Cover of MoneyWeek magazine issue no 513

Soaring profits

19 November 2010 / Issue 513

Cash in on natural gas

PLUS:

  • How to profit from the weak dollar
  • The fatal flaws in Europe's rescue plan
  • The Russian robber-baron turned martyr

Excerpt

Why I’m getting déjà vu

If you are over 40 you might have a nasty sense of déjà vu. Think back to 1981.

The Tories, led by Margaret Thatcher, had recently been elected. They started by trying to cut Britain’s budget deficit by cutting spending where they could and by raising taxes. Unemployment rose above three million in early 1982. There were riots across Britain – they were triggered by different events, but all stemmed from economic deprivation and the anger of the many unemployed (“Maggie’s millions”). In 1981, real GDP fell by 2.2% and by 4.6% in total during the recession.

Then, just as everyone was feeling really down, there was an announcement from Buckingham Palace. There was to be a royal wedding! See what I mean?

Clearly, 1981 wasn’t exactly like 2010. David Cameron makes a big deal of not being a new Thatcher. No one is worried that the pound might suddenly soar. There is little risk of sterling being a petro-currency again. GDP has fallen by more during the recession (6.4%).

The inflation situation is very different, too.

• Read the full editor’s letter here:
Why I’m getting déjà vu

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