November 17, 2011
Way back in 2008 much of the world sank into recession because housing bubbles in the United States, the UK, Ireland, Spain and elsewhere began to deflate. This ended a boom in construction and caused consumption to plunge as the housing wealth that provided its foundation vanished.
Unfortunately, memories at the NYT are apparently weak. It told readers today:
“To the roster of pain inflicted by the , add this: rising and persistent joblessness among young Britons.”
Of course, the European debt crisis is very much secondary in this story. The proximate cause of the high unemployment in the UK is the decision of the government to impose a harsh austerity package involving cuts in spending and higher taxes. This was a decision by the government, it was not in any way a necessary result of the UK’s debt burden as the article implies. Financial markets were willing to lend the UK money at very low interest rates.
Also, the cause of the “debt crisis” was the economic collapse that followed the bursting of the housing bubble. Most of the countries now facing serious problems paying their debt had modest budget deficits or even surpluses in the years prior to the collapse of the bubble.
The NYT also appears to be suffering from the millions/billions confusion that is also afflicting NPR. It told readers:
“Reducing youth unemployment by one percentage point could save £2 million, or $3.2 million, by avoiding youth crime, according to research by the Center for Economic Performance, a research concern at the London School of Economics and Political Science.”
Presumably the numbers in this research were billions, not millions. If in fact they were millions, the results were too trivial to bother writing up.
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