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We’re screwed (and all that)

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  • We’re screwed (and all that)

    I happen to agree with practically all of this article and I think we’re going to be in for a rough ride. I honestly don’t understand all this QE free money madness that’s been going on for 10+ years and even if the article is focused on the UK you can replace a few names and much the same applies here. And I enjoy a bit of ranting as much as the next guy.

    To the experts, economists and other idiot savants who inexplicably failed to see this storm coming, thanks for nothing. All of their acronyms, PhDs, fancy modelling and algorithms have proved useless: Britain and the world are plunging into the most terrifying economic, political and cultural crisis of the past 40 years. A bunch of intelligent amateurs couldn’t have done much worse.

    Inflation is out of control, a terrible recession is looming and higher interest rates are about to send house prices tumbling and unemployment soaring: the politicians are still in denial, unlike the voters, but the reckoning, when it comes, will be traumatic.

    This is like the financial crisis all over again, only worse: for the second time in less than 15 years, the public has been betrayed by a failed technocratic orthodoxy, an over-educated yet staggeringly ignorant ruling class convinced that it can defy human nature as well as the laws of economics.

    Why do these people never learn? Why do they have no shame? Where is the abject apology from the Governor of the Bank of England for the fact that, even after stripping out the cost of food and energy, inflation is hugely higher than his target? And why are our politicians refusing to treat this crisis with the sense of emergency that it requires?

    The system is broken, millions are facing poverty, the middle classes are being hammered and yet no action is being taken on tax or supply-side deregulation, while interest rates, scandalously, remain at just 1 per cent. Why is the Chancellor not holding Andrew Bailey, the Governor, publicly to account for his reluctance to act and his abysmal predictions? Since when is the Bank’s “independence” an excuse to allow it to fail with zero consequences, with no genuine oversight? The cowardice and buck-passing are sickening.

    The rot started, as with so much else, in 1997 with the election of Tony Blair. The Bank of England was given the wrong mandate when it was granted its operational autonomy: it had to focus almost exclusively on consumer price inflation, rather than asset prices (such as property) or financial stability. Soon enough, house prices started to surge, the Bank ignored the liquidity-fuelled madness in the City, and economists on a power trip started to believe their own propaganda.

    The experts drew exactly the wrong lessons in 2008 when Northern Rock and Lehman Brothers went bust: they thought that bailouts and ultra-low interest rates were the answer to every problem, even though they were actually the very cause of the irrational exuberance of the 2000s.

    All of these tools and more were wheeled out again and again over the past decade, as those entrusted with our money convinced themselves that inflation was forever tamed. Fixated as they were on narrow measures of price increases, they turned a blind eye to the money gushing into property, commodities or tech stocks. The central banks, the supposed guardians of our capitalist society, had become central planners, prisoners of an intoxicating groupthink: they were sure they could manipulate interest rates and use QE to guarantee perpetual growth. They thought they were right, god-like even, and everybody who didn’t buy into their new religion was not just wrong but stupid and old-fashioned.

    The politicians, starting with David Cameron, lost interest in economics: an older generation of Tories studied Keynes, Hayek, Friedman and even Mises to understand the chaos of the 1970s, 1980s and 1990s, but their successors – with a few glorious exceptions – couldn’t be bothered. They quickly forgot two of the golden rules of economics: too much money chasing too few goods, services and assets pushes up their price; and debasing the currency is one of the easiest ways to destroy a civilisation.

    Instead, the job of the politician, as Cameron, Theresa May and even Boris Johnson see it, is to divvy up the proceeds of growth that somehow automatically appear like manna from heaven, rather than having to think how to grow the size of the GDP pie. Thanks to the magic of ever-lower interest rates, it no longer mattered whether they hit businesses with regulations or entrepreneurs with higher taxes – or so they thought.

    This emboldened the hard-Left. If it was OK to print money after the sub-prime crisis, why not print more now to pay for public spending? Why not ignore budget deficits altogether? The centre-Right, meanwhile, embraced green and public health schemes to make energy, travel and food more expensive, convinced that overall prices would remain low.

    The lockdowns were the culmination of this madness: the Government spent as if in a World War, “paid” for by central banks creating money out of thin air. The magic money-tree was normalised, with catastrophic short, medium and long-term consequences that haven’t all become clear. Millions became addicted to the crack cocaine of free money. House prices and share prices rose further, fuelling the rage of the have-nots. Many decided that they were entitled to an income without needing to work for it. Older workers quit the labour market. A socialist ethic gained ground, undermining the free society.

    The benefit-to-cost ratio of lockdowns continues to deteriorate: yes, furlough bailed out millions, but now is the time to pay up, and the inflation tax, dislocation and cultural meltdown is going to prove extraordinarily steep.

    The inflationary hit is being greatly exacerbated by Russia’s invasion of Ukraine and the massively reduced supply of food this is causing. But this supply shock comes in the context of years of excessively low interest rates and quantitative easing, a grievous set of errors for which Western elites have nobody to blame but themselves. Inflation would have been a massive problem even without Putin’s crimes.

    It now looks as if the public will either be forced to accept its greatest real-terms pay cut ever, or wages will spiral, requiring a savage overreaction via much higher interest rates – and a bitter recession – to wring the inflation out of the system.

    “Why did no one see it coming?” the Queen asked after the demise of Lehman Brothers during a trip to the London School of Economics in 2008. The answer then is the same as it is today: a toxic combination of intellectual error, hubris and political short-termism. The voters’ revenge, when it comes, will be pitiless.

  • #2
    Interesting read Cold and like you, I wouldn't argue with anything raised in the article. You might say the writing is on the wall and the only questions remaining is when and just how hard people will be hit.

    Economic undulations, peaks & troughs are a fact of life really. The financial crisis of '08 or the '80s recession are far from new phenomena so it's somewhat of a given that it will happen again, but to what extent?

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    • #3
      I think i would fundamentally disagree with many of the points raised by this article, especially the opening line saying experts et al failed to see this coming for the UK. There were numerous experts who predicted a lot of what the UK is going through, but were dismissed by politiicans and the author (It looks like a Telegraph article written by Allister Heath (a tory fan boi)) as fear mongering and project fear. I think that there may be a roughish ride, but more so for the UK where there is massive poverty and hardship as a result of policy decisions, and a decline in economic activity due to Brexit. They can't hide bhind covid anymore. Ireland has the benefit of EU membership where we can pool resources which should lessen the impact of a global downturn, and also has a positive growth forecast with inflation of 6% compared to a forecast contraction and inflation of 10% in the UK. Stagflation anyone? Add that to a potential trade war with the EU if Bojo scraps the NIP (which I don't think even he will do) and yes, the UK is screwed.But it was all predicted.

      On the whole, I think this, and other stories in the likes of the Telegraph and the Express are published to try distance themselves from Brexit, the mess it and 15 yrs of Tory policies (that these publications championed) have caused in the UK before the sh1t hits the fan. The express claimed recently that 94% of their readers didnt get the brexit they voted for........ The mind boggles.

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      • #4
        If you think this is just the UK then you’re dreaming

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        • #5
          Originally posted by Cold View Post
          If you think this is just the UK then you’re dreaming
          C'mon Cold - I didnt say that at all. I said the UK is screwed, but Ireland may not be as screwed. I'd be more concerned at taking UK centric articles with no sources and very limited facts in the Telegraph as a measure of anyything.

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          • #6
            Pfft, who cares, the Nuclear Apocalypse/Environmental Collapse/Monkeypox/Covid2-electricboogaloo/AI uprising will wipe us out first.

            https://www.instagram.com/diecast_1_64/

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            • #7
              Unfortunately/fortunately we will go from Guardian inspired “problems” to real problems soon enough (if we want to stick with the lazy labelling). I think. I could never get my head around the massive QE of the last decade. It just cannot end well.

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              • #8
                I don't doubt there's pain at some point down the road, but I think 2008 with Dark Souls hard mode turned on is only scratching the surface and we're potentially facing a crisis of survival and obtaining basic necessities for some people and not just extreme financial discomfort. The amount of people who are working actual full time jobs in countries like Germany or the UK or here, but are having to use food banks is increasing, but even those food banks are struggling to obtain the same as before, never mind an increase. Irelands regarded as high in terms of food security, but even we are a net importer of calories. (which is mental when you think about it)

                I mean, I'm sure there's pain down the line, but his breakdown of it, I'm not sure, might be right, might be wrong, but there's too much ideology/political leaning in it to make a coherent judgement. It's all self referential - if you subscribe to his ideology it makes sense, if you don't it's weak. It's a bit like the Kierkegaard idea that we must subscribe to either and aesthetic/rational or a moral life but each of those can only be justified on logic you subscribe to after making that choice so you just have to go with one but have no impartial way to make that decision.

                I kinda turn off when anyone starts talking about straw man "elites" or being "over-educated", if recent history has shown anything, there's much more of an inherent distrust of intellectuals/academics/experts than ever and an overabundance of populism, which hasn't worked out too well.

                If you look at Turkey for example, that's a case where the lack of any politically independent input into things has created a cost of living crisis that makes here and the UK look like small potatoes. Inflation is out of control, but their government just doubles down, sticks its fingers in its ears and insists if everyone just hangs on, it'll all work out.

                We're in the middle of a big de-globalization too, which is going to bring some more pain, it's not just Brexit, but half the world isn't trading with the other half now.

                He's sorta not wrong, anyone with a healthy level of realism can see most of the worlds financial/commercial/political/social systems are broken, but that doesn't mean he's right either, if that makes sense.


                Last edited by crank_case; 19-05-2022, 11:30 AM.
                https://www.instagram.com/diecast_1_64/

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                • #9
                  1998 Porsche 911 3.4 Carrera 2 (996)
                  2000 Mazda MX-5 1.8 Jasper Conran #68/400
                  2003 BMW 325i E46 Sport Touring


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                  • #10
                    One day Ill sign into this Motoring forum and it will be wall to wall motoring posts instead or politico doom and gloom harbinger threads.

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                    • #11
                      These are motoring posts

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                      • #12
                        Originally posted by Cold View Post
                        These are motoring posts
                        https://www.instagram.com/diecast_1_64/

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                        • #13
                          Oh come on, do I really need to invoke Young MC?

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                          • #14
                            Originally posted by Cold View Post
                            Oh come on, do I really need to invoke Young MC?
                            You've still lost me, are you going to Bust a move?
                            https://www.instagram.com/diecast_1_64/

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                            • #15
                              In the city, ladies look pretty
                              Guys tell jokes so they can seem witty
                              Tell a funny joke just to get some play
                              Then you try to make a move and she says, "no way"
                              Girls are fakin', goodness sakin'
                              They want a man who brings home the bacon
                              Got no money and you got no car
                              Then you got no woman and there you are

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