For weeks now there has been nothing but unremitting gloom. The collapse of the markets, the failure of Fannie Mae, Lehman Brothers, Icesave, etc and inflation soaring to its highest level for 16 years.
All this was underpinned by commentator after commentator telling us there is worse to come.
There has been no other story in town, not least because everything else seems so much less important. Even government departments appear to be holding back important announcements for fear they will be buried by the bad news. How times have changed!
The government’s injection of £37bn of capital into RBS, HBOS and Lloyds and a positive reaction from the markets brought a small glimmer of hope. Meltdown Monday was averted. But everything is happening at such speed that the next week could tell an entirely different story.
Yet such is the human character, the desire to find something to smile at is slowly creeping into newspapers, at least. After pages 1, 2, 3, 4, 5–9 on the economy, a little bit of cheer. The Daily Mail produced a double page spread with the caption: ‘Banks crash. Pensions shrink. Gloom abounds. But let’s remember how lucky we are to live in such a beautiful country, as shown yesterday in this display of autumn colour at the eighteenth century landscape garden at Stourhead, Wiltshire.’ It was, indeed, a beautiful autumnal picture.
And The Times published an article with the headline ‘Why the recession is a blessing in disguise’. It was based on research by Christopher Ruhm, a professor at the University of North Carolina, who says rates of smoking and excess weight decline during an economic downturn, while physical activity increases.
Ruhm’s research states: ‘The drop in tobacco use occurs disproportionately among heavy smokers, the fall in body weight among the severely obese and the increase in exercise among those who were completely inactive.’ It is not entirely clear why this happens, although he says that declining work hours might provide one reason, while at the same time there is little evidence of the role that income reduction will play in this.
Still, the Department of Health would do well to study Ruhm’s findings closely as it struggles to get its obesity campaign off the ground.
The Liberal Democrat Treasury spokesman Vince Cable also wrote at the weekend about the ‘good news’, which was largely that all this shock to our systems will force us to be more sober and careful with the management of money. There will emerge, he wrote, a culture of prudence and and self-restraint. We will all re-learn to grow our own food and stop being quite so hedonistic. It sounds a bit boring but if it gets us through the next few years perhaps we should just live with austerity?
None of this, of course, is to diminish the importance of what is happening. It has not yet become entirely clear what the effect has been on pension funds. But the increase in the cost of living for elderly people was placed at 9% last week, double that for the rest of us, because a disproportionate amount of their spending is on food and fuel.
Nor do we have any clear idea what the impact will be on local authority spending, although the prime minister was at pains to pledge that the bank bail-out fund would not affect education or health.
There are also concerns over the effect of this very sudden economic downturn on mental health. So far, we have heard of two apparent suicides of high-flying businessmen. Now psychiatrists are warning of the knock-on effects, especially in the City, when these people with ‘type A’ personalities suddenly find themselves unemployed.
Private mental health clinics are reporting increased numbers of men approaching them for help, too proud to go to their own GPs. They are calling it the ‘Square Mile syndrome.’
And unemployment is not just affecting former Lehman Brothers’ workers. The October unemployment figures show a rise of 164,000 to 1.79 million, the biggest single rise for 16 years. Around 40% of unemployed people suffer some sort of psychological distress, which in turn puts more pressure on cash-strapped mental health services.
Keynesian interventions are increasingly being called for via government investment in, for instance, transport. Now is not the time, it is argued, to put Crossrail on hold. And now is the time, experts say, to buy up cheap properties for social housing to cope with the numbers of people affected by repossessions, job losses and the dearth of council houses.
But at the risk of being a Pollyanna, reverberating in my head right now is Ian Dury’s Reasons to be cheerful, released in 1979 at the end of the Winter of Discontent. In his list was ‘Health service glasses, gigolos and brasses. The juice of the carrot, the smile of the parrot, a little drop of claret — anything that rocks.’ I am sure it could be rewritten for 2008.
