http://informationc learinghouse. info/article2196 5.htm
'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
By Nigel Morris, Deputy Political Editor, and Sean O'Grady, Economics Editor
February 10, 2009 "The Independent" -- 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.
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--- On Tue, 2/10/09, John Churchilly <[email protected]> wrote:
Fr
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