Economic Depression – one more for the road eh?

Coronavirus could lead to an Economic Depression on a scale not seen since the 1930s – according to the International Monetary Fund. We’re already seeing people going without food and being kicked out of work. And when the virus subsides, it’s not going to be a return to business as usual. The damage that’s been done is way too severe.

Millennials experienced the 2008 crisis as a brutal coming of age. A long, deep recession that trashed people’s life chances. For Boomers, I’m losing count how many economic recessions we’ve been through now. Sterling crisis of the 1960s. Oil crisis of the 1970s. Manufacturing collapse under Margaret Thatcher. Housing market collapse in the early 1990s. And here we go again!

Only this time it will be very different. It’ll be way more catastrophic in terms of the impact on jobs and markets. And of course it’s happened not because of economic cycles or government policy but – a biological virus. You’d surely have to go back to the Black Death of the fourteenth century to see a disease hit our economy at such a scale.

Economic depression – all about oil in the 1970s

As Boomers, we’ve seen economic recessions with very different characteristics. The 1970s saw short bursts of recession that despite the reputation of the decade for crisis and gloom, actually saw the economy bounce back into positive growth pretty quickly. The psychological impact though was huge because we’d basically been booming since the end of the Second World War and suddenly, we experienced a taste of what our grandparents had lived through in the 1930s.

The cause of recession in 1973 was the decision by oil producing countries to quadruple the price of ‘black gold’. Basically, they weaponised oil and were punishing the UK, US and other nations for supporting Israel in the Yom Kippur War. I remember the news bulletins were always relaying the latest bad news from the meetings of Arab oil producers. And Sheikh Yamani – the Saudi oil minister – became a household name. Here he is blithely informing us that oil is now a weapon…

Sheikh Yamani was a household name

Monetarism turns economic recession into depression

1979 saw Margaret Thatcher become Prime Minister in the UK and she implemented what was called a “monetarist” policy in the face of an economic downturn. That meant Austerity-Max with public spending cut and state support to manufacturing industry reduced. What Thatcher wanted to do was break the trades unions, reduce inflation and privatise the state-run parts of the economy. So, a political agenda as much as an economic policy.

The result between 1979 and 1981 was benign if you lived in the south east. But in Scotland, the north and the Midlands of England – industries collapsed like dominoes. I went on a canal trip at the end of secondary school on the Cheshire Ring canal and we were gobsmacked as middle class southern kids to see mile after mile of closed factories. It was a scene of devastation that led to a summer of riots in cities across the UK in 1981.

Thatcher remained in power until 1990 – when she oversaw another, often forgotten, recession. Like 1979 to 1981, the recovery took way longer than the downturns of the 1970s. We’d had the yuppie boom of the late 80s when markets soared. But then 1987 saw a stock market crash on Black Monday with the FTSE falling nearly a quarter in two days. Two years later, the aftershock hit the ‘real economy’ with unemployment rising sharply all over the country.

What I recall the most about the early 90s recession was the collapse in house prices. There were a lot of what were termed ‘voluntary repossessions’ where people chucked their own keys through the letterbox and walked away from their own home. And there was a boom in auctions of empty properties.

I was a financial journalist at the time and the other thing I reported on was the massive amount of financial corruption that was exposed as the economy slowed down. From Lloyd’s of London to independent financial advisers on the high street – the reality of the 1980s Yuppie era revealed itself in one scandal after another.

Back to the 1979 to 1981 recession. Here is the Toxteth riot of 1981 – what happens when you let youth unemployment skyrocket…

Royal Wedding and a Riot – flavour of 1981

In the summer of 1981, I got a place at Liverpool University. In July of the same year, the Toxteth district of that city exploded in riots over unemployment and a breakdown in community-policy relations. At the same time – Prince Charles married Princes Diana in front of three generations of the Royal Family.

The front page of the newspaper featured here sums up the mad contradictions of that long hot summer. Britain was convulsed with rioting in every major city – particularly Liverpool and London. While at the same time, millions tuned in to the “fairy tale” wedding of Charles and Diana – which ended up being more of a horror story.

This was the massively divided Britain of the early 80s. Half the country north of the Watford gap took the brunt of a two-year economic recession that decimated manufacturing industry. While the south-east – I think it’s fair to say – coasted through. At least that was the impression I got at the time.

Something snapped that summer. Youth jobless rates had gone through the roof. The government was bent on a monetarist economic policy that had turned a recession into a disaster. And there’s no getting away from the polarising affect that Margaret Thatcher had on people. She was either idolised or vilified. There really wasn’t much by way of a middle ground.

What this newspaper front page reports is the sole death that occurred during the Liverpool riots – in the Toxteth area of the city. It’s a very sad story. A disabled guy, David Moore, unwisely decided to take a closer look at the rioting near where he lived and was crushed under the wheels of a police van.

As Charles and Diana said “I do”, David died in hospital.

When I turned up to university, I was totally unaware that my halls of residence had just been used as a police dormitory for officers drafted in from all over the country to quell Toxteth. I only found that out years later.

Power cuts in the 1970s – my experience

The recent Coronavirus lockdown in many countries will have come as an unpleasant shock to millions of people – especially the young. To have bars, clubs, shops and meeting places closed by order of the government must seem very disturbing. But to us Boomers, there’s a ring of the familiar. And here’s why…

Because in the early 1970s we endured regular government authorised power cuts. This was a measure in the United Kingdom by the Conservative government of prime minister Edward Heath. He was locked in battle with the National Union of Mineworkers – an episode dramatised in the Netflix series, The Queen.

In order to conserve coal stocks and face the miners down, Heath ordered that energy consumption needed to be reduced. To achieve this – at a time when coal-fired stations provided most of our energy – he demanded that at certain times of the day, the lights should go out.

And I wrote about this in my Holiday Diary in 1972 (aged 8 or 9) – a journal we were ordered to keep by our teacher at school. Amusing to read how my piano lessons were cancelled (oh the horror!); the local swimming pool was freezing and we couldn’t go to Sunday school.

The latter was a particular relief – not being browbeaten by nuns in order to get my First Communion. Because I went to a state school – or “Protestant” school as our local parish priest called it – I had to endure an hour of the Sisters of Mercy (inappropriately named) every week. Thankfully, they couldn’t bully us without the lights on for some reason.

Then there were all the TV shows I had to miss. A serialisation of Ann of Green Gables – which clearly had me hooked. But mercifully, they still managed to screen the Cliff Richard Show with the UK’s Eurovision Song Contest entry for 1972 – The New Seekers singing Beg, Steal or Borrow. We lost that year.

What I don’t mention in the diary below is going to the local library and the whole place being illuminated by candlelight. Could you even imagine that being allowed now? Rows of highly combustible material with candles flickering on the shelves alongside. Different time.

Asking the Home Secretary to ban a demo

Home Office reply

In 1978, I was as concerned as many of my friends about the rise of extreme Right parties in London. I grew up in a suburb of east London and at the weekends would drive with my Dad to Petticoat Lane and Brick Lane for the street markets. On our way, I’d see posters on the wall that were so racist – I wouldn’t even reproduce them on this blog.

There were a lot of Jewish kids at my school back then (it’s now a Sikh private school – change of demographics in the area) and they were worried sick about the emergence of anti-Semitic groups. Cemeteries and synagogues were being attacked and areas like Hoxton – now very trendy – had become hotbeds of fascist skinhead activity.

So imagine my dismay when I found out that the National Front – the leading extreme Right group – was going to hold a demonstration in my London borough. In those days, it was nothing other than a huge provocation and show of strength to ethnic minority communities. There was no pretence of being anything other than utterly racist.

I was 14 and decided to write to the Home Secretary (equivalent of Homeland Security in the US or an Interior Minister in other countries) asking for the march to be banned. As you can see below – I got a rather discouraging reply. And the march went ahead. But hey – at least I tried!

Letter from the Home Office in 1978