Wednesday, 8 April 2009

The Depression: People are Wising Up.

Here's a report that says we won't be out of recession until 2012:

http://news.bbc.co.uk/1/hi/business/7989061.stm

I can add to that: It'll be 2014-15 by the time we actually do get out of recession. Thats because the government plan another fiscal stimulus amongst other stuff in the forthcoming budget, which will prolong the misery another 12 months.

I can't remember where I blogged it (probably commenting on Nick Robinson's blog, but I can't be arsed to find it), but last year I put a figure of 5-10 years on the depression. It looks like the money men are finally coming round to my way of thinking.

No-one wants to say it, but for various reasons every fiscal stimulus puts approximately another 12 months ONTO the length of the downturn, rather than make it shorter.

The Government missed a trick way back when the banks started to get into trouble. They should have secured depositors money, but left the banks to go to the wall. The depression would have been far shorter. It would have been painful, but would not be the decade-long lingering death we're committed to now.

The problem thats emerging from all of this is that it looks like the depression will last longer than the next government's tenure. Winning the next election will be a poisoned chalice: all they can ever be committed to is repairing the damage caused by Gordon Brown, with all the painful measures like reduced public spending and higher taxes that go along with it.

That causes a dillemma: would people vote for the same party again, after 4-5 years of austerity? I doubt it.

So where does that leave us? Would it mean an immediate return to power for Labour at the election after next? Its an interesting thought that this could be a deliberate strategy to hinder the re-election chances for the next (presumably Tory) government and therefore ensure that Labour are only out of office for 1 term. I wouldn't put it past thais cynically manipulative government.

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