Monday, February 16, 2009

The Lost Decade

So the net worth of the average American household is now less than it was in 2001. This gives support to my own view that the growth figures of Brown's years as Chancellor should be recalculated, stripping out the contributions of financial services - now massively negative - and the property bubble. I think we'd find we are back where we were in 1997, or soon will be. A lost decade.

21 comments:

  1. What about the song Bryan, "things can only get better" by D:Ream, we still have that left, there is still something to grasp as we slip down Gordon big black hole.

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  2. I'm definitely hearing violins this morning.

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  3. Only lost from a money / growth point of view. Who needs them?

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  4. Or 1947 maybe.

    Not that i care, i cannily decided to have no money and i've learnt to live on bugs and tree roots. While the world burns i shall be living in a hollow tree, my life more or less as it was.

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  5. According to accountant extraordinaire Mark Wadsworth, it goes something like this.

    "£700 billion or so that's purely down to credit growth, divide by ten = £70 billion per annum, which is broadly speaking equal to compound growth of 5% or so since 1997"

    Which is much worse than I feared and if you add in the politics, nulab followed Tory spending rules until they let rip in 2000, so 97-2000 gdp growth cannot be given to Brown, thus for them its even worse.

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  6. We often think of you elberry, sitting up there in your chilly tower, fingerless gloves giving little warmth, chewing on the odd passing squirrel, riddled with consumption, Newgates knocker calling ever louder, yup 1947 it is then.
    Fool that I am for asking but wasn't a labour government in power then ?

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  7. If we strip out the contribution of financial services, that'll make the 'good' years look worse, but because revenue from the financial services industry has collapsed recently, your adjustment will make 2008/9 look a lot better. Perhaps under the Appleyard adjustment, we're not actually in a recession?

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  8. Don't forget the inflationary factor--$1 in 2008 bought only what $0.83 would get you in 2001. In other words, if in 2001 your house was worth $60,000, and in 2008 it was worth $72,000, then the house hadn't increased in value at all, because the entire increase was due to inflation.

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  9. "What was lost cannot be recovered, but let us save what remains...." Thomas Jefferson, after his library burned down.

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  10. Luis has just coined:

    the Appleyard adjustment

    Good name for the whole experience, in this corner of the blogscape?

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  11. Yes, of course, you're right - the world wide web hasn't been invented, Viagra doesn't exist, all those houses were never built, there's only four television channels, flights to Paris cost £250 and we're all no better off than we were in 1997. Laugh test man, laugh test. You're mixing up gross value added with accounting profit - one could use the argument you're using about financial services to prove that the invention of the aeroplane has never benefited society.

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  12. Er, strongly sympathetic with your line of reasoning, daniel davies, but when are you implying that the world wide web was invented? Not after New Labour in 1997, surely? It was 1990. The very moment Thatcher was on the way out. But your general drift is extremely important. Much for all of us to be thankful for (and that's not remotely a party political point).

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  13. Bit literal, Daniel D.

    I like the angle of the Lost Decade. It pleases me, but then I'm anti-progress.

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  14. From the Guardian website: Daniel Davies is an analyst and stockbroker working in London. He started his career working in the Bank of England and has been a stockbroker for ten years.

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  15. Daniel's point highlights the absurdity of GDP accounting. Quite right. But that's what Brown uses. My point is he asked for it.

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  16. The Appleyard Adjustment could be applied to a number of issues. It could even be an alternative name for the blog.

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  17. Or the name of a Robert Ludlum book.

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  18. Say what you like about 1997, my assets would have been worth something and Blur were bringing out some of their best music.

    Once you've lost it, you can never get it back.

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  19. Bryan,

    Can you expand a bit on why Daniel's point highlights the absurdity of GDP accounting?

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