Dave Hill's Big Britain

We're Doomed

The Guardian's Ashley Seager:

"We're going into recession. That's all you need to know. Actually, not quite all you need to know. It may be worse than that - we may already be in one. The turn in the economy, although it has been lurking out there for some time, has come swiftly and sharply in the past few weeks, as is often the case with recessions. When the economic history books are written, they will almost certainly say the late-noughties recession began in earnest in the late spring of 2008...You can search all round the data - and we have - for signs of strength in this economy and there are virtually none."

Oh joy. Read on, if you dare.

Crunch Times

My mum was on the phone. She's 85 and became a widow last year.

"Ooh, the shares have gone down today!" she said. "Over a hundred points."

She checks them on Teletext. Dad used to do that. Now Mum does it, and frets.

"I did tell you to sell them all," I tease her. "Squander the money! Go mad!"

"Oh no, I mustn't do that!"

She and Dad had only a small investment portfolio, but they were rather proud of it. Now Mum is anxious about it. She depends on the dividend income to make ends meet.

She said, "Do you think they'll come up again?"

"No idea," I said. Then, "Probably, but maybe not for a while."

I've no idea if that is true. She said, "What's caused this, David?"

"No idea," I said again. And that time I had nothing to add. That's because I simply don't understand. Does anyone?

The BBC's Robert Peston seems to. "The most powerful economic force in the world right now is what bankers call 'deleveraging,'" he writes.

When I first read that I felt a headache coming on. I persevered though.

"In many ways," Robert explains, "deleveraging is a good thing. It's time we learned not to borrow more than we can afford."

Now there's a sentiment my mother would agree with: one held in common with almost everyone of her generation. She may not understand why the shares are going down, any more than I do. But maybe the big players of the global economy - maybe all of us - could learn a thing or two from her.

Fcuking Skint

The crunch bites in historic Bath.

Unevenly Crunched

The rich are getting richer, the north is getting poorer.

"The chief executive of Marks & Spencer believes the UK is fast becoming a very divided nation: the rich who live inside the M25 - and the rest. Speaking earlier this month, Sir Stuart Rose said there was a widening gulf between the have-nots and the have-a-lots, which is now wider than he had seen in 35 years behind the counter of stores such as M&S, Burton and Dorothy Perkins. "I have never seen such a polarised UK economy," he said. "The rich are so very, very rich. The West End can't get enough diamonds. But the poor are getting poorer. Outside London it is a completely different economy."

Surprised? Let me guess. Now read on.

A Housing Slump? Hurrah!

Rob Williams:

"One of the great enduring myths of our time is...that house price rises are good for the economy and benefit homeowners. They do not. Most people in the UK have more to gain from falling property prices than they think. First-time buyers, the lifeblood of the property market, will finally be able to get their foot on the ladder without taking out eye-watering mortgages, or resorting to increasingly desperate 'buy with a friend/somebody you contacted on Facebook' methods. As prices have rocketed over the last decade, existing borrowers have seen their budgets stretched. This, of course, is also bad for the wider economy as discretionary spending has to be reined in. Falling house prices will enable people to spend more of their earned income on the high street without going into further debt."

Funny, that's exactly what I've been thinking but was afraid to say so. Now read on.

Northern Rock: Cricket As Metaphor

Ron Sandler, senior banker and former adviser to Gord:

"My situation is that I'm in the pavilion with my pads on. Let's appreciate that I've been asked to do something in the event that the bank is taken into public ownership. I don't think you should read anything into my appointment. It's sensible contingency planning."

Read anything into it? Perish the thought.

Falling Marks

The Beeb's Robert Peston:

"The great British shopper has kept our economy moving forward since the early 1990s. But this autumn has seen a turning point. The high street boom is over. The symbolic manifestation is today's dour trading statement for the 13 weeks to the end of December from the totemic market leader, Marks & Spencer...The most worrying numbers from Marks are those relating to general merchandise, or clothing and homeware. In those areas, overall sales were down a fraction; and sales adjusting for new selling space, or like-for-like sales, were more than 3 per cent lower. To achieve even that uninspiring performance, Marks had to charge 6 per cent less than in the previous year. The savage deflation worked, in that shoppers bought more items. But the aggregate value of those items fell. Marks and its rivals may well have to cut prices by even more this year, to prevent turnover from falling off a cliff."

Food and fuel prices going up is one thing. But Marks & Spencer pricing down is something else. Truly, this great nation is doomed...

That Christmas We Went Mad...

I blog from a bathroom in a smartish hotel in the south-west of England. On the other side of the door, my wife and younger children lie peacefully asleep. I have already eaten an enormous full English breakfast. My digestion, though, has not been smoothed by what I read in the Guardian:

"The spending binge over Christmas looks likely to be followed by a big rise in personal insolvencies, falling house prices and debt problems for a quarter of the population, it emerged yesterday. Accountants Grant Thornton warned that excessive Christmas spending will account for up to a third of all the people who declare themselves bankrupt in the first three months of this year."

It continues:

"Britain's total personal debt now totals £1.39 trillion, and consumers are paying out £93bn a year in interest on loans, credit cards, overdrafts and mortgages, according to the comparison website uSwitch.com. YouGov research for the company found that an estimated 9.5 million people in Britain had "maxed out" on at least one form of credit over the past six months, and that 23% of the population were finding their current level of debt unmanageable...The average household is paying about £3,744 in interest a year (on all borrowing including mortgages), which is £517 more than last year, and has amassed unsecured debts of £4,281, made up of £2,684 owed through loans, £1,204 on credit cards and £393 on overdrafts."

I suppose, though, that Britain does contain some people who live within their means and save diligently for the future. They're called Poles.

Year Of The Rat

From the Independent:

"Appropriately, 2008 marks the Year of the Rat, an animal considered in Chinese folklore to be a harbinger and protector of material prosperity. Britain will feel the full power of the new superpower's confidence. This month, for the first time, China's state-controlled banks will begin spending some of its $1.33trn (£670bn) in foreign currency reserves on London's financial markets. Beijing has ruled that Britain should become only the second destination after Hong Kong to be allowed to receive investors' money via so-called "sovereign funds" – the huge state-controlled surpluses built up by cash-rich economies from Qatar to South Korea. Throw in the biggest round of Chinese art exhibitions ever to tour these islands and the oriental bias to 2008 becomes even more pronounced."

Now read on.

Freedom, Happiness, Stuff...

Chris Dillow on people:

"[We] stay in situations where we're unhappy, like frogs who stay in water getting gently hotter until they boil to death."

Now read on.