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The really wild show

Does the downturn have a Loch Ness Monster shape?

28 Sep 2010

By Melanie Stern

Melanie Stern is editor of Financial Director

I know it’s a jungle out there, but this is ridiculous. I’ve noted the proliferation of wacky economic theories this summer that were animal shaped. As this issue of Financial Director went to press, an email dropped into my inbox reminding me of ‘futurologist’ Ian Pearson’s theory of the shape of the downturn: it’s a Loch Ness Monster downturn, “with uneven peaks and troughs emerging with very little warning”, he says.

“You cannot afford to bury your head in the sand and hope for the upturn,” adds Pearson, adding an emu to the list.

This email reminded me of Societe Generale’s warning at the beginning of 2010 of the ‘bear case’, in which we would face “a sharper fall in the value of the US dollar, a decline in global equity prices, a sharp retreat on property values” and oil prices retreating to a paltry $50 a barrel.

Journalist Michael Blastland took it into the insect world in a piece for a recent BBC programme in which he unveiled his ‘recession web’ – plotting the pattern in the last three UK recessions of the fall in GDP, unemployment levels, public borrowing, repossessions, falls in household income and business insolvencies to come up with a cool-looking spider’s lair. I came away none the wiser, but I had another creature to add to my list of economic theories.

Which of them really apply? We won’t know until we can look backward. As I don’t like spiders and rather fear bears, my money’s on the Nessie theory of the downturn – damp, wiggly and mysterious.

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