Telegraph has vacancies for new AEP ghost-writers
Excitement grows over right royal Ukraine divorce
Yesterday’s Slogpost (linked at the end of this piece) tried to point out how, in terms of idiotic optimism, all politicians seem incapable of presenting the reality of any situation – especially when it comes to economic and fiscal matters.
Today’s examples of this syndrome are, if anything, even more glaring in their ability to show why not only are our pols off with the fairies, surrounding institutions are in turn colluding with their spin quacks to keep up the pointless pretence of normality.
Iain Duncan-Smith and the Bank of England are suggesting this morning that IDS’s welfare cuts sorry, reforms, are producing a nation of entrepreneurs. Yes Dean and Waylene Rumpy of Colchester, yesterday you were idling sofa-spuds, but now you are bustling entrepreneurs: keep this up, and it’s only a matter of time before one of the major banks considers your property worthy of a confiscation that later turns out to be a clerical error. Bloody clerics, why can’t they keep their noses out of the vital process of keeping Britain open for business?
But there are higher order things that go beyond business, and one of them is the geopolitics of dick size and spheres of influence that guarantee a secure future in which every Nation can do preferential business. So it is that Ukraine has swept EU insolvency and mountainous American debt off the back burner to another more comfortable position offstage. The Establishment press has been at full-on Royal Wedding warp speed this week, “explaining” what’s going on in this small but suddenly significant East European country. We’ve had Your Full Guide to all the Russian separatist flags that make up the united front against Western imperialism, full details on who’s been found dead and why, exhaustive coverage of the Maidan Voyage of Western democracy in Kiev, and the Compleat Cold Warrior’s encyclopaedia of what Putin might do next: a second Georgia, cut off the gas, or (to quote US Vice President Joe Biden) “stop talking and start acting”.
An odd remark, this one from Biden. Given that Vlad the Lad has already annexed Crimea and is busy bumping off every Mayor he can can find who supports the EU, I’m left wondering – as I so often am with Joe – just WTF he’s on about. Maybe he thinks Rasputin should quit politics and get into the movies as the prototype All-Ruskie hero Vladdy Barbellovich. Or maybe he’s just the usual jerk with a past that Presidents choose as running mates in order to ensure zero threat from that quarter. Former Presidential candidate John Kerry, meanwhile, is now threatening the RF with “even more sanctions”, the ones we have in place having reduced the Kremlin to a collection of gibbering neurotics.
We’re late, we’re late, for a very important fate
The problem with the Western sanctions is that it’s all a bit like Zimbabwe issuing sanctions against the UK: neither side is in great economic shape, but you can’t help feeling that Mugabe would have more to lose. For Zimbabwean economy read ‘EU’ and for Zimbabwean currency read ‘USA’. These issues may have been swept off stage while the clowns are brought on to keep the audience distracted, but they aren’t going to go away.
However, nihil desperandum my fellow Romans, because Ambrose Evans-Pritchard VII is out there saying that the US debt problem has been solved in record time. As this early clockwork android of AEP knocks out bollocks at a tidy rate, I feel a detailed deconstruction coming on:
1. ‘Claims that President Barack Obama is bankrupting America with a lurch towards hard-Left statism are for tabloid consumption only. Outlays have fallen from 24.4pc to 20.6pc of GDP in five years. Spending is roughly in line with its 40-year average. This fiscal squeeze has been achieved without driving the economy into recession or a Lost Decade, a remarkable feat.’ Where to start re this one? The 40-year average delivered America unto a debt in excess of $17.trillion. The debt was $17.1trillion last October, but it is as of today 24th April 2014, over $17.5 trillion – you can see it growing here, in a less than tabloid reporting manner. 0.4 trillion bucks = 400 billion. In just seven months, the US debt has grown by more than the combined gdp of Austria and Pakistan. If you take QE out of the gdp of the US, it has never moved out of recession….and without that QE, the Dow would be under half the level it is now.
2. ‘Francisco Blanch, from Bank of America, estimates that shale gas and oil have given the US economy an extra tailwind worth 1.9pc of GDP – what he calls the “energy carry” – with effects rippling through the chemical and plastics industries. Sadly for this conclusion, fracking is not a money-maker for the miners, and they are withdrawing from it in several states. Further, it brings with it diminishing returns. The US may well have overtaken Russia as the main exporter of refined petroleum, but given a world economy on the brink of the abyss, demand for that is falling.
3. ‘US household debt has plummeted from 98pc to 81pc of GDP in four years’. Household debt has nothing to do with Sovereign debt. Household debt tends to fall when consumers lack confidence in the economy. Paying off debt means less consumption. I’m not sure ‘plummet’ would be my verb of choice here either: if the amount of stuff bought on tick is four-fifths of the biggest GDP in the world, would a better (adjectival) usage be ‘still insane’? I suspect so. The ‘spending recovery’ we have seen is largely retail-based, and at retail the majority of goods being sold are still imported from Asia. That isn’t any kind of way to improve the trade deficit…which is still growing.
4. ‘America’s public debt has peaked at 72.3pc of GDP (bonds held by the public). The CBO expects the ratio to fall gently for the next three years’. It is completely pointless to compare % levels of debt/gdp ratio when your gdp is astronomically higher than most other nation States: whichever way you cut it, the debt is still obscenely huge, and only capable of being maintained by Zirp policies that cannot be continued forever – whatever the zealots pretend. The Congressional Budget Office (CBO) has been quoted so wildly out of context there, I feel compelled to put it back into some kind of real perspective: ‘CBO estimates that the federal deficit would total $492 billion in 2014 and that the cumulative deficit over the 2015–2024 period would amount to $7.6 trillion...Federal debt held by the public would increase from $12.8 trillion, or 74 percent of GDP, at the end of 2014 to $19.9 trillion at the end of 2024, still equal to about 74 percent of GDP.‘ What slipped AEP VII’s mind was the reality that Obama is a politician, and the CBO is non-partisan: the fact is, the CBO doesn’t agree with Obama’s outlook….and neither do I. Either way, an outlook is all it is: it is not a fact, as suggested by the Telegraph piece.
Next week, AEP III outlines the collapse of China. I won’t be covering it, as this is now (like the Elm House investigation IV) up there as the longest-running denialist cover-up in history.
The Slog 