As the UK gdp figures for 2014 first quarter are out now, and show a further period of “growth”, expect an avalanche of twitterbollocks from Downing Street. Ignore it: the same ever-present flaws in the interpetation of it are there for all to see.
To take a few extracts from today’s ONS data (see link above):
‘ [the economy] is 0.6% below its pre-downturn peak in Q1 2008….production contributed 0.1 percentage points to GDP in Q1 2014….the main contributor to growth was the services industry, which grew by 0.9% on the quarter and contributed 0.7 percentage points to quarterly GDP growth… [Labour market] figures are not yet available for the first quarter of 2014.’
My general point is the same as always: how can the UK economy possibly be in good exporting, anti-deficit shape when the entire world is spiralling into a slump….and how can we take any economic data seriously that includes QE in its calculations?
But the extracts above are now so well observed at to be barely worth pointing out any more: our services sector contribution is seven times bigger than our manufacturing capacity. It is now six years since the banking collapse, and output is still below what it was then. All the data being trumpeted on employment is now six months behind what it really happening.
But don’t strain your eyes looking for any of this to be reported in the mainstream media. Glance instead at the drivel pouring forth from allegedly intelligent hacks still in denial about the train/canyon/no bridge thing.
Quite a few commentators, for example, seem to be getting exercised about the one-third drop in Deutsche Bank’s net income in the last fiscal. They should pay more attention to the non-netted nature of its derivative exposure, which is around 45 times its net income…if some recent estimates are anywhere near accurate.
In the last post, I was taking the gentle mickey out of a jargonised article about the Chinese currency, but this was more a statement about hiding behind acronyms and sprained English that any attempt to dismiss the global crisis in a flip manner.
This column, by contrast, is concerned to highlight the continuing obsession in the mainstream business press with a sort of Business as Usual tone. It’s the tone adopted by pilots when 3 out of 4 engines have gone, and the plane has diverted to a sand-strip that is 300 metres too short. You know…the laconic “Little bit of turbulence around today folks, but if you look out of the left side of the plane, you’ll see the paradise island of Omdigga, and I thought it’d be nice to make an unscheduled stop there so some of you can stretch your legs. Cabin crew to seats for landing please, and both myself and co-pilot Chuck Biltong hope that you’ll fly with Origami Airlines again one day soon”.
The state of DB’s income is of course significant as an indicator that all is not well, but it is the media equivalent of telling somebody on the way to the guillotine that you don’t like the sound of that cough.
“Without reform,” Roger Bootle tells us in today’s Telegraph, “it would be best for Britain to leave the EU”. I’d quibble with the choice of ‘best’ as a word in that context – it would’ve been best for Britain to leave the EU when the euro reared its head – but it’s the way Bootle tells us that last year ‘overall, the UK paid £9.6bn more to the EU than it received from it, amounting to about 0.6pc of nominal GDP’ that gets to me. The EU is flatlining, Roger. Look at the piddling size of its imports to us in February, and tot up the aggregate insanity of fiscal austerity, banking instability, thinly disguised insolvency, and German policy domination.
Mr Bootle is about to publish a book about the subject of Britain’s relationship with the EU. I predict it will be overtaken by events.
‘UK gdp data to show strength of economy’ headlines The Guardian, while relegating another piece – ‘recovery talk is fiction’ – to the bottom of its related pieces subhead. As it happens, the article nestling in the undergrowth there by Aditya Chakrabortty is first rate, and a brilliant summation of what he calls ‘Down is up. Sick is healthy. The RMS Titanic is seaworthy’ syndrome as applied to recent rubbish printed in the MSM about the UK and Greece.
As is so often the case on the subject of money, The Mail too has a sane importance hierarchy when it comes to analysing WTF is going on. Today it headlines the Canuck’s banking stress test vis a vis a housing bubble, a good call given that yesterday it became clear just how quickly Osborne’s forever blowing bubbles are spreading outside London.
The Treasury mandarins and Number 11 continue to be hugely pissed off by Mark Carney’s determination to retain a sense of reality, but the former Goldman staffer is standing his ground. ‘Threadneedle Street’s stability watchdog the Prudential Regulation Authority will today reveal details of tougher safety checks for the High Street giants. It is thought that the tests, to be conducted in the coming weeks, will gauge their ability to cope with a sudden rise in house prices’. I disagree: the point of the test is to keep the fact that it’s already happening in front of the populace.
I still can’t quite work out what Carney’s agenda is, but against my normally suspicious instincts I’m impressed so far. The same can’t be said of ‘top banker’ Andrew Sentance, the former Bank of England man who says that Britain will overtake France to become the fifth biggest gdp in the world ‘as the recovery picks up pace’.
“Norman Stanley Sentance, you are a habitual liar who approaches the grand larceny of banking in the casual manner common to most professional criminals. You will go to prison for seven years”.