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The Economist Corner – essential readings III

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Britain 2010: An election briefing

Who speaks for Britain?

With a month to go, voters seem to think Labour deserves to lose the election but the Conservatives don’t deserve to win it. An unexpectedly close race could hand an important role to a third party for the first time in almost four decades. Apr 7th 2010-  From The Economist print edition

THIS time next month, a government may have fallen, and New Labour gone to its rest alongside Thatcherism. But the mood in 2010 is very different from the buzzing eagerness of 1997, when the Labour Party swept the Conservatives from power. This time the polls are close; party positions are far less distinct than party rhetoric; many voters are undecided; and a big chunk of them are more apprehensive about the future than elated by it.

Five years ago Labour won an unprecedented third consecutive victory. Five months ago it looked as if that would have to be the limit of its ambition. Labour seemed tired and divided, its leader, Gordon Brown, ham-fisted and hated. The Tories, redeemed from political Siberia by a fresh-faced centrist, David Cameron, were streets ahead in polling, and had only to hold on to win.

But things moved on. The prime minister, bloodied but unbudgeable, urged voters to “take a second look at Labour” and “a long, hard look” at the Conservatives. They did. And decided they either didn’t know what the Tories stood for or didn’t like it. By the end of March a hung parliament, in which no party enjoys an overall majority, seemed a plausible outcome. Read more here.

A special report on America’s economy

Time to rebalance

America’s economy is set to shift away from consumption and debt and towards exports and saving. It will be its biggest transformation in decades, says Greg Ip (interviewed here). Mar 31st 2010 – From The Economist print edition.

STEVE HILTON remembers months of despair after the collapse of Lehman Brothers in 2008. Customers rushed to the sales offices of Meritage Homes, the property firm Mr Hilton runs, not to buy houses but to cancel contracts they had already signed. “I thought for a moment the world was coming to an end,” he recalls.

In the following months Mr Hilton stepped up efforts to save his company. He gave up options to buy thousands of lots that the firm had snapped up across Arizona, Florida, Nevada and California during the boom, taking massive losses. He eventually laid off three-quarters of its 2,300 employees. He also had its houses completely redesigned to cut construction cost almost in half: simpler roofs, standardised window sizes, fewer options. Gone were the 12-foot ceilings, sweeping staircases and granite countertops everyone wanted when money was free. Meritage is now catering to the only customers able to get credit: first-time buyers with federally guaranteed loans. It is clawing its way back to health as a leaner, humbler company.

The same could be said for America. Virtually every industry has shed jobs in the past two years, but those that cater mostly to consumers have suffered most. Employment in residential construction and carmaking is down by almost a third, in retailing and banking by 8%. As the economy recovers, some of those jobs will come back, but many of them will not, because this was no ordinary recession. The bubbly asset prices, ever easier credit and cheap oil that fuelled America’s age of consumerism are not about to return.

Instead, America’s economy will undergo one of its biggest transformations in decades. This macroeconomic shift from debt and consumption to saving and exports will bring microeconomic changes too: different lifestyles, and different jobs in different places. This special report will describe that transformation, and explain why it will be tricky. Read more here.

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Written by Theophyle

April 15, 2010 at 11:41 am

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