few apologies from politicians and chuck some bankers in prison, change governments and wait for everything to get back to normal. I'm certainly looking forward to the Tories turning the situation around, and making Britain Great again with their forward-thinking, proactive policies. And to buying a humongous new flatscreen for the bathroom.
Since September 19, 2008, I have been shouting to anyone I could reach that this is going to be a "Civilization-Destroying Depression."
Apparently, no one in the United States has listened. Billions of dollars are still flowing into the hands of the very people who created this mess: The thieves = Wall Street Bankers and Securities Brokers aided and abetted by the United States Securities and Exchange Commission (SEC), and the private Federal Reserve Bank (The Fed).
There is only one course of action to forestall the utter collapse of our civilization: All consumer debt must be canceled immediately. All mortgages; credit card, and car loans, etc., CANCELED.
The aiders and abetters are saying that we must create money to give the bankrupted banks so they can begin financing business and consumer spending. What utter nonsense.
Business and, more importantly, citizens are buried in debt for stuff they were talked into buying so banks and investment "experts" could package up huge blocks of overburdening debt, as derivatives, and sell them to foreign and domestic banks and assorted investors without disclosing the fact that consumer debt levels were beyond saturation and that the ability of people to pay their debt would be soon collapsing.
These same "experts" were telling people that the real estate market was rising; the stock market was rising, with no end in sight. They were told to "refinance your homes; buy another and you will be able to sell it before the adjustable rate mortgage kicks in, in this red-hot market! BORROW, BORROW, BORROW!!! Do it now! DON'T MISS OUT. Millions of people believed them. After all, bankers and brokers wouldn't lie! They had the mighty SEC policing the markets! What could possibly go wrong???
Well, it was all a lie. The SEC and The Fed were the "friends of the thieves" and the absolute enemy of the unwitting, trusting, American citizens.
Everything, that could possibly go wrong, went wrong all at the same time.
The absolute proof that the SEC; The Fed, and the bankers and brokers were in cahoots, in creating this mess, is the fact that they persuaded the U.S. Congress to gut the one powerful law that citizens could use to keep the banks and securities industry in line, Title 18 U.S.C. Section 1964(c).
In 1995, the Congress placed a little "exception" in that law that stripped all persons swindled, by banks and brokerage houses, of the power to sue the swindlers unless and until the United States first obtained a criminal conviction against the defendant.
That is precisely why, after 1995, virtually all financial transactions were morphed into a "securities transaction" escaping the reach of the people they would swindle.
Further, after 1995, the SEC would simply refuse to investigate and prosecute those who were stealing the world blind.
I don't know what will be done in the UK. But, as for the U.S., we must cancel all consumer debt; allow the corrupt banking and brokerage houses to collapse; recover all of the money given to them, thus far, under the TARP boondoggle, and prosecute the criminals in and out of government.
Just thought you should know why your citizens will soon be cold and hungry, as will ours.
Questions:
Will they now withdraw all the funding from all the ID Card, surveillance and database programmes, diversity programmes such as Outreach etc, all the funding for Browns' foreign pet projects, including the EU?
Will Local Councils stop funding their petty, oppressive and insidious spying on the people who pay their wages and get rid of all the Stasi?
Will Common Purpose training now cease across the whole of the public sector and the BBC?
Everyhting is cyclical and the parameters of this cycle indicates that Balls disclosed reality, unlike the other shysters and a dootiful meeja
You've seen nothing yet.
2. Is there not as a matter of national emergency, massive switch of resources out of corporate welfare wars, fraudulently claimed snouts' expenses, and other misuses of public money into education, education, education, of the only exploitable natural resource we have left : underdeveloped people?
THINGS ARE GOING TO GET BETTER, MAYBE NOT INSTANTLY BUT WE JUST NEED TO CUT OUR CLOTH TO WHAT WE NEED TO SURVIVE AND LET 'MUST HAVES' AND THE GREED GO BY THE BY.
WHAT IS A 'MUST HAVE' ANYWAY. SOME FRIPPERY THAT IS NEITHER USE NOR ORNAMENT, DOES IT HELP YOU KEEP HEALTHY, PAY YOUR BILLS? I DON'T THINK SO.
LOOK FORWARD! AND MAKE NECESSARY CHANGES TO YOU LIFE STYLE TO CUT ANY WORRIES THAT YOU MIGHT HAVE, AND LEARN THE LESSON THAT IS BEING GIVEN BY THIS LATEST RECESSION.
WHICH IS DON'T OVER STRETCH YOURSELF MONEY WISE, SAVE FOR THINGS YOU NEED DON'T USE CREDIT CARDS. DON'T PAY EXORBITANT MORTGAGE PAYMENTS IF YOU HAVE TO GET A HUGE MORTGAGE TO BUY A HOUSE DON'T DO IT, WAIT TO GET ONTO THE PROPERTY LADDER, PEOPLE ARE IN TOO MUCH OF A RUSH THESE DAYS SLOW DOWN, THINK THINGS THROUGH, DON'T SPEND MONEY YOU HAVEN'T GOT.
YOU REALLY DON'T NEED EVERYTHING NOW!
Brown inherited a stable economy from Ken Clarke with falling unemployment. The Tories might have contributed to the last recession but at least they managed to conquer it. Brown and Darling are running round like headless chickens.