Posted in Credit Crunch, Finance, Money, Recession on April 29th, 2008
In Britain a recession is defined as two consecutive quarters of negative growth.
It’s said that this definition was deliberately put about by advisers to President Johnson in the 1960s to allow him wriggle room when events were not neat and symmetrical — which is the the most likely case.
For example, if within a six-month period one month bucks the trend and shows a slight positive number, it can’t be a recession no matter how bad conditions are across the economy.
However, we know that because of population and productivity growth, the UK needs to expand by about 2pc just to keep unemployment from rising.
We should forget the official definition because even flat growth is negative for the economy and almost everybody in it, and that means less than 2pc.
Everything points to conditions being much worse than that right now.
We could just as easily define it as six months of high gold prices — just like the present.
Ronald Reagan had a stab with, “A recession is when your neighbor loses his job.”
Ominously he added, “A depression is when you lose your’s.”
Posted in Credit Cards, Credit Crunch, Finance, John Evans, Loans, Money, Recession on January 8th, 2008
Is a worldwide recession already underway?
The Chief Economist of U.S invesment bank Merrill Lynch believes so. According to his analysis America is now into the first month of a recession, defined as two successive months of negative growth.
Other commentators think it could be longer than that, while some, like Irwin Steltzer, speaking on the BBC’s Newsnight, believes sovereign wealth funds will allow the banks to re-establish their balance sheets and avoid a banking crisis.
For an analysis of the coming recession on both sides of the Atlantic see John Evans’s article in Syntagma.
He writes, “All banks are now hoarding cash like Ebeneezer Scrooge on a bad day and virtually ceasing to lend. With house price indices slithering down a slope like novice ice skaters, and inter-bank rates running at around 8 percent, this has become a total banking crisis worldwide, and that has the potential for real evil in our economies.”
Read the article here.
We will shortly publish an updated piece on how to avoid the worst effects of a recession in your personal finances.
