A year ago we experienced the effect of the worst financial crisis in a century. Its scale was greater than the collapse of 1929, mainly due to the global nature. Testimony after analysis of recent crashes around the world talking about the long-term consequences.
The question is, when it will end. Answer: not soon, it concerns both the U.S. and Europe. Banks still do not make loans, and if the issue - they are very difficult to obtain. Deflation remains a concern in many countries.
Central banks are very concerned that they do not know how to deal with hyper-deflation. They are trying to achieve inflation, because they know what to do with it. I think we achieved what John Maynard Keynes called "semi-long decline, following the acute phase of the cycle, which we passed over the last year or so.
The biggest mistake the current policy would be to get rid of incentives too early. This can lead to a W-shape or L-shaped recovery, provided that the private sector, it seems, is not in the best condition. Should take into account the experience of events in the United States in 1937, when it was believed that the recession came to an end and monetary policy tightening, which led to a spiral of economic decline.
Consequences of the financial crisis primarily affected the U.S. housing market: housing prices began falling in late 2006. Unemployment started to rise since mid-2007, and then began employment decline since December 2007, which the National Bureau of Economic Research and identified as the beginning of a recession. The economy did not decrease until the second quarter of 2008.
At the other end of the Atlantic
This was also the beginning of the period of recession in the UK and the European Union, either the unemployment or output. Financial pandemic spread across the Atlantic.
Evidence of growth could be something that makes the labor market to grow, not fall, so this indicator can be correlated with a recession. Going forward, I am looking for any early signs of recovery in the labor market in the U.S., but at the moment, they exist just a few. In the recovery driven by the growth of housing construction, for example, you can see an increase in employment of construction workers. I am looking for growth in employment, which appeared at least several industries.
Last week the U.S. Bureau of Labor Statistics released the latest data, which suggests that the unemployment rate rose to 10,2% in October from 9.8% in September and 6.6% compared to last year. Some commentators have consoled myself with the thought of slowing the pace of reducing the number of jobs in non-agricultural sector, which fell to 190,000 per month.
An even greater reduction
These data were obtained after the research enterprise, but, according to alternative estimates of employment, based on household data, the decline was much greater. Based on the data eih, employment fell by 590,000 per month, and nearly 1.4 million during the past three months. Over the past 12 months, employment has decreased by 5.5 million posts and 6.4 million, relying on data on households.
The reason for the difference in the data is that the household survey has a broader scope because it includes self-employed, unpaid family workers, agricultural workers and employees of private households, which are included in this study.
Market exclusion nannies, handymen, gardeners, and can greatly affect the data. There is not much evidence to suggest the development in this area. In health, the only sign of life observed in the growing temporary help services, which, in essence, is the beginning. Construction and manufacturing are most affected by the crisis. In these industries, there are no signs of recovery.
Wealth, as the stabilization
There are also signs of recovery in the labor market in Europe, not related to government incentives. Social security systems operate in many countries as an automatic stabilizer that prevents falling incomes. Subsidies for part-time workers in Germany and the Netherlands, for example, helped to keep unemployment low. Even with that decline in production was approximately 5% from the peak, the Dutch have been highly successful in minimizing the impact on the labor market.
At the moment, their unemployment rate remains at 3.6% compared with the mean data from 27 EU countries, who say the unemployment rate at 9.2%. However, there is only little evidence that in many countries of the EU creates a significant number of jobs in the private sector.
Program "cash for trash" minimized. Temporary tax cuts will be returned at the end of the year in the UK. Moreover, firms in the euro zone has not yet experienced the full impact of currency appreciation.
Unemployment continues to rise in major EU countries. Organization for Economic Cooperation and Development predicted that unemployment will exceed 10% in Belgium, Finland, France, Germany, Hungary, Ireland, Italy, Poland, Portugal, Slovakia, Spain and Sweden in 2010.
Keynes' biographer, Lord Robert Skidelsky, argues in his new book, "Keynes: The Return of the Master" (Public Affairs, 2009) that the objective of macroeconomic policy is a quasi-boom "to enable people to live" wisely and well pleased. "
We definitely do not live.
David Blanchflower - a former member of the Committee of the Bank of England's monetary policy, an economics professor at Dartmouth College and the University of Stirling.
The question is, when it will end. Answer: not soon, it concerns both the U.S. and Europe. Banks still do not make loans, and if the issue - they are very difficult to obtain. Deflation remains a concern in many countries.
Central banks are very concerned that they do not know how to deal with hyper-deflation. They are trying to achieve inflation, because they know what to do with it. I think we achieved what John Maynard Keynes called "semi-long decline, following the acute phase of the cycle, which we passed over the last year or so.
The biggest mistake the current policy would be to get rid of incentives too early. This can lead to a W-shape or L-shaped recovery, provided that the private sector, it seems, is not in the best condition. Should take into account the experience of events in the United States in 1937, when it was believed that the recession came to an end and monetary policy tightening, which led to a spiral of economic decline.
Consequences of the financial crisis primarily affected the U.S. housing market: housing prices began falling in late 2006. Unemployment started to rise since mid-2007, and then began employment decline since December 2007, which the National Bureau of Economic Research and identified as the beginning of a recession. The economy did not decrease until the second quarter of 2008.
At the other end of the Atlantic
This was also the beginning of the period of recession in the UK and the European Union, either the unemployment or output. Financial pandemic spread across the Atlantic.
Evidence of growth could be something that makes the labor market to grow, not fall, so this indicator can be correlated with a recession. Going forward, I am looking for any early signs of recovery in the labor market in the U.S., but at the moment, they exist just a few. In the recovery driven by the growth of housing construction, for example, you can see an increase in employment of construction workers. I am looking for growth in employment, which appeared at least several industries.
Last week the U.S. Bureau of Labor Statistics released the latest data, which suggests that the unemployment rate rose to 10,2% in October from 9.8% in September and 6.6% compared to last year. Some commentators have consoled myself with the thought of slowing the pace of reducing the number of jobs in non-agricultural sector, which fell to 190,000 per month.
An even greater reduction
These data were obtained after the research enterprise, but, according to alternative estimates of employment, based on household data, the decline was much greater. Based on the data eih, employment fell by 590,000 per month, and nearly 1.4 million during the past three months. Over the past 12 months, employment has decreased by 5.5 million posts and 6.4 million, relying on data on households.
The reason for the difference in the data is that the household survey has a broader scope because it includes self-employed, unpaid family workers, agricultural workers and employees of private households, which are included in this study.
Market exclusion nannies, handymen, gardeners, and can greatly affect the data. There is not much evidence to suggest the development in this area. In health, the only sign of life observed in the growing temporary help services, which, in essence, is the beginning. Construction and manufacturing are most affected by the crisis. In these industries, there are no signs of recovery.
Wealth, as the stabilization
There are also signs of recovery in the labor market in Europe, not related to government incentives. Social security systems operate in many countries as an automatic stabilizer that prevents falling incomes. Subsidies for part-time workers in Germany and the Netherlands, for example, helped to keep unemployment low. Even with that decline in production was approximately 5% from the peak, the Dutch have been highly successful in minimizing the impact on the labor market.
At the moment, their unemployment rate remains at 3.6% compared with the mean data from 27 EU countries, who say the unemployment rate at 9.2%. However, there is only little evidence that in many countries of the EU creates a significant number of jobs in the private sector.
Program "cash for trash" minimized. Temporary tax cuts will be returned at the end of the year in the UK. Moreover, firms in the euro zone has not yet experienced the full impact of currency appreciation.
Unemployment continues to rise in major EU countries. Organization for Economic Cooperation and Development predicted that unemployment will exceed 10% in Belgium, Finland, France, Germany, Hungary, Ireland, Italy, Poland, Portugal, Slovakia, Spain and Sweden in 2010.
Keynes' biographer, Lord Robert Skidelsky, argues in his new book, "Keynes: The Return of the Master" (Public Affairs, 2009) that the objective of macroeconomic policy is a quasi-boom "to enable people to live" wisely and well pleased. "
We definitely do not live.
David Blanchflower - a former member of the Committee of the Bank of England's monetary policy, an economics professor at Dartmouth College and the University of Stirling.
David Blanchflower
Bloomberg
November 10
Bloomberg
November 10
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