2008 – 2014 The Great Depression of The 21st Century

By Andy Shaw | January 25, 2010

Originally Posted 9th February 2009

“Yes, We Are In A Depression”

This is a stake in the ground article where I have researched my previous articles and compiled a list of all of the measures I have recommended they take to stop this becoming a depression.

Well it is too late for that now as unfortunately the tipping point has been passed and we are now in a depression! So this is what they need to do now to stop the rot from spreading further and keep the country afloat for the next 5 years and put us in a position to finally be a world leader again coming out of it. If, and when, they fail we are more or less doomed to lose the next decade in a way partly similar to Japan. What’s more there could be some pretty horrible stuff waiting at the end of this depression. The first depression ended with the 2nd World War!

The timescale 2008 – 2014 includes 2 years of slow recovery and the start date reflects an average of when the leading world economies went into the depression.

If they do not do most if not all of this right then we will have an awful inflationary boom when we do eventually come out of this. Though my opinion is that if our government accumulate enough assets through nationalisation then we will not need inflation to kill our national debt. Our assets will grow and dwarf the debt giving our country a stable economy for the first time since before the First World War.

So Is It Just Me Who Has Made The Depression Call?

Following George Bush’s admission that the US was in a depression (even though the media chose to think it was a slip of the tongue) there was this week Gordon Browns statement, ”it is a depression that the world is in.” Now, bearing in mind that the UK is the worst performer, even though he didn’t say the UK, I think this counts. Then there is this little beauty I just pulled from Bloomberg:

”Advanced economies are already in a ”depression” and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.

”The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. ”There’s a lot of downside risk.”

So for anyone who thinks we are not, then this is the point that you’ll have to remember. We are, and it is going to get very, very bad for those that are not informed and don’t look for ways to profit.

So in a minute I’ll list all of the things that I think could stop the rot and turn the economy around very well. In my opinion, as I have said countless times, they have to do too much too soon, rather than too little too late, as their ridiculous inaction is what led us to this point. They now need to take massive action in an attempt to shorten it and bring recovery as soon as possible.

I am writing this now because if I can sit down behind a computer screen for a few hours and come up with these suggestions then you can bet someone in government has considered them. Doubtless though, they will still fail to act and then once again bring out the old stalwart of all people who get it so spectacularly wrong…”with the benefit of hindsight.”

How Big Is The Problem?

I wrote a few weeks ago that I do not see any way the US can escape depression now as things still to come will destroy all efforts that are currently being made. Mr Obama’s $775 Billion won’t even touch the sides, especially as this is little more than a three card trick to get his spending plan passed (I’ll cover that at another time). I said that they should try $10 Trillion and they may just be able to solve it, but I doubt it!

Well since writing that they are now talking about an additional $1 to $3 Trillion to help sort out the banks. Now by my maths that will bring the total to over $5 Trillion spent if they go for the lot and that is just to fix it so far. So it makes my ridiculous figure of $10 Trillion enter the realm of possibility.

The trouble is with all this talk of trillions and billions (whatever happened to talking in the millions?), we forget just how unimaginable these figures are…as £10 Trillion is nearly ¼ of the world’s total output!

Now if the Fed do spend $5 – $8 Trillion to sort out their $13.8 Trillion economy then if you pro-rata it for us, this means that we will probably be forced to spend £700 Billion to £1.5 Trillion to sort out ours! Very nasty, they’ll have to nationalise a lot of banks to pay for that amount of spending.

We are not talking about a small problem here anymore!

On How We CAN Solve It

This doesn’t mean prevent it, as it has already happened. This is just what is needed to prevent it from getting much worse and all the horrors of the 1929 Depression starting to be relived.

Now I am mainly going to focus on the UK here.

The property market needs to be stabilised and lending to people who want to buy property needs to be started in earnest. Lending to businesses needs to start promptly and businesses need real encouragement to retain and employ more people.

As I have stated before one of the reasons the Great Depression was so bad was the supply of credit dried up. So the economy could not expand as the banks were de-leveraging.

What Is Needed For Businesses

The government should make loans directly to businesses on the basis that they are viable through their own banks; RBS, Northern Rock, Lloyds and Birmingham Midshires. Funds should be offered to other banks if they are willing to lend as well so as to not kill the competition.

Funds should be lent at Base plus 1 – 4%, depending on the suitability of the borrower. This should extend to all businesses that can prove they are making a profit in these difficult times. (This makes the government a profit and does not cost other than a temporary debt).

More controversial businesses should be allowed via VAT, Corporate Tax and Inland Revenue payments, to hold the debt and repay it over a 48 month period. This should be provided that they maintain all future payments and the size of the debt decreases.

I know this goes against the grain but it will keep businesses afloat and thereby producing an income for the government. This will effectively give the government a stay of execution to failing businesses that may be able to keep going if their existing state of delinquency does not go any further. Effectively the government would be a preferred creditor, but needs must in these times.

This would give the existing businesses the equivalent of a government loan for 48 – 60 months. This would prevent the massive failures predicted this year, leaving the failures to be the ones that really should be left to fail.

Now this will be paid by cashflow and so the government will not lose money this way. If it allows the businesses to fail it will lose money in all sorts of ways. Firstly, the debt will be wiped out instead of having it on a loan and secondly, they will have to pay for the clean up operation.

So it seems very logical that to keep an income coming in and keep people employed they would have to pay for it. The government could charge a 5% arrangement fee plus 5% p/annum interest. (This makes the government money and protects the economy).

Protectionism must not be allowed a foothold and the UK should lead the way in stating that this would not be allowed and any company taking any form of government assistance will be stopped if they do not allow a free market. There is no direct financial gain here other than the kudos we would receive by being the enlightened world’s leaders in this policy which we all must follow if we are to get through this in good shape. If I was about to go to the electorate again next year then I would do this and all the other things, as I’d have nothing to lose!

Give companies the same (or 50%) money as you would someone on benefits, including housing benefit as an economic boost if they employ that person for at least 36 months. Only pay them for 12 months money that is, but in this way they are insuring that firms work hard to not lay people off. What I mean by this is that the government are about to start paying a fortune to support waves of unemployment, so why not keep people in work for 50% of the money?

This doesn’t save the government any money today, in fact it costs, but they will be spending only 50% of what they would anyway and this person would be an income producer not a drain, which means in real terms they are probably saving 75% of real future costs. Also, it will be a somewhat popular scheme and will bolster a politician’s popularity. It could even be given as just an interest bearing business development loan at 2% interest, then in that case they would actually make a profit on it.

Governments should offer all businesses assistance of £5,000 per employee to be paid over the next 36 months whilst the employee remains employed. This is not a gift it is a loan and is due to be repaid starting in month 37 at an interest rate of 4% over a period of 5 years.

All of those suggestions will help bolster businesses and should produce a profit for the government.

The Government & The Bank Of England

The Bank of England’s mandate should be changed to cover inflation and the economy with immediate effect.

They need to state that interest rates will remain under 2% for a minimum of 36 months – this restores stability to the market.

The BoE should guarantee inter-bank lending to UK banks that put the money into play in the economy for a period of 24 months.

There needs to be (unfortunately) further direct investment in some banks. This should be done as preferred shares. To make sure that money is not invested poorly or on bad terms, the various governments should invest alongside private investors, on the same terms. If a bank cannot find private investors willing to invest alongside the government, then they should be quietly helped into the arms of stronger banks and the banks that are too big to fail must be taken over.

All weak banks must be swallowed up by the stronger banks as soon as possible. We are already seeing deposits leave banks, many of them small, due to depositor concerns that small banks will not be seen as too big to fail. This must be stopped and a 100% guarantee given to help all banks who open their balance sheet and books up for government inspection. This is no small task and needs a fair bit of work.

New personal loans and second charge loans should become available for people to spend on home improvements that get spent directly in the economy. Borrowers should have to prove the money is being spent on their homes by way of bank statements and receipts. This can be achieved by a bank guaranteeing a loan to someone for the works and builders drawing against it. Not simple, I know, but it can be organised.

If the Bank of England guaranteed second charge loans for the next 36 months as long as the money was spent in the economy then this would really help to stimulate the economy as a whole.

Conclusion: This fully stimulates the economy and using the nationalisation tool the government will not lose money, instead they will make it by picking up valuable assets at a few pence on the pound and all they will give in return is a guarantee.

The Banks Lending To Each Other

The BoE, our central bank, needs to lower their lending criteria to banks and provide a safe home for the banks’ mortgage backed securities. If they do this effectively then banks can borrow again and confidence should/will return to the market. They have now started to do this and are offering to take more than just the MBS’s so this should continue and be expanded.

The banks should be allowed to hold their assets on their balance sheets either at face value or written down but with a bank of England guarantee on the shortfall. The banks continue to make profit elsewhere through earnings and selling stock so that they can afford to write off these bad debts at some point in the future. This is similar to the Latin debt crisis of the late 70’s and early 80’s.

What is unlike the Latin debt crisis is that there is actually a fairly good chance that the banks will not lose much money on this, as opposed to the Latin debt where I believe the loans were all but wiped out completely.

This buys time for the banks to sort out the debt they now have. Though the question that remains is, will the other banks still lend to each other when they know that they are ALL lying in their books, even if it is government sanctioned lying?

The mark to market rules that helped to create all this chaos have to be suspended immediately and these rules have to be revised for the future. The rule is that some companies that hold certain assets have to be AAA rated. If at any time those assets are not AAA rated then the company must sell those assets immediately for whatever price it can get. This is the single worst rule I have ever seen in the financial markets and in my opinion was the main stimulator for this crisis. This was the single thing that caused the loss of confidence, and as this whole thing is a con trick; the last thing it could afford was the loss of confidence.

The UK Property Market

The property market needs to be stabilised by offering a tax break, such as saying any property purchased from Jan 1st 2008 to Dec 31st 2011 will have no capital gains tax when sold. This will bring property investment companies and property investors back into the market again very quickly.

I think the HIPs fiasco really helped to push the knife in when the property market least needed it. I think this to be a ridiculous waste of time and should be revoked immediately. I know the Conservatives said they will kill it when the time comes, but they may change their minds.

The barriers should come down on lending and be based on affordability rather than 3, 4 or 5 times the income. If a borrower locks into a 10 year fixed rate at 4.25% then they can afford say 10 times the income for example and this should be taken fully into consideration when lending. The percentage of their income used to service a loan on that affordability basis will still be less than 3.5 times the income on a 13% loan (this was the 1980’s loan criteria and is well overdue a re-think as we are not in the 80’s anymore).

The housing market needs to be either stabilised or stimulated, otherwise the rebound to this downturn will be obscene and completely unsustainable and will create further boom and bust scenarios.

Property Owners In Trouble

Halt repossessions: do not feed this cancer unless people want it. This combined with other measures will halt deflation in its tracks.

A judge or a new body should be set up to change the rates paid on existing mortgages to ensure that only people who did not deserve to lose their homes should not lose them. This should apply to people who are making nearly all of the payment but thanks to an overhang or a punitive interest rate they are becoming delinquent.

The mortgage lender who has got the existing loan can either allow this, or be forced to sell the government the loan at a mark to market value, or they can just accept that they have no control over the home owner and that they cannot repossess – effectively making the lenders take a lower rate for their loans.

The rate for these loans should be at a minimum of 4%, or 2% above BoE base when they start to rise above 2%. If there are people who still can’t make the 4% payment but can make the 3% payment, then the government should take over 30% interest in the property in return for making 25% payment to the lender for the mortgage. They are taking the assets from the banks, so why not take them from individuals too, at least that way the home owner that would otherwise lose their property gets to keep the majority of their asset.

All people who fall below the 3% payment should be repossessed and the government should look to buy the properties and sell them to landlords on either 5% deposit or NO MONEY DOWN deals. Obviously to suitable landlords, the government could even make a profit on this and would make a profit on the loans, of course.

The properties that underwent the new 4% interest rate should be now guaranteed to the original lenders by the government, so that the lender was guaranteed of no further loss and that would strengthen their balance sheet without marking down the loan.

Conclusion: This would fully stop the rot for the distressed owner market. It would provide stimulus for the investment market and make the government a very good profit.

The abundant amount of existing properties waiting to be sold would soon be picked up by new market re-opening as detailed below.

Buy To Let Property Investors & Large Property Investment Companies

80 – 85% mortgages with 125% coverage need to become the norm for buy to let investors. These can be lent out by the perfect lender they already own: Mortgage Express. They should allow refinance after a period of three months.

All mortgages want to be tracker rates with a margin of 2.25%. They can charge 3% arrangement fee for this with no redemption penalties (let the market go back to work properly).

The government will profit greatly from this and in 10 years time Bradford & Bingley would control a massive market of very well controlled landlords. This company could then be sold on for a huge profit.

First Time Buyers

The government should allow lending to all first-time buyers who can prove credit worthiness and produce a 5% deposit. They should loan 25% of the home purchase. For this they should receive interest on this money fixed at 2% for 10 years and have a 20% (check) interest in the property.

The first time buyer can then go to any lender they choose to loan the 70%.

This will release the pent up demand that comes from simply no longer being able to get onto the ladder. It will also make a profit for the government and fully stimulate the property market, making it easy for returning first time buyers with a low deposit and all time low interest rates.

Getting People Spending Again

The lure of deals and availability of credit for purchasing within the economy will stimulate growth because of the low interest rates. We will see confidence return and people will want to borrow again, but at this time it will be at acceptable rates.

Whilst this is going on there is no reason to let a good crisis go to waste and I would suggest that the government forced all credit card companies to cut their rates to a maximum of 12% for a 36 month period.

General conclusion: I may have missed a few tricks here but generally the biggest single problem is stopping the rot and getting money into the hands of the people who will use it best to get the economy going.

I’ll be referring to this little list of actions frequently.

Lets see just how little of it they do!

Now to finish on a slightly more upbeat note as it is pretty awful that little lot:

Is Property The Duff Asset People Would Have You Believe?

Now with all this doom and gloom, especially in the property market, it is easy to forget that property is one of the strongest assets there is.

With shares falling hard 35%ish and then their dividend payouts falling harder still they have really suffered, whereas the property market (which we all know I have said is not the real market) fell a supposed 13% (I am waiting to confirm this figure but the government haven’t updated their table yet – personally I doubt it’s accuracy, but lets say it is right).

So my properties went down in value 13% but my rental yield went up somewhat.

For example here is one of my best performing properties. It is the average UK property. A 3 bed end of terrace in Durrington, West Sussex.

In the summer I was renting it for £735 and had a mortgage on it of £134,563. Pre-credit crunch valuation £205,000, but I doubt I could have sold it then for more than £175k. The tenant has been there for over 5 years and I have never put the rent up. Current rents in the area dictate I could get upto £825 but this would be pushing it.

My mortgage payment in September was £525.05. The rent I received from the letting agent was £672.56. A profit of £147.51, before any property improvement costs.

The current market price is £165 – £175k, but I doubt I would be able to sell if for that – more like £155k (I could easily achieve a valuation of £175k).

Now this terrible asset has dropped in value by approx 12%, so that indicates that generally the 13% could be real.

Still this a fair bit better than shares, given that shares will fall again this year as property is expected to as well. Once again property remains the best asset, and even if I go into negative equity I cannot be wiped out as long as I continue to service the mortgage (all that said of course, I still have no money on the line as I was given all my money back in 2002 and a little more in late 2007).

So this asset has got stronger thanks to the credit crunch as my rent is still £735, yet my mortgage is now just £81.19, thanks to rate cuts. So my profit has grown from being £147.51 to £591.37 (a 400% increase in profits – something any business on earth would die to achieve).

Now next month if rates come to just 0.5% as I am expecting, then my mortgage payment for this 3 bedroom end of terrace house will be a whopping £15.70, (now who would have thought I could pay less than £20 a month for a 3 bed semi on the South Coast?) meaning my business profits will have grown by nearly a massive 4,200%!!!

If they cut rates further still my interest rate on this property will be reduced to 0%. Now this deal and several others I have are on a discounted rate so at some point over the next 12 months they will return to BoE base + 1.75%, so it is short lived and then I’ll be back to a more modest 200 – 300% increase!

My portfolio now is running at just 3.19% as an average and should the rates go down by another 0.5% then it will be at 2.88%…unbelievable!

Property really excels as an asset class when it can perform this well in an awful market. This asset class has ways of protecting itself that others only dream of.

Best wishes


PS I don’t get it right all the time. When I researched my articles I find a few times when I called it the wrong way. For example:

o I was still expecting a market rise in 2008 of 12% and I thought the Northern Rock crisis was just clearing the air!

But then there are articles like this one: “We’re In The Silly Season Where Supply And Demand Fundamentals Are Ignored – 16th July 2008

Where I sort of got it dead right on a fair few things :-)

o Oil prices falling – It was at its near all time high

o Commodities falling dramatically – When they were still high

o Inflation falling to below 1% – Inflation was the BoE’s & ECB’s primary concern & they were predicting it going much higher

o That the BoE & ECB would keep the economies in recession for longer because of their pointless fight on inflation

o That interest rates should be cut immediately to fuel the economy

o No. of builds would fall to 80 – 90K in 2009

o US was at the start of its recession

o The world was at the start of its recession

o That we hadn’t scratched the surface of the s**t yet

o That external factors really were causing house price deflation and when they went away the market would bounce back

o That emerging markets would start to slow down over the next 12 months

o Supply and Demand would come back with a vengeance – Wait till after the Depression

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More Thoughts on the Economy Part XIII

By Andy Shaw | January 25, 2010

Originally Posted 4th February 2009

Europe & Trichet

This week the ECB and their luminary leader Jean-Claude Trichet have said that they are not looking to cut rates (what graphs and charts must this guy be smoking!). The market though, seems to think that they will be forced to. They think the Euro may survive this crisis but with the very real possibility of one or more countries going into administration

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More Thoughts on the Economy Part XII

By Andy Shaw | January 25, 2010

Originally Posted 30th January 2009

David Blanchflower

In his most recent speech, David (THE ONLY MEMBER OF THE MPC THAT I RATE) explained that he thought the recession started in May 08 and yet there was no mention of a recession in the Bank of England inflation report in August (nice dig!).

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More Thoughts on the Economy Part XI

By Andy Shaw | January 25, 2010

Originally Posted 29th January 2009

Robert Peston

One of the many commentators I read is Robert Peston. A lot of his articles are just noise but being the head of business reporting, the guy does get to grab some great interviews and insight. Yesterday he  interviewed George Soros and Nouirel Roubini. I recently looked at Roubini’s calculation for losses in the UK and in the US. In the UK he said $2 Trillion losses and in the US $3.6 Trillion. I think he could be fairly accurate (+£250 – £500 billion) regarding the UK. However, I think the cumulative effects of what he mentions happening with the US cause a much larger spiral than in the UK and as such I would say that this is once again yet another underestimation of the damage to the US economy.

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More Thought on the Economy Part X

By Andy Shaw | January 25, 2010

Originally Posted 23rd January 2009

I read the Bank of England minutes yesterday and was shocked (though I don’t know why) to see once again a vote going 8 – 1 against David Blanchflower. You’ll remember he was the ONLY one of them who got it right before they started to cut rates.

From the MPC minutes:

32 For one member, the news on the month had been more decisively to the downside and it was becoming increasingly probable that there would be a deep and prolonged recession. House prices continued to fall sharply, which would have negative effects on many self-employed who used their homes as collateral for business loans. There had been no real improvement in financial markets and conditions in labour markets were worsening quickly. The monetary transmission mechanism was impaired, which would limit the effectiveness of the various monetary and fiscal stimuli.

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More Thoughts on the Economy Part IX

By Andy Shaw | January 25, 2010

Originally Posted 15th January 2009

A Conversation With My Accountant

I was discussing my accounts the other day with my accountant and finalising some figures. He is in a company that is somewhere in the top 50 – 70 accountancy firms in the UK. I asked him what he thought of the economy.

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More Thought on the Economy Part VIII

By Andy Shaw | January 25, 2010

Originally Posted 14th January 2009

What About The Savers?

The Fed and the Bank of England are punishing savers and the prudent people by manipulating interest rates to zero. So you can sit in cash and earn zero or you can be forced out on the risk spectrum just so you can keep up with inflation or your benchmark.

I actually agree with this policy (for some but not all, especially pension funds) but the problem is that in the main this is going to be forcing money into risky assets and this could be a very dangerous experiment, if not the most dangerous ever done. It will be so large in scale and so unprecedented that we really have no idea how it will end.

Most expect it to end with hyper-inflation. However, I think that is unlikely but have not as yet figured out where I think it will end (more info is still required). However, I do think that the funnelling of assets into risk is masking the deteriorating fundamentals and giving the appearance of a market that has bottomed out. I think this is a bit of a 3 card trick and is an illusion.

What I Think Of The Buy and Hold Stock Market Right Now

I read in an article one analyst wrote, ”The Fed has declared a war on savers, a war on prudence and provided the ultimate Moral Hazard Card-and with our money no less. They are also setting up the ULTIMATE BULL TRAP-a trap so large that when it is sprung, perhaps as early as the end of the first quarter/beginning of second quarter, there will only be sellers left.” I agree with this, the Fed want people spending, they don’t want them saving. It’s just as when they called in all the gold, they will get what they want. I also agree with the analogy of the stock market trap that is being set as I commented recently.

Cash in the US is now officially trash and if you buy one month of Treasury Bills, you are rewarded with a yield of a whopping 0.02% per year. So I suppose people with more than enough money can keep it invested for an entire year and make nothing or they can give in to the pressure and say, ”I can’t make zero forever if I want to retire!”

Now, let’s imagine that you are a professional money manager that is paid 1% a year to invest other people’s money (a nice way to make money). If you feel that being prudent is to sit in cash, and attempt to charge a fee the math is simple: 0.02% per year minus any reasonable fee is a negative return. This is forcing many managers out on the risk spectrum at precisely the wrong moment, when risks are at their highest ever.

Do you see how dangerous this is, these managers can only invest in certain assets and do not have the freedom to choose from everything and they now no longer have the freedom to choose cash, if they want to get paid. Would you feel safe having your ISA’s with these people?

Well it reminds me of this:

”You got to know when to hold ‘em know when to fold ‘em

Know when to walk away and know when to run.

You never count your money when you’re sittin’ at the table.

They’ll be time enough for countin’when the dealins done.”

–Kenny Rogers, The Gambler

Most money managers are driven by ‘beating the benchmark’; no matter how imprudent it may be to do so. Like Kenny Rogers sang in The Gambler, ”you have to know when to hold ‘em and know when to fold ‘em.” Knowing when to fold ‘em or play it close to the vest, while everyone around you is partying is perhaps the most difficult task we face as investors.

I am fully aware of the Fed’s goal to both ’save the system’ and ‘force everyone out on the risk spectrum’, but I have seen this play before.

I believe very strongly that investors who believe that they must be invested in risky assets at the expense of prudence will rue the day that they did so. A comment that I agree with, again from an American analyst is, ”when I consider the risk/reward ratio with equities at 22 times earnings (using 931 S&P 500 and $42 in earnings in 2009), I cringe when I hear people say that stocks are cheap.”

I really worry about the funds people have invested in UK pensions and ISA’s at the moment as the money managers that once were searching for that extra profit are now FORCED to search for ANY profit. If that isn’t gambling then I don’t know what is! But the real losers won’t just be the managers who fail and top themselves, it will be their families, and the families of the thousands, if not millions who have trusted their pensions to people who are trapped.

Depressing stuff, but there is light at the end of the tunnel for mortgages as I have a little good news in the next article…

Best wishes


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More Thoughts on the Economy Part VII

By Andy Shaw | January 25, 2010

Originally Posted 13th January 2009

Deflation – Recession/(Depression) Ends When?

“In troubled times, investors tend to withdraw from foreign markets to concentrate on the home scene they know best.”

The Fed & the BoE worry that in deflation, offsetting monetary policy is difficult since its target rate has to stop declining when it reaches zero. Of course, they have other tools such as quantitative easing which I discussed earlier. Nevertheless, all these measures amount to trying to lead a horse to water, but do not actually fix the problem as the horse may not drink.

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More Thoughts on the Economy Part VI

By Andy Shaw | January 25, 2010

Originally Posted 12th January 2009

It Hasn’t Even Got Going Yet!

I’m going to continue on this further today as I want to try and convey the pressure that is going on and is being placed on the economies around the world.

Spain’s Unemployment Figure Goes Past 3,100,000

This is an awful number, especially when you think that there is only a maximum of 45.2 million people there (I am unsure of the exact number as there were reports from 40.5 – 45.2). That makes the Spanish unemployment rate far higher than the US.

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More Thoughts on the Economy Part V

By Andy Shaw | January 25, 2010

Originally Posted 8th January 2009

This Downturn Hasn’t Really Got Going Yet

Before whatever spin Gordon Brown puts on it, try to remember this – this current downturn hasn’t really got going yet. The British people will not start to feel the effects properly until the Autumn. It will be clear to be seen, but it will start to hurt then as unemployment really gathers pace. The unemployment figures have gone up by 7% as an average in previous recessions, so does anyone think that this will be better than average?

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