The economic crisis is the most important feature of the political landscape, and is likely to remain so for the next year or so - unless or until the political fallout of said crisis starts to grab the headlines.
The bursting of the dot-com bubble in 2000-2003 sent the FT100 down to about 3300 - a level which this far more serious crisis has yet to achieve, hitting a low of about 3800 in November. But as I type the Dow Jones has dropped another 250 points or 3.5% to around 7100 and the FT closed at 3850, only 70 points off the November low. Given today's Dow fall, the FT may well hit a new low tomorrow.
It may be, as CityUnslicker says, that the dominos fall slowly, but there's been nothing slow about the stock market fall. The dot-com collapse saw a drop from 6900 in Jan 2000 of about 700 points by Jan 2001, a further drop of 1,000 points by Jan 2002, 1200 points by Jan 03, and another 700 points by March 03. This crisis saw 2,000 points off the FT in 2008, most of it in the last four months of the year.
Anyone in IT could see the dot-com bubble for what it was. I remember, when Dixons freebie net access provider Freeserve was valued at several hundred pounds per subscriber, wondering how that could ever be a realistic valuation. Where were they going to make that sort of money ? The average Freeserve user in 2002 probably didn't spend more than £100 a year on the Web, and although more sophisticated users might be spending several hundred, how was the provider going to get even a small percentage cut of that, let alone the hundreds of pounds that could justify the share price ? I looked at the FT's 2000 level and moved my AVC pension pot into cash funds - one of my few big and correct calls (I then failed to switch out in 2003 !).
There were enough financial professionals calling the credit crunch over the last two years - yet it still came as a shock to the rest of us. Not being in the banking business, I wondered vaguely how they kept declaring multi-billion-pound profits and put it down to the hefty spread between the interest rate on savings accounts and that charged to the credit card. I couldn't work out why Iceland seemed to be buying up the High Street, either.
I digress. What does it all mean ? I've already noted that Labour's solution will be to rob the pensioners via inflation in order to a) bail out their director mates b) bribe the vibrant youth not to riot, by stopping their mouths with outreach workers - but a few other observations.
i) the Western European countries deepest in the brown stuff seem to be those who swallowed whole all the stuff about the global goodness of mass immigration, ever-rising property prices and financial services - to wit, the UK, Spain and Ireland. Demographic basket-case Spain now has millions of immigrants and millions of unemployed, mass-immigration Ireland is in deep doo-doo.
ii) in the UK it's likely to accelerate a shift of votes to the BNP, enabling them to reach the Holy Grail of Euro-funding. Something our rulers aren't too keen on, but they're running out of options to prevent it. The obvious solution - stopping mass immigration immediately for say 5 years while the emphasis is put on integration - is unthinkable, so I guess we'll just get lots of get-tough stories coupled with zero action and perhaps more harassment of BNP activists.
iii) the Govt fear rioting in the streets.
iv) any future spending cuts are likely to be aimed at the non-rioting classes - i.e. the people who've been paying in for 40 years.
v) at this stage in the lifecycle of the Major government there was great, Obama-size hope in Tony Blair and New Labour. I had it myself. They came to power with a huge amount of goodwill. Cameron, and still less Osborne , don't - and won't have that. Would you trust either ?
Painting the transition (by Ian Holliday)
1 hour ago