Recession in the UK: the history repeating…

Recession has come to Britain - open the door!

In brief: Britain returned to the gloomy but stormy seventies, the recession absorbs a great kingdom.

In 1970 I was 6 years old and I remember very little of that time. The collapse of the Beatles walked me to a party, as well as the football World Cup in 1970, and I have only vague memories of that year held a general election, when a Mr. Heath has changed some of Mr. Wilson. The only event that made an indelible impression on me, was the first manned landing on the moon. I still remember those grainy photographs taken in 1969 when Neil Armstrong uttered his now famous words. Then I decided that I would be an astronaut. Then I grew up.

Travelling on a big spaceship in the open space lost to me bygone charm. But nothing on earth I was not attracted. In 1972, my grandfather took me and my brother for a walk around London, and, once on Smith Square, we will have witnessed the case of riots. I watched with amazement as the men fight with the police. I later learned that this was a key point of dockers strike that could paralyze the entire country. Seventies associated with anger and discontent. Oil shocks, strikes, fuel for the card, turning off electricity, reading by candlelight, the endless election, stupid policy, incomes policy, these eerie bell-bottoms, and, worst of evils, terrible music. No economic and political suffering does not compare with the Bay City Rollers, Mud, Showaddywaddy and Donny Osmond. Decade was torture on many issues. The more I think about it, the more begin to fear that we will again return to its former dark times. However, we must admit that the music has changed for the better (although I’m not sure that I will have to taste all that pumped into the iPod of my daughters). In other areas the situation is developing in alarmingly familiar pattern. This applies not only to defeat England in the match against Germany at the 2010 World Cup. As in the 70′s, it seems, our economy has lost its true course. Just a few years ago, many politicians and various other custodians of our economic destiny were sure that you have found the elixir of economic success, something like “speeding up scientific-technical revolution” of Harold Wilson in the mid 60′s. However, it appears that, as Mr. Wilson in his time, they were mistaken. Ultimately, the footboard Wilson held up the economy, which has been unable to fulfill all the grandiose promises of the Prime Minister. Britain had lived beyond its means, constantly stepping on the same rake – balance of payments crisis, which led in 1967 to the humiliating devaluation of the pound and vague, in most cases, kidding about the “pound in your pocket”.

Subsequently, the various policies offered a lot of decisions quickly. Conservatives found themselves in the majority in the early 70′s, organized a huge boom, which then turned inflation. Others have seized on the speech Powell monk in 1968, which was titled “Rivers of blood”. The sharp, accusatory, about racism, it has warmed more anti-immigration sentiment. I wonder if Powell’s idolized in contemporary Arizona? At the head of Labour Party did not know what to do. Some proposed to leave the EU and to establish new trade barriers. The challenges on the left side of the Labour Party wanted to nationalize everything, while others, on the right side, felt it was time to reduce public spending. Meanwhile, in the ranks of the Liberals was a mess, mainly because it all happened in suspicious circumstances.

Then what’s the similarity, you say? The thing is that we again do not live within its means. Now there is no crisis of balance of payments. But we have a debt crisis, which greatly weakened the effectiveness of the financial system, had violated a confident position of households and forced the new government introduced austerity measures of this magnitude, we have not seen since 1977, when the IMF persuaded the Labor government led by Jim Callaghan on the “draconian “reduce costs. In response, the government Callaghan, faced with a vote of no confidence, was forced to conclude a deal with the Liberals. Nothing reminds? Financial markets welcomed the budget, George Osborne with great enthusiasm, the pound rose, the yield on corporate bonds declined. But Miinstru Finance has yet to disclose details of its “draconian” spending cuts. The strategy is clear: a few months to prepare voters to the terrible truth, which will become available on October 20, when they open many more full report of the Government on public spending. Frankly, the government has no choice. In the UK a difficult financial situation, least of all we need now visits charming women and men from the IMF, offering their assistance. Why then were needed general election? None of the parties would not win because of the financial strings pulled to the IMF, and not Parliament.

But here there are obvious risks. The public sector remains tightly controlled by the unions. Conduct a significant reduction not only – in British Airways know this firsthand. The scale of reductions in some departments of the British government simply stunning. Reduce costs by 25% or more will require a combination of such qualities as resourcefulness and absolute brutality. How much grief have yet to experience the country? The police have already been brought to white heat. It is not that a coalition is made up of weird set of participants, just this government, as in the 70′s, has no authority to promise tough action. Before the election, each political party has made every effort to convince us of their willingness to defend the basic social institutions. Honest talk about the scale of cuts was completely useless.

Full account of expenditure will soon be ready and obnarodova. Will it be accepted with unanimity, or we wait another political squabbles? Callaghan and Denis Healey, the Minister of Finance, in the end, were forced to call in the IMF in 1977, since the Cabinet could not reach a consensus to reduce costs. At this time, we have plenty of time to find the right answers, and complete fully the political obstacles that most likely may encounter on our way. While the government was forced to struggle with significant financial profligacy, the Bank of England also speculated on what to do next. In addition to the recent expansion of authority, which allows you to focus on achieving not only price, but also financial stability, the central bank will continue to seek new tools for the task. In the 70′s attempted imposition of a rigid framework to curb the growth of debt, tentatively called “corset”. She brought no results (as a rule, corsets designed to camouflage rather than correction redundancy). Today, conversations are just about new reasonable rules in macroeconomics and capital adequacy ratio for banks. It may be that these funds will result. However, they are suspiciously reminiscent of the old “corset”. According to statements of the Bank of England, to “Corsets” was to encourage the change of direction of banking operations. Will anything this time? Nevertheless, it is hoped that, despite the threat of unrest and discontent, we will avoid repeating the worst episodes of the 70′s. No more power cuts since the bulk of it comes from France. No more awkward muttering at the school disco to the sound of Leo Sayer and “When I Need You”. Of course especially to the improvement is not worth waiting, but also prepare for the worst is still early.

Ukrainian Globalist
2010-07-25 13:38, Economics.

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