I’ve kept a copy of the Guardian’s “What might happen next?” guide to the recession from 18th October (http://www.guardian.co.uk/business/2008/oct/18/creditcrunch-recession). Julia Finch and Ashley Seager set out five possibilities, ranging from a ‘short, sharp shock’ to ‘Armageddon’. A photocopy is stuck somewhat haphazardly in the sightline to the right of my screen, and from time to time as the news rolls in, I glance and wonder how it’s going.
I assured anyone that asked me in the late summer of 2007, when it was still called a sub-prime mortgage crisis, that this was The Big One. A great unravelling had begun, I asserted: twenty years or more of unregulated debt-funded turbo-capitalism had run into the buffers. When the UK government nationalised Northern Rock I explained to the same audience that much, much more was still to come.
Now that it’s a recession, or a crunch, or just a fucking mess, the news keeps on rolling in, and much, much more has indeed come. A key sign of just how much has come is how hard it is to remember last week’s bad news, or to try to choose the five most remarkable things that have happened. It is possible, in early December 2008, for news of, oh I don’t know, half a million people losing their jobs in a single month, or the US stockmarket falling by the second highest percentage amount ever recorded, or the value of the pound reaching a record low, it is possible for this kind of news not even to make the main headlines.
Here’s a few highlights from the last few months:
- in the UK, interest rates were lowered by 1.5% points, and before the paperwork had even arrived on the mats of the nation’s mortgage holders, rates dropped again by 1%;
- several major financial institutions, in the US and UK - Fannie Mae, Freddie Mac, Lehman Brothers, HBOS, Bradford & Bingley – have either collapsed, been taken into public ownership or leant billions of taxpayers’ pounds;
- house prices are falling in the UK at double digit rates;
- the US government tried to announce an $800bn rescue package for the financial sector, failed, tried again, succeeded, but made no difference;
- the entire US car manufacturing sector is on the verge of bankruptcy;
- the UK government has abandoned fiscal propriety, cut VAT and projects the government’s borrowing requirement, on optimistic assumptions about growth, to sail past £100bn next year;
- many companies are experiencing unbelievable changes in fortune, not simply sales that are a little lower than the previous month or the previous year, but total collapses in demand – in the third quarter of 2007, Volvo sold just fewer than 42,000 trucks in Europe; and in the same quarter of 2008 they sold – wait for it – 115. ONE HUNDRED AND FIFTEEN! Normal rules have been totally suspended;
- the outgoing US president convened a global summit to sort everything out, and precisely nothing happened;
- according to today’s news, more than half a million Americans lost their job in November;
- commentary that ‘fiscal injections’ aka Keynesianism would be required has now been overtaken by the extraordinary euphemism “quantitative easing” – this means, in fact, printing money and giving it away. I kid you not.
Absolutely every think tank, policy wonk, media commentator, pundit, department, agency and government has waded in with their views on how terrible it’s going to be, and their proposals for what to do about it. Some of these proposals sound sane, some sound mad, some defy satire. NESTA – “a unique and independent body with a mission to make the UK more innovative” – issued a press release recently explaining that the solution to the problem was, er, innovation.
We have heard innumerable times that we are in uncharted territory, and it shows. Slash interest rates, lend trillions of dollars, buy up the US car market, employ millions of people in a ‘green task force’, let’s give it a go. Despite more than 200 years of economics, absolutely nobody has any clue at all whether – for example – a cut in VAT will cause consumption to rise.
So I’ve updated my view. Eighteen months ago, by The Big One, I meant that the era of debt-fuelled, consumer-led growth had come to an end, and a protracted period – at least five, and possibly ten years – would be required for all the various agents in the system both to clear the backlog and to develop new protocols (e.g. spending on the basis of money you’ve saved, investing on the basis of accumulated profits, trading on the basis of real things rather than derivatives).
Now I’m thinking that something even more profound may happen. I think it’s possible that the very idea of consumerism might collapse. I think it’s possible that the logic of the arguments from sustainable development – that it is western levels of consumption that most endanger the planet’s eco-system – could mesh, for the first time, with the day-to-day experiences of millions of consumers over the next few years. These millions of consumers are going to stop buying stupid volumes of useless stuff – and they are going to discover that this does not make them miserable, or empty, or pariahs. It is possible that they will discover that living with less – living with enough – is actually quite good, and has the extraordinary additional benefit of saving the planet.
The pressures to stop this happening will be immense, of course. Trillions will be spent to keep the old show on the road, and corporations are wily and resourceful beasts with long memories and deep pockets. But maybe, just maybe…
Anyway: several years of rollercoaster weirdness guaranteed. Hold on to your hats.