Goldman Sachs’ boss Lloyd Blankfein says we must stick with austerity

Enough to make you weep.

You wonder if George Osborne’s tears at Margaret Thatcher’s funeral were as much to do with sorrow at having adopted her not for turning mantle, as regret at the passing of a political hero who didn’t feel the need to speak estuary to up her popularity ratings.

Today you wonder whether the tears are flowing more copiously, or have just dried up in resignation on hearing from Goldman Sachs’ boss Lloyd Blankfein, sitting comfortably atop first quarter profits of £1.47bn (1.2% of UK government borrowing in 2012), that Osborne is stuck with his austerity approach, like it or lump it.

Talk about a rock and a hard place.  Speaking on Radio 4’s Today Programme, Blankfein fundamentally concurred with the conclusions of IMF chief economist Olivier Blanchard last week, and the thinking behind the decisions of first Moody’s and latterly Fitch to downgrade the UK’s triple A credit rating.  If the country’s efforts to escape the downturn are to not to continue to resemble those of a spider climbing out of the bath, it needs an economic plan B.

“You would like it at this part of the cycle not to cut, to push out austerity and not to shrink the economy,” said Blankfein.  But, tough, he added. That course is only permitted to countries, which have done their housekeeping, balanced the books and not cranked up an enormous deficit, otherwise the markets will react badly.

“If you have a big deficit, you lose optionality,” said Blankfein. “The choices get taken away from you.”

So no chance then of that preferable loosening of the purse strings to let the economy breathe. Instead, continued snail-paced growth, with the likelihood of the further credit rating downgrades that entails, followed, in turn, by probable higher government borrowing costs and, consequently, even less flexibility for pump priming business and industry.

Reading between Mr Blankfein’s lines, businesses, especially small to medium-sized ones (SMEs), can’t expect the banks to stump up much more of the cash that government can’t provide either. The reason? They’re frightened, poor loves.

“Businesses are starving for cash and banks have cash idle, but they’re afraid, for want of a better word,” said Blankfein. And he understood their anxiety, he added, uttering the words you probably wouldn’t expect or hope to hear from a Jedi master among masters of the universe; that “lending money to businesses is one of the riskiest things you can do”.

Goldman Sachs, however, does a little something for the small business community. It won’t lend them the cash they’re starving for (they’re way too small and it’s way too frightening), but it will teach them new skills. Blankfein is over here to talk up and talk about his company’s programme for improving the general business nous of SMEs and “professionalising” them, an international offshoot of its USA 10,000 Small Businesses scheme.

Participating businesses in the UK do rate the initiative. But facing flat demand in a stagnating economy, those SMEs which have seen their or their customers’ credit ratings cut by the banks are likely to utter a hollow laugh, or shed an Osborne like tear, at any suggestion that such projects are going to do much to lift their or the UK’s fortunes in the near future. 

Lloyd Blankfein Photograph: Getty Images

Mike Jeffree edits the Timber Trades Journal.

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Calais Jungle: What will happen to child refugees when they leave?

Hundreds of unaccompanied child asylum seekers are being taken to Britain where they face an uncertain future.

Hundreds of unaccompanied child asylum seekers are being taken to Britain, moved from a camp in Calais, northern France, as its closure begins. There were 387 unaccompanied minors in the French refugee camp known as “the Jungle” with links to the UK and they are arriving in England in groups of 70.

Upon arrival, the children are taken to a secure unit for 72 hours, before being reunited with families already living in the UK. They are from a group of more than 1,000 children who have been living in the camp in recent weeks. And now, some of those without links to Britain, but who are regarded as particularly vulnerable, are now also being taken across the English Channel.

The youngsters were granted asylum under the Dublin Regulation. The children’s move to Britain has stalled twice already, over delays in accommodation and establishing proof of age. Migrant children have been subjected to intense media scrutiny upon arrival in recent weeks. Calls for dental checks to verify the true ages of youngsters who looked older were called for, but the UK government branded such a practice as “unethical”.

For a long time, the minors living in the camp faced an uncertain future, but the move to take some children to the UK signals a change of tack by the British and French governments. Britain has been criticised for its lack of humanity, but it now seems that the pleas of these children at least have been heard.

Impact of war

While the youngsters may have escaped serious physical injury, the conflicts in the Middle East will have taken a psychological toll on them. Living in the midst of war, many have witnessed unspeakable horror, losing family members in brutal circumstances. Consequently these youngsters are now incredibly vulnerable to mental illness, with research indicating that more than 80 per cent are likely to develop issues such as post-traumatic stress disorder (PTSD).

It is important to remember a child’s trauma extends far beyond the experiences that resulted in them fleeing their homes. The children going to the UK now endured prolonged exposure to stress-inducing conditions in the Calais camp, and will now need to adjust to their new cultural surroundings.

War directly affects millions of children everyday. Exposure to conflict and acts of terrorism can lead to the development of acute or chronic stress reactions. Research also indicates that the psychological impact of war on children is likely to have long-term effects – they don’t simply “grow out” of their stress-related symptoms. Continued exposure to traumatic events, as these children have experienced, carries a cumulative impact too, that can worsen the severity of post-traumatic symptoms.

Funding challenge

The children going to Britain will need the right sort of trauma-based therapeutic support so they can successfully move forward before chronic conditions take hold. However, mental health services in the UK are desperately underfunded. More than 850,000 children and young people have a diagnosable mental health disorder, and half of all lifetime cases of mental illness begin by the age of 14. But just seven per cent of the total mental health budget is allocated to child and adolescent mental health services, with one in five young people refused treatment because they do not meet the criteria for care.

A recent poll of specialist nurses found 70 per cent thought child and adolescent mental health services in England were inadequate due to historic under-investment. The government is under growing pressure to invest more, and it is hoped that the arrival of these children will see additional money allocated to the services. When, or even if, this will happen, remains unclear.

Post-traumatic growth

While many of these children are likely to suffer form long-lasting psychological symptoms, there is a possibility that some may emerge stronger than they are now, benefiting in some way from the experience resulting in positive post-traumatic growth, or PTG. PTG is possible in children who have been affected by war trauma, particularly if they are young, as they are more open to learning and change. Interestingly, research has revealed that even the negative aspects of PTSD do not “block” growth when children are placed in a supportive environment – found to be the most conducive thing for PTG.

Receiving the proper social support will play an important role in helping these children deal with the psychological effects of war trauma. The complex situation that the young and unaccompanied migrants have faced calls for help that addresses both the trauma and grief, and will secure continuity in their new lives in the UK.

Losing loved ones is just one of many extremely traumatic experiences these children may have faced, and it could prove quite difficult to disentangle the effect of the loss from other stresses and changes. Time does not simply heal the long lasting scars of prolonged stress that they have experienced. However, it is vital that society does not write these children off as ill or broken. With the right support they can lead full lives and make strong contributions in their new homes.

Leanne K Simpson, PhD Candidate, School of Psychology | Institute for the Psychology of Elite Performance, Bangor University

This article was originally published on The Conversation. Read the original article.