Over the last fifteen years, various unelected groups have destroyed capitalism with more success than the USSR ever managed during 70 years of trying. It’s a special kind of mentality that hogs all the money, mechanises and robotises until there’s not enough work, and then accuses those on the scrapheap of being “useless”.
Here’s a little opener to simplify both the British and general fisco-economic situation. (Don’t be fooled into thinking it’s simplistic).
I wrote this in March 2011: ‘Western economies showing little or no growth are left with just one way to defend the credibility of their currencies: higher interest rates.’ One big problem with that: people will buy into your currency for the higher interest (observe the recent climb in Sterling’s exchange rate against the $ over the last six months at a whopping 11.37%) but it holds back your exports because it makes UK products more expensive. Catch 22 with all floating currencies.
Now however, the Covid19 spending splurge has added a further serious downside: in several posts after 2009, I suggested that the ballooning size of global Sovereign debt meant that interest rates could no longer be ‘normalised’, because the time would come – given almost every nation was an abnormally spendthrift borrower – where honouring higher rates on debts would become the fast lane to bankruptcy.
Setting aside the elliptical theories of those who say Retail Bank and Sovereign bankruptcy is “impossible”, I would attack that view with anthropological social reality: if the only way to repay debt is to print money, then you destroy the currency….and sooner rather than later, that destroys the ability of the average citizen to afford rent, food and pretty well everything. To be blunt, it annihilates human society as we know it.
But there is more. Because in order for a Sovereign nation to keep on affording to cough up to foreign creditors, a point is reached whereby it can’t be done without raising taxes on the citizen and corporations. This will be about as popular as persistent foul wind in an Apollo spacecraft. Today at the website Comment Central, Vince Cable – still, I think, the best Chancellor we never had, although the bar has been set very low – has this to say:
‘Although (official) interest rates are now 4.25% – – the highest since the financial crisis in 2008 – they are still negative in real terms and are working only slowly so far…..Taxes have already risen albeit hidden in frozen tax thresholds. They will simply have to rise further whatever totemic ‘tax cut’ Jeremy Hunt tries to conjure up before the next election. Britain is still a relatively low tax country and there is plenty of scope for raising taxes further – however fervently politicians deny it. The future promises higher taxation, but it will not be popular’.
To close this section and open the next one, what we are looking at here is the real reason for Covid’s creation, and wild overspending to “fight it”; an attempted cull of the proles with a bioweapon; the launch of foreign adventures against Russia and China; a veil to throw over Bidenite social division alongside doubly incontinent Washington spending; and the half ‘solution”, half scam called ‘digital currency’. They are all, variously, distractions, preparations and rationales to obfuscate where blame lies for the biggest can-kicking greed and power fest in recorded economic history.
Twelve years have passed since I made the judgement that kicked off Section 1. The bust was unavoidable then; today, it would require a miracle of Red Sea splitting proportions to evade the vat of excretia bourse-and-bank monopolist globalism is about to drop 95+ per cent of us into. You may be surprised that I left the word ‘capitalism’ out of that gloomy description. The fact is, the ruling economic fantasy that dominates all discussion in 2023 is, on every level, not capitalism: price and product enhancement to stimulate invention is a chimera, globalism (be it via central banking or multinational business) restricts competition, banks do not feed entrepreneurs but rather intratrade the better to con clients and arrange yet more lumbering monoliths of m&a, the vast majority of commodity sectors are blatantly rigged, one currency (the US $) arm-wrestles every weaker one into a corner it doesn’t want to be in, and American military dominance ensures that the NYSE and CIA’s will prevails. And trust me, if you want healthy capitalism, you absolutely must have a free speech, querying media set to combat what is laughingly called these days “moral hazard”. No subject has more euphemisms attached to it than Evil.
Consider a few simple recorded facts, stats and trends. Forget total debt to gdp ratios, and simply look at the percentages by which G7 countries worsened their positions last year.
The USA leads the pack at up 26%, followed closely by the UK Japan and Italy at 22%.
Those are hefty leaps in one year. But taken as a whole, ALL BUT TWO G7 countries are trading insolvently: Japan at 172%, Italy at 144%, the US at 109%, the EU at 106%, and the UK at 97%. Even Germany at 52% still has debt sums to repay standing at $29 billion…… and those figures are pre US special forces blowing a big hole in their access to Russian energy.
I predict without fear of contradiction that all but one of those debt situations will be seen to have worsened at the halfway stage in 2023.
In short, if US military dominance can’t afford a telling action to solve a massively pressing fiscal and economic situation, then as a Great Power it is not only in terminal decline; as we’ve already seen, it is becoming a rogue State employing increasingly desperate measures to “scare” its “enemies”….and concern its allies.
Beyond the G7, China’s drive to improve and modernise local infrastructure took its debt to gdp ratio from 21% in 2016 to 45% just before Covid struck. As of May 2022, China’s debt was a staggering 340% of gdp…a debt run up partly by funding Third World projects – those countries now in turn needing more help to manage their even bigger debt ratio of 350%. The eurozone clocks in at 320%, the US at 315%.
Despite these unprecedented levels of relative indebtedness, the world is replete with politicians smiling a lot and/or drivelling on about these not being “real” debt increases because during Covid gdp fell – therefore, it just “looks” bigger. So let’s all go home to lockdown forever, do nothing and see how things pan out. That’d be an interesting element to add to the New Normal.
And interest rates will go higher before they come down.
So much for the sovereigns. What about the banks?
The immediate problem with assessing bank debt is that it is infinitely easier for a Board of morally hazardous values to hide dodgy loans or over-exposure to certain sectors by giving some columns odd names (‘Miscellaneous items’) or calling risks “assets”, which technically they are. Also in my experience, financial hacks are notoriously hopeless at asking questions about the bank’s “business model” and then listening carefully for signs of waffle. And of course in 2023, banks don’t have to answer awkward questions any more because such things are not done. Or else.
What we do know is that three banks have collapsed, and in a new study this month it was revealed that 38% of US consumers are “very concerned” that the carnage is far from over, while 78% see a major recession as a near certainty. There seems however little awareness about the degree to which the sovereign debt sizes are way bigger than they were in 2008, or indeed that this time China is a fellow-sufferer, or that emerging market sovereigns are also deep in the mire. Bankers are of course lobbying for the US debt ceiling to be raised, but this time Congress is (at least for now) saying “out of the question”. And perhaps the biggest millstone of all, inflation (especially in energy) is close to double figures
“The years of loose money are over,” declare the pundits at Bloomberg and CNN. But then, there’s never been a credit squeeze before when so many daily purchases were made using smart cards, inflation was so inexplicably high, AI was stealing human jobs at a phenomenal rate, ignorant lunatics have declared alternative energy to be the only way forward, mortgages are becoming unaffordable, and a new Cold War has reached maturity with Russia, China and the Saudis now very clearly aligned (and almost ready) to end the Dollar’s reserve currency monopoly forever.
Nor have things ever looked so stagflationary in a time of war: and trust me, we The People are at war: divided over the Ukraine bunfight, waking up to Pharma’s cheating on a major scale, election rigging while the judiciary looks the other way, dead set against further migrations, furious about the indictment of Trump, fed up of the Tories but wary of Labour, as divided as ever about Brexit and rapidly turning against the wannabe Sun King in France. Look as hard as you like for consensus: there isn’t one, anywhere.
While retail banks are nervous in private, central banks, Davos and the US Deep State have an attitude that’s easy to summate: “bring it on”. This is hardly surprising given their own implication in rigging some of the apparent disasters – from global warming and Covid to energy inflation and food shortages. When it gets bumpy, the revolts will start; when the traffic controls are rolled out, demonstrations will be widespread; as more and more welfare civil rights are removed and taxes raised, then the repression will start in earnest….wrapped in the thin excuse, “We have a duty to maintain law and order”. But despite lacking as we do the recourse to law against against Big Pharma, banking malpractice, BoE obstruction of electoral decisions, POTUS election ballot rigging, pointless and unconstitutional controls upon movement, and lost press freedom, the majority of complyonauts will still nod quietly and agree.
While it is true that the major power centres in the unelected State are based on bots, digitalisation of money, harsh censorship, riot training, arms, growing thuggery, the standing army itself and the accelerating shift towards the Smartphone as a means of tracking, controlling and punishing disobedience, the only truly smart thing they have done is to keep the Resistance divided and confused at all times. The French and Italians see through this, the Germans are catching on, the Canadians are simmering, but everywhere else there are ideologues of the Left in silent approval and conservatives who feel politically homeless.
The only thing that binds sane humans together is our shared uniqueness as individuals. But obviously, this is also what – if you add a dash of testosterone – keeps us apart. (And I’m not just talking about blokes here: after the age of 55, both genders have roughly the same testo levels – and over 70, girlies have more. What else could explain the behaviours of Harriet Harman?)
This is the factory-wired advantage the psychotic megalomaniacs have. But I still doubt that the coming Tsunami about to wipe out the rationale for financialised globalism can be stopped. Ironically, it emphatically can’t be stopped by the Davos to Langley New World Order antimatter: but it can be rationalised if enough Useful Idiots keep nodding things through.
Using every browser and search engine I could find, I’ve been unable to dig up any MSM opinions over the last thirteen days about what happens next beyond the usual Fed/Powell/Yellon balm from a distant planet somewhere. I see this as a very bad sign – almost certainly a reflection of the sort of State media clampdowns now in operation on a near-permanent basis.
What mustn’t happen is about to happen. Stay tuned. Oh….and Happy Easter.