Thread: Mass Unemployment To Take Center Stage

After dramas of 2008, prepare for unemployment to take centre stage

Sunday, September 14, 2008, symbolises for me the year when the unimaginable happened. Over a few frantic – and I have to admit at time surreal hours on that Sunday – we ripped up our business section time-and-time again as the night unfolded.

Richard Fletcher
Last Updated: 9:51AM GMT 01 Jan 2009

First to tell the breaking story of the failure of Lehman Brothers; then the collapse of Merrill Lynch into the arms of rival Bank of America; and finally a last ditch private-equity bid to rescue AIG from the brink.

In the period of just a few hours we witnessed three events that in any "normal" year would have been among the biggest stories of the year. In the taxi home at the end of the night I remember texting the night's headlines to my father (a former Merrill employee). I started my text by assuring him I was sober (and still sane).

It will, I suspect, be years before we discover quite how close we came in September to a full blown credit crisis.

(I hope to have retired by the time the Cabinet papers are released in 2038 – but given the current dire state of my pension fund I fear I may still be scribbling away).

Few expect 2009 to be as unprecedented as 2008. What we now face is a hard, relentless grind as the fallout from the credit crisis spreads into the real economy. While the collapse of financial institutions dominated 2008, I believe unemployment will dominate 2009.

The dire data of recent weeks is worth repeating. More than 75,000 extra people claimed Jobseeker's Allowance in November – the largest monthly increase for more than 17 years.

If the forecasters are to be believed the picture will get a lot worse in the coming year.

The Chartered Institute of Personnel and Development (CIPD) forecasts that 600,000 workers face redundancy this year – the equivalent of 1,600 people a day.

As I have written before, don't underestimate the effect of unemployment – not just on those unfortunate enough to have been laid off, but also on the confidence of friends, family and neighbours.

The fallout from redundancies spreads: hitting the confidence of everyone – no matter how secure their own jobs.

With economists now predicting that unemployment could now hit 3m, jobs look set to become the a major headache for the Government in 2009.

Unfortunately there is no quick solution. No bail-out would be large enough to fix the economy and avoid us all paying the price for the excesses of the last decade.

Downturn's already a record-breaker

How long will the recession last? Listen to some commentators and we face years of stagnant growth with a Japanese-style downturn that could last up to a decade.

New Star economist and strategist Simon Ward is more upbeat predicting on his blog – moneymovesmarkets.com – that we could see the bottom of the curve as soon as February (although we will have to wait until 2010 until we return to growth).

G7 industrial output has already contracted 7pc since peaking in February 2008, according to Ward who has crunched the November and October output data for the G7 members. The speed and depth of the downturn mean that we have already exceeded the 2000-2001 downturn and look set to exceed the 1980-1982 recession with the current decline heading towards 10pc.

That would make the current recession the second worst since the Second World War, beaten only by the 1974-75 recession when output plunged 12pc from peak to trough.

http://www.telegraph.co.uk/finance/comm ... stage.html

It scares me for sure. So many places closing.........and so many more expected to. Felt bad for the people out there holding those stupid going out of business sale posters when the wind chill was below zero.

The way things were spiraling upwards and people were all acting like they were rich on borrowed money, I can't say I think this reality check is a bad thing. It will force many adults to grow up.