Tuesday, February 24, 2009

More Crunchy Things ...

The economic crisis is the most important feature of the political landscape, and is likely to remain so for the next year or so - unless or until the political fallout of said crisis starts to grab the headlines.

The bursting of the dot-com bubble in 2000-2003 sent the FT100 down to about 3300 - a level which this far more serious crisis has yet to achieve, hitting a low of about 3800 in November. But as I type the Dow Jones has dropped another 250 points or 3.5% to around 7100 and the FT closed at 3850, only 70 points off the November low. Given today's Dow fall, the FT may well hit a new low tomorrow.

It may be, as CityUnslicker says, that the dominos fall slowly, but there's been nothing slow about the stock market fall. The dot-com collapse saw a drop from 6900 in Jan 2000 of about 700 points by Jan 2001, a further drop of 1,000 points by Jan 2002, 1200 points by Jan 03, and another 700 points by March 03. This crisis saw 2,000 points off the FT in 2008, most of it in the last four months of the year.

Anyone in IT could see the dot-com bubble for what it was. I remember, when Dixons freebie net access provider Freeserve was valued at several hundred pounds per subscriber, wondering how that could ever be a realistic valuation. Where were they going to make that sort of money ? The average Freeserve user in 2002 probably didn't spend more than £100 a year on the Web, and although more sophisticated users might be spending several hundred, how was the provider going to get even a small percentage cut of that, let alone the hundreds of pounds that could justify the share price ? I looked at the FT's 2000 level and moved my AVC pension pot into cash funds - one of my few big and correct calls (I then failed to switch out in 2003 !).

There were enough financial professionals calling the credit crunch over the last two years - yet it still came as a shock to the rest of us. Not being in the banking business, I wondered vaguely how they kept declaring multi-billion-pound profits and put it down to the hefty spread between the interest rate on savings accounts and that charged to the credit card. I couldn't work out why Iceland seemed to be buying up the High Street, either.

I digress. What does it all mean ? I've already noted that Labour's solution will be to rob the pensioners via inflation in order to a) bail out their director mates b) bribe the vibrant youth not to riot, by stopping their mouths with outreach workers - but a few other observations.

i) the Western European countries deepest in the brown stuff seem to be those who swallowed whole all the stuff about the global goodness of mass immigration, ever-rising property prices and financial services - to wit, the UK, Spain and Ireland. Demographic basket-case Spain now has millions of immigrants and millions of unemployed, mass-immigration Ireland is in deep doo-doo.

ii) in the UK it's likely to accelerate a shift of votes to the BNP, enabling them to reach the Holy Grail of Euro-funding. Something our rulers aren't too keen on, but they're running out of options to prevent it. The obvious solution - stopping mass immigration immediately for say 5 years while the emphasis is put on integration - is unthinkable, so I guess we'll just get lots of get-tough stories coupled with zero action and perhaps more harassment of BNP activists.

iii) the Govt fear rioting in the streets.

iv) any future spending cuts are likely to be aimed at the non-rioting classes - i.e. the people who've been paying in for 40 years.

v) at this stage in the lifecycle of the Major government there was great, Obama-size hope in Tony Blair and New Labour. I had it myself. They came to power with a huge amount of goodwill. Cameron, and still less Osborne , don't - and won't have that. Would you trust either ?

Interesting times.


Anonymous said...

The Great Depression came after years of mass immigration to the US also.
Then they had millions of unemployed people and were forced to enact a load of government programs to help them out.
It would be interesting to know if the spending programs of the Great Depression were basically a transfer of wealth from 'traditional' Americans to the newcomers who were more likely to be in less secure employment. I have not thought about it before, but it would seem plausible.

Martin said...


The Wall Street Crash happened in 1929.

The Johnson-Reed Act, which massively restricted immigratin ot the US, was passed in 1924. No connection between immigration and the depression. No wealth transfer to newcomers as demographics.

TDK said...

the Govt fear rioting in the streets.

So do a large proportion of the public

TDK said...


A large body of work exists which shows that the interventionist government programs of Roosevelt actually did more to extend the depression than to solve it.

For example here and here

Moreover the policy had provisions that kept wages high. These provisions helped whites at the expense of blacks and more recent immigrants.

dearieme said...

My memory is that few people had high hopes of Mrs T; it was just that enough people thought that it was worth giving her a go, the socialist policies of Wilson, Heath et all having led us into a blind alley. In contrast, hopes for Obama have been absurdly inflated.

Hugh Oxford said...

at this stage in the lifecycle of the Major government there was great, Obama-size hope in Tony Blair and New Labour. I had it myself.
So did I. What were we angry at John Major for, exactly?

Martin said...

Because he nationalised paternity through the Child Support Agency, devalued every undergrad degree in the country be expanding the university system, slashed defence spending while allowing in Abu Qatada,made graduates the serfs of the Student Loans Company, led us against our will into a European empire when we'd just spent 40 years trying to stay out of another one, led a government almost unique in its debasement into corruption, degradation and filth, and because he knobbed Edwina Currie while they were both married to other people.

How's that for starters?

dearieme said...

The Edwine Currie business emerged only years later. Unless you had inside knowledge, of course.

Anonymous said...

I was about to point out what dearime said.

Anyhow, five years brake on immigration to allow integration. How about 50 years? With the mess we have built up, I'm not even sure about that.

The 5 year halt implies that immigration is a natural flow that we can slow but not halt.

What happens after 5 years, go back to the present set up? Shades of the frog in the pan of warm water. How about another 5 years of no immigration, then another etc.

The default level of immigration should be zero, then we can according to whatever standards we choose to apply on a case by case basis. No reference to the EU, UN or human rights.

I for one would be all for setting standards that would make liberals wet their pants. First in the queue; white English speakers from the former Empire (including Ameria), next white non-English speakers ie other Europeans. After that everyone else gets to put their case based on IQ, educational attainment and the like. Certain probationary provisions should be applied.eg Oath of loyalty to the Queen, breaking of which would entail prosecution followed by deportation with no right of repeal or return (loss of citizenship), you break the law, you get thrown out. No going off to Afghanistan and then spending a few years in a Cuban holiday camp, instead firing squad, gallows warm and ready at all times.

Hey, I sound a bit like Sgt Troy!

Anonymous said...

@Martin: "John Major...led a government almost unique in its debasement into corruption, degradation and filth..."

Almost unique, that is, until the present lot came along, who have surpassed everyone's worst expectations in that direction.

To think that Neil Cameron was hounded out of public life (and is still virtually a pariah) for allegedly accepting small sums in cash in exchange for asking questions.

Asking questions! How unambitious can you get? You mean he didn't offer to put up amendments, or hand out passports, or channel huge sums to his pals? Or help himself to tens of £K in dodgy expenses and then try to justify it?

The guy just wasn't imaginative enough.

Anonymous said...

Martin, no connection? just because they tightened up the rules 5 years before the crash, (and had done so 2-3 years previous also), even though 30-40 years before had seen the biggest wave of human migration in history upto that point? (with over 1 million immigrants per year even though the total population was only 70-90million at the time.)

Then 2-3 years after the crash unemployment was running at 14 million.

I am not fan of Major because of the EU mostly, but if thats all you got on him, its nothing compared to the damage Blair has done.
Oh and Majors government certainly wasn't 'unique' in its corruption, its just that they didn't have the whole MSM covering for them as Blair did in his early years.
Laban has pointed to much hypocrisy and Labour corruption including the dodgy post voting system.