After 30 years of watching politics with ever increasing despair at the incompetence, corruption, delusion and hubris, I once again entered one of my periods of studied indifference. Thrice ‘meh’. But I was woken up again by the hysterical hoohah about the latest Conservative budget.
As for the general state of the economy, I saw what was going to happen more than two years ago.
That’s where we are now. In the time between the dawning realisation and the life-threatening crash.
Some people fail to realise or understand that we’re beyond the point of no return, heading over a socioeconomic cliff. Others are programmed to plumb the depths of denial, lest they have to confront the reality that’s heading our way.
We know what comes next: Loss of jobs and homes, loss of life, shattering of families, job security out of the window, lower standards of living, higher taxes, a bigger more overbearing state, pulverisation of civil society, destruction of children’s social education, crumbling mental health, demolition of the underpinnings that enable our innate human social being.
And it’s all here now, isn’t it?
Well, except for one thing - about which I do appear to have been eventually proven incorrect - higher taxes. The recent budget seems to have undermined that point, though I could argue otherwise on several grounds.
If the ‘dash for growth’ announced in the latest budget stumbles - which it almost certainly will in this chaotic global economy underpinned by 20 years of delusional economics, eco-lunacy and bampot diversity schemes - it ain’t the bankers who are going to pay. It’s you and me.
The response to the recent budget has been interesting and illuminating, hasn’t it?
It was entirely predictable for the Left (i.e. half of the Tories and most of everyone else) to decry the removal of the top rate of income tax and the cap on bankers bonuses at a time when people who aren’t even close to that bracket are struggling to keep their lights on, let alone worrying about where their next Porsche is coming from. The political optics of that seem to be very bad indeed.
But British business leaders and old-school conservatives liked it all very much.
And then something else happened. The globalists woke up and realised that this budget had the potential to destabilise the collective economic delusion in which the world has been wrapped up for the last 20 years. It only takes one powerful voice of dissent - in the shape of this new Conservative administration - to burst the whole damned bubble.
The response of the markets and the globalists has been universally negative. They don’t like it at all: as a result Sterling is in freefall. Emergency Bank of England interest rate hikes are on the cards, even on top of the rises we’ve already seen in recent months. People whose mortgages aren’t already fixed for the foreseeable future are shitting themselves.
To their credit, The Telegraph has had pretty useful coverage of both sides in this debate. I was struck by one particular comment from a globalist banker:
Former Bank of England rate-setter Willem Buiter has branded the plans “totally, totally nuts”.
Well.. sounds serious. A serious economic brain has described the budget plans as “totally, totally nuts”.
[BTW you can learn some more about Dr Buiter here on his WEF profile page and here on his Wikipedia page. You can tell from his CBE and his long-standing relationship with academia and global banking that he is globalist establishment to the core.]
Which led me to wonder… did he think the printing of hundreds of billions of pounds and dollars to bailout the banks in 2008 was ‘totally, totally nuts’?
Well, as it turns out, the answer is sort of ‘yes’ - he’s written some stuff about the 2008 crisis that seems very sensible indeed to me. Specifically this report.
If I were to take the last two words of the title -“Lessons Learnt”- literally, this would be a short note indeed, as it is my view that few lessons have been learnt and expressed in legal, regulatory and other institutional reforms, and of these few some were the wrong lessons. So I will extend the scope of the presentation to include lessons that ought to have been learnt but thus far have not been.
But, you’re only as good as your last game, so did he think printing of hundreds of billions of pounds, dollars and Euros to shutdown the economy and keep everyone at home because of a bad cold in 2020 was ‘totally, totally nuts’? Was the fact that huge proportions of this magic money was inevitably lost to fraud and corruption in the UK and US ‘totally, totally nuts’?
Well no. Not at all. But then he has been mixed up in the world of academia during the period when academia itself went “totally, totally nuts”.
The full answer can be found in an article Buiter wrote in April 2020 called “Pandemic Socialism”
By introducing a uniquely disruptive shock to both supply and demand, the COVID-19 pandemic has upended longstanding ideological debates almost overnight. Suddenly, far-reaching state intervention in the economy has become necessary to save market capitalism, which is unlikely to emerge unchanged.
Ironically, just as the “democratic socialist” Bernie Sanders has suspended his presidential campaign in the United States, many of his policy proposals are becoming necessary around the world. Social-distancing measures to mitigate the COVID-19 pandemic have disrupted production and household income streams alike. But the effectiveness of social distancing could be undermined by workers who lack proper health insurance, adequate sick pay, unemployment compensation, or other forms of income support or savings. These individuals will feel that they have no choice but to keep working, despite the health risks. Universal health insurance looks like the inevitable outcome, even in the US, where Sanders, virtually alone among national politicians, has advocated it for decades.
At the same time, the original supply and demand shocks – to labor and household consumption, respectively – from the COVID-19 crisis are being reinforced by the breakdown of global, national, regional, and local supply chains. And all of these real-economy shocks are causing disruptions in the financial system, too.
Under these conditions, central banks have a critical role to play in preventing disorderly financial markets from adding to the strain felt by non-financial companies and households. At a minimum, central banks must step in to ensure ample liquidity in key markets, including those for government debt, commercial paper, and key asset-backed securities such as residential and commercial mortgages.
…
In the case of the COVID-19 crisis, public funding and mandates are needed to ensure that everyone can get tested expeditiously for the coronavirus. Global cooperation can play an important role here, given the imperfectly synchronized nature of national outbreaks. But, ultimately, all coronavirus-related treatment (including hospitalization) will need to be covered by the state, and only national governments can marshal funding on that scale.
Likewise, the state will also need to provide full compensation for workers who lose income as a result of the crisis. To maintain aggregate demand, governments could introduce a temporary universal basic income, whereby every adult receives a periodic cash transfer for as long as the crisis lasts. Even the US under President Donald Trump has blundered toward this obvious palliative measure, by including in its recent $2.1 trillion rescue package a disbursement of $1,200 for every adult earning less than $75,000 per year.
But even with government-provided income support, companies are still likely to experience dramatic revenue shortfalls, owing to crisis-related disruptions to the labor force, domestic and external demand, and supply chains at all levels. Here, the state could step in as a buyer of last resort, or it could provide credit or credit guarantees to financially distressed companies. Such credit could be converted into equity, either immediately or once the crisis is over, in the form of non-voting preference shares, thereby impeding the slide into a centrally planned economy.
There should be no restrictions on eligibility for the various forms of financial support outlined here. Large corporations are just as likely as small- and medium-size enterprises, the self-employed, or gig workers to be affected by the demand shortfall and supply-chains disruptions. And though they may be able to tide themselves over for a while – owing to their superior access to bank lending and debt markets – they cannot hold out forever. Given the build-up of non-financial corporate debt before the pandemic, we could easily see a wave of corporate defaults and insolvencies in the absence of state intervention.
Banks and non-bank financial intermediaries did not start the crisis this time, but they will inevitably become a part of it and will also become candidates for state rescues and bailouts as the asset side of their balance sheets deteriorates. And command methods familiar from wartime market economies and centrally planned economies – think of Trump’s invocation of the Defense Production Act to force General Motors and 3M to produce critical supplies – could well outlive the crisis.
Finally, the new socialism will also have an international dimension. Italy, for example, will need support from the European Central Bank or the European Stability Mechanism, or else through the issuance of eurozone coronavirus bonds. Among emerging and developing economies, external debt markets are already constraining the ability of many to provide fiscal support. Addressing these limitations with more foreign aid from advanced economies – including a targeted increase in the International Monetary Fund’s Special Drawing Rights – would be the morally correct and economically sound response.
As the trajectory of the COVID-19 crisis indicates, capitalist market economies will have to give way, at least temporarily, to an improvised form of socialism aimed at restoring income flows for households and revenue flows for companies. We will then see whether the consequences of this experiment with socialism last well beyond the end of the pandemic.
So here we have a highly qualified and experienced economist who unequivocally called for urgent and necessary state socialism and massive money printing as a response to covid. Question whether covid actually calls for any of this hysterical response? Noooo… the WEF and WHO wouldn’t like that. Question whether any emergency frameworks put in place would be exploited endlessly by cronies and fraudsters? Well no - they wouldn’t invite him to their next dinner parties if he did that.
And yet here he is, shouting that the current UK government’s attempts to steer a different course back towards some kind of reality-based economic footing is “totally, totally nuts”?
I’m not convinced his motivations are pure. Not convinced at all.
Truss and Kwarteng may be blundering around in the dark, but after 20 years of tepid, tedious tinkering and endless money printing to no particular end other than kicking the can down the road, I’m glad that they have had the balls to buck the bureaucrats of the managed decline and the self-interested, techno-globalist psychopaths and try something bold and unexpected, however it ends up turning out.
Sometimes you just have to upend the table and let the chips fall as they may.
It may turn out well and, in any case, the status-quo holds absolutely no appeal at all, so fuck it, let’s rock.
After all, this is the status quo:
Hardly makes a case for ‘steady as she goes’ does it?
AJ