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Thousands trapped in negative equity

Bankers’ bedtime stories lead to Nanny Boom

Housing market in jeopardy as first-time buyers vanish

Larry: addressing inequality will benefit us all

Larry: why is everyone still spending?

Pawn shops thrive as credit tightens

No housing for Olympians now the Gods have failed

Dan: Inflation - ‘a year of going backwards’

Pets feel the crunch!

Dan: Housebuilders hit by ‘gazundering’


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    Welcome to The Gods That Failed blog.

    Our new book was published on 5 June by The Bodley Head, and we've set this up to give ourselves, and the public, the chance to learn about and discuss the economic crisis that we're currently all facing.

    It's high time people realised how and why we've reached the state we're now in. The Gods that Failed argues that we need a new system: instead of an increasingly risk-prone, privatised, profit-driven economic model overseen by a largely unaccountable and speculation-obsessed elite, we need an economy that is run and regulated in the interests of ordinary people.

    Fuel strikes begin

    Posted by Editors on June 13, 2008 at 10:55 am

    Shell workers today begin a strike that could leave one in ten pumps dry, say the Telegraph.  While many complain that drivers are overpaid, they insist that their wages have not risen since 1992.

    In chapter 3 of The Gods that Failed, Larry and Dan discuss the strikes of the 70s and 80s, and the correlation between the development of the free market economy and strike action. They quote Bernard Levin:

     ‘Has he [Edward Heath] any idea what a man earning £20 a week feels when he sees speculators about to make untold millions by befouling Piccadilly Circus and Covent Garden and indeed any other bits of any other city they can get their hands on?’ (Times, May 30 1972)

    Despite government warnings not to panic buy, the Times reports a rush on petrol stations yesterday.

    An Oil Bubble

    Posted by Editors on June 12, 2008 at 2:43 pm

    Agence France-Presse report that yesterday’s surge in oil prices is receding. Read the full article here.

    In chapter 7 of The Gods that Failed, Larry and Dan outline the four distinct phases of a speculation bubble: 1) A change in the economy causes a rise in asset prices; 2) overseas speculators buy up shares, driving the price higher; 3) in the rush to buy, speculators throw caution to the wind; 4) an inevitable collapse as credit tightens.

    It happened to the housing market - could it be going the same way with oil?

    Labour bungled tax change

    Posted by Editors on June 12, 2008 at 10:44 am

    ‘Alistair Darling, the chancellor, had announced that he was relaxing his proposals to tax more heavily one group of immigrants – the so-called non-doms (non-domiciled residents) who were mightily wealthy and used London as a tax haven… it was hard to see why it was thought that a good way of bringing foreign money into the UK was to let rich foreigners live here without paying taxes so long as they kept most of their money overseas.’ (The Gods that Failed, Chapter 1)

    Yesterday, the House of Lords reported that this tax decision had damaged the UK’s global competitiveness. Read Larry’s article here.

    Larry Elliott - The Fed’s optimism is tactical

    Posted by Editors on June 11, 2008 at 3:57 pm

    ‘The timing of Bernanke’s comments is important: there is a concerted effort by the Fed, the US treasury and the White House to talk up the value of the dollar in order to lower the cost of imports - especially oil - and to boost consumer spending power.’ Read Larry’s article on why Ben Bernanke, chairman of the Federal Reserve, may be too optimistic about the USA’s economic future.

    The economic slowdown has been developing for a while. In this NBC report, Mort Zuckerman, the American real estate billionaire, sees America as being in ‘about the fourth inning of a nine inning ball game.’ Interestingly enough, the interviewer sees it as a ‘perfect storm’.

    Poverty up for pensioners and children

    Posted by Editors on June 11, 2008 at 12:33 pm

    ‘Voters had supported the increase in spending; they had been unhappy at the shabby state of the public realm in 1997 and wanted to see extra investment in the services they needed and used. Understandably they wanted to know what had happened to all the money.’ (The Gods that Failed, p.150)

    On the front page of today’s Guardian, Larry reports on the growing inequality in Britain - while the rich have been getting richer, the poor have been getting poorer. The Labour government’s high-profile bid to end child poverty seems to have come off the rails. Read the article here.

    The Perfect Storm

    Posted by Editors on June 11, 2008 at 11:34 am

    In Chapter 9 of The Gods that Failed, Larry and Dan point out the strange frequency of the phrase ‘perfect storm’ in the media - no longer just a meteorological term, it is now the official tagline of crisis in general.

     ‘The state of the global economy in the first half of 2008 made it a prime candidate for the “perfect storm” thesis… As the chief economist of the International Monetary Fund, Simon Johnson is hardly one for apocalyptic visions of the future, but in November 2007 he popped up to warn of a “perfect storm” caused by the interaction of turmoil on the financial markets and the spiralling cost of energy.’

    Today, Larry Elliott and Ashley Seager report on Mervyn King’s admission that we will see more ‘turmoil in the markets,’ and his plan for improved regulation. And it seems the storm is spreading to the rest of the world. In South Africa, the national Times reports a ‘near perfect storm in housing.’

    Larry Elliott - The return of stagflation

    Posted by Editors on June 10, 2008 at 10:14 am

    The imminent collapse of the housing market brings the threat of a wider market crisis of low demand and high inflation. Read Larry’s article here.

    The Telegraph reports similar fears, with factory charges up 8.9% since last year. Read the full article here.

    15000 estate agents to lose jobs

    Posted by Editors on June 9, 2008 at 5:06 pm

    Today the Centre for Economic and Business Research announced that it predicts up to 15000 job losses among estate agents alone. Read the article on ThisIsMoney.

    The new winter of discontent

    Posted by Editors on June 9, 2008 at 12:46 pm

    Throughout the book, Larry and Dan look at the 1978/9 ‘winter of discontent,’ with a grim nod to the present climate. Recently ‘nine porters at Boston’s Logan airport had seen their incomes drop dramatically after the airline for which they worked decided to charge passengers for bag check-in. This diverted money previously paid direct to the porters in tips to the company instead.’

    Instances like these are becoming more common, even since the Telegraph drew similar parallels two weeks ago. The BBC have uploaded a video reporting on pay cuts for ground level workers, especially those closest to the City, and it seems likely that there will be pay cuts across the country.

    Northern Rock - just like a rolling stone

    Posted by Editors on June 6, 2008 at 4:04 pm

    The spectre of the Northern Rock crisis still hangs over the economy, and the bank itself is still under government protection. As Larry and Dan write in the book:

    ‘…European Union competition rules demanded that the competititive advantage enjoyed in the present by the receipt of state aid, had to be “given back” in the future to its competitors. In other words the firm [Northern Rock] would have to be hobbled in some way in its future activities.’

    And according to the New York Times, the European Commission is launching an inquiry into the legality of the ongoing government bailout.

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