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Are We Heading For A Recession Like In The 30s?

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David Bell, an economist at the University of Stirling, the former Threadneedle Street policymaker said the collapse in activity amid Covid-19 and the accompanying rise in unemployment looked to be at least 10 times faster than in the recession triggered by the 2008 financial crisis.

 

https://www.theguardian.com/world/2020/apr/03/coronavirus-uk-business-activity-plunges-to-lowest-ebb-since-records-began

 

Two weeks of lockdown has caused massive falls in the FTSE, huge rises in unversal credit claims and massive governemnt debt.

Once the three weeks of lockdown is over, can the economy take any more, surely we need to relax the lockdown and get more people working?

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I think the hope is that the lockdown will slow down the rate of transmission of the virus to a rate where the NHS and other services can cope with it.  After that then the various restrictions can slowly be relaxed.

 

This is, of course, predicated on people not going to the beach or having a street party tomorrow and probably also an adequate testing regime. 

 

I've posted this elsewhere, but the various government schemes, should hopefully be holding enough people in work so that the economy will start to bounce back fairly quickly. My employer deals with China and Hong Kong and that seemed to be happening there, though now all the shops in the rest of the world are closed I imagine things are slowing down again. 

 

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44 minutes ago, El Cid said:

Once the three weeks of lockdown is over, can the economy take any more, surely we need to relax the lockdown and get more people working?

That would literally be the worse thing we could do.

 

And you're not paying attention if you think this lockdown is going to end in three weeks.

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3 minutes ago, Funky_Gibbon said:

That would literally be the worse thing we could do.

 

And you're not paying attention if you think this lockdown is going to end in three weeks.

That is the problem, for the economy, it wont end after three weeks. China ended its lockdown, then it was force to reintroduced some measures, after new cases were discovered.

So are we talking anout another two weeks or maybe more? Very costly for our economy and the world economy.

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33 minutes ago, El Cid said:

That is the problem, for the economy, it wont end after three weeks. China ended its lockdown, then it was force to reintroduced some measures, after new cases were discovered.

So are we talking anout another two weeks or maybe more? Very costly for our economy and the world economy.

At least another two weeks as we are now, then I'd hope for a gradual relaxation, with all shops opening but all  following the current social distancing measures and people working from home if they can. 

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37 minutes ago, El Cid said:

That is the problem, for the economy, it wont end after three weeks. China ended its lockdown, then it was force to reintroduced some measures, after new cases were discovered.

So are we talking anout another two weeks or maybe more? Very costly for our economy and the world economy.

What sort of numbers of people are you willing to sacrifice for the economy? Government have said 20k will die, I reckon nearer double that. If we release everybody that number will get very high, very quickly.

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Posted (edited)
29 minutes ago, tinfoilhat said:

What sort of numbers of people are you willing to sacrifice for the economy? Government have said 20k will die, I reckon nearer double that. If we release everybody that number will get very high, very quickly.

Its a ballance between keeping government borrowing down, we chould carry on the lockdown untill the end of May, coronavirus is said to be around for another 6 months, but that is not realistic.

Its not my decision, I dont know how all the different countries economies will fair, in 2/3 months people start looking at how different countries have performed.

 

I assume you are aware of the deaths that were caused by the 1930s recession?

Edited by El Cid

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53 minutes ago, El Cid said:

Its a ballance between keeping government borrowing down, we chould carry on the lockdown untill the end of May, coronavirus is said to be around for another 6 months, but that is not realistic.

Its not my decision, I dont know how all the different countries economies will fair, in 2/3 months people start looking at how different countries have performed.

 

I assume you are aware of the deaths that were caused by the 1930s recession?

Have we not moved on from the 1930s?

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1 hour ago, tinfoilhat said:

Have we not moved on from the 1930s?

I have read articles where it said things could get to be like it was in the 30s, but it was just news item, conjecture.

 

Only taking account of measures announced so far, and even if the economy “only” shrinks by 5% per cent this year, we might expect borrowing in the coming financial year to exceed £175 billion, or more than 8% of national income. This would be more than triple the amount forecast in the Budget just two weeks ago.

How many people will become homeless or unemployed because of a 5% downturn? Wealth allows better healthcare and people live longer, lets hope that we have enough to carry on growing our NHS.

 

https://www.ifs.org.uk/publications/14771

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27 minutes ago, El Cid said:

I have read articles where it said things could get to be like it was in the 30s, but it was just news item, conjecture.

 

Only taking account of measures announced so far, and even if the economy “only” shrinks by 5% per cent this year, we might expect borrowing in the coming financial year to exceed £175 billion, or more than 8% of national income. This would be more than triple the amount forecast in the Budget just two weeks ago.

How many people will become homeless or unemployed because of a 5% downturn? Wealth allows better healthcare and people live longer, lets hope that we have enough to carry on growing our NHS.

 

https://www.ifs.org.uk/publications/14771

In the /50s and 60s we spent (If memory serves) 10% of GDP on defence, building countless weapons we never used. It will be difficult, it will be painful. But whats the alternative? In 1940 we could have worked a deal with Hitler, shipped the Jews over and probably saved lives. We didn't as it wasn't right.

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28 minutes ago, tinfoilhat said:

In the /50s and 60s we spent (If memory serves) 10% of GDP on defence, building countless weapons we never used. It will be difficult, it will be painful. But whats the alternative? In 1940 we could have worked a deal with Hitler, shipped the Jews over and probably saved lives. We didn't as it wasn't right.

I read that if the economy drops more than 9%, then that will cost more lives than we will save by having a lockdown.

The lockdown will only delay coronavirus, it wont stop it, that is what Boris said.

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I hate to be negative but I can’t see any change to this for a few months never mind a few weeks and even then I think it will be limited.

 

theres no logic that says to me that in 2/3/4 weeks if we were to relax it we won’t just end up

back in the exact same state as we are in now a couple of weeks later.

 

the only way I think they could relax it slightly would maybe be on the type of shop that could reopen albeit with distancing restrictions.

 

for example - could they allow somewhere like B&Q / Homebase etc to reopen - to allow people to maybe do their own diy/garden projects to pass on time albeit still staying in doors.

 

i think the economy will be devastated personally. 

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