The UK is an extended branch of the USA. The people, values and Money Managers are almost identical.
Today, July 22, 2009, a leading British Think Tank published its latest economic prediction:
It would take five years to return to the Living Standards of 2008!
We are now beginning to talk of Living Standards and not of GDP, DEBT, INCOME or MONEY SUPPLY.
As I have explained in Rip Tide, the economic current is returning to the ocean where the Living Standards are low. Westerners will have to live in poverty once again, as they did in the 19th Century, when they made their first move to conquer the economy of the world. Only cheap labor can combat the cheap labor of Asia.
“The research body predicts heavy cuts in spending in addition to a rise in taxes over the following four years, to mitigate the significant debt. Recently-released data shows total outstanding government debt in the UK has hit a record £799bn, or 56.6% of UK GDP – the highest since records began in 1974.”
This astounding debt is reflected in the US as well. It is the result of fraudulent lending to a uneducated and manic public, unaware of where they were going.
In addition, we will see unemployment rising until 2011. “And like other forecasters, NIESR sees unemployment rising until mid 2011, peaking at 9.3%.”
THE SERVICE ECONOMY
In my opinion, this is a very unsophisticated and optimistic view of unemployment. It is based on full recovery of the World Economy and a return to its former state of global interdependence where the West controlled the financial empire and its workers basked in a Service Economy.
The Service Economy has disappeared and will not return.
Any economy consists of four pillars:
Unless all four pillars are present , the others can only exist alone if the world economy supports them. Asia now has all all four pillars. It will not support a service economy in the West. Even countries like Switzerland, Luxembourg, and Holland will have to accommodate a new set of economic forces.
Another weakening force on employment, are the tens of millions of immigrants brought to Europe, especially the UK, and also, to the US.
These people were brought from poverty areas of the world to do the tasks Westerners shunned. They will not return to their homes, because the poverty of the West will not reach the low levels of their former homes. They will remain in the West and flourish in the soft governmental environment that the liberal Western mentality supports.
As a consequence of these additional millions, unemployment will never be low again.
Immigrants from the impoverished areas of the world, reproduce at a very high rate because of cultural and religious pressures.
This will not change for several generations. The population of the West will grow, and with this growth, so also, will unemployment grow.
Unemployment will probably settle in the mid twenties as it has in the Middle East and North Africa.
BBC STEPHANIE FLANDERS
This BBC economics editor refers to the fall of the UK economy as the worst since 1926:
“The Office for National Statistics has said that the revised 2.4% contraction in GDP in the first quarter of this year was the steepest since 1958, when output fell 2.6%. But the NIESR’s director, Martin Weale, thinks that if you measured the 1958 data the same way we measure it now, that first quarter fall would be “probably the worst quarterly economic performance since the 1926 General Strike.”
We are seeing the economists of the world re-interpreting the economic disaster of 2009 as something that has not occurred in the last century.
They will soon recognize and admit that what has occurred is a structural change in the world economy and not a simple slow down of economic activity with a return to the former status quot.
The sooner the Western governments recognize that fact, the sooner they will realize that giving enormous sums of money to their friends the bankers is futile and worsening the crisis.
Help cannot come from printing paper money. Its cab only comes from the rebuilding of our deformed economies.