BBC Breakfast, like most of mainstream media, obsessed over the Conservative Party leadership contest and who it will throw up as our next Prime Minister throughout the weekend just gone, giving a platform to contenders and their supporters and critics, and also to various talking heads from the opposition Labour Party who were all keen to describe in detail what the government had got wrong, but rather coy when required to detail how Labour would have done things differently and how their policies would have produced a better outcome.
However the most significant comments on the many headed crisis that awaits the new
Prime Minister came from a guest who is not linked to any political party:
Lord Mervyn King, who was governor of the Bank of England between 2003
and 2013. Asked about the narrative being spread by some Liz Truss supporters, perhaps in a bid to undermine her successor and set in train events that will lead to another gangland execution, that financial markets ‘bullied’ Truss out of
her plans and out of office, King gave a
clear explanation of what had gone so badly wrong for Liz Truss and her hapless Chancellor Kwasei Kwarteng:
“Markets
are not in charge. Governments and central banks are. Markets respond
to the announcements made by government and central banks. And central
banks have lost control of inflation, government lost control of the
public finance; not surprising that markets respond to that.
“I
think all central banks in the west, interestingly, made the same
mistake. And during Covid, when the economy was actually contracting
because of lockdown, central banks decided it was a good time to print a
lot of money. That was a mistake. That led to inflation. We had too
much money chasing too few goods. And the result was inflation. That was
predictable. It was predicted, and it happened. So that’s one problem
we have to try to get out of. But the public finances both in the United
States and the United Kingdom were not put on a sustainable track. And
markets responded to that.
King’s words highlighted several important factors that
led to the mayhem that followed on the heels of the ill - fated mini-Budget, reportedly authored by Kwarteng and Truss themselves, and the economic chaos it plunged the country into. He stressed that the economic crisis is global, that the UK is
not the only country experiencing higher interest rates or borrowing
costs, as the economic climate is changing for everyone (albeit it’s
happened faster in Britain, with far more international attention). This will not be well received by the people who still cannot accept that in a democratic vote we chose to leave the European Union and thus try to twist every negative news story in a way that enables them to blame it on Brexit. Unfortunately for them, Joe Public is all too aware that all the economically significant EU member states are as far or further up shit creek than we are.
The former central banker's verbal lashing did not spare the central banks. King made it crystal clear that mistakes had been made by all
central banks in the west, though it was obvious he rated the Bank of England’s
decision to dither and dally on actions to curb inflation as the biggest of all central bank cock ups, also lambasting their decision to
print uncontrolled amounts of money in order to appease politicians and purveyors of 'The Science.'
While the cost of wrong headed and utterly ineffectual COVID reponse schemes like furlough (paying people to stay off work,) –
roughly £70bn in total – did require the Bank and Treasury to work
hand-in-hand, it has been a point for contention for a while now just
how much money printing took place (the Bank created more money in the
first year of Covid than it had in the decade leading up to it).
NB when we say 'printing money' in relation to governments and central banks, it is not a case of simply turning the speed of the printing presses up to eleven, money is created by selling bonds - in effect a contract to pay interest at a fixed rate on a certain sum for a specified number of years before redeeming the bond at face value.
Not only did the Bank oversee an astoundingly huge increase in the money supply;
government policy saw cash flow into the national economy through furlough, business support support schemes, etc), yet central banks meekly went along with political denials that such reckless economic management would have no
inflationary consequences, which was bollocks of course.
At one point in the show King blamed on the economics profession directly: 'If I were to
blame anyone,’ he said, ‘I would blame the economics profession for
encouraging [central banks] to print money [like] it didn’t matter.’
He also stressed that markets are not political in the way party
politics are, forming policy and reacting to world events but instead are responding to a particular tax cuts or set of performance statistics – on the wider scale they are responding to the
sustainability of financial plans, the ‘sustainable track,’ as King
called it.
The recent mini-Budget that sank the government of Liz Truss was evidence that politicians are not taking fiscal discipline seriously after the loonytoons public spending splurges of the pandemic responses. It was a time when
public debt has skyrocketed and deficits in peacetime hit record highs.
It appeared to be a tipping point beyond which the philosophy of debt driven economies and rational behaviour parted company. All politicians are having to
grapple with the consequences now, unfortunately few seem to realise that.
But
perhaps the biggest impact of King’s appearance was not
simply what he said, but how his contributions influenced what followed. Asked by The BBC's Laura Kuenssberg what direction the UK ought to be taking, King was warning about the ‘more difficult’ decision to come, including austerity
and possibly ‘significantly higher taxes’ to fund public services, both
to get the books in order but also to avoid passing on a staggering
bill to future generations.
His
comments echoed as unsuccessful Tory leadership contender refused to comment on any public policy, economic and
otherwise, insisting that she would ‘not being drawn into the detail’ on
decisions that presumably she would need to start making in less than a
week, were she to become leader and by tradition Prime Minister. This included not
talking about how she might reduce the UK’s deficit, which is thought to
be required to regain market confidence and get things back on track –
no doubt in part due to the serious lack of popularity spending cuts
will have at a time when the cost of living crunch is worsening.
‘You
heard from Penny Mordaunt,’ King pointed out, ‘we will probably hear in
a minute from Keir Starmer (leader of the opposition Labour Party), that public expenditure isn’t going down,
if anything it will go up. Therefore taxes will have to rise to fill the
gap which is there at present. That doesn’t make a very happy picture
for the next few years.’
Indeed,
that’s exactly what happened when the Labour leader sat down in the hot
seat, refusing to be pulled in on discussion of spending cuts, while
insisting that some areas, including the usual Labour Party sacred cows, needed a funding boost. Starmer singled out
healthcare, declaring ‘of course the NHS needs more money’ (he followed
up later with vague talk of reform as well). With healthcare spending on
track to account for almost 45 per cent of day-to-day government
spending in the next few years, at some point Starmer will have to lay
out just how high he thinks that number should go, and where exactly the
money might come from.
King’s main point, that these are difficult
times indeed, has been echoed by our new Prime Minister, Rishi Sunak, and by every politician of every party who has been given chance thecise their vocal cords in public since . Very few of those politicians however, are ready to discuss the remedies
publicly, nor are they prepared to seriously discuss spending cuts.
RELATED:
The True Cost Of The Green Energy Boom Is Now Being Realized
For four decades we have been fed a constant stream of propaganda assuring us that green energy was the only way forward if we wanted to secure supplies of the energy essential to a modern society while preventing the environmental catastrophes that would be the inevitable consequence of climate change caused by the Carbon Dioxide (CO2) emitted by human industrial, commercial and social activity. ... Continue reading >>>
Soaring Lithium Prices Putting Transition To Electric Cars In Doubt
With battery quality Lithium Carbonate regularly trading at above $US70,000 per ton the impact of this soaring cost of the essential material in batteries for electric vehicles is starting to impact the push to abandon fossil fuels . Worse still, analysts are predicting lithium prices will continue to rise as demand for electric cars and goods vehicles grows.
Do We Have A Winter Of Civil Disobedience Ahead?
As many people in Britain slap on the apres sun gloop in the wake of what passes for a heatwave in these cool cloudy climes, our inept politicians caught with their pants down by unusual weather as usual have heard that that winter is coming and are making plans for a coldwave.
We are in the grip of an energy crisis at the height of summer. Last week, it was reported that the UK government is laying down plans for a “reasonable worst-case scenario” including blackouts for industry and even households. And this is as energy prices spiral out of control to new records every day.
Is Russia Selling Its Oil To The World Through An Obscure Egyptian Port?
As this blog predicted when NATO and EU member states shot themselves in the foot by reacting to Russia's invasion of Ukraine with sanctions that prevented Russia from selling oil, gas and vital raw materials to the countries that needed them most, the NATO and EU member states, the Russians have had no problems finding alternative customers for their gas and oil and no problem getting oil into the world's commodity markets through the back door.
Jingoistic Western Triumphalism Will Not End The War In Ukraine Or Cripple Putin, But It Is Crippling Western Nations
As the war in Ukraine grinds on and Russia steps up its economic war against the west and in particular The European Union, claims made recently by the idiotically 'woke' leaders of Europe's main economic and military powers that the West has a once-in-a–generation chance to severely weaken Russia’s capabilities, both militarily and geopolitically, look increasingly hollow. Putin's critics have cited 'Western unity' as one of the main reasons why Russia will be economically destroyed and politically humiliated when the Ukraine's military finally claim victory.
UK Households Are Paying Wind Turbine Owners To Not Generate Electricity
On another near windless day here in the United Kingdom, Boggart Blog came across a very interesting piece if news. According to figures published by the business and management consultancy LCP, british taxpayers have been paying operators of wind turbines farms for the time their windmills were NOT generating electricity increased to record levels last year ...
Russia and China announce a new global reserve currencyIt was always on the cards that Russia, China and rest of the BRICS countries would use the CIA / NATO engineered war in Ukraine to launch the main thrust of their economic war on the west, in fact after having written so much in our Currency Wars page about the inevitability of Russia and China challenging the US dollar’s global reserve status, now, it’s happening we can only say: "We Told You So".
"Our Country Is Facing The Biggest Crisis The Crisis We Ever Had": German Employers' Association Warns Over Russian Gas Cut
With the Nord Stream 1 pipeline closed for maintenance, with the possibility that President Putin will not allow it to reopen at the end of the scheduled 10 days downtime in retaliation for the EU's continued support or Ukraine in their conflict with Russia, Germany is facing an unprecedented crisis that could erase the prosperity Germans have grown accustomed to, warned Rainer Dulger, head of the Confederation of German Employers’ Associations.
European Union Is Again Close To A Meltdown As Eurozone Economy Collapses
Once more we return to the political instability and economic fragility of the European Union as the conflict in Ukraine combined with loonytoons Climate Change mitigation policies, the failure of 'sustainables' to meet ever increasing demand for electricity, fod shortages and rampant price inflation put economic and social pressure on governments of member states ...
Net Zero Is A Dangerous Fantasy, But Scientists Believe In Fairies It Seems
With oil and gas prices rocketing and the highly propted sustainable energy sources performing way befow expectations the energy crisis currently gripping Europe (with worse to come as food shortages start to bite, polticians still seem more intent on pandering to the green lobby and chasing the dream of a fossil fuel free world rather securing the energy and food supplies needed by the people they serve.
The Federal Republic of New Normal Germany
So, the government of New Normal Germany is contemplating forcing everyone to wear medical-looking masks in public from October to Easter on a permanent basis. The fanatical New Normal fascists currently in charge of Germany’s government are discussing revising the “Infection Protection Act” in order to grant themselves the authority to continue to rule the country by decree, as they have been doing since the Autumn of 2020, thus instituting a “permanent state of emergency” that overrides the German constitution, indefinitely ...
Europe's Depleted Gas Storage Might Not Get Refilled Ahead Of Next Winter
While mainstream news reporting of the conflict in Ukraine continues to pump out a torrent of anri - Russia, pro - war propaganda the catastropic effects of this war that could so easily have been avoided are not mentioned. Well why would warmongering governments admit they have inflicted an energy crisis, food shortages and soaring living costs on their people for no good reason ...
While Crazy Joe Biden Claims Victory Over Russia, NATO's Expansin Plans Have Been Derailed By PutinJoe Biden (or his handlers because we all know Joe's mind is gone,) have been trying to spin reports of Russian troops withdrawing from positions close to the Ukraine border as a diplomatic victory for the USA over Putin but in the geopolitical game things are seldom what they seem to be ...
EXPLORE:
[
Daily Stirrer] ... [
Our Page on on Substack ]... [
Boggart Aboad] ... [
Ian Thorpe at Quora ] ... [
Greenteeth Home ] ... [
Greenteeth on Minds.com ] ... [
Here Come The Russians ] ... [ Latest Posts ]
The absence of England from the meeting of first ministers of the IK's member nations, convened in Cardiff to agree the break-up of the Union is a mystery nobody involved is in a hurry to explain. The country with by far the biggest economy in the UK and a population several times greater than the other three put together was left out of the talks between the three nonetities who preen and posture as if their staus as first ministers of three non-countries, John Swinney of the SNP, Plaid Cymru’s Rhun ap Iorwerth and Michelle O’Neill of Sinn Féin met to decide the future of the Union..
In typically pompous fashion Swinney called the meeting a “significant and pivotal moment for the United Kingdom”, adding: “The people of Scotland, Wales and Ireland have a right to self-determination. They are entitled to decide on their own future.”
But not the English, it seems. The late Gerry Fitt, leader of the nationalist SDLP in Northern Ireland, put it this way: “Their slogan is Brits out – but leave your wallet on the mantelpiece.”
And Swinney's self important babble is further undermined when we look at the results of huge numbers of illegal immigrants being planted in Northern Ireland's small, close knit communities.
How the three other parts of the UK would survive when the flow of money from English taxpayer support is another question nobody from the Scottish, Welsh or Ulster delegation wishes to answer. Payments under the Barnett Formula, which allocates public funds to the Scottish, Welsh and Northern Irish administrations, amounted to £45bn, £20bn and £18bn respectively last year. Were the SNP not fully committed to Net Zero, Scotland would at least have some revenue from the oil in its territorial waters, but Wales and Ireland could not cobble together a viable economy between them. Is it any wonder that England is being riven by civil unrest as the people's rage spills into the streets?