Slog analysis in recent weeks is still comfortably ahead of the econo-financial ‘news sites’

In yesterday’s opener to a three-post special, I noted that ‘the cost of purchasing everyday needs hasn’t fallen in any clearcut sense at all’ – although I was still certain that, as per Hoisington’s belief in “the deflationary paradox of legislated increases in the cost of living”, we would get rises in the price of both government services and energy. A report today from Lloyds TSB shows household spending power is down by 1.4% since last year, leaving the average UK household with £13 a month less to spend on non-essentials. Further, gas and electricity are taking up more of that budget.

It doesn’t sound like much, but it is. Only a minor acceleration plus compound growth over a five-year period would render that figure close to 12%. Over a decade, it would add up to a drop of a quarter at least in household spending power – and probably more like 30%.

Again, Part 2 of yesterday’s Treble Chance made the point that ‘falling world demand for manufactured goods was bound to produce the all-time demand slump. This time we are well on the way to that’. Previously of course, The Slog has posted for Europe about the insanity of depressing demand via austerity in the EU. Today it is being forecast that quite a number of eurozone members will miss deficit-reduction targets ‘because of a weak economy’. And this morning, Bloomberg concludes that Germany’s economic contraction in the fourth quarter was largely driven by a drop in exports. Otherwise known as ‘falling world demand. (Oddly, this hasn’t stopped German business confidence from rising in the latest survey. So then, like some new sort of miracle health food, Germany is ‘High in Expectation, but Low in Exports’. Hmm.)

Meanwhile, Mohammed El-Erian of Pimco appears in today’s Financial Times, writing about the ‘set of challenges facing most western central bankers – and an increasing number in emerging economies. As a result of varying degrees of political dysfunction, monetary institutions have been thrust into leadership roles for which they find themselves ill-equipped. As such, they are pursuing too many objectives using tools that are too few, too indirect and too imperfect. The longer this persists, the greater the scope and scale of QE’s “costs and risks”. In the process, the Fed’s credibility and political autonomy will be questioned….’

Yesterday in Part 3, I opined that ‘One underpinning belief among those electro-shocking the economic cadaver’s atrophied muscles, for instance, is that confidence will remain firmly behind stock market price levels supported by nothing at all beyond taxpayers’ money – aka, QE. That too cannot hold forever….ultimately, even the most cynical directionalising can’t be kept together if the other signals are all showing bright red’.

El-Erian is (unlike his partner Bill Gross) rarely wrong. If one examines the diminishing returns from QE closely, it is perfectly clear he is right about that too: it can’t go on failing forever….but it will, because the US economy lacks the spending-energy and overseas demand to pick itself up properly.

Closer to home, last week I penned a controversial piece about the horsemeat scandal, suggesting ‘When a media spokesman says that the horsemeat scandal “in no way represents the tip of an iceberg”, you can rest uneasy in the knowledge that it represents an iceberg hitherto hidden entirely, but of a size more than capable of sinking the Titanic’s bigger brother….As a sector, [the meat trade] attracts villains, and always has’. This earned me a couple of unpleasant emails, but I am intrigued to note that Sainsbury’s CEO Justin King is taking a considerably less airy-fairy position:”The entire industry is facing a new reality,” he begins, ” Trust has been severely damaged. The horse meat scandal has identified potential weaknesses in the food supply chain that must be addressed with urgency and rigour.” Give ’em hell, Justin: there is far more dirt to come out on this one yet….as one valuable Slogger source is already alleging.

And finally, the recurrent theme of private industry and how it runs rings round (ie, cheats) the governments and civil servants of the day….who between then have the collective commercial nous of a Royal foetus. Last November, The Slog ran an exclusive about job-scheme fraud being ‘rife’ among private employment agencies, while also noting that ‘Employers and intermediaries are paid by results to get people into work, and providers can earn between £3,700 and £13,700 per person, depending how hard it is to help an individual. The DWP says the scheme so far has cost just over £2,097 for every participant…’ Today the Daily Telegraph confirms that ‘A multi-billion-pound scheme to help long-term unemployed people into work has been branded extremely poor by MPs. The government’s Work Programme only managed to get 3.6% of the people on the scheme off benefits and into secure employment.’

Are we really heading for a cultural maelstrom? Of course we are – we’re already in the thick of lies about rising unemployment and living costs being ‘under control’, there being no global depression, QE’s aims, food contents and job creation. Maelstrom is the word, and maelstrom is what we’re going to get.

It’s a cracking word, maelstrom; like ‘shibboleth’ it sounds like it should mean something else. I’ve often thought that the Israelites probably smote the Shibboleths, and then begat the Shadraks or something. It’s the same with maelstrom: it should be the surname of a Scandinavian explorer…Per Maelstrom, the man who – on his raft made entirely of bananas – proved that if you set off from Nigeria to Argentina thus prepared, you’d be blown off course and end up shagging sheep on the Falkland Isles.

If there is anything worth talking about, it’ll be up here later. Stay tuned.

Recently at The Slog: Why most professions today are useless and crooked.