De-constructing the recovery
Is there anything fishy about Britain's recent GDP numbers? At least one economist thinks there might be. To be precise, he thinks there might be a problem with the figures for the construction sector, which has accounted for an unusually high share of Britain's recent growth.
I hesitate to get into this, having got embroiled in a similar debate about Britain's official output data this time last year (see my post Small difference: Britain's third-quarter GDP). You'll remember, at that time, many economists thought the economy was stronger than the official numbers implied. The numbers for the third quarter were considered especially dubious. Everyone was expecting the numbers to show positive growth - instead they showed the economy continuing to shrink.
At that time, Danny Gabay, of Fathom Consulting, was one of the few economists prepared to stand up for the ONS. The preliminary GDP data weren't perfect, he said - but they were better than anything else out there. Since then, the official estimate for growth in those three months has jumped around a bit, but the official story is still that the economy shrank by 0.3% in the third quarter of 2009. The first estimate was of a decline of 0.4%.
Perhaps the numbers will be revised up sharply in a year or so, as the critics suggest. The point is that Gabay is not usually one to knock the ONS. But the construction figures for the past six months have him a bit concerned. If he's right, that would suggest the recovery has not been quite as strong as we thought. Construction has accounted for 40% of the UK's economic growth in the past two quarters, even though it accounts for just 6% of the economy.
The figures show real construction output has been growing at an annualised rate of 27% since the beginning of April. A number of explanations have been offered for this: for example, companies had to catch up on the ground lost due to bad weather in the first quarter. Some have also pointed to a flurry of public construction projects in the months leading up to the election.
But we're not just talking catch-up. I'm not sure public investment can explain it either. After all, the figures show the construction sector making up all of the ground that it lost in the recession, in just those two quarters. After the last recession it took 11 years (see chart below).
Is that plausible? The man from Fathom is not so sure, for three reasons.
First, there's the surveys, like the PMI. These do suggest a sharp rebound this year, but they are still well below their long-term averages, and Gabay notes that the PMI has actually decelerated since April.
Second, and more curious, you can look at the labour market figures, to see whether this construction boom is leading to a similar jump in employment. The answer is not really. Instead the official numbers show each worker suddenly becoming enormously more productive.
Now, it's perfectly usual for productivity to rise sharply coming out of a recession, as output comes back faster than jobs. Manufacturing productivity is now 7.5% higher than a year ago (it fell sharply during the recession because, as I've discussed many times, output fell much further than employment). But the construction sector is streets ahead, with a 13% increase in output per head.
You have to wonder whether one of those figures - either the output, or the number of heads - might be slightly wrong. It's not beyond our wildest imaginings that construction companies might, shock, have people working for them that they don't tell the ONS about (or the tax man). But it's not clear why they would be doing this a lot more than they did, say, two years ago. As the chart below shows, these productivity figures are much stronger than in any recent boom.
Finally, there is the awkward fact that the ONS has just changed the way it measures construction output, with the introduction of a new, monthly, output survey. The new survey got its first outing in - wait for it - the second quarter of 2010, the same quarter in which construction output jumped by nearly 7%. The ONS clearly think the new series is reliable, or they wouldn't have introduced it. But, having not used it before, they can't say for the sure that it's not made a difference.
It's possible that Britain is in the middle of the biggest construction boom in recent memory. Given the lead-times on construction, you'd want it to lead the recovery rather than lag, and there are some enormous buildings going up in the City. But has the sector really make up all of the ground lost in the recession in just six months? I leave it for you to judge. I'd especially like to hear from people in the construction business, what things feel like to them.
In the meantime, we can take some comfort from this week's very strong manufacturing figures for October - output grew by 0.6%, the strongest figures since March. Happily, Britain's recovery is built on more than construction. It also seems to have some momentum - even if the middle of 2010 turns out to be slightly less marvellous than the ONS thought.
~RS~q~RS~~RS~z~RS~02~RS~)
I'm 
© MMXI
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Stephanie, if you are going to write a story everytime an economist dissagrees with other economists - you will be the busiest yet least productive person in the UK.
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In answer to your question I think there is something fishy with the figures for the construction industry, unless we are spending more on the olympics than we have been led to believe! There are far fewer large housing sites under construction in the South East and as a developer I know that most of my colleagues have either disappeared or are choosing to remain inactive until matters improve. Also small builders may still have work but I would say that generally the volumes are smaller. In 2008-2009 builders used to give the standard response that they have never been busier but now tend to be more honest and admit that they are not - there just is not the same amount of work out there. Don't forget less work means more competitive pricing- does this lower GDP? House price falls (just starting - more to come)and lack of bank lending or expensive lending rates to finance development projects and mortgages is not helping my sector one bit.
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Good detective work! No offence to Gabay, but I hope he's wrong... we need all the help we can get right now.
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There should be little surprise, the government is in the business of keeping everyone in good spirits as they continue to support the wealth of bank stockholders. These numbers are of little matter as it is unemployment that should be the measure. All the different rationales given for bailing out the banks continue to fall flat.
The answer may be in understanding bureaucracy. The stimulus, remember the stimulus, is finally hitting the streets. It take a bureaucracy about two years to run any project over the multiple desks and departments and actually result is something getting done. The election set the process back as new "friends" would be feeding at the trough.
One day the policy people will understand that when the middle class has money to spend the economy will do well. Very simple, but the political have been moving the money upwards and profess that big business can produce jobs when there is no one to buy the products....interesting economics...not real economics, just continued robbing of the middle class. At these small percentage increases are projected out, things will get better in about 100 years....encouraging.
Leadership does not walk on a banker's leash.
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Steph I can usually work out which angle you are approaching a topic from, this one I cannot and therefore congratulate you on a well balanced approach.
We all know about statistics but if a method is changed there can be no correlation to previous results (unless some one as worked out a sliding factor, because in all probability it will be based around a hyperbolic function)
Here in the West Midlands it appeared that all construction of new house stopped about 12/16 months ago and only the ones that had buyers completed. If there was free land it was being built upon, so literally there was houses in various stages of completion. These seem to have now been quickly completed, so there are or appear to be many new unoccupied properties about but for 20K lower than the originals. (I bet they feel sick if they bought one of the originals)
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To and from work, I walk along London South Bank and up towards the Square Mile. Over the last few years I have seen major building projects become paused, delayed or allegedly mothballed. They have then recently come fully alive again- the Pinnacle, ‘Cheese Grater’, 'Walkie Talkie' etc, and with the Shard now starting to tower over London Bridge, it certainly seems like a boom for construction (in this hot part of London anyway!).
Could it be that construction projects of size, take so long to move from inception to completion, that we have seen some sort of 'backing up' or pressing ‘pause’, that has then been released the moment the environment has seemed more stable? Could this at least account of some of the rebound?
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You are right. There are problems with the construction data. But you have to see the problems in two parts. The old series data and the new series data. It is inconvenient that they should have changed at a period of such volatility
Some moves have been made to improve the new data series that resulted in a sharp revision downward in the second quarter from 9.6% to 6.8%. This has not yet fed through to the GDP figures but will shave about 0.2% off the second quarter.
There is also a fair chance that the third quarter construction figure will be revised down from its current 4% growth.
This would still leave us with pretty spectacular growth, but not totally unbelievable, as the rebound from the recession has been more coordinated than has been the case in the past, as was the collapse in workload - the perculiar effects of the impact of the financial crisis followed by the stimulus.
Normally speaking there are greater lags between movements of the various construction sectors in and out of recession. The net effect is increased volatility.
Add to this the coincidence of the bad winter coming at the bottom of the recession and at a stretch you can almost accept the figures.
A further factor is that the new series is more heavily weighted towards new work, as oppose to repair and maintenance. This would also tend to make the new series more lively than the old series, so historic comparisons don't necessarily hold that well.
But that is the growth rate out of recession, we then need to look at possible problems relating to where we are (the level). It is, in my view anyway, highly likely that the old construction series under reperesented the size of the boom. Without going into too many details, this was a result of issues with the labour force data used to scale up that series for unrecorded output (measuring migrant labour is tricky).
Calculations I have done for brickonomics suggest the under-recording could have been some £billions.
The effect of this would be to make the bounce back look more impressive within the series than perhaps it is.
Still, while there are plenty who doubt the accuracy of the figures, it is the best we have and the good folk at the ONS are trying hard with a horrible job to get the series in shape.
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Suspicious government figures - surely not. Buy physical silver and bust them.
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Having contacts relating to construction but not being involved in it I can say that construction is not seen as being on the up in this region. Support services such as electrical work are still a matter for concern. There is clearly overcapacity. Housing still is problematic. I would suggest that the idea we are in the biggest construction boom in recnt memory is a bit optomistic. The job market is apparently nonexistent which leads to further query. I gather the average town has several thousand unemployed. The latest figures for housing mortgages are dismal. If the man from Fathom can't fathom it then it must be, well, unfathomable. Just raises more questions about the reporting of it all doesnt it.
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Many have questioned the validity of the recent growth figures with the construction sector being the most suspicious because of its extraordinary growth. It may well be dubious as you suggest although some construction industry figures have appeared to back it. However it also reminds me of the way we use economic statistics and I remember a critique of the output figures from a year ago on notayesmanseconomics.
"One factor often forgotten about these numbers is that really they only give you a range within which the economic indicator (GDP) is likely to have been in but this gets ignored and all the focus goes on a single number. In a more logical world the statistics offices of the world would publish a range within which they feel GDP has been in and look to refine this over time or they could publish an idea of the probability distribution of the numbers. Either would be sensible but neither is likely...... Even after several years have passed there is no guarantee that the number is correct, in fact it may never be."
So perhaps we would be better looking at the underlying range rather than a spot figure.
http://notayesmanseconomics.wordpress.com
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Construction output depends on two things:-
1. government spending.
2. housing bubble.
neither 1 nor 2 look at all positive so the only way is south.
To save construction (with all its inefficiencies and very expensive ways of working) will need some QE directly into infrastructure and public housing projects. Perhaps the conversion of the, soon to be closed, rump of the university sector into bed sits would be a start!
The 'Fools of Threadneedle Street' (FoTS - more apt than BoE!) still seem to want to prop up the busted banks rather than spending QE on building assets that have a long term benefit for the Nation.
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5. At 6:20pm on 08 Dec 2010, common_man_123 wrote:
"Steph I can usually work out which angle you are approaching a topic from, this one I cannot and therefore congratulate you on a well balanced approach."
I agree. They're seems to be a little more hesitancy in what Steph is typing, possibly even fear.
Steph needs to approach every story with the mind-set 'the numbers don't add up'. Then I think we'll get a few more stories where the numbers are questionable and conflicting.
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Personal experience this year:
New house building nominal rise.
Domestic extensions and improvements, significant rise, apparently due to people deciding to convert cash into something of value, which in turn is presumably due to a fear of inflation eroding the value of savings.
Commercial building and improvements; flat.
Maybe it's due to extensions and improvements.
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8. At 6:32pm on 08 Dec 2010, truths33k3r wrote:
Suspicious government figures - surely not. Buy physical silver and bust them.
========================
I have still got about five silver dollars that I won in Las Vegas in 1975.
Has anyone any idea how much they are worth?
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This comment was removed because the moderators found it broke the House Rules.
I think you are missing the other part of the puzzle, which is the oncoming change in VAT and the proposed reforms in planning permission. Many unpopular garden grabs, in particular multi-property builds, have started to beat these changes.
That is going to significantly increase the amount of new site work in the short term, before the planning reforms kick in. There should also be a correspondingly high fall off due to the inclement weather over the last month (and possibly into the new year).
The validity of the construction data series will be determined whether it can adequately model these effects.
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http://en.wikipedia.org/wiki/Eisenhower_Dollar
AE if they are the standard Eisenhower dollars not very much as they don't appear to have any silver in them. USA stopped putting silver in the coins after 1964 - a modern equivalent of the ancient art of coin clipping. Now know as the Quantitative Easing of the Ben Bernanke.
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Stephanie you are right to be very suspicious of figures showing a boom in construction. All companies I deal with in construction and associated businesses such as quarrying and cement production are really struggling and are well down on business levels as existed prior to 2007. Furthermore all see great uncertainty from about the 2nd quarter of next calendar year (2011).
The figures certainly feel very inaccurate and over-cooked. The only exception is suppliers dealing with the olympics construction work, but this is now down too as the major works near completion.
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Whatever the true position with construction things can only get worse as the enormous cuts in public sector capital spending impact on the industry's order books. Dont get too excited about manufacturing as it expands and converts part time working to full time but also has to face a weak export market. Then there is VAT in three weeks time!
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17. At 8:40pm on 08 Dec 2010, truths33k3r wrote:
http://en.wikipedia.org/wiki/Eisenhower_Dollar
AE if they are the standard Eisenhower dollars not very much as they don't appear to have any silver in them. USA stopped putting silver in the coins after 1964 - a modern equivalent of the ancient art of coin clipping. Now know as the Quantitative Easing of the Ben Bernanke.
=============================
Thanks for that. I went and found them and two are indeed Eisenhower faces. The other is a 1921 Morgan which is worth about $16.
I should have known that since they were being used as currency they would have been worth $1 at the time.
Back in the late sixties there were quit a lot of coins still in circulation in the UK with a reasonable silver content. I worked for a bank at the time and made a lot of money sorting them out while doing my job of bagging silver. They were a slightly different colour and easy to spot with practice.
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Ok it's off topic but relevent all the same.
I am reading that Old Gordy blames everybody else again, as per the norm, but ofcause he did save the world!
When asked to defend his own record in government, the former chancellor and prime minister claimed he had called for years for better international financial regulation.
The next questions should have been; SO WHAT DID YOU DO ABOUT IT? WHAT ACTIONS OR PLANS DID YOU PUT IN PLACE TO STOP IT HAPPENING HERE OR AT LEAST SOFTEN THE BLOW? YOU HAD A MAJORITY GOVERNMENT AND ON BALANCE THE UPER HOUSE, YOU COULD HAVE RAILROADED REGULATION THROUGH? To back quote sugar - you where fired!
Mind you with preprepared/agreed questions and the real posibility of being called a comy, there are not many journo's out there quick enough or willing to take a risk.
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Well Steph, I know the answer you and the BBC and its moderators want to hear !
YES!!! What we need is a new labour government, total control handed to europe and a campaign to keep new labour run by public school kids-isn't that toff of toffs Teddy Millibrand cute! And so good at play acting being a prole! This and a licence fee hike will put the whole economy bang to rights!
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Watriler @ 19 wrote..
Whatever the true position with construction things can only get worse as the enormous cuts in public sector capital spending impact on the industry's order books.
--------------------
The story on the BBC website about decimation of public sector building programmes due to the spending review was wrong. Those figures included the cuts already decided by labour and implemented over the last year, before the spending review. Most of the cuts in capital spending within social housing have already happened and were planned years ago.
Overall, construction is a mixed bag. Some companies had cut staff drastically immediately after the credit crunch but other companies have cut staff drastically over the last year as a result of government spending cuts.
I believe that government investment in housing has already halved over the last year as a result of cuts put in place by Labour. There isn't much left to cut in that area but there are still some further cuts to come. The budget for the housing revenue account for 2011 financial year will not be announced to social housing providers till February next year.
The spending review was mostly smoke and mirrors. The cuts were hyped so when the real cuts happen at a level that is still unprecedented, people will say "it's bad but not as bad as I thought it was going to be".
Unfortunately the BBC doesn't always check its facts, for example when Philip Green made his suggestions about public sector savings there was no mention by the BBC that many of the suggestions were illegal, for example it's illegal for the government to enter into bargaining with suppliers due to anti corruption laws.
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I‘ve noted the following this year, namely:
People spending money on house improvements, which, under normal circumstances, they probably wouldn’t do.
The reason they give (albeit not in all cases) is because they believe that the value of money will be eroded by significant inflation in the near future.
And I’ve not just noticed house improvements.
People I know; sensible and reasonable people, (at least as far as I can judge), have been withdrawing money from banks and converting it into gold, silver, antiques, shares etc., in short, anything that they believe will hold its value.
As far as I can see, some people seem to have lost some faith in ‘0’s and ‘1’s held on computer chips that represent ‘money’ (saved up wealth).
People seem to be questioning whether those ‘0’s and ‘1’s are safe.
In short whether when push comes to shove, they can be converted into something of value.
It makes me wonder whether the financial industry has pushed it, a little bit too far.
In any event, I recommend that you tread carefully now Great Uncle Mervyn.
‘Faith’ is critical, because its counterparty ‘fear’ considers little consequence of its actions. If faith is lost, those ‘0’s and ‘1’s held on computer chips, are at the mercy of fear.
This country desperately needs some monetary reason, and the positive money group endeavour to offer it. Will you let this opportunity slip Mr King?
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Government "investment" and its expenditure was always planned to be at record levels in 2010.
Government central local are spending their 2010 budgets, the ones that were designed and meant to fend off the recession.
In case you have not noticed Government borrowing is still at record levels,and so far the promise of future cuts is keeping the loan markets happy (maybe they were never that twitchy, maybe it was only an highly effective black propaganda campaign by the dedicated "small government" movement got us ready to accept our fiscal slimming "medicine" on health rather than doctrinal grounds)
The cuts we are all facing are almost entirely going to kick in during 2011-12
The construction industry is feeling the benefit of the 2008-10 spending spree but this may well be the last hurrah for some time
As projects are completed and new contracts evaporate then the construction boom (which in fairness is visible and anecdotaly backs the figures)will turn to bust and the "recovery" will disappear
Perhaps the dreaded "double dip" will appear even more dramatically given that the recovery appears to based, as Irelands was, on the construction industry and their dodgy figures
An industry that is highly volatile and driven from boom to bust (and vice versa)almost overnight,and backed by numbers that are, like many a builders estimate,wildly inaccurate, and sadly almost always at the buyers ultimate expense
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Steph,
run a correlation on the flux in Portland Cement sales/usage (a really concrete measure ;) with the data on UK Productivity (Construction) over the relevant quarters. Deviation through low correlation coefficient will tend to suggest that the 3rd quarter jump is wishful thinking.
Geoff.
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jimp1720 @ 25
It's true that most of the government spending cuts haven't happened yet, but the decent homes programme, which was the major capital programme within housing peaked before this financial year. The reduction in this year's housing investment programme was planned some time ago, in fact shortly after the credit crunch. There have also been major problems with PFI funding for schools and hospitals, though the contracts that have been signed have been cheaper to complete than abandon. I think construction has had an appalling time and is recovering slightly. There are a lot of other disasters waiting to happen though.
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construction has picked up after being out of work for eighteen months i am now in regular employment but it has come at a price the day rate i get is what i was earning in 1990 diffulcult times indeed and if the weather continues like this the uk will be a construction free zone for many months.
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Well common sense tells me that it is impossible for construction to resume on the same basis as previously for several reasons, the model has to change
Retail devepment, we just dont need anymore retail (now or for the forseeable future), we now have a very efficient internet shopping industry too
Domestic housing, everyone knows the various problems with this sector, prices about double where they should be, shortage of credit, high deposits required, this sector cant move ahead until prices fall substantially
Thirdly, and this is a biggie for the next decades, young people (first time buyers) could soon be starting working life with student debts of £40,000 (£9,000 per year fees + living costs) or more which will be repaid via the tax system, EVEN those that get a well paid job are not going to be in a position to take out large mortgages, and so the housing and construction market can not move ahead on the previous model, prices will have to fall dramatically for the industry to resume, this obviously has effects on the DIY, retail, furniture industries as well.
To me, this is obvious, and I cant see how anyone can imagine that construction of houses, shops and commercial premises can recover to previous levels....it aint going to happen, so if there is a construction recovery....its a blip
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At last some ... GDP examination.
There are huge problems with GDP (and incidentally most countries calculate GDP differently) and many UK construction materials are imported and some have export tariffs from the exporter as costing more and ... and all counted as 'growth'.
Construction companies tend to look 2 years ahead with some purchases for stock buying when prices are good and re-selling to DIY outlets etc and buying is seasonal and we had a late labour govt spendaholic construction spending spree (Sping 2010) on govt borrowed money.
Ask anyone who lives outside of London and the SE and they will tell you ... the recession/depression has a real bite.
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Here we go again. Now its the turn of another left wing brigade, the BBC, to try to damage confidence in the British economy for political reasons.
I never heard any doubt about all the dodgy figures produced by Gordon Brown or Darling. How often did we hear of his off-balance sheet accounts. When they said we would not even go into recession I don't recall the BBC casting any doubts about that either, even though it was obvious to everybody where we were heading.
And speaking of dodgy figures how come we hear so little from the BBC about the dreamland accounts of the EU?
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common_man_123 - the great thing is that when G Brown pops his clogs (and as he's quite fat that might not be so long) he won't be able to push out his point of view. And everyone else will remember him as one of the worst chancellors in UK history, because he was.
Housing construction would pick up if people could build houses without the council wanting a massive pay-off and if NIMBY groups allowed greenfield development. The difficulty in building a family home on bought land is propping up house prices by restricting supply.
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Hey,
Stephanie, I'm pretty sure you're aware of this, but any difference between the new and old surveys precludes before-and-after comparison. Put it this way, if the old survey were under-reporting construction activity (a 'systematic', in the parlance, because its a feature of your measuring system rather than the thing you want to measure), the new, more accurate survey would show exactly this kind of productivity 'jump' without any actual change in activity. It's rather more complex, of course, because for the points you made an increase is expected, so the data probably shows both real effects and the effect due to the newly-absent systematic. Running the two reporting systems side-by-side for awhile would allow one to get a handle on that kind of systematic error, and I'm a little surprised this wasn't done (or maybe it was?)
Yours,
Jonathan
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Dempster - you know people with savings? I agree fiat money is a joke, but if the minority of savers are getting out of cash that is a minority within a minority.
Most people under 35 that I know fall into 3 catagories:
1. in debt all the time
2. rent and live month to month, no savings beyond say a coupe of hundred quid.
3. own a house as they got the deposit from their parents around year 2000. Live month to month, no savings. Would say their house is their savings.
Myself and my wife know tens of middle class people our age and none of them bought a house without help from their parents.
A friend of ours who has a pretty bad job in admin outside London has a different circle of friends and only knows one person her age who owns a house.
My point is that there is very little slack in the system. For most a currency disruption would not ruin their savings as they have none. The resulting inflation would stretch most. Those who consider themselves stable are underpinned solely by the housing market.
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Stephanie
I am married to a builder in the west country, he like others in our area has been frantically busy all year, why ? I will tell you.
Home improvements, extensions, new roofs, new kitchens, new bathrooms.
Retired people with money in the bank not earning a penny, spending it on their home.
People who have decided to spend on their home rather than leave capitol declining in banks.
People who earn more by purchasing a buy to let outright than interest on an investment.
All want work finished before the V.A.T increase comes into effect!
People are scared what the future holds, bricks and mortar are tangible assets in troubled times.
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To 34. At 09:10am on 09 Dec 2010, Ben
I live up north and my age group are the ‘over 50’s’ lot.
In any event, my personal observations of what’s happened thus far:
2007 Credit crisis starts, & there’s run on a British bank as the Northern Rock goes down, people are surprised and curious.
2008 RBS & HBOS fail, and some people start to lose a bit of faith in ‘money’ and convert it into gold and other items of intrinsic value.
2009 The Band of England prints £200bn. More people lose faith in ‘money’ and convert it into gold etc. Inflation kicks in and wages stagnate.
2010 Inflation continues and wages stagnate for a second year, more people try and protect their savings. The demand for index linked savings certificates is so great, they stop selling them.
From the Office of National Statistics website:
Average weekly earnings (whole economy not seasonally adjusted):
Jan 2009: £444
Sept 2010: £443 (provisional)
Wage inflation = – 0.002%
Retail price index (all items):
Jan 2009: 210.1
Sept 2010: 225.3
Price inflation = + 7.2%
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Construction fell off a cliff in summer 2009 but has since climbed back up on the back of the easy-money scenario now so popular with the majority in the UK.
I have seen commercial construction going on recently which in my view cannot be justified in the immediate term so perhaps some commercial property businesses are building themselves a bank of stock for some future recovery. With interest rates where they are that would seem shrewd. I feel they are being hopeful but nothing beats romancing the shareholders.
I have also seen a lot of domestic construction activity. The argument for that seems to be that the cash is earning nothing at the banks so lets sink it into building or improving our property. Given falling house prices I wonder how long that is going to go on.
Still, I won't begrudge a man his work and a wage. We will all have enough time to reflect on this when the sterling crisis hits....I told an Irish friend yesterday that his country was just the first in the queue. They are polishing off the little ones first, then they will come for the bigger fish.
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Let's also offset those growth figures with a huge increase in public spending, eh?
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This thread appears to highlight a number of problems with a series of issues:
- Change of statistical reporting
- The nature of the industry
- Regionality
Statistics
Brilliant things aren't they? Whilst more accurate reporting is always welcome it is embounden upon the 'authority' making the changes to be both aware of the consequences of those changes and to provide a clear transittion vehicle so that accurate comparisons can be made with previous records. In this instance these factors appear to have been forgotten.
Industry
It is clear from the posts above that whilst some people consider the industry to be majorly concerned with large capital programmes whilst others focus their attention upon housing. We need to be more clear about which elements we are talking about.
Regionality,
In #6 james points to continuing work on projects on the banks of the Thames. Others outside of the South East report that there is little sign of activity. It is my belief that this holds true for the majority of industry sectors. It is not just a housing bubble that has effected our economy. We are now seeing the effects of the regional bubble.
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With Bank Rate at .5% for 20 months (sorry if you've all heard this before...)
Either 2 things will happen.
1. The biggest stampede you've ever seen by the under 45s for loans; or
2. The biggest stampede by the over 55s to convert cash into something more rewarding. (but not holidays in the Costas)
I've seen no evidence of 1. - because no-one seems to want more debt - not even at these prices. - Or maybe the lenders don't want to lend . Either way -
That leaves 2. And the "something more rewarding" is property, gold, or other 'tangibles'. Those choosing gold have probably missed the boat. So maybe the "Construction numbers" are not so wrong.
Those between 45 and 55 are too worried about their pension prospects to make any rash moves in either direction!
(I'm happy to be flexible about the age ranges)
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Stephanie,
I owne one of the largest decorating contractors in the South of England - I think the true picture is somewhere between both extremes.
I don't think the true effect of the recession is played out in the official figures - masked by the largest construction projects (Olympics etc).
The house builders stopped building for 12 months just selling off surplus stock. They are now building again at levels some way below the recession - but they are building.
The use of subcontract labour probably helps to explain the new found efficiency of the industry. Firms employing 50 odd subcontractors were down to 5 - those that didn't go bust tried to keep as many of the back office staff on ready for things to get back to somewhere normal. You can double the number of subcontractors very quickly without having to increase the back office much.
There are certainly people out there that don't play it straight.
Contact me via the web site [Unsuitable/Broken URL removed by Moderator] if your interested in talking at more depth.
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It's the 'Happiness Index' that matters now.
G
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I am an insurance broker and I have to say that with one exception all our construction clients have exceeded turnover and wageroll estimates over the last year and are projecting the same levels for next year with some posting increased projections. So may be there is something in the figures from the ONS
Craig
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Hi moderator - you can pass my e-mail address on to Stephanie if she is after more information [Personal details removed by Moderator]
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TimSavi
Please can you give some indication on what level of demand as a rough percentage, in terms of monetary amounts, is coming directly or close-to-directly from government spending?
It's my contention that any rise or levelling off in GDP has to take into account that the government just spent 11% of GDP as deficit stimulus. Take away that and the whole economy would just crash through the floor.
Does that sit with what you experience?
Regards
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What recovery? There never was one. Pre-credit crunch the economic growth over the last 20 years has been as a result of people spending by taking on debt. The only way we can recovery is for people to take on more debt. But this is not going to happen when we have reached a point of peak debt. Therefore there will be no recovery until debt levels are reduced either by people paying off debt, which will take decades, or the debt is destroyed through default, which will probably bring down the banking system. Rock and a hard place. The only solution is monetary reform (see Positive Money web site).
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Hi Stephanie,
I don't know if this helps or not, but all Social Housing projects had been completely frozen since last year and even though budgets have been cut by the new government the fact is that they are now going ahead again where they weren't before.
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Developers have started up again and finished off existing housing developments recently. There are signs of increased refurbishment of office blocks in major cities. Prime development land is going for very high prices across the UK. London in particular as a global centre and the location of the Olympics has had alot of activity but now actual construction of many venues must be nearing completion.
Certain sectors are busy however some have been going through what is euphemistically called 'right sizing' particularly areas which relied on government spending. This has been happening for about a year in the private sector. The public sector has achieved a reduction in size to date by letting its private sector secondees, etc go. As a rule the minimum possible is being spent by government and it could be this way until the new financial year.
Thus I would say in the UK in general for the UK construction industry there is a great deal of uncertainty about the future. Whereas in the boom years the uncertainty was about whether grow could happen now its about whether further contraction will happen. A few people think we haven't seen the end of the contraction in the construction industry yet. I get the feeling things are abit like they were in 1992 now. I have heard from others that many insurers still have developers they lent too much to and have them effectively on life support. Many city centre flat developments loans are being paid for by rental income still.
It isn't all doom and gloom and with a fair wind things could get better. I'd say the construction industry should be roughly steady for the whole of next year at best.
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#46 - Too right. Also, I recall recently hearing a 'respected economist' calling for Germany and China to encourage their populations to take-on more debt in order to 're-balance' the world economy. Of course, what he really meant (pleading for) was for these nations to 'save' the west from its own profilagacy and irresponsibility - fat chance! The quest for ever more debt-slaves required to prop-up the international Wall Street/City Ponzi scheme truly knows no bounds.
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Tick, tock, tick tock....you can hear the wheels of economic journalists minds slowly turning.....
"and there are some enormous buildings going up in the City"
True - but WHO IS GOING TO FILL THEM???
There are over a million square feet of empty commercial space within 1 mile of Bank station - that's with the existing buildings - why does anyone think that there will be sufficient demand for the new buildings too?
...because they all have so much invested - that's why....it doesn't mean it's going to happen, it just means they're all going broke if it doesn't!
Oh how the weak are led to their doom - so easily and so complicitly...
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50. At 1:56pm on 09 Dec 2010, writingsonthewall wrote:
There are over a million square feet of empty commercial space within 1 mile of Bank station - that's with the existing buildings - why does anyone think that there will be sufficient demand for the new buildings too?
--------------------------------------------
Sounds the same as Dublin....
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@26 GeoffWard
@35 ruralwoman
Excellent comments...you've both "hit the nail on the head"
If only our economists had the same insight !!
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I worry rather less about construction than manufacturing. Remember the area that is supposed to lead us out of recession. UKgov spending cuts are already leading to a factory closure by BAe, surprisingly, our biggest manufacturer.
Would it not have been wiser to have cut something that we are buying from the US - like the non-functional Joint Stike Fighter? Does our Gov worry more about making a bad impression across the Atlantic than supporting UK manufacturing?
If everything else closes, what do we do with empty buildings?
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49. At 1:39pm on 09 Dec 2010, TheNewPonzi wrote:
#46 - Too right. Also, I recall recently hearing a 'respected economist' calling for Germany and China to encourage their populations to take-on more debt in order to 're-balance' the world economy. Of course, what he really meant (pleading for) was for these nations to 'save' the west from its own profilagacy and irresponsibility - fat chance! The quest for ever more debt-slaves required to prop-up the international Wall Street/City Ponzi scheme truly knows no bounds.
=====================================================================
Very well observed- just because the "anlgo saxons" (that's us and the USA} have behaved collectively like complete fools, we expect the rest of the world to do the same to save our bacon.
The number of posts on these blogs which criticize nations and/or individuals who put thrift before consumption just beggar belief. Since the current (so-called western} world economic model relies on this kind of thinking, then no wonder it is down the tubes.
Everyone else in the world can see that borrowing to consume is just a fool's paradise. Time for a rethink in the UK, if it's not too late (the USA will never change-instant gratification is all they understand).
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I hope we haven't used all of the nation's stock of salt in the last three weeks because we all need to keep a very large spoonful handy to take with the masses of economic data we are bombarded with. As the economic house of cards relies on good news to keep it from collapse, it's only to be expected that official figures will paint the rosiest picture.
This is a timely debate because out here in the real world, a million miles from the M25, the economy looks like a bedraggled three legged moggy so it's nice to know that the poised tiger illusion coming from the 'talk it up, they'll never catch on' brigade, might be a load of rubbish, is heartening to those of us who had been left scratching our heads in confusion at how the figures could be so different to reality.
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The UK construction industry is acting like Kevin Costner in that film "Field of Dreams".
"Build it and they will come" - is the line, but sadly you have more chance of deceased baseball stars turning up and filling these new office blocks than any viable business.
If you think we're bad at getting our GDP wrong - Japan have just resorted to 'guesswork'!
http://online.wsj.com/article/SB10001424052748703766704576008983510168062.html
...still they have been in crisis a lot longer than we have - do you think underplaying the GDP numbers has anything to do with the desire to be the 'weakest' weak currency in the world perhaps?
Fortunately we're not that cynical are we?
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51. At 2:32pm on 09 Dec 2010, Kit Green wrote:
"Sounds the same as Dublin...."
...but the Irish do it with a lot better humour.
[Unsuitable/Broken URL removed by Moderator]
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53. At 2:38pm on 09 Dec 2010, WolfiePeters
Wolfie - this is how you SAVE defence spending! (well in the new coallition way)
http://www.telegraph.co.uk/news/newstopics/politics/defence/8191690/3.6-billion-Nimrods-dismantled-for-scrap.html
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Interest Rates at 0.5% for nearly two years.
Real inflation at over 4% pa.
Hundreds of billions of QE.
And you think these GDP construction figures look strong?
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"De-constructing the recovery" is the title of Shephanie Flanders blog.
Oh, dear - so much going on behind the scenes in UK defence procurement cuts under current Conservative/LibDem Government.
They don't sack the incompetent mandarins or name and shame ALL the previous incompetant Labour Ministers responsible for wrecking the MoD and placing our troops in areas of conflict without proper equipment.
This Government is now just simply (fully-planned before election) selling on defence to countries who have no interest in our defence.
BAE systems sold to America with subsequent products made in China to increase shareholders and investment bankers income - the same people who never allow their own children to go to war, but make $billions out of those who do across the world?
Perhaps we should sell our armed forces too and only rely on mercinaries as do some States in Africa? No pension, no accommodation, no wages and no loyalty.
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#59. Elduderino01 wrote:
"
Interest Rates at 0.5% for nearly two years. Real inflation at over 4% pa. Hundreds of billions of QE.
"
We know what this means - even though the BoE will never admit it. The banks are bust and their balance sheets are even more fictional than is usual. However no one will admit this for to admit this will inevitably lead to the need for even more taxpayers' to bail out the busted banks.
But - Mervyn King is being extremely foolish for he is sacrificing the medium and long term for the ultra short term. His thick glasses must have clouded over completely! Just as he caused the bubble and the collapse he is now deliberately creating the conditions which have to lead to another even worse collapse very shortly.
Interest rates must rise on the basis of inflation - that is unavoidably and obsoletely imperative. But the "Fools of Threadneedle Street" (calling them a Bank is risible) are so obsessed in rescuing their friends they are either oblivious to the plight of the country or consider that everyone must rescue bankers even at the cost of their very lives!
We must cap bankers pay. Introduce a National Maximum Wage for these idiots bankers who are on the most generous conceivable social security scheme - because make no bones about it bankers are receiving our money just like the poor and the crippled - except they get many hundreds of times more - why should they?
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Stepanie,
The construction industry was given a large boost due to the kickstart programme introduced by the last government via the HCA. There was as a result some 150 plus projects started in march and the suppliers were in the situation of overcapacity during the summer supporting what was perhaps a one off spike in the output. It looks unlikely this can be maintained but maybe this has provided some momentum.
I agree the figures otherwise cannot stack up
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There are lies, damned lies and statistics. Not for nothing is economics described as a dismal science. I don't believe a word of it. No one is spending or building much except for the last rump of public scemes like new health centres etc and cash for welfare and dole benefits.
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Personally I think the fishy construction figures are probably correct and due to ( the cash rich retired ) moving money from banks into bricks.
If you had £150.000 sitting in a bank, what would you do in uncertain times?
A ) Buy a rental property in a hot rental market and earn £600 per month or earn next to no interest while you watch your capital depreciate?
B) Repair or improve your home, ancient roof or dated kitchen or leave your money in sitting in a wobbly bank knowing material and construction costs are on the increase?
If you cant sell your home and if you have funds at hand, you might as well improve or repair it and be ready for any upturn in the housing market... because your a long time dead.
60s mods and rockers have proved to be a savy bunch, we grew up listing to parents talking about tough times during the war, have ridden a property boom and intend to protect assets.
Bet the construction figures go splat in the next 3 months when the VAT increase comes into play.
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Stephanie
I think you are right to be suspicious.
I work for an engineering consultancy and our building engineering work has fallen off a cliff this year, culminating in a substantial number of redundancies.
OK, a lot of our business is international, and some of this is fall-out from a slow down in Middle East activities, however we are certainly not seeing a construction boom here in the UK.
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A low-brow comment- very little sign of significant development or planning applications over the past year in my part of the south. I suppose the new Brighton stadium can be added to the Olympics big ticket stuff.
Am aware of some local private interest in green investment, particularly Mr Ded's FIT scam.
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Seen reported today...NINETY per cent of the container ships heading to Northern Europe from Asia have been forced to slow to the speed of a "fresh breeze".
So it looks like the lack of demand for fresh stock will show a new downturn over the coming months.
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"But - Mervyn King is being extremely foolish for he is sacrificing the medium and long term for the ultra short term. His thick glasses must have clouded over completely! Just as he caused the bubble and the collapse he is now deliberately creating the conditions which have to lead to another even worse collapse very shortly."
I think you need to see Merv's big picture. It's hanging in his big house. Merv does what keeps Merv in a big house for the longest possible time. Seen from this aspect his behaviour is 100% rational.
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If we are honest can anyone beleive any government figures. No government figures are reliable having been constantly manipulated so they do not have any credibility. Despite the long touted independence this is meaningless.
Sadly, the effect is that it is almost impossible to plan on the back of government data. Certainly any rise in interest rates will result in a double dip since the growth in the economy is so fragile and the cust have yet to bite.
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60. At 4:32pm on 09 Dec 2010, corum-populo-2010 wrote:
This Government is now just simply (fully-planned before election) selling on defence to countries who have no interest in our defence.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I remember commenting to that effect back in the summer, when Ishkandar and I were debating sovereignty and I was lamenting our "open-boarders" (sp) policy.
At the time I thought it was a joke.
When the carrier fiasco was announced, and we signed a joint accord with France for naval support, I realised it wasn't a joke any more.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Anecdotal evidence...two years ago, our local builder's merchants took their advertising cards board down, and being a regular customer, I asked why.
They said "all the Eastern European builders have gone home, there's no work for them any more, and the UK guys don't see the need to advertise to each other."
I agree with ruralwoman, though, since they closed index-linked national savings, and reduced the payout of the premium bond, where else are the wealthy pensioners to put their cash? Lots of local builders doing jobs and staying below the VAT threshold.
But only those with savings can spend. Regarding a low base rate, the headline rate for a secured loan in the high-street is around 5-7%, and if you try to obtain that, by the time you go through the application, the actual rate is nearly 20%.
JohnfromHendon is right, the banks are more broke than anybody could possibly imagine.
But as I suggested yesterday, if government spending is financed by borrowing, government is beholden more to the banks than it is to the electorate.
The earliest record of this situation in English history may well be King John, (a profligate and dissolute monarch.) When he ran out of money, we got a new constitution (the Magna Carta).
The questions is, what are we going to get now the robber baron's pockets are empty as well? Loss of sovereignty and foreign ownership is the inevitable result. Utilities (EDF and Eon), Banking (Santander HSBC and Barclays), Defence (BAE etc.) and Legal government (Brussels).
When Britain joins the Euro (which it will), it will remain a nation in name only.
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#26 >>Deviation through low correlation coefficient will tend to suggest that the 3rd quarter jump is wishful thinking.
Geoff.
But they don't build them of cement any more !! They build them with sticks and straw and the first Big Bad Wolf that comes alone will huff and puff and blow them all down !!
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#30 >>Ask anyone who lives outside of London and the SE and they will tell you ... the recession/depression has a real bite.
Ask anyone living in London and they'll tell you the same, too !!
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Construction output figures ??The easy way to check these figures
is to ask the builders merchants,aggregate suppliers,timber merchants,
plant hire firms etc, what there figures are.
Michael Tosh
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I am employed as a construction loss adjuster and the feed back I receive from sites that I visit is generally pessimistic.
However, it's possible that the figures have some basis in fact. A number of multi billion pound infrastructure projects that don't make the headlines have reached their zenith during the last six months, e.g., M25 widening, several large National Grid jobs and PFI work such as London & Barts Hospital. but these are all coming to completion within the next 12 months and there is little to replace them it seems.
The brokers who place the large 'project' policies in the London insurance market complain that business has tailed off dramatically.
Stand on any bridge in London and count the tower cranes. Two years ago you would see a minimum of 40, at present you will struggle to count 20.
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I'm no expert in this, but... The figures being discussed are Output GDP figures (the Expenditure GDP figues show hardly any rise at all). Output GDP measures the added value generated by each sector during that period. Presumably this includes unsold stock. So if the construction industry were building up a stock of unsold homes and offices, and being generous in how much it declared them as being worth in its accounts, then that would be counted as a contribution to Output GDP. I wonder what happens if they just revalue the land they are sitting on. Does that count towards GDP too?
Overall, the GDP figures are unreliable, and the inflation figures are unreliable too - so the Government is steering without a compass.
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70. At 09:13am on 10 Dec 2010, stillpuzzled wrote:
...Loss of sovereignty and foreign ownership is the inevitable result. Utilities (EDF and Eon), Banking (Santander HSBC and Barclays), Defence (BAE etc.) and Legal government (Brussels).
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Last Saturday The Times reported that Berkeley Homes were selling 40% of their new builds in London and the SE to overseas buyers. This compares to a historical average of 12%. Their income in the six months to October was up 20%.
A similar position for sales outside new build was also reported.
Are these properties for owner occupation? Surely not. So we are also going to be renting from more foreign landlords. This is not in itself wrong but the fact they will be taking money away from the UK and probably not paying tax here means we are getting more and more "fare dodgers" sucking us dry without contributing to the nation.
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When UK was going through its "boom", just like the Irish, the whole place was over-run by Eastern Europeans who also needed housing (albeit temporary housing) !! Now many of them are gone and those housing will stand empty; increasing the pressure on the price of properties. How will the construction companies deal with that when they can no longer make as much profits on each unit they build ??
This "boom" may well be a blip or a "statistical anomaly" and the long term future for them looks very bleak indeed !! You won't catch me buying shares in construction companies in the near future !!
Those "green shoots of recovery" are looking more and more like dreams fueled by illicit substances !!
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#68. Ben wrote:
"I think you need to see Merv's big picture. It's hanging in his big house. Merv does what keeps Merv in a big house for the longest possible time. Seen from this aspect his behaviour is 100% rational."
But that is NOT why he is being paid is it (as well you know)!
He should have been sacked some time back. The longer he hangs on - the more tenuous his grip on his big-house becomes. He has made the wrong call at the wrong time ever since he got the job - he is still doing it now. The longer he hangs on the higher the probability is that it will not be his big house to which he retires, but an entirely other kind if he continues to pay no heed to the real economic conditions and policy necessities!
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77. At 10:26am on 10 Dec 2010, ishkandar wrote:
Those "green shoots of recovery" are looking more and more like dreams fueled by illicit substances !!
But when said 'illicit substances ' are legalised at point of production, supply and consumption think of the tax revenue and jobs created.
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Actually ,Stephanie there has been a huge turnaround in the construction sector and it is enough to generate the growth we have seen:
Here are a few instances:
1 Some huge hospital projects nearing completion.
2Some huge roads projects .
3Tram and railway projects.
4Personally....I have completed 2 hitherto-in-mothballs projects with a developed value of 2 million quid.And if I got funding then others did too.
5My architest is doing a lot of projects at the moment and not all Labour-commissioned public spends.
6My brother , a leading development surveyor,is rushed off his feet.
7Spoke to a chap working for UK's leading wholesale supplier to the buiding trade of kitchen and bedroom fitted furniture ...... they are really busy too.
8My business banker says they are lending again.
So when my personal experience is reflected by others I know then I know
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Oblivion
We do not have much work directly with Public sector. We work on a few school re-ferbs but not much. Interestingly we are on several Council Preferred supplier lists but have received no enquiries...if I ever got the time I would like to find out what is going on there.....and don't get me started on the CompeteFor programme.
The nearest we have get to Government is generally working for the builders that are building social or affordable housing. During the depths of the recession these were the only flats that were being built so we were probably doing 80% of our turnover (the last Government has to be praised for this at least!). This work has now tailed off and as the private buyers come back to the market we are probably on about 20% of turnover now.
Looking at the government procurement sites there has been a huge reduction of tenders since the election - I presume before the election departments were frantically spending their budgets to stop them being removed after the election!
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http://www.director-e.com/news/index.asp?newsid=5861
Please view this link, if I'm not breaking house rules about external websites, according to a report published by EEF, the report says Britain's manufacturers are continuing to report strong trading conditions with indicators for output remaining at record levels for the third quarter in succession. Apologies if the BBC has already reported this.
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Don't people realise that this is a depression. Some areas of the economy will record strong positions. However when you look across the whole economy you find that they were either temporary or off-set by even greater decline in other sectors. The one thing that you can be certain of is that there are no 'bell-weather' sectors.
# 79
:)
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Just to add to my previous post which was number 10 on here. I notice that today notayesmanseconomics has spotted some problems with our producer price inflation numbers and questions the Office for National Statistics in this area.
"This is at best very embarrassing for the Office of National Statistics. It was only last month we found it making methodological changes to its calculations of these numbers and now suddenly it has such problems it cannot publish part of them."
So there may be more widespread problems at the ONS rather than just GDP numbers.
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#76 Kit Green
"Last Saturday The Times reported that Berkeley Homes were selling 40% of their new builds in London and the SE to overseas buyers. This compares to a historical average of 12%. Their income in the six months to October was up 20%.
A similar position for sales outside new build was also reported.
Are these properties for owner occupation? Surely not. So we are also going to be renting from more foreign landlords. This is not in itself wrong but the fact they will be taking money away from the UK and probably not paying tax here means we are getting more and more "fare dodgers" sucking us dry without contributing to the nation."
That's the problem when you continually run a trade defecit you end up with foriegners hold lots of you currency - and rather than sit on it in light of high inflation and low interest rates they decide to invest in something tangible. Increasingly we are going to have to sell more assets to pay for all our imports - many of which we should be producing here in the UK.
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76. At 10:25am on 10 Dec 2010, Kit Green wrote:
Last Saturday The Times reported that Berkeley Homes were selling 40% of their new builds in London and the SE to overseas buyers. This compares to a historical average of 12%. Their income in the six months to October was up 20%.
A similar position for sales outside new build was also reported.
Are these properties for owner occupation? Surely not. So we are also going to be renting from more foreign landlords.
~~~~~~~~~~~~~~~~~~~~~~~
Somewhat puzzling...since JfH continually predicts/requests a 40% devaluation in house prices.
Why would you put your hard-earned Yuan/Roubles etc. into an asset that is likely to devalue? Makes mushroom think the smart money is buying for the continual income without worrying about the "asset price".
Let me think...pay 250k in cash, which was getting 2.5% in the bank (6250 pa), and receive back 1200 pcm in rent. After expenses, that could be 8-10,000 pa. Seems like a deal to me. Works even better if you do a deal wiht the banks to bulk buy repo-s on the side, to keep them from affecting the market price.
Anyway, if you are riding the pendulum, house inflation outstripped prices for 10 years, and now its catch-up time. Prices must now inflate faster than houses making the pound in your pocket worth a lot less next year than it was this year. (Anybody else noticed 1.20 per litre for unleaded?)
Can't remember if it is a bull or a bear, but mushroom thinks that if you slosh your money around at the right time, you can always make something of it.
Great, eh...it looks as if the banks can't raise saver's interest rates, because they will also kill off 40% of the market for new-build, and "property" may well be the biggest single entry on their books?
That won't be good for the "Construction Industry", now will it?
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#86 Still Puzzled wrote:
Somewhat puzzling...since JfH continually predicts/requests a 40% devaluation in house prices.
Why would you put your hard-earned Yuan/Roubles etc. into an asset that is likely to devalue? Makes mushroom think the smart money is buying for the continual income without worrying about the "asset price".
=================================
Perhaps they are ignorant of the Great Man's prediction/hope. Who would you believe: a ranter or people putting down their own money?
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Lets see Pay Freezes, with Official Inflation running at 3 percent per annum.
Thats going to mean falling sales volumes at least in the consumer market.
Unless lots of people have gained employment who were previously out of work ? No, oh well then.
To be honest a 0.4 percent decline sounds very optimistic to me.
But Statistics can be dressed up any way one likes.
Like House prices. Quote them year on year in one breath , then month by month in another, in the same article equals one slightly confused audience.
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Hi Stephanie
I'm not in construction but I am renovating my house and project managing it myself. Every tradesman I deal with was grubbing around for work in the early part of the year. They are now booked up solidly until well into the new year. Many people are following the motto, "Don't move, improve."
New house building fell off acliff at the start of the recession and is improving dramatically. I think the figures are a fair representation of reality.
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The answer could well be down to the government spending.
1 work on schools and the public sector getting things done this financial year as the money is going to dry up and stop.
2 the massive increase in affordable housing funding last year and the lead in times for that.
The private or commercial sector is pretty dead still with some land and sites almost a liability.
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#87 AnotherEngineer,
"Perhaps they are ignorant of the Great Man's prediction/hope. Who would you believe: a ranter or people putting down their own money?"
Typical of another limited technocrat. If you care to go back over JFH's post you will find the rationale for his call for the depreciation of house prices.
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71. At 09:36am on 10 Dec 2010, ishkandar wrote:
#26 >>Deviation through low correlation coefficient will tend to suggest that the 3rd quarter jump is wishful thinking.
Run that past me again.
Sounds like gooblygook for diasappearing up one's own A$%$%.
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91. At 9:48pm on 10 Dec 2010, foredeckdave wrote:
#87 AnotherEngineer,
"Perhaps they are ignorant of the Great Man's prediction/hope. Who would you believe: a ranter or people putting down their own money?"
Typical of another limited technocrat. If you care to go back over JFH's post you will find the rationale for his call for the depreciation of house prices.
Agreed.
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91. At 9:48pm on 10 Dec 2010, foredeckdave wrote:
Typical of another limited technocrat. If you care to go back over JFH's post you will find the rationale for his call for the depreciation of house prices.
==================================
I am well aware of the rationale - one is that pay in this country is too high because of house prices, and that wages will go down if house [rices crash. My view is that if people have lost their capital reducing their pay as well will not be popular.
Any attempt to discuss things with him, however, just leads to a diatribe and personal insults (which are water off a duck's back having worked with the Army for many years).
See 282 on Robert Peston's current blog for a typical example.
I always assume that someone with a strong argument is quite happy to discuss it.
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Steph
You were great tonight on Newsnight. Calm, intelligent and NOT belligerent. If you are going to do this more often, please hold on to your own style. Please, please don't adopt the cynicism of other fellow presenters (even if you feel it!!). May I suggest that Brian Walden should be the role model - intelligent, incisive and humorous.
Ted Smith
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Inaccurate data can be one point, - on the issue of productivity, many organisations took the opportunity to prune staff and impose wage cuts,in effect becoming more lean. Furthermore, we see more eastern block workers on the ground, - are the statistics capturing these effects?
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If we want to be more scientific about this, and I think we do, then the ONS should have run both the old and new construction industry models together for at least a couple of quaters, this would have given a control for comparison. Perhaps they did before they went 'live'? If so what did the two sets of data show?
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#98 Richard Dingle
"Interesting how the Party of Privilege is reverting to type. You will notice that the tough words before the election of dealing with the inequality of the banking crisis (a crisis for all except the banks) has come to nothing."
What a pathetic little comment this is - so many like you never happier than when carping on about the Tories. No mention of Labour's betrayal of their own. They should still be in power had they not sqandered their opportunity - with the poiosn of Iraq, the catastrophic mismanagement of the economy - the missed opportunity with public services, most notably the failure of their education policy. Not to mention overseeing the rapid decline of our manufacturing base which they accelerated with glee - despite the workers in those industries being their core support. At least the Tories look after their own, however wrong that may be there is an honesty to it - what about Labour's heroes, Blair, Hoon, Straw, Morley - they trampled their own in the rush to get their noses in the trough.
As the LibDems have shown the lot of them are dishonest but some - particulalrly those that champion the working class are the worst of the lot.
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GDP growth - who cares. We should be getting animated only about the deficit/debt and trade deficit.
I have heard nothing yet from this government that suggests they are serious about tackiling either of these.
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101. At 10:39am on 11 Dec 2010, StartAgain wrote:
#98 Richard Dingle
"Interesting how the Party of Privilege is reverting to type. You will notice that the tough words before the election of dealing with the inequality of the banking crisis (a crisis for all except the banks) has come to nothing."
What a pathetic little comment this is - so many like you never happier than when carping on about the Tories. No mention of Labour's betrayal
Sound of Tory Boy spitting dummy out.
If you bother to click on my moniker and read my previous posts you will see that everything you say about Labour was said by me, even more strongly, before you.
I doubt whether Ed Miliband will make a difference - I know a 'trophy' politician when I see one.
At the last election I voted Green. I last voted Labour in 1997.
My comment alluded to the fact that we are in the 21st century and once again have a very wealthy Old Etonian as PM. Cameron is a charming and decent man but he cannot help his DNA or background which by design is totaly out of touch with 'ordinary people'. The same applies to about 90% of the cabinet.
Education benefits society as a whole and should be paid for by society as a whole. To take the narrow view and say that the person being educated should pay for his or her education is very wrong.
Education in Germany is free and it shows in German economic dominance.
Also understand what a 'knowledge economy' is. It is not about banking, insurance and consultancies (I remember the boasts in the 1980s that the UK economy had leap-frogged the German economy and moved to the next level when all that happenned was a series of property bubbles), it is about high R&D and high-added value manufacturing and it ain't happening here.
I totally agree with everything you said about New Labour.
It takes nothing away from my 'pathetic little comment'.
If anything good comes out of this coalition it is that it exposes the Liberals for what they are. Confused, gutless, dishonest and phoney. Frankly 'the stupid party'.
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96. At 10:44pm on 10 Dec 2010, foredeckdave wrote:
#93 Richard Dingle,
Like the majority of us (I think) I would have prepared a non-violent demonstration. However, I am starting to agree that without some form of violence no notice will be taken. Yesterday one third of the Liberal Democrats proved just that.
I am also very saddened to see the reaction of senior police officers, Cameron and May demanding the full force of the law be used without any mention of a review of police actions.
-------------------------------------------------------------
I was watching live coverage on the BBC News channel. I saw nothing but perhaps a bit of low level aggression from either side until after the first mounted "charge".
This has made me think that the establishment need a bit of trouble to show in the media to discredit the protesters.
Prior to this, reporter Ben Brown had also been shown telling us that the marchers could not get onto Westminster Bridge Road as the way was blocked. Pictures then showed that they had to go somewhere so ended up pushing into Parliament Square (rather than towards the Embankment where there was meant to be a rally). It almost looked like a set-up.
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However (and it is and with prove to be so) flawed a vote for the Tories ws the only credible one in May - everything else was waste including your green one.
Good for Germany however it will be interesting to see how long this can continue as the cost of propping up the Euro/PIIGS accelerates. Also, now as Germany appears to be trustworthy again it must make a greater contribution to the cost of maintaining global security - and take the pressure off Britain and France upon it has relied for so long. Defence spending by Germany is significantly lower than Britain and France over time this will have to increase - perhaps at the cost of education?
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RD
I don't see ANY of our politicians tackling the inequalities of the banking crisis - surely the time to do that was in their hour of greatest need? When they had the begging bowl out.
It's becasue the revenue they bring is all we have - change that then the banks can become less significant.
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105. At 12:16pm on 11 Dec 2010, StartAgain wrote:
However (and it is and with prove to be so) flawed a vote for the Tories ws the only credible one in May - everything else was waste including your green one.
There is no such thing as a wasted vote.
Also, now as Germany appears to be trustworthy again it must make a greater contribution...
It is not possible for Germany to be trustworthy other than within an 'EU container' and what is required is an EU defence force to replace national armies.
This is not a case of good or bad Germany it is just the realite of 80 million rather resourceful and naturally dominant people smack bang in the centre of Europe. Take the Genie out of the Bottle and other countries get nervous. The political point of the EU, and why it must develop into an integrated structure, is that it is the only 'strategem' that has successfully answered 'The German Question' which has dominated Europe for so long.
To give an example, within the EU, any German claims on the former territories in Poland (Danzig, Pomerania and Silesia) are a nonsense and an irrelevance; these territories are EU land and open to all.
If there were not an EU the claims cease to be irrelevant and become very real again. In football known as a 50/50 ball.
An adequate defence force and free education are not mutually exclusive if the economic model is the right one.
The Social Market Economic model has a track record of success over the past 50 years, the 'small state', laissez faire Anglo-American model is an abject failure.
The state need not be small, it needs to be effective.
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106. At 12:27pm on 11 Dec 2010, StartAgain wrote:
RD
I don't see ANY of our politicians tackling the inequalities of the banking crisis - surely the time to do that was in their hour of greatest need? When they had the begging bowl out.
It's becasue the revenue they bring is all we have - change that then the banks can become less significant.
Agreed. Absolutely spot-on.
By not letting bad banks fail (RBS a classic example) we missed a golden opportunity to trim the sector. Any contagion or domino effect could have been dealt with. It is significant that Brown / Darling were surrounded by bankers during the height of the crisis and unsurprisingly none of the turkeys voted for Xmas.
Incidentally, I have no issue with bankers bonuses, it is the business of the banks and their staff alone, a private contract. But not out of taxpayers money. A lot of the rather silly comments about bonuses are no different than the sort of envy that attaches itself to footballers wages. The morality of earning that sort of money in a world with so much inequality and unfairness is questionable but it for the consciences of the recipients, not state diktat (because where will it end).
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104. At 12:15pm on 11 Dec 2010, Kit Green wrote:
I was watching live coverage on the BBC News channel. I saw nothing but perhaps a bit of low level aggression from either side until after the first mounted "charge".
This has made me think that the establishment need a bit of trouble to show in the media to discredit the protesters.
I tend to dismiss conspiracy theories and lean towards 'the c*ck up' scenario.
The police were outnumbered and out manouvered and it was obvious that they did not call it right.
What concerns me is demonstrators turning up ill equiped (no helmets); the demonstrator who was clubbed on the head could have died; this is far more serious than some ghastly harridan being poked in the ribs through an open car window.
Top marks to the demonstrators.
This one will run and run.
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RD
"The Social Market Economic model has a track record of success over the past 50 years, the 'small state', laissez faire Anglo-American model is an abject failure."
In Germany and one or two other northern nations perhaps but it has been a failure too elswhere in Europe - France appears to be okay but is it really?
As for the "German Question" this has always been ducked it was fudged in 1918 - when the war should have continued until allied troops took Berlin then there could have been no doubt in the mind of Germans that they had been defeated. Although I fully understand and respect the desire of all the combatants to put an end to the carnage when they did.
And again in 1945 - Germany should have been divided up - a homeland for the displaced Jews. A greater Denmark, France, Poland, Autria and Switzerland with a small nominal German state of no more than 5M centred on Berlin. Of course the rise of the Soviet threat to replace the German overtook events.
That said I wouldn't want you to think I am a German hater as I buy their cars (who wouldn't), drink their beer, buy their capital equipment, invest in their companies and enjoyed my time in the country and would happily revisit.
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RD
"It is significant that Brown / Darling were surrounded by bankers during the height of the crisis and unsurprisingly none of the turkeys voted for Xmas.
It is also significant that the two most distressed banks were Scottish just like the PM and CoE - there aws no way they were going to let them fail or even take them over to be wound down as in the case of B&B - again two turkeys not voting for Christmas. I would have loved to have been fly on the wall - presumably everything Brown/Darling stood for would have been shouting at them to let these smug self-satisfied bankers fall on their swords. But they put their own self interest first and with it every principle they had previously held dear - it can't have been lost on them, or have been pleasent to realise that they were no better.
I assume Nick Clegg and Vince Cable are going through similar emotions now.
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110. At 1:30pm on 11 Dec 2010, StartAgain wrote:
'And again in 1945 - Germany should have been divided up'
Divide up as much as you like but it misses the point. Germany more than any other entity in Europe is defined by its language and culture. You cant't 'divide' language and culture.
It is the culture and language that dominates (and includes non German nationals past and present such as Kafka, Freud and Hayek).
As for a 'Jewish homeland', for obvious reasons they did not want to stay, though Berlin to-day has the fastest growing Jewish population in the world.
Too much attention is given to the the nation state which is why the EU project must move forward to its logical conclusion
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I got the impression that building firms were being hard hit by the recession and the freezing of govt. contracts. I know someone who works for one of the big building companies and the impression he gave me was that the industry was shedding jobs right left and centre and lets face it he's in the know. Course it could be that London and the South East have escaped the downturn whereas everywhere else is suffering, but would that really alter the statistics? Which begs the obvious question, who do you believe? Either way someone is being a bit economical with the truth.
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Stephanie, take a look at Building Magazine's website http://www.building.co.uk/ - there's no evidence of a sudden recovery there, and this is a very trusted and normally cautious platform for the industry.
They even talk of a triple dip recession for construction. I'm an architect, and i've moved into the higher education sector due to the dearth of jobs in my field (don't laugh, i can feel my own personal double dip coming on) - and we are usually the first to feel the benefits of an upturn in construction (and the pain of its downturn). Nobody i know who is still working thinks the future is rosy. Look at what a very high profile company like Arup are having to do...
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re #110 and 112
Please pardon me for barging in with the observation that many European nations are relatively recent constructions and the lessons of the 19th and 20th century should be to call time on the meddling.
Can we not now say "We are where we are. We stay as we are. We work at getting along better internally and externally; socially, economically and politically"?
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re #108
I do have an issue with individual bonuses and not just bankers' bonuses. All bonuses. See my past postings - there are lots of good reasons to stamp out the dreadful habit with one exception.
That is where a bonus pot is paid by an employer and divided equally between all employees.
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Wow are some of these posters stuck in a rut.
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117. At 7:22pm on 11 Dec 2010, Not Buzz Windrip wrote:
Wow are some of these posters stuck in a rut.
Windrip, do your parents know you are out this late.
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I am somewhat surprised that noone has looked at a summary of the basic output figures in construction by type issued in November 2010. They are here.
http://www.statistics.gov.uk/pdfdir/oec1110.pdf
I have no time that the moment to exam in how they were collected etc and if there is an article about all this in the ONS online monthly journal However there is this which explains in part the sources etc.
Construction Principals and Execs who have commented might on may be able to explain further what they put on the forms
http://www.statistics.gov.uk/downloads/theme_commerce/output-description-of-changes-q1-2010-v.2.0.pdf
Note the above Stats feed into GNP.
It would help if Steph put her own recommended links in the blog.
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I own a business, Recycling. We recycle the cartridges that run virtually every business , home, school, University and college in the country.
In October business stopped, dead.
Our business to business and walk in custom in November/December has hit 2/3 less than this time last year.
The economy isn't on recovery, not in the slightest. And it is going to get worse.
I blame the government, a government who rather than buying british buys European, Stationery and it's consumables, i understand that people have to get the best deal and best prices, however, if we want to kick start the UK ECONOMY, we have to buy british. Every large company feeds off small companies, when small companies go under, people stop spending, and more often than not it;s the big companies they stop spending with... Thus it's in their best interests that schools, colleges, hospitals, universities and bigger businesses to support the local small businesses so that we the small business owners and our families keep buying from them and not their European competition!
It's a dog eat dog world right now and british dogs need to stick together.
the politicians are doing what they do best, massage figures (or spin) to make us feel like its getting better.... reality check time for all you that think it is...
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Tim Savi
Hi thanks for the information and apologies for the delay.
That is very interesting. If the information is representative then the private funding of construction is either being driven by borrowing enabled by state spending or it is being driven by private sector savings who have lost faith in other assets like cash.
It would be interesting if you could trace your supply chain to one those two options a) government stimulus b) private sector savers (retirees etc)
or a c) other and work out to what extent
Info of that nature would put an end to this interminable prattle on sites like this.
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Richard Dingle
Weren't Kafka, Freud and Hayek all Czech?
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122. At 11:12pm on 11 Dec 2010, Oblivion wrote:
Richard Dingle
Weren't Kafka, Freud and Hayek all Czech?
The point I was making was that passport or 'name of country on map' is not important (unless you are English of course :) ). Culture and language are everything.
Kafka was a Czech, Freud and Hayek Austrian citizens. They ALL thought and wrote in German. German was their first language. That was my point.
Recent research into linguistics indicates that the language you think in is critical to outcomes. For example, Einsteins General Theory would never have happenned had he been English or French. Something would have happened but it would have been different.
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#123 Richard Dingle,
You are really over-egging your case.
In global terms, the German language is a minor language. German culture has not embedded itself (or been embedded) outside of a small area of Europe. That is fact.
Your claim regarding Einstein is quite meaningless as neither of us could prove that had Einstein thought in another language he would not have provided us with an even better theory.
You also have to accept that German culture is as much as a misnoma as British culture - it is made up of differeing local and regional sub-cultures. Hence within German culture you have the Bavarian cuture which is at variance with the Prussian culture ot the culture of the Rhur which is different to that of say Hamburg. If you want to praise nationalsitic characteristics then you also have to accept the negative aspects. German culture is no better than French or British - it is merely different.
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The figures are curious but the revival of banking and manufacturing may create some stimulus in construction.
In my area construction was 10% of emplyment but largely in housing . This is continuing at a much lower rate despite the economic stability of the east of England with its strong economic drivers such as London and Cambridge.
I also suspect that many companies will be concentrating on finishing projects and raising capital .
At a personal level I have switched from ISAs etc to home improvements and my suppliers all say that they are very busy as millions follow the same route. I attended an auction yesterday where record prices were achieved despite the apparent weaknesses of the economy and there seems to be a general flight from cash into anything else that is useful attractive solid and improving in the widest sense. Where this takes us I am not sure - but it could be a dark place.
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124. At 01:44am on 12 Dec 2010, foredeckdave wrote:
#123 Richard Dingle,
You are really over-egging your case.
In global terms, the German language is a minor language. German culture has not embedded itself (or been embedded) outside of a small area of Europe. That is fact.
'Fact' LOL.
As usual you are wrong.
The German language is roughly six thousand years old, it is the most widely spoken language in Europe and the 4th world language. It is also still spoken today as a first language in enclaves in Poland, Denmark, Russia, Israel, Serbia, Hungary and Slovakia. Also, Yiddish, about a thousand years old and the language of the European (and American) Jews is a branch of High German and takes 85% of of its words from german.
But I was really on about quality not quantity.
German culture has not embedded itself (or been embedded) outside of a small area of Europe.
In terms of ideas you are wrong.
Examples are Marxism (at its height covered more of the globe than any Englisg idea), quantum mechanics (the head boy was a Dane, Niels Bohr, but most of the hotspots were German universities) and the nuclear age. Oh, and pschoanalysis.
Incidentally, without quantum mechanics the world would be very different. No lasers, iPods, flat screen tv, micro chip, basically no computer age.
Scientific ideas are international and there is no greater international community than scientists. But think of the really hotspots in the 'intellectual furnace'.
Also a favourite thing of many Englishmen is the pension. You can thank Bismarck for that. The Germans in turn can thank the English for Fussball.
Try again FDD - but visit the library first.
'Your claim regarding Einstein is quite meaningless as neither of us could prove that had Einstein thought in another language he would not have provided us with an even better theory.'
Suggested by latest linguistic theories. Not my claim. It is accepted by most experts that if the world were to have a scientific language it would be German.
You are really over-egging your case.
You seem to misunderstand my case. It is not a pro German one.
I am merely stating in my opinion that langauage and culture is more important than the nation state, and this is why EU integration will succeed.
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121. At 10:56pm on 11 Dec 2010, Oblivion wrote:
Tim Savi
Hi thanks for the information and apologies for the delay.
That is very interesting. If the information is representative then the private funding of construction is either being driven by borrowing enabled by state spending or it is being driven by private sector savings who have lost faith in other assets like cash.
All this obsession with economic minutiae is meaningless and tedious.
Economic cycles come and go. They go up and down (hence the word cycle).
What is important is any evidence that the UK economy is re-balancing and changing.
There is none. No lessons learnt. No lessons understood.
Same old same.
Whats the betting the ConDems go into the next election on the back of a consumer boom and another property bubble.
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120. At 10:29pm on 11 Dec 2010, youngblood wrote:
I own a business, Recycling. We recycle the cartridges that run virtually every business , home, school, University and college in the country.
In October business stopped, dead.
Our business to business and walk in custom in November/December has hit 2/3 less than this time last year.
The economy isn't on recovery, not in the slightest. And it is going to get worse.
....................
Well said Youngblood
Straight from the horse's mouth ... we must buy British and we must apply sensible import and export tariffs to British trade so as to give our domestic UK economy some real breathing space and glimmer of margins to allow British businesses to compete from our high UK cost base. We must tax the goondog billionaire and import sucking spivs who wreck our UK economy by buying cheap overseas and resell at extortionate prices in the UK ... this destroys our UK ability to compete and makes our UK manufacturing base more costly and therefore much less competitive.
Also, we must give tax relief on those UK businesses which add high proportion process value to their UK operations as requiring a range of low medium and highly skilled jobs.
We must recycle more and dare I say it the UK needs another quango ... yes a 'quality commission' to decide which UK businesses are both adding high value process value in their UK operations and delivering competitive international quality on UK made products ... these should get tax relief for their higher quality business management ... and we should take the bank bonuses of the spivving bank money shufflers and give these bonuses in tax breaks to those who achieve high value process value additions and/or high international quality standards on their manufacturing processes.
Finally we need to recognise our real home based UK business entrepreneurs and get them away from the TV and get them to visit our schools and colleges.
Finally we need to bin GDP and replace it with a better economic measurement mechanism in the form of a range of economic and/or social indicators (happiness cannot be measured as it is too subjective and an 'enlightened hermit living with next to nothing materially' can be far happier than e.g. a 'goondog billionaire import sucker'.
A national sustainability index (NSI) would be a good start and require everyone to focus on what really matters and need measuring except of course ... what does really matter and what does need measuring?
We (UK) are still importing far too much electrical, vehicles and gas guzzler, white goods and other equipment and this needs to be taxed but most importantly ... the revenues need to be invested directly in where it will do most good in the domestic and not to be lost in the wider global economy.
There is still next to zero UK business strategy being applied by UK government ... UK plc urgently needs radical business strategy ... and we need new emergency laws to kick ass in UK banks and get cash flowing into UK SME's ... this all needs to happen now as things can get and will get worse unless our UK government acts quickly and decisively and has a real good strategy and plan of action.
Britain is in decline outside of London/SE and the globalised sectors.
The Coalition govt have done some good work ... but stagnation is upon us and asking the banks for direction and trying to attract rich investors from overseas will not work as they see reduced level further margins and profits and exploitative opportunities in the UK ... as the foreign spivs already have what they want from the UK; after 40 years of UK govt promoted 'frightened rabbit sell offs' of British businesses.
Our UK government must wrestle strategic control of our money from the UK operational banks and stop asking the banks for advice and loans ... and start telling them where to invest and pick winners which meet the process value and quality commission guidelines ... otherwise things will get worse as the rest of Europe also slows, until the Euro currency crashes or is heavily devalued to a competitive exchange rate.
If the ECB does not devalue the Euro currency heavily ... it, the Euro/EMU/EU will crash and anyway, the next recession is the Great Euro Recession (which arguably is already underway).
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#126 Richard Dingle,
What any of this has to do with deconstructing the recovery I don't know but as a response to your post then:
There are Middle and Far Eastern languages that pre-date and are more widely spoken than German.. As for spread then you need look no further than the language that you are using.
If the Chinese, Egyptians, Persians and Greeks had not already made the major break-thoughs then German 'culture' would have got nowhere.
It is you who are trying to limit the whole concept of 'culture' as the basis for your argument.
"I am merely stating in my opinion that langauage and culture is more important than the nation state, and this is why EU integration will succeed."
I have to totally disagree with your contention. All of the European 'enclaves' that you point to only exist within a larger national culture and within another language. I do not see the Poles ready to even consider giving up their distinct culture or language for the sake of European integration. I certainly do not see them allowing themselves to be subsumed as part of a greater German culture.
If Europe is to integrate further then it will have at its core the pronciple that its strength lies in its differences.
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128. At 11:10am on 12 Dec 2010, nautonier wrote:
we must buy British and we must apply sensible import and export tariffs to British trade so as to give our domestic UK economy some real breathing space and glimmer of margins to allow British businesses to compete from our high UK cost base. We must tax the goondog billionaire and import sucking spivs who wreck our UK economy by buying cheap overseas and resell at extortionate prices in the UK
I won't bite.
But what about the poor consumer - does he or she not have a choice.
the Euro/EMU/EU will crash and anyway, the next recession is the Great Euro Recession (which arguably is already underway).
Not really, the PIIGS are static but represent no more than 10% of EU GDP.
Over the next 3 years I would expect EU growth to be higher than UK growth.
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129. At 11:26am on 12 Dec 2010, foredeckdave wrote:
What any of this has to do with deconstructing the recovery I don't know but as a response to your post then:
Nothing but my #127 post explains why. Why bother discussing same old same. So I thought I would go off-topic.
If the Chinese, Egyptians, Persians and Greeks had not already made the major break-thoughs then German 'culture' would have got nowhere.
Can't argue with that. You forgot the Arabs whose contribution to world knowledge far outstrips their nemessis, the Jews. Thankfully they (Baqhdad) introduced a nought into our number system.
Ideas and culture are inter-twined. It is not about spread or quantity, English takes first place there but I doubt whether it would have done so without Empire. It would not have done so with ideas alone.
As for Poland and eastern Europe.. 'do not see them allowing themselves to be subsumed as part of a greater German culture.'
Well they do have a track-record. German as a linqua franca was common throughout eastern Europe. It was the language of most if not all the seats of learning in northern, east and middle Europe.
As an example, von Neumann, a Hungarian Jew who emigrated to the USA, and is famous as the father of probability theory, wrote his thesis, while at university in Hungary, in German, Why was that.
At various points in history the first spoken language in Zagreb, Milan, Prague, Ljubljana, Budapest was German.
I am really just refuting your point that German is a minor language not adopted much outside Germany.
Also substantial German language enclaves in Brazil and Argentina.
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130. At 11:31am on 12 Dec 2010, Richard Dingle wrote:
128. At 11:10am on 12 Dec 2010, nautonier wrote:
.....................
Hi Herr Dingle
Still on the periphery with your comments - even Goondog Trillionare AKA 'Gordo' thinks that the Euro zone is in for a bashing?
But you did raise one other pertinent point -'But what about the poor consumer - does he or she not have a choice'.
Of course the consumer has a choice ... but with process value measuring import tariffing ... the importer/the consumer would simply pay a sensible amount more for certain foreign made white goods where e.g. child/slave labour is used or simply damaging to UK plc or extortion being applied by UK importers.
Remember that UK consumers firstly need a job to go out and buy anything on sale in a shop.
Process value adding import/export tariffing does not reduce customer choice, although, obviously some imports and exports would become more expensive due to higher tariffs - it applies higher tariff taxation generally directly on the importer which can add the maximum opportunity cost benefits to UK manufacturing/job creation security.
Some of the UK tariff costs would be passed onto UK consumers (just like exports traiffs at source on UK imports) but if a consumer can or can't buy an equivalent quality UK process value added manufactured e.g. 4x4 or other vehicle ... clearly e.g. some foreign made vehicles should be taxed more and the tariff invested directly in British industry when an alternative UK made vehicle is available ... and if the UK cannot yet compete on international quality ... then the tariff can be made more modest/adjusted.
If the UK is going to recover, the UK govt is going to have to make some tough decisions here ... personally I would be happy to be price restricted to e.g. British made vehicles even if they are below the best international quality standards ... if every British person who needs a job gets one as result ... it's a question of rampant consumerism - v - the welfare of millions of ordinary British people (the kind of Brit 'that some people tend to ignore')
UK consumers are alreday being ripped off by many importers and this increases UK manufacturing costs/UK cost of living wage and salary and personal debt levels - I suppose that you happy with this?
UK politicians and 'frightened rabbit syndrome BBC' need to understand that whatever failings many British people have or do not have in terms of their employability/skill levels ... UK politicains still need to apply policies for their benefit and not to ignore them and continually write them off.
Otherwise, after reading many of your posts, I get the impression that, generally, you seem to be happy with 'UK economic status quo' because either it doesn't affect you directly or at some stage you will get the last Lufthansa plane to your beloved Deutchland?
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132. At 12:20pm on 12 Dec 2010, nautonier wrote:
Otherwise, after reading many of your posts, I get the impression that, generally, you seem to be happy with 'UK economic status quo' because either it doesn't affect you directly or at some stage you will get the last Lufthansa plane to your beloved Deutchland?
Why don't you read them again. I am the last person on this board happy with the UK eonomic status quo.
I am in favour of abolition of private education (a good free state education underpins economic performance).
Also consistently argued for a re-balanced UK economy.
Now moving onto the nonsensical bit.
'with process value measuring import tariffing'
Gobblygook - what does it mean. How do you measure - an army of men (and woman) in bowler hats with clipboards.
pay a sensible amount more for certain foreign made white goods where e.g. child/slave labour is used
Any evidence of child labour should not mean paying more, it should lead straight to banning those imports outright. This is currently the case where evidence presents itself.
If another country can make goods cheaper and of equal or superior quality to UK manufactureres I should be allowed to buy them. The fact that said 'another country' has cheaper human and raw materials should not be held against them.
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#131 Richard Dingle,
Richard,
This is going round in circles. There are even Welsh speakers in Patagonia but so what? There is, I believe nothing intrinsically in the German language that gives it any higher intellectual standing than there would be in Greek or latin (after all the majority of European scientists and philosophers actually presented their works in these languages - even if they were not their mother tongue).
Whilst language is an element and identifier of culture, it has consistantly proved to have been far from the most essential element of culture. Take the difference between German and Austrian culture as a classic example.
In today's world, German is most definately a minor language in terms of its global usefullness.
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Ok, seems to me that the best way to answer the question about whether the growth rate is genuine is simples:
Use the OLD formula for calculations and see how the results compare to the new formula for calculations.
If the new approach is incomparable to the old approach, and may partly be responible for a spike, it just seems really obvious to me that both or either formulas can be applied to the data.
At least then we can demonstrate that using the old formula there is or is not comparative growth. I know many statisticians and I know for a fact that you can make the data produce whatever statistics you want by have adaptable formulas for measurement.
In fact, I a m surprised that an accomplished journalist at the BBC chose to foucs on objective speculation rather than objectively present clear evidence based on the actual data and the old and new formulas - honestly, its not difficult to get the data and the formula together and click a button on a computer!
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124. At 01:44am on 12 Dec 2010, foredeckdave wrote:
#123 Richard Dingle,
You are really over-egging your case.
In global terms, the German language is a minor language. German culture has not embedded itself (or been embedded) outside of a small area of Europe. That is fact.
------------------------------------------------------------------------
German would/could still be spoken throughout Europe; Czechoslavakia, Romania, Poland to name but three and would have been a common language in Israel and known elsewhere in the Middle (Near) East before WWII. There would have been German communities (and may still be) in Africa (especially east and southern) and there are existing communities in Canada, the United States of America and in Latin America, mostly in Argentina but not exclusively so. I would not be at all surprised if there were still German communities in Australia and, perhaps, New Zealand. {I ought to know about that - I may go and look it up.}
The German language and culture even managed to survive Ceaucescu in Romania.
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On the subject of the construction industry:
1. One area of the coastal south-east, to my knowledge, has all sorts of residential developments underway, being completed and sold. That may be due to its proximity to France. There are indications of a definite upturn in late 2009 and thru' '10.
2. One thing concerns me as far as residential property is concerned: are overseas nationals borrowing cheap money from us to buy, on mortgage, residential property in the UK. This may/was probably a (small) factor in the credit crunch in 2007/08.
Anyone have info on this or the time to go searching for it?
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Having visited and researched many universities recently (with my 18yo kids), I have been struck by the huge amount of development currently underway at each and every one. Apparently a countrywide phenomenon, these establishments also promise that the building of departmental, leisure and accommodation facilities will continue to increase over the next few years.
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#136 Richard Dingle,
When 2 people who speak different languages attempt to communicate in another language, German does not appear in the top 4 alternatives.
Now rather than concentrate your efforts on the German language, please supply other evidence that German culture now underpins any other European country. I would dearly love to see how you would go about proving the debt that Canada, USA, Australia and New Zealand have to German culture.
This whole argument reminds me of a very drunken night in St. Raphael when a rather large red-bearded Irish sailor protested very fiercely that we (the British) should " Get out of his f'ing country". Well he was too big and I was to old to fight about it so I agreed with him. But I then pointed out that the English, Scots and even Welsh had been in and around Ireland for so long that the chances of him being pure Irish (Gael) was very remote - therefore who's country?. The whole night ended in farce as I challenged him to step out of the bar and sing the Irish National Anthem whilst I sang The Sash My Father Wore. Accompanied by a huge crowd we left the bar. He started his national anthem and I started the tune of The Sash - but I substituted the words of a Kop song (still sung at LFC by fans of both religious persuassions). The audience fell about laughing but it took him a good 3 minutes to realise that I was singing different words! We met again the next day exiting the showers and whent back to the bar together for a 'hair of the dog'.
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134. At 1:46pm on 12 Dec 2010, foredeckdave wrote:
139. At 3:10pm on 12 Dec 2010, foredeckdave wrote:
===========================================================
Wrong.
I would dearly love to see how you would go about proving the debt that Canada, USA, Australia and New Zealand have to German culture.
Ok, USA, Hollywood. Also, though we dare not speak its name, investment banking. German contribution to the making of America is more significant than English, though it came later.
More examples, The Pulitzer Prize, named after a German, er, Pulitzer.
Also Reuters, though I might be wrong on that one. Still in Berlin I think.
'Canada, Australia and New Zealand With no disrespect to these countries, backwaters.
Take the difference between German and Austrian culture as a classic example.
Ok, what are they. You tell me. None.
FDD, you define youself on this board by trying to win un-winnable debates, to do this you argumentally disappear up your own a...
Your inability to concede fills me with admiration and reminds me of the White Knight in Monty Python, he loses a hand. 'only a scratch', an arm ' just a flesh wound'.
And I haven't even got onto Music and Philosophy.
Also some more, trivial, Germam contributions...bicycles, the typewriter and comics.
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136. At 2:30pm on 12 Dec 2010, Up2snuff wrote:
I would not be at all surprised if there were still German communities in Australia and, perhaps, New Zealand. {I ought to know about that - I may go and look it up.}
There are German communities in South Australia.
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#140 Richard Dingle,
What an absolute load of tosh.
Ask yourself why the germans you laud in the USA were there in the first place? Answer - to escape the stultifying effects of the culture in their homeland. Now, ask yourself why, with all of their claimed superior culture and intellect they were not able to inpose either their culture or language upon those countries in which they settled. In the case of emigrants to the USA it is simple - because they did not want to!
Try telling an Austrian that his culture is no different from that of Germany. I an certain that you will get short-shrift.
Like all fanatics, you lose the ability to see beyond the end of your nose and your arguments just become more and more silly.
BTW, I stand to be corrected but I believe that you will find that the Chinese invented comics.
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#141 RD,
"There are German communities in South Australia."
Oh is that why the Aussie press were saying that The Barmy Army could celebrate the test win down there because there was nothing else to do :)?
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FDD
To add to my list of famous Americans of German origin.
Eisenhower, Rockefeller, Chrysler, Boeing, Gropius (Architect), Roebling (Brooklyn Bridge), Anheuser (Beer), Jack Nickaulas (Actor), Doris Day (Actor), Babe Ruth (Baseball), Leonardo di Caprio (Actor) - surprised me that one.
English gave the language - I suspect not much else.
Now FDD, stop being silly.
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142. At 5:08pm on 12 Dec 2010, foredeckdave wrote:
#140 Richard Dingle,
Ask yourself why the germans you laud in the USA were there in the first place? Answer - to escape the stultifying effects of the culture in their homeland.
THe dynamic that founded America was to escape from religious oppression and this applies to all European immigrants including Germans.
You really do come across as a rather narrow socialist and a nationalist. I never could understand why the first thing one claps eyes on when entering a Working Mans Club is a picture of the Monarch of the day.
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142. At 5:08pm on 12 Dec 2010, foredeckdave wrote:
BTW, I stand to be corrected but I believe that you will find that the Chinese invented comics.
No, pornography.
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133. At 12:36pm on 12 Dec 2010, Richard Dingle wrote:
132. At 12:20pm on 12 Dec 2010, nautonier wrote:
Otherwise, after reading many of your posts, I get the impression that, generally, you seem to be happy with 'UK economic status quo' because either it doesn't affect you directly or at some stage you will get the last Lufthansa plane to your beloved Deutchland?
Why don't you read them again. I am the last person on this board happy with the UK eonomic status quo.
........................
A) Ah, I see ... you just have zero solutions for the UK improving its economic performance in the short/medium term.
..................................
I am in favour of abolition of private education (a good free state education underpins economic performance).
....................................
A) Our UK politicians keep telling us that is the best part of the UK economy ... and you wish to do away with it?
....................................
Also consistently argued for a re-balanced UK economy.
....................................
A) You may argue for it ... but you put forward 'nix' to achieve it
...........................
Now moving onto the nonsensical bit.
'with process value measuring import tariffing'
Gobblygook - what does it mean. How do you measure - an army of men (and woman) in bowler hats with clipboards.
...........................
A) It means should the UK keep importing e.g. billions of cheap batteries from e.g. China or should we try making about half a billion ourselves and put create 50,000 new UK jobs in the process ... and that is just one product.
Import tariffing for adding domestic process value is what Russia is now doing with car imports ... putting 25% tariff on all cars made outside of Russia. I know its a difficult economic concept to grasp.
Just a small say 15% tariff on UK battery imports could make a huge difference here
..........................
pay a sensible amount more for certain foreign made white goods where e.g. child/slave labour is used
..........................
A) We've all probably got clothes at home which are made using child or other dubious cheap labour or where basic human/employment rights are not respected
.......................
Any evidence of child labour should not mean paying more, it should lead straight to banning those imports outright. This is currently the case where evidence presents itself.
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A) You're correct there but the distinction between exploitation and slave labour is very blurred, in some instances.
.......................
If another country can make goods cheaper and of equal or superior quality to UK manufactureres I should be allowed to buy them.
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A) No one is saying different except that if the pricing of those goods is harming British industry or acting as a barrier to their UK production in terms of production cost advantage, then it is sensible to apply tariffs on a carefully targeted basis ... we already have import tariffs ... thousands of them, but they're not being administered properly
...............................
The fact that said 'another country' has cheaper human and raw materials should not be held against them.
...............................
A) Currency manipulation or weak currency is a different issue and raw materials are a different category/issue also ... the tariffs should apply almost entirely to finished goods that the UK should be producing or in greater numbers and providing jobs in the UK. Currently, about 80% of UK imports are controlled by a small percentage of mainly foreign/multi national controlled importers ... it is this business element that needs to be targeted.
I recall visiting a huge textile mill in Lancashire when closing down for manufacturing about 10 years ago when it had been bought by a company in Asia ... about 200 British workers lost their jobs ... but much of the machinery in the mill which was then about 60 years old ... was dismantled piece by piece and shipped out and re-assembled in India ... and as far as I know is still operational today.
The point being that Britian cannot generally compete on a production cost basis against countries with ridiculously low operating costs ... what are our British workers to do if there are not enough basic jobs?
Doing nothing for them means writing them off as per New Labour and now a Coalition govt as both suffering from 'frightened rabbit syndrome' in terms of helping them and taking difficult decisions and arkward, radical actions
... someone in UK govt is going to have to 'grasp the nettle'
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Good Blog as always Stephanie.
I think it is important we have credibility in the figures. Particularly as the GDP figures are closely watched and many people have vested interests in the numbers.
I actually write a blog about currency www.eurorateforecast.com , where we often look at the impact of GDP figure son the currency markets.
Thanks
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#145 RD
Now you seriously are talking rubbish. I suggest that you study European migration to the USA. Except for the Jewish communities in Eastern Europe it was not religious oppression that drove people to seek a better life, it was grinding poverty and starvation.
As for your personal attack. If I were a nationalist then I would have positioned my arguments in terms of British culture or British achievements. This I have not done. I fail to see what working mens clubs have to do with my arguments.
When challenged you consistantly respond in terms of individuals, achievements or historical events. In terms of culture this is a nonesense as culture is the accumulation of norms and values as they appear today within an environment. Hence culture constantly changes. The culture that Bismark percieved is not the one that Merkle sees today. German culture is no different to any other, it is in constant change as is merely informed by what went before. It is not better or worse it IS different. I suggest you actually study the question of culture before making even more silly remarks.
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147. At 6:08pm on 12 Dec 2010, nautonier wrote:
A) Ah, I see ... you just have zero solutions for the UK improving its economic performance in the short/medium term.
We have reached the point where there are no short term solutions.
Tariffs would just make thingd worse.
I am in favour of abolition of private education (a good free state education underpins economic performance).
....................................
A) Our UK politicians keep telling us that is the best part of the UK economy ... and you wish to do away with it?
Private educations skims off the very best in terms of resource (teachers) and raw material (pupils) and makes it very hard for state education to improve. It is also elitist. I have lost count of the number of parents who openly admit they send their offspring to private school because it 'opens doors'.
Overall, education in this country is poor and we are reaping the economic results.
The point being that Britian cannot generally compete on a production cost basis against countries with ridiculously low operating costs ... what are our British workers to do if there are not enough basic jobs?
Use the education system to 'skill-up'. Hmmm, I forgot, the education system is not up to the job.
You are not seriously suggesting the UK develops a textile industry.
Also consistently argued for a re-balanced UK economy.
....................................
A) You may argue for it ... but you put forward 'nix' to achieve it
Not true. Education, investment, R&D. Creating a meritocracy by dismantling private education and removing the Monarchy in favour of a Republic. Sounds a bit more than 'nix'.
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149. At 6:25pm on 12 Dec 2010, foredeckdave wrote:
Now you seriously are talking rubbish. I suggest that you study European migration to the USA. Except for the Jewish communities in Eastern Europe it was not religious oppression that drove people to seek a better life, it was grinding poverty and starvation.
Search for a better life was paramount and religious oppression played it's part.
Europeans came to America to escape religious oppression and forced beliefs by such state-affiliated Christian churches as the Roman Catholic Church and the Church of England.
The obvious example and I am surprised you missed it are The Pilgrims who were escaping religious persecution in England.
'grinding poverty and starvation' I think you are thinking of the Irish who went to America after the Great Potato Famine.
'The culture that Bismark percieved is not the one that Merkle sees today.'
Oh, in what way. I have a sneaking suspicion that Bismarck would have said something like ... 'thats my gal'.
You really are wriggling on this.
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150. At 6:42pm on 12 Dec 2010, Richard Dingle wrote:
147. At 6:08pm on 12 Dec 2010, nautonier wrote:
...................
A) You may argue for it ... but you put forward 'nix' to achieve it
Not true. Education, investment, R&D. Creating a meritocracy by dismantling private education and removing the Monarchy in favour of a Republic. Sounds a bit more than 'nix'.
.........................
?
Social education ... mainly a social and is not an economic objective?
Dismantling the monarchy? Another social/constitutional issue and not an economic objective
As I said ... 'nix' in economic terms ... nix in terms of short, medium and long term strategy ... the only thing wrong with our UK educational system is the lack of a range of vocational and apprentice training from age 14 onwards and the problem of too many going to University studying '-ologies' and the sheer number of good quality training places required for apprentices, part time/vocational training etc. A change is mindset and emphasis needed here.
Also, there are too many barriers to entry now with qualifications for British workers and students ... even though foreigners are welcomed with zero UK qualifications ... it is an outrage.
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152. At 7:14pm on 12 Dec 2010, nautonier wrote:
?
Social education ... mainly a social and is not an economic objective?
Dismantling the monarchy? Another social/constitutional issue and not an economic objective
As I said ... 'nix' in economic terms
All I suggest has an economic impact. What you suggest with tariffs would be disastrous for the UK economy.
At least entertain us by describing how things would work if you introduced tariffs, what criteria.
'Social education' - A good state education is not socialist.
Can't you join the dots up.
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144. At 5:24pm on 12 Dec 2010, Richard Dingle wrote:
FDD
To add to my list of famous Americans of German origin.
Eisenhower, Rockefeller, Chrysler, Boeing, Gropius (Architect), Roebling (Brooklyn Bridge), Anheuser (Beer), Jack Nickaulas (Actor), Doris Day (Actor), Babe Ruth (Baseball), Leonardo di Caprio (Actor) - surprised me that one.
English gave the language - I suspect not much else.
Now FDD, stop being silly.
------------------------------------------------------------------------
I heard Tom Lehrer's song about Werner von Braun on R4 the other day. Was Tom Lehrer being silly with the final line?
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As far as nations, culture, language, races, nationality, etc., go we now live in a mixed up, muddled up, shook up world .....
I blame Lola.
Hey! Let's be truly c a r e f u l out there, tomorrow. {Thanks, Sgt. Phil}
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#151 Richard Dingle,
"You really are wriggling on this."
Oh contraire! I have no need to wriggle as you are clearly demonstrating a very poor understanding of social history and a complete lack of understanding of what culture actually is.
If you consult your history books then you will find that the potato blight spread across the whole of Europe and caused great starvation.
As for emigrating groups then one of the largest ethnic groups in the US are Italians. I don't see too much religious persecution being imposed upon them to cause them to emigrate.
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155. At 7:32pm on 12 Dec 2010, Up2snuff wrote:
As far as nations, culture, language, races, nationality, etc., go we now live in a mixed up, muddled up, shook up world .....
I blame Lola.
:)
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153. At 7:22pm on 12 Dec 2010, Richard Dingle wrote:
152. At 7:14pm on 12 Dec 2010, nautonier wrote:
?
Social education ... mainly a social and is not an economic objective?
Dismantling the monarchy? Another social/constitutional issue and not an economic objective
As I said ... 'nix' in economic terms
All I suggest has an economic impact. What you suggest with tariffs would be disastrous for the UK economy.
At least entertain us by describing how things would work if you introduced tariffs, what criteria.
'Social education' - A good state education is not socialist.
Can't you join the dots up.
...............................
I call that 'nix'.
I can join the dots up when there are enough dots to join up and the dots make a recognisable pattern ... I'm afraid that although you have some good genuine thoughts and comments I don't think you have anything of substance i.e. that would bring an improvement to the millions and millions of forgotten Brits who need help sustain themselves economically and are now in a vicious fight for their own economic survival and future well being.
Like millions of others in the UK and elsewhere ... the idea that, overall, the UK is going to ....... 'recover' .... is a nonsense and the stuff of history ... because the current economic cycle is like nothing that has been seen before.
Only truly radical and substantial solutions can now assist the UK ... the main benefit of tariffs is that they are in economic terms - 'immediate' and can be turned on and off like a tap ... very few fiscal measures have this effect ... other than e.g. VAT ... that is why it is being used by the previous and current govts ... but the tariffs have been overlooked and are much more powerful than VAT as they can radically change behaviour and promote new investment. Obviously, great care would be needed in how they can be used more effectively than at present ... but their effect can be massive ... even in a matter of weeks or months.
If the Coalition govt hold back from intervening and continue (like New Labour) to pander to global free trade market forces ... the UK is heading for further disaster... we have nothing to lose ... 'UK re-balancing' must now urgently be enforced through trade tariffing and by strict control of bank lending to where it is needed most in the UK domestic economy.
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156. At 7:40pm on 12 Dec 2010, foredeckdave wrote:
As for emigrating groups then one of the largest ethnic groups in the US are Italians. I don't see too much religious persecution being imposed upon them to cause them to emigrate.
Italian immigration to the USA started around 1850 (latecomers) and they are not one of the largest ethnic groups though probably the noisiest.
What ethnic groups make up the USA - close your eyes FDD you won't like it...
15% Germans
10% Irish
9% Afro American
8% English
...
6% Italian
So earlier you posted...
' I would dearly love to see how you would go about proving the debt that Canada, USA, Australia and New Zealand have to German culture.'
Well in respect of the USA I would say the debt is the USA itself.
Perhaps when the Euro is on the mend, and the defacto world reserve currency, perhaps the USA would like to join.
Like a lot of people you build a false picture of America based on the movies. More Italian characters than Germans in Mafia films, well obviously.
Do some proper reading and stop accusing others of spouting rubbish.
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158. At 8:02pm on 12 Dec 2010, nautonier wrote:
If the Coalition govt hold back from intervening and continue (like New Labour) to pander to global free trade market forces ... the UK is heading for further disaster... we have nothing to lose ... 'UK re-balancing' must now urgently be enforced through trade tariffing and by strict control of bank lending to where it is needed most in the UK domestic economy.
You are obviously genuine in your desire to find an economic remedy for the UK.
Unfortunately there isn't one. Chickens coming home to roost, etc.
Making one wrong call after the other since days of Empire.
Tariffs will start a trade war and given that the only real hope of re-balancing the economy is by exporting more we will suffer retaliations.
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I have recently been in Portugal for a week, and before that in Germany. I live in Switzerland.
All the talk about the EU and the Euro has been interesting, but like Stephanie I am skeptical of the figures produced by government. But such was the visible poverty in Portugal, in Lisbon, when compared to Munich, that I was compelled to do a little of my own research. I just could not fathom how Lisbon, which is a second world city, and Munich, which is a very highly developed city, could share the same currency.
So I did some research, and I found some astounding figures. I came to an epiphany regarding Europe and the EU, and the fate of the Euro seems clear to me now. Since returning to Switzerland the people I have met seem convinced by my reasoning, and the numbers upon which my reasoning is based are easily verified and not contested by anyone.
On that basis, I'll share the ideas on this fine blog, and see what y'all think of it.
Firstly, the numbers:
Average wage in Portugal: 800 Euros per MONTH.
Minimum wage in portugal: 475 euros per month
Average civil service wage in portugal: 200% average private sector wage in portugal.
Average civil service pension in portugal: 400% average private sector wage in portugal.
Number of civil servants in portugal 1975: 284 thousand (pop: 9 million)
Number of civil servants in portugal 2000: 747 thousand (pop: 10.5 million)
Euros paid in civil service pensions 1975: 10 million
Euros paid in civil service pensions 2005: 5'727 million
These figures for civil service wages are a bit low. In reality, civil service wages are much higher, because of the way they are paid and calculated. Also, large numbers of portuguese party members work for the EU, and they receive wages that are in line with the Netherlands and Germany. But these figures are modest enough not to be contested by anybody. For verification, consult the OECD data:
http://www.oecd.org/dataoecd/28/11/38700072.pdf
So, what? Who cares?
Well, consider the UK:
Average wage in UK: 2080 gbp per month.
Minimum wage in UK: 980 gbp per month
Average civil service wage in UK: 91.5% average private sector wage in UK. (£22,850)
Average civil service pension in UK: circa 60% average private sector pension income UK. (6700 quid)
Number of civil servants in UK 1975: 746 thousand (pop: 56 million)
Number of civil servants in UK 2000: 493 thousand (pop: 61 million)
GBP paid in civil service pensions 1975: ???
GBP paid in civil service pensions 2005: ???
I'm not really sure about how "civil servant" is defined in Portugal. If it means means public sector worker, then some of these comparisons are bunk, because the UK has 6 million public sector workers.
But if the definition of civil servant is the same in both countries, a very clear picture emerges, and so too does the inevitable fate of the Euro.
Put simply, ever since the Euro became the currency of Europe, civil service wages in the poorer areas have converged upon the civil service wages in the richer areas. That has been the consequence of all those civil servants getting together in Brussels, and chatting away about the glory of party policy and a united Europe to each other.
In essence, the EU brought all European CIVIL SERVANTS together. In Brussels. That was supposed to be the first step to a united, wealthy, prosperous Europe. The trouble seems to have been that the civil servants talked more about unifying civil service wages than they talked about unifying EU productivity. Or perhaps those civil servants were not able to boost EU productivity, so they did what they could do. Which was to unify civil services wages.
And the direct and absolutely inevitable consequence of that is abundantly clear, if you look at these figures.
Indeed, the consequence for the Euro zone is abundantly clear if you look at those figures and ask a simply question:
What would be the fate of the UK if the number of civil servants increased by 300% and their pay increased by 220%, and their pensions increased by 800%?
Well, it is a pretty easy question. Even the most hard core communist in Britain must shudder at the economic outcome if civil servants in the UK were to increase in income by those proportions. The UK arguably can't pay for the civil servants it already has.
So, that is why Europe is the way it is, and why the Euro MUST fail.
Put simply, the party members of Europe gathered together in Brussels forty years ago, and applied their best efforts at bringing equality and fairness to bear on the European continent. They started with their own salaries.
In so doing, they have bankrupted the next few generations of Europeans. They have made their own children inevitably destitute, and their grandchildren slaves of an insurmountable public debt burden.
THAT has been the consequence of allowing the party members to define a glorious unified Europe, and of giving these people the keys to the public wealth of the continent.
I'd be happy for anyone to shed further light on these figures, but at the same time if you are really curious to understand why the EU must fail, and the Euro also, you owe it to yourself to go to Lisbon, and take a look around.
Look around Lisbon, and as you do so contemplate the idea that the government officials in that place travel to brussels and wine and dine and talk shop with their "fellow europeans" from Holland, Germany, the UK and Sweden.
How could it possibly turn out any other way?
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160. At 8:22pm on 12 Dec 2010, Richard Dingle wrote:
158. At 8:02pm on 12 Dec 2010, nautonier wrote:
If the Coalition govt hold back from intervening and continue (like New Labour) to pander to global free trade market forces ... the UK is heading for further disaster... we have nothing to lose ... 'UK re-balancing' must now urgently be enforced through trade tariffing and by strict control of bank lending to where it is needed most in the UK domestic economy.
You are obviously genuine in your desire to find an economic remedy for the UK.
Unfortunately there isn't one. Chickens coming home to roost, etc.
Making one wrong call after the other since days of Empire.
Tariffs will start a trade war and given that the only real hope of re-balancing the economy is by exporting more we will suffer retaliations.
.................
Like the many forms of protectionism ... Britain is one of the few countries that does not operate some form of protectionism ... obviously I do not share your defeatist attitute for the UK ... Britain will not simply export more as things stand ... because 'we':-
- cannot produce at the operating cost prices that are CURRENTLY needed to be able to export
- are restricted on everything that we do by the EU
- cannot produce most things of sufficient international quality
- do not have the money to stimulate new investment
- we do not have the environment to be able to depend on exports in the short and medium term ... as things stand ... doing a lot better on exports is a long term UK business aim for UK plc
That is why we need to radically change how we do things, indeed most things ... and depend much less on imports ... even though the UK will always probably be a net importer in the short and medium term.
Having 'frightened rabbit syndrome' with tariffing will set us back 20 years - we have nothing to lose!
Oil? - Electrify UK road systems
Cars? - Electrify all UK cars
Gas - prdouce it ourselves
Nuclear - build it ourselves
Trident - build it ourselves
Electrical - make it ourselves and tariff the rest
Banks - take strtegic control and tell them what and where to lend
Electric Railway investment
Increase all alternative and energy efficiciency measures
+ Many other similar domestic focussed projects
We do these green energy related things and get them right using fairly modest tariffs for finance ... then we become less dependent on imports and we 'recover' ... if we don't we stagnate and decline as is what we have now!
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#159 Richard Dingle,
Are you just being really silly or are you stupid?
One I never claimed that the Italian immigrants were the largest ethnic group. If it is possible for you to comprehend, I calimed that they were "one of the largest". However the main point that I was making in their regard was that they did not emigrate because of religious persecution.
Now put together the rest of your rubbish in this post and add them to the list you presented in #154. Then ask yourself why these people left Europe; why they helped develop an altogether different culture? and finally why the majority of them chose to change their nationality. Having done that ask yourself why they did not chose to remain within the German culture. You may have done some research but your posts declare that you lack the ability of critical analysis.
You have absolutely no understanding of culture and it shows. If you wish you can go on to try and define some genetic reson supposed German superiority but then that has been tried before - and failed!
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Now the BBC headline is that the EU is going to make the private investor pay for any bond instability.
Well, I'll be darned.
Clearly the BBC is two steps behind the EU, as this is quite clearly shocking news.
NOT!
Jay-sus. I give up. It's like being a goldfish in a small bowl, wondering if intelligent life might exist outside my 6 second daydream while reading the newspapers written by plankton.
*yawn*
One thing is obvious, friends and comrades: we're wasting our time here.
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#162. nautonier précis: Little England is the answer.
I do not agree. We are unable to be self sufficient in many things such as food, for example. We have to remain part of the World.
I do not comprehend why you reject the golden opportunity of the single European market as our home market? Please explain yourself? Do you want to stop all foreign (European) holidays? (Re)Introduce strict trade-only exchange control?
I don't, as I see that this will make our position far worse. If you were Welsh or Scottish (or indeed Cornish) would you want to separate from the UK. So why do you want to be separated from the EU? (The EU is after-all 70% of our 'export' market and we can make it truly our home market by joining the Euro.)
What is it with the way that the system has so alienated you from the structures and mechanisms of our economy that you want to damage the country so much? What has stopped or prevented you from understand our real position and our real opportunity?
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#165 John_from_Hendon,
John,
I think the problem is far more complex than either you or nautonier are presenting. You are well aware that I do believe that one of the major tools for Europe to employ is protectionism. To that degree I am at variance with you. However, I have always argued that such a policy would have to be enacted on an EU basis, As you say over 50% of our 'exports' are to EU countries.
The question of joining the Euro is another even more complex issue.
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163. At 10:30pm on 12 Dec 2010, foredeckdave wrote:
The Italians came later and it was not the result of religious persecution.
Most of the peoples who came before them were 'escaping religious persecution'
The Italians are not 'one of the largest groups'.
Your argument is getting ridiculous. None of the people who went to America were making a conscience decision to ditch their culture. Though between them they created a new one.
Is that too hard to follow.
Your insults tend to increase in correlation to losing the argument.
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163. At 10:30pm on 12 Dec 2010, foredeckdave wrote:
Then ask yourself why these people left Europe; why they helped develop an altogether different culture?
It was not to escape their culture, that notion really is ridiculous.
They were proud of their culture and created communities based around it. These communities eventually coalesced to form America.
#166
To that degree I am at variance with you. However, I have always argued that such a policy would have to be enacted on an EU basis
Quite absurd. To what extent are German exports in need of protectionism. It would destroy their export model.
Protectionism is as I have said before, many times, a flawed policy. It gives short-term relief by protecting indigenous industries from reality.
It has never worked. That does not stop it being advocated by 'muddle heads' who want a quick fix and can't face the truth.
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#168 Dingle,
IF, "These communities eventually coalesced to form America." then they would still discernably be Germanic in culture and their common language would be German. Now even you cannot prove that to be the case.
It may have passed your attention that German economists and politicians are already addressing the question of export surpluses.
Perhaps one day you will finally understand that continually preaching rubbish does not make it fact.
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I wonder how much the construction industry is using illegal labour. My information is only anecdotal but there are workers from countries not in the EU on some projects.
In agriculture there are legally controlled gangmasters but in construction there is no such legislation. A lot of companies use subcontractors and as quite reputable firms might, somewhere down the chain, be not quite conforming with the law.
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169. At 10:36am on 13 Dec 2010, foredeckdave wrote:
IF, "These communities eventually coalesced to form America." then they would still discernably be Germanic in culture and their common language would be German. Now even you cannot prove that to be the case.
The American language was based on English and all immigrants accepted the 'standard'; adopting a common tongue was essential. A lot of these communities retain a lot of their original culture, Little Italy for example.
Nothing to do with your argument.
It may have passed your attention that German economists and politicians are already addressing the question of export surpluses.
In the long-term surpluses are damaging and are addressed through exchange rate appreciation. Nothing to do with tariffs. It is basic logic that if exchange rates were completely free to rise and fall surpluses and deficits would cease to exist.
Perhaps one day you will finally understand that continually preaching rubbish does not make it fact.
I take great care with facts and do my research. You just don't like the argument. This thread started with the basic assertion that culture / language is more important than the nation state, especially in the case of the Germans.
All the evidence does point to, whether you like it or not, that America to-day has more German influence than English.
This is a classic of accusing your opponent of the faults you possess in abundance.
You undermine your case by falling back on insults.
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#171 Richard Dingle,
You totally miss the point when you try and make points regarding culture. You only have to see just how important it is for Americans to promote themselves as being Americans. The myths and stories, their routines, etc, are all designed to unite them within an individual culture that they have designed for themselves and continue to develop. Whilst they may indentify with sub-cultures eg Irish American, Polish American and yes even German American the important thing for them is their identification as AMERICAN. The culture of their country is deliberately different from that of the cultures that their ancestors left. Their routines - the flag, the Oath of Allegiance, etc. are identifiers of their own culture. This is also evidenced by the difference between US culture and that of Canada.
As for 'Little Italy', the anthropoligical studies show these sub-sets within a wider culture do not continue to reflect the culture from which they stem but actually become parodies of them. A very good example of that being British ex-pat communities.
"In the long-term surpluses are damaging and are addressed through exchange rate appreciation. Nothing to do with tariffs"
In a theoretical world your argument would have substance. However, overt and covert protectionist policies in the real world ensure that this balancing mechanism does not work.
If you were correct then the Euro would not be in its present weak position (the EU being a net exporter). So what has gone wrong with the mechanism you promote? Or are you trying to say that the failure of free-market economics is that we haven't had enough of it?
When the system is so out of balance then a workable re-balancing mechanism has to be employed. Protectionist policies offer that opportunity.
"All the evidence does point to, whether you like it or not, that America to-day has more German influence than English."
Here you present the flaw in your argument. I have never been arguing about the relative merits (or otherwise) of the influence of British culture vs german culture. The ONLY reference that I have made to British culture was made above - and that in a derogatory way!
But if you wish me to do so then I would point to the following factors - language, law and media (for starters) which are most certainly not based upon a Germanic cultural model. However, it is important to note that they are no longer essentially British, they have truly become American.
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172. At 2:01pm on 13 Dec 2010, foredeckdave wrote:
If you were correct then the Euro would not be in its present weak position (the EU being a net exporter). So what has gone wrong with the mechanism you promote?
The Euro is not 'its present weak position' - some of the national finances of the countries that make it up are.
The Euro is just a currency and happens to be 25% stronger against sterling than it was 5 years ago. To reduce German surplus it needs to higher. This won't happen.
What has gone wrong is that any upward shift in the Euro to reduce German surpluses is prevented by the economic state of the PIIGS.
So rather than highlight German surplus we should look at the surplus / deficit of the EU as a whole. This shows the mechanism working. Eurozone surplus (quite tiny, or break-even) is a reflection of the value of the Euro against other currencies.
As I said before the Eurozone can only go forward towards integration or implode.
None of this has anything to do with protectionism.
Back to culture. American culture was produced by the various groups that make up the American people, that much is obvious. However I repeat my basic point which is that culture and language is more important than nation state and defines us, but some of us more than others.
To look at America and say wow they all speak English, we (the English) made America is just silly.
The current Joint Franco-German army unit use English to communicate with each other, but it is not an English army unit.
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Steph
There is something wrong with the figures – the cut across the business and investment funding has hit the property and building markets very hard, Social Housing and the work they push out has almost stopped, Central Gvt is doing nothing, the bodged cancellation of BSF caused huge damage and extreme uncertainty exists in who is able to do what when and where.How can you remove 40% of the market and still have growth?
This weeks Building Magazine has already identified that over a 3rd of building contractors are tendering at 0% [zero] or negative margins, there has been [and there will be more] mass redundancies from the large professional practices, there are pay cuts across the board, graduates are not being recruited.
The announcements that there is growth in the market have been met by derision by those of us that work in the industry, we are planning for a deep double dip recession over the next year – this being an industry that accounts for 9% of the GDP and is ignored by the political classes as it is not one massed body like a large factory [or bank any one?].
When you talk about the building industry its not one thing, the guys doing extensions operate in a different market to the contracting industry, which is again very different to the Civils and Rail markets. A few large scale vanity projects are not what is needed, projects between £1m and - £50m are the engine of the building industry and are where the bulk of the trades are employed. The very big project tend to be open market EU tendered and won by large combines often headed by overseas contractors.
The sadness is that we were just beginning to get reskilled following the last debacle in the 1990s and then this hit us, currently almost 30%of all Architects are looking for work or are on short time, this is almost as bad as the early 90s recession when 50% of all Architects were unemployed [this being a profession where you have to study full time for 5 years – and with the Governments management of the fees situation will leave them with £64,000 in debt]. Is it any wonder why we struggle to get the right calibre people when times are half way decent!
Look forward to some very depressing news….
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#173 Richard Dingle,
Oh I see, I've got it all wrong - along with the majority of commentators! The Euro is not weak, it is merely the national finances of its member economies that are weak. I must be very silly but if the majority of memebers within a currency union are weak then the currency itself is weak. Hence your exchange rate appreciation model is not working and will not work in the short to mid term.
I fail to see what relevance your reference to sterling has in this context.
Back to culture - if we must but its not your forte
In every region of the world, the largest unit in which culture has identified itself is the nation state. After that the cultural linkages become more obscure and tenuous. Even with advent of the EU we find it almost impossible to define what being European actually means and how it relates national cultural identity.
I have not said that we (the English) made America. I have been at great pains to insist that it was the Americans who made America. That you could interpret that from what I wrote actually beggers belief.
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175. At 3:59pm on 13 Dec 2010, foredeckdave wrote:
#173 Richard Dingle,
Oh I see, I've got it all wrong - along with the majority of commentators! The Euro is not weak, it is merely the national finances of its member economies that are weak. I must be very silly but if the majority of memebers within a currency union are weak then the currency itself is weak.
You seem to have no concept of proportion or balance.
The 'weak' countries in the Euro comprise no more than 10% of Euro GDP.
Hardly a 'majority' is it.
If the Euro is 'weak' then Sterling is deceased.
You really are a little confused on the Euro. The argument currently raging is around the fact that the Euro prevents the 'weak' countries from getting a quick fix through devaluation. The 'one size fits all' criticism.
PS. You started the 'America sub-thread'.
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Yes these figures do reflect an increase in the growth of work on major projects, and minor projects.
The latter however has fallen sharpley since the advent of the snow and ice. I use two monitors the rising unemployment of Town and Country Planers and the fact that I have not seen for at least a month the pick up vans taking labourers to work (they could of course changed the pick up spot).
We have all taken a bad knock, banks, investors, workers etc. but until the culprits of the slump the house owners take a knock we are in a hole we cannot get out of. Please, please remove Capital Gains Tax Exemption on first and all second homes.
AlanR
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There are quite a few factors that led to a construction "bubble":
1. Olympics construction
2. Darling construction boost
3. Fall in £ makes UK property cheaper to overseas investors
The meltdown in Ireland, Spain & USA in both commercial and residential property is a stark warning, but the real issue here is the very heavy cut in government construction spending that is about to hit us, combined with the ending of the olympic construction and Darling plan boosts.
If construction nosedives after Christmas, the impact will be disproportionate as it has been so buoyant recently.
I still project the 300,000 jobs that the Darling Plan safeguarded, plus the 500,000 on the olympics will go to swell to 1,000,000 construction jobs lost by this time next year.
That will not only choke off growth but lead to a big increase in welfare payments, and the construction industry in turn provides a large number of supply jobs too - probably 5 times - you're looking @ 5M unemployed...
House prices are falling - first time buyer average age now 35 - there is going to be a massive trade down trend as so many pulbic sector workers face never working again - plus student debt will stop new buyers entering the market next year.
The OECD predict a 40% fall in UK house prices - they look to be on the money to me.
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With all due respect, I seriously question whether many of our BBC journalists have the sense of perspective which is required to accurately gauge and report on the gravity of the situation which now faces the UK. Just look at the way that they're still happy to play with words in their titles. This is still story telling to 'sell' copy. I reckon it courts readers and praise - it's not useful reporting.
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Just read this......
"Somebody has got to spend all this QE.
Wall Street is awash with QE.
Let the party begin.
And you lot in third class.....Tough s--t.
We're in the Money, We're in the Money, We're in the Money...."
Says it all really.....Applies to The City as well.
Also with the government cutbacks...this will give even more money to the Centre of Power (London), whilst the outer reaches will have to fend for themselves, whilst still paying their TAXes.
So really it is...FOR THE CITY and BANKS...
"We're in the Money, We're in the Money, We're in the Money...." or if we go back to the good old days of Mrs Thatcher..."LOADS OF MONEY"
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178. At 5:46pm on 13 Dec 2010, richard bunning wrote:
That will not only choke off growth but lead to a big increase in welfare payments, and the construction industry in turn provides a large number of supply jobs too - probably 5 times - you're looking @ 5M unemployed...
House prices are falling - first time buyer average age now 35 - there is going to be a massive trade down trend as so many pulbic sector workers face never working again - plus student debt will stop new buyers entering the market next year.
The OECD predict a 40% fall in UK house prices - they look to be on the money to me.
=======================================================================
Looks like a reasonable forecast. Only that measure of property deflation can stave off a 'rebellion of the young' whose generation is being sh*fT*ed every which way.
Despite being a house owner I welcome such a collapse. I am proud to be one of those 'economic perverts' who bought his house as a home to live in not as an ATM.
As for welfare benefits for the 5m unemployed you are being a little optimistic given the rabid ideological appetite of the ConDems.
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176. At 4:30pm on 13 Dec 2010, you wrote:
175. At 3:59pm on 13 Dec 2010, foredeckdave wrote:
Oh I see, I've got it all wrong - along with the majority of commentators! The Euro is not weak, it is merely the national finances of its member economies that are weak. I must be very silly but if the majority of memebers within a currency union are weak then the currency itself is weak.
Are you 'silly'? Well if you persist in trying to win an un-winnable position. If the cap fits, etc.
The Eurozone dilemna is quite 'delicious' as far as a problem goes. The PIIGS can either embrace poverty by having their own little currencies back or embrace poverty within the Eurozone until their economies get more competitive, which will probably take decades.
A third path they could take is to 'think out of the box' and reject GDP as a The Measure and go for the 'life balance' option.
The point is, if the PIIGs leave they are in trouble, if they stay they are in trouble but within a 'club'.
And it is not all the fault of the 'wicked Germans' for working hard and building a big surplus.
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Stop bashing the Germans - I love my Audi. People who work hard, save and believe in quality. Maybe we could give it a go.
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183. At 8:24pm on 13 Dec 2010, truths33k3r wrote:
Stop bashing the Germans - I love my Audi. People who work hard, save and believe in quality. Maybe we could give it a go.
You might have to get that one past FDD :)
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I'm working in a scaffolding business: no sign of a boom!
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185 - you need to get in quick with a local council who want to waste millions of hard earned pounds on some "installation art representing the post industrial ennui of the UK"
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186. At 8:45pm on 13 Dec 2010, truths33k3r wrote:
185 - you need to get in quick with a local council who want to waste millions of hard earned pounds on some "installation art representing the post industrial ennui of the UK"
...or just concentrate on a few erections of your own - well it is Xmas.
(Moderators might be challenged by that one).
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I would agree that the reality of the increase in activity is much less than the figures would imply. There is an easy way to check. Look up the year on year sales of cement which are available from the the UK cement manufacturers association which exactly track construction/building activity. In the autumn of 2008 when the 'crunch' hit the construction sector in the UK sales of cement fell by c30%. Whilst in 2009/2010 they have recovered from that low the recovery has been much lower and I would guess, the figures will confirm, that sales of cement are still down 15/20% from their 2008/9 peak. The cement companies are not expecting any significant upturn until 2013.
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#184 Richard Dingle,
It's a pity that other matters intervened this afternoon. It was a delight to see you demonstrate your complete misunderstanding of the concept of culture by making more and more silly claims.
As for truths33k3r, I wouldn't take too much comfort there. Your beloved social-market model is a complte enathema to his liberterian philosophy.
Turning to the Euro. Germany is caught upon the horns of a major dilema. Stay in the Euro and become de facto the underwriter of the bail-outs and further support mechanisms or leave and revert to the DM. If it choses the former then it will be a major drag on German financial resources and their banks will face a major hit. If it leaves the Euro then it is likely that the value of the DM against the Euro will mean the loss of a large proportion of German exports (see the stats, if you don't believe me) along with a likely crash in its banking sector.
Now I don't care if you believe me or not but I am thankful that it's Germany's problem to try and cope with.
On top of that, there is a growing movement (even within the G20, OECD and IMF) that is demanding action upon surpluses. For once we are not only in agreement with each other that surpluses are unsustainable but also with a growing number of economists and politicians. It does make for some strange bedfellows as Ken Clarke puts surpluses at the top of the list of problems and I would never have thought that I would agree either politically or economically with him!
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165. At 10:56pm on 12 Dec 2010, John_from_Hendon wrote:
#162. nautonier précis: Little England is the answer.
I do not agree. We are unable to be self sufficient in many things such as food, for example. We have to remain part of the World.
I do not comprehend why you reject the golden opportunity of the single European market as our home market? Please explain yourself? Do you want to stop all foreign (European) holidays? (Re)Introduce strict trade-only exchange control?
I don't, as I see that this will make our position far worse. If you were Welsh or Scottish (or indeed Cornish) would you want to separate from the UK. So why do you want to be separated from the EU? (The EU is after-all 70% of our 'export' market and we can make it truly our home market by joining the Euro.)
What is it with the way that the system has so alienated you from the structures and mechanisms of our economy that you want to damage the country so much? What has stopped or prevented you from understand our real position and our real opportunity?
,,,,,,,,,,,,,,,,,,,,,,,,,
Hi John
I'm afraid your own perspective and understanding is limited by your own tendencies towards barriers and stereo-typing and you're attributing a lot of nonsense and misinformation to my posts which is not actually contained in any of them.
When someone writes a different perspective and way forward try and understand what is holding Britain back and why Britain is split many ways between the 'haves' and 'have nots' and then you might see the way forward.
I'm afraid, that like Herr Dingle ... you have some good ideas and interwsting points but effectively other than waiting for Britain to hopefully get dragged along in some sort of mysterious future split speed EU based economic 'recovery' - you give no hope or overall economic solutions to the millions of British people who are now and will increasingly be struggling for their economic survival and living standards, in the UK.
If this makes me a 'Little Englander' as you call it ... I'm proud of it ... if that means my not being a British back stabber ... then I'm proud of that also.
I think that 'Pro Euro, neo-liberal domineering political union dicatation' towards free thinking British people has to be challenged and the arguments won before the UK or England is permanently damaged by the 'EU straight-jacket' that now envelopes the UK.
Ironically, many countries that are not EU members are 'doing better' and doing better trade with the EU than the UK ... that is the acid test!
If the UK is to recover ... we must re-organise ourselves differently and do things differently economically and do what is best for all of the UK ... the 'open globalised alternative' is what we have now and is long term stagnation for about 75% of the UK population while approx. 15 - 25 (?)% of the UK population continue to look after themselves and dictate to the remainder that ... 'all is well'.
If you have any real and immediate and substantial overall economic solutions for the UK ... please can we see your comments?
Cheers!
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'The inflation may be temporary - and it may be due to "exceptional" increases in energy and other costs.'
...........................
Temporary ... definitely not.
The UK is importing too much stuff that we should be trying to make ourselves
The UK is being ripped off on its imports and needs to 'box and bit more cleverly'
The UK has e.g. no integrated transport and energy policy e.g. full UK transport electrification of road and rail transport. We need to plan ahead and become non oil and gas dependent (within e.g. 30 years) and invest massively in full transport and energy electrification on a massive scale ... the investment will also lift the UK clear out of recession ... free solar power vehicle charging stations etc on every lamp-post and street corner etc ... plan and implement and GO FOR IT now or we're in further serious long term economic stagnation going forward
UK inflation will force interest rate increases upon the UK (and EU) as our UK and EU policy makers fail to deal with Britain's net trade deficit - because British Business and trade needs a massive overhaul and protection for British domestic business and UK process value adding capacity.
The Bank of England now has a dilemna on interest rates - v - inflation because our frightened rabbit UK politicians/self serving business community will not forge a new economic business model on the UK and enforce re-balancing of our UK economy with intelligent fair trade protectionism and the taxation of inflationery import goods and suitable import tariffing.
In other words the UK must apply e.g. taxation/tariffing/rationing and get tough on its trade or the UK regional stagnation will become much wosre when the interest rate rises are forced on the UK through higher and higher inflation which will get much worse when the global economy picks up and Britain gets left behind with higher and higher inflation and interest rates.
This is very serious for the UK - Everything affects everything else - in economics!
Radical and urgent strategy, planning and action please!
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I'm in the construction industry. It's nonsense to suggest we're recovering. We are clearly not. There are lots of factors. One factor is that people are very hesistant. Companies and homeowners are simply frightened of spending money. It all comes down to what happened to the oil prices. Let me explain:-
They fear hyperinflation I think. Bear with me, I'll get back to this point, but firstly some background: Oil prices were $40 per barrel back before 2008. During that year they suddenly rose to $147. This pushed carriage costs up. Particularly for shipping between China and the USA. Suddenely $800 a day became $1100 a day. That put Chinese goods up in price and the raw materials the parts they sent to America and Europe. This was the underlying trigger to the credit crunch and Recession. Oil prices are always behind it. And we live in a world where oil is getting scarce and demand is rising. I calculated that if you take the oil reserves and assume 1% growth in use per year, it's all gone by 2046. That actually is also the figure on the EU Energy portal. Energy remember IS the only TRUE WEALTH. Due to the regulations being torn down by the Bush Administration, banks started lending to poor workers - people who were high risk but okay as long as oil stayed at $40 a barrel. Then came the scarcity/demand spike and bang, the days of cheap credit were over. Oil energy was the key. That's why they needed bailing out. Banks have no money. They just take yours and invest it in the hopes of making a profit out of your capital. They give you 2% and make 17% or something like that - whatever they choose as their margin.
One solid law of economics is that if energy prices go up, this forces governments to print money to bail out their failing bankds. If inflation goes up at 4.5% per year, in 16 years it halves the buying power of money. This is what people fear. They also fear that extending homes when they are low in value, because people no longer have access to easy credit despite the bail out, is simply not an option.
Now since wage demands are not happening it is unlikely we'll get hyperinflation. But we could see high inflation, and a lack of easy credit, due to all that money that's been printed (QEP) trickling its way into the economy.
The construction industry is thus not rising, but falling. Anyone who thinks differently isn't looking at the right figures. In any case we are an island nation. Population grows exponentially. Eventually there's not enough land available to build on to satisfy this growth. Remember if something grows at just 7% per year, it doubles in size every 10 years. Luckily our population isnt' rising that much, not yet. But bad times usually herald a baby boom. This is why I firmly believe that capitalism is in fact doomed to failure. It cannot go on indefinitely. The lack of oil, which is used to harvest materials, gas and coal, will eventually force us to rethink the way we exchange goods and labour and the very nature of our lives. We should learn to live for one another rather than simply exploiting (profiting) from each other. In doing so we may be kinder to the environment at the same time.
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J Clarkson wrote:
"This is why I firmly believe that capitalism is in fact doomed to failure."
I was with you until you made this comment. With respect, capitalism is both a theoretical economic system and a complete practical myth. But it is not a system of political organization.
Democracy, party based oligarchy, dictatorship, theocratic feudalism, corporate controlled representation: all these are actual systems of political organization. As such, they come and go, and may be doomed to failure from time to time.
But pure economic theories that do not exist in the material world cannot fail, and are never doomed. There will always be some idealist and dreamer who will create them in the mind, which the only place such things have ever existed.
Any problem with the distribution of resources amongst people is a political problem, not an economic problem. If you have a political solution to the political problem, the economic result follows the political solution and corroborates it.
The economic results are the noise made by the political machine, if you will. Studying the economics of a society and searching for solutions is thus very much like listening to a machine to deduce how it works and what might be wrong with it. It is one part of a far greater analytical challenge that will become absurd if performed on its own.
Just now, the western system of party based oligarchy and orchestrated representation, which calls itself democracy but which is increasingly clearly nothing of the kind, seems to allow the farming of human beings for private profits, and seems further to enslave the vast majority of people by allowing the party members who are sponsored by the oligarchs to control information.
The myth of western democracy is eroding in the public mind just as quickly as the myth of free speech. As party members tell us what we can know, and imprison people simply for knowing too much and sharing information, one is naturally drawn towards the conclusion that secrecy in western government is crucial to its operation, in its current form.
If one believes that the problems the collective mass of people face, in terms of resource distribution and environmental sustainability, are only to be solved by the collective understanding and political power of people, then it follows that information must be made free, and that our political systems must evolve beyond orchestrated representation for oligarchs and towards real participatory democracy, where ordinary people vote for the laws under which they live. Party control must be dismantled.
But if one believes to the contrary, that the mass of ordinary people have problems that are either not worth solving, or which can only be solved by a priestly class of ordained experts, either religious cultists or members of a political party of some kind, then it follows that information should be kept away from the mass of folks, and further that ordinary people are really wasting their time having an opinion at all.
So it becomes a question of what you choose to believe, of course. Note, however, that if you choose the latter, you had better shut up and say nothing at all. Unless you are a priest, or a party member.
For the rest of us, the choice remains simple. Shut up and say nothing, or seek direct democracy and the right to vote on the laws under which you live, as if you were a competent and adult human being, as fit to have an opinion as any other.
Curiously, in the UK, there is a very large proportion of folks who reject this logical choice, and who chatter on and on about the foolishness of people like themselves having an opinion at all. I must admit, I have never understood that cultural trait. To chatter away like a clockwork monkey whilst openly adoring a monarch, it just baffles me.
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Steph,
I work in the construction sector in Scotland and I can tell you that it is all doom and gloom here. Easily the worst since the early 1990's.
Most of my colleagues are either idle or finishing off their last jobs with no prospect of any further work after April next year. I know of many firms who are down to a 3 day week already (although they still like to give the appearance of being open 5 days a week to their customers). A number of well established small to medium sized contractors have also gone into administration lately. In fact, I just spoke to a director of a company yesterday who told me thay will probably go bust in the spring if they don't get any work in.
All this does not point to a construction boom, just the opposite.
The only thing keeping the constuction sector alive here right now are the big civil engineering projects (motorway extensions, bridges, infrastructure etc), but even they cannot continue for long.
Steph, don't believe the spin - Your gut instincts are correct.
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Steph,
Post 174 Reader1957 is absolutely correct and has summed up the current situation in the construction industry very well.
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