New Boss of the Bank of England Cannot Create Miracles. Four years after the Great Crash, UK economy falls into double-dip recession
The appointment of Mark Carney – current Head of Bank of Canada – as the first non-British governor of the Bank of England in its 300-year history has received near-universal praise. But can this 47-year-old former Goldman Sachs veteran of 13 years remedy the ills of a struggling British economy?
Four years after the collapse of Lehman Brothers sparked the greatest financial crisis and economic downturn since the Great Depression, none of the underlying contradictions of the world economic system has been resolved. Global imbalances and deep-rooted tensions have deepened even further, the financial and economic crisis and the outlook looks pretty bleak. Hundreds of billions of dollars have been made available to save the banks and financial houses around the world.
Governments and central banks took off the books of the banks, the worthless or so-called toxic assets were now transferred to the states’ budgets. The bailout operation, like other similar measures like quantitative easing, has cost more than 25 percent of global GDP. This large-scale bailout rather than solve the problem, has increased the volatility of the system. World stock markets hit their lowest level in 2012 as poor US jobless figures and weak manufacturing data from Europe sparked renewed fears of a global slowdown. Recently, the World Bank warned that Europe runs the risk of sparking a Lehman-style global crisis that will have dire consequences for all Western economies. Four years since the start of the economic downturn, it is becoming increasingly clear that a new period of intensified crisis is gripping the global economy.
Far from easing the dire crisis conditions and introducing careful investment policies, governments of the advanced economies, in line with the international financial institutions, are now implementing sharp austerity programmes on a scale not seen since the 1930s. Everywhere in the Western world there is unemployment, foreclosures, bankruptcies, depressed housing market, and no recovery in sight. Already, in many advanced economies the highest number of people since the 1930s are now jobless or unable to find full-time work.