Sterling work

Regular readers will know that I am fond of waxing nostalgic about the early 90s, when I was young and carefree, so perhaps I should be grateful that the government has chosen to stir up memories of that era by arranging a rerun of the 1992 Sterling crisis.

As I recall, that particular debacle came to a head a week or so before I took a trip to the US, somewhat curtailing my spending power, so I’m glad that this time around I’ve had my summer holiday before the pound started flirting with dollar parity. That’s about the only bright spot though, as Kwasi Kwarteng’s horribly misjudged mini-budget threatens to deepen the coming recession into a full-blown depression.

The gloomiest forecasts are predicting that interest rates will have to go up to around 6% to arrest the fall in sterling, with the resulting increase in mortgage costs set to hit the middle-class bedrock of Tory support particularly hard, so political reality suggests that Liz Truss will perform a signature U-turn and adopt a marginally more sustainable fiscal policy. Failing that, we might have a new Prime Minister even sooner than expected.

Fiscally reckless

So, after months of inaction occasioned by the Tory Party indulging in one of its regular bouts of internecine warfare, and a further delay for some feudal mourning rituals, today the Government finally got around to unveiling a plan to tackle the looming financial crisis.

There had been some expectation that newly-minted Prime Minister Liz Truss, free of the need to pander to the assorted oddballs who comprise the Conservative membership, would come up with something semi-sensible, a hope encouraged by the fact that she had shown some ability to recognise political reality by abandoning her “no handouts” approach to the energy bill emergency and adopting a price freeze strategy, albeit one financed by debt rather than taxes on the power sector.

Alas, it turns out that Truss, and her Chancellor Kwasi Kwarteng, are even further down the neoliberal rabbit hole than was feared. The budget presented this morning, featuring tax cuts unapologetically targeted towards the wealthy, with wildly unrealistic projections of economic growth which will supposedly compensate for the resulting deficit, has not only dismayed the mass of the electorate who are not going to benefit from the abolition of the top tax rate, but also caused panic in the financial markets, sending the pound to a 35-year low against the dollar. Commentary in the press has been overwhelmingly negative, comparing the plan to the infamous “Barber Boom” of the early 1970s, an attempt by Edward Heath’s government to kick-start the economy by aggressively cutting taxes, which ended with the ignominy of an IMF bailout.

Truss seems to be betting that this time the trickle-down strategy will finally work, and that everyone will have forgotten about all the unpleasantness by the time the next election comes around. Since that poll is at most two years away, that is quite a gamble. The stake for Truss is her premiership; if she wants to wager that on a long shot I guess she can, but the stakes for the nation are so much higher that it’s hard to view this reckless course of action with equanimity.

All is not lost though; the scale of the crisis and the obvious inadequacy of the government response is provoking a backlash, as workers are forced into action to defend even a basic standard of living. The country is set to become ungovernable unless there is a change of course; one can only hope it comes before too much more pain is inflicted.

Power crisis

I’ve been trying to think of a metaphor for the current state of the nation that doesn’t involve some mode of transportation heading for disaster, but it’s tough. A ship, the captain drunk and the junior officers fighting amongst themselves, steaming straight on to the rocks, a train speeding towards the buffers, the driver asleep at the switch, or an autonomous vehicle careering along a cliff edge, the AI heedless of the danger. In each scenario the passengers can do little but look on, aghast, bracing themselves for the inevitable collision.

If we go with the nautical analogy, then I guess the announcement last week that domestic energy prices will be more or less doubling in October would be an iceberg floating into the doomed vessel’s path, a development for which the authorities seem completely unprepared, despite the fact that it was sighted months ago.

The interminable process by which the 0.3% of the UK electorate who are members of the Conservative Party choose our next Prime Minister is thankfully almost at an end, but I am not at all sure that the installation of a new regime in Number 10 will result in much more in the way of decisive leadership. There is a general assumption, in the liberal press at least, that Liz Truss will win, and that, once in power, she will shed the performative Thatcherism that she had to adopt to get elected, but which nobody, not even her Tory audience, and least of all herself, actually believes is a coherent response to the current crisis. Even if she is morally unmoved by the prospect of a sizeable section of the population slipping into destitution, the economic and political calculations all point towards the necessity of state action to offer at least some relief to the voting public.

And yet… If the last decade of UK politics has taught us anything, it’s that no policy is too bone-headed or self-defeating that the government won’t at least consider enacting it. Respond to the most significant cost of living crisis in half a century by cutting Corporation Tax and trusting in the magic of trickle-down economics? Why not?

I’m fortunate that I’m in a position to be fairly passive about this; I can absorb the extra costs, so I feel no pressing need to do anything more active than posting some mildly acerbic pieces on my little-read blog. Others are obliged to be more militant; the current wave of strikes seems certain to spread, as workers are forced to defend their already precarious standard of living, and talk of civil unrest, and even riots, is uncomfortably plausible.

So, despite the evidence to the contrary, I remain hopeful that our ruling class retains enough common sense to realise that inaction is not an option, and that they will do just enough to get us through the winter without mass starvation. Some kind of deficit fund to subsidise a power bill freeze looks likely, especially if it can be structured in a way that funnels big fees into the pockets of Tory cronies.

Of course that will be just a temporary patch, and will do nothing to fix the structural problems that leave the country vulnerable to the vagaries of the international energy markets, so the reckoning is only being postponed for a few months. It’s time that will make the difference between life and death for many of our citizens though, and it will give us a chance to get a bit more organised, and push for a proper solution, so I guess we have to take any breaks we can get.

Recession gloom

So, I’m back from the US, after a pleasantly extended sojourn spent catching up with old friends, revisiting past haunts, and exploring some new ones. Naturally enough a lot had changed since my last visit back in the 90s, but there was enough reassuring familiarity that I was able to properly relax. Apart from some anticipatory anxiety as I stood in line at immigration, I can’t recall a single tense moment. I guess it helps that I’ve slowed down a bit over the last 30 years, and am content to spend a whole morning taking a gentle stroll through a gallery, or sitting outside a cafe watching the world go by, rather than rushing around trying to see every attraction on offer in whatever locale I happen to be passing through. If I did have a minor complaint, it was that the cost of living was much higher than I remembered – $30 for a beer and a burrito! – though I suspect this is mainly because I stayed in nice hotels and ate at classy restaurants, unlike my younger self, who was happy with grubby hostels and cheap burgers. I tip more these days too.

Anyway, back to reality. I had planned to have a bit more downtime before returning to work, but the latest news on the economy has spooked me a bit, and I’m thinking that I should probably get some money coming in sooner rather than later. I might be more relaxed if I had any confidence in the government, but since our nominal Prime Minister has chosen to spend his final days in office sulking rather than running the country, as his would-be successors vie for the hearts and votes of Tory party members by promising ever more outlandish fantasies of low taxes and reactionary social policy, it seems likely that things will get very much worse before they get any better.

Of course any worries I might have are insignificant compared with those facing the 50%+ of the population who are forecast to find themselves in fuel poverty going into the winter. It seems inconceivable that the political pressure generated by such widespread hardship will fail to push whoever ends up in Number 10 into some sort of action to inject some more spending power into the economy, whatever fears they may have about the effect that might have on inflation. Some combination of price controls and a boost to Universal Credit would probably cover it, but that may be too much to hope for, and a limited expansion of the already-announced fuel credits is a more likely outcome.

It remains to be seen whether the Tories, following their instinct for self-preservation, will unite behind their new leader, or if continuing internecine conflict will tempt Truss/Sunak to seek a personal mandate from a General Election. From a democratic viewpoint that would be a welcome development, but I suspect that dealing with a fractious party for a couple of years while hoping the economy picks up will look like the lesser evil when compared to inviting the judgement of the electorate in the midst of a cost of living crisis, so there will be no semi-competent technocratic administration riding over the hill to save us any time soon.

And these are just our local problems – I haven’t even touched on the war in Ukraine, US-China tensions, Middle East instability, climate change… I may need another trip to the calming oceanside sooner than I think.

Outlaw government

As the war in Ukraine looks set to grind on through months of attrition, a scenario which, as we’ve previously noted, Vladimir Putin probably won’t be too unhappy with, domestic attention is already turning back towards more local matters. After the revelation last week that Chancellor Rishi Sunak much prefers taxing the poor to paying any himself (not to mention the fact that he has so little faith in the economy he is nominally in charge of that he maintains a personal plan B involving a US Green Card), Westminster has today been shaken by the news that Sunak, and his boss, PM Boris Johnson, have each been fined for attending illegal social gatherings during lockdown.

The liberal press is naturally calling for both to go, though there is a definite air of resignation around the editorials, as if the entreaties are made for the sake of form, rather than in any expectation that Johnson and Sunak will do the decent thing, either of their own volition or at the behest of their party. Mendacity is so baked into our political system that the idea that a Prime Minister who breaks a law that he himself has promulgated, then brazenly lies to Parliament about it, should see these transgressions as a resigning matter seems like an echo of a distant, more honourable past.

In anticipation of today’s events Johnson’s allies have been spreading the message that his misdeeds were of a nature so trivial that he cannot be expected to quit, especially at this time of national and international crisis. This argument might be more plausible if the current administration displayed any signs of competence, but, as shown by their shambolic response to an energy price spike that threatens to plunge millions into poverty, Johnson and his cabinet would probably do the country a favour by spending from now until the next election drinking in the garden of Number 10, well away from the levers of power.

Party on Boris

Just when one thinks British politics can become no more ridiculous, our current government manages to plumb new depths of farce. The best spin that can be put on Boris Johnson’s transparently mendacious explanation for his attendance at a lockdown-busting party in his own garden is that it is an ambitious attempt to gaslight the entire nation; inviting us to accept that he thought the crowd of people standing around drinking was just a normal work day at Number 10 is such an obvious lie that no rational person could possibly expect it to be believed, therefore we must conclude he is actually telling the truth.

If Johnson was hoping that this daring manoeuvre would disorientate the opposition then he has been woefully disappointed, as critics from every point of the political spectrum have lined up to solemnly contrast his callous frivolity with the noble sacrifices made by the population during the pandemic. Seldom can an easier target have been presented, and, most worryingly for Johnson, the condemnation is resonating far beyond Westminster, shaking the confidence of many Tory MPs, and fuelling talk of a leadership challenge.

So, slightly unexpectedly, we are presented with our first opportunity of the year to make a political prediction; will Boris still be Prime Minister at the end of this month?

I’m going to say yes, since serious candidates to replace him, like Rishi Sunak, are likely to be reluctant to take over at the top just when the country is facing a particularly rough patch, as the pandemic, Brexit, and spiralling energy prices combine to produce a cost of living crisis. Better to let Johnson take the flak for a bit longer, then make a move when the worst has passed. If Boris makes it to the end of the week then I think he’ll last until the summer at least, but he may not get the chance to host any more Christmas parties in Downing Street.

Viral déjà vu revisited

I may find the unchanging nature of Second Life strangely comforting, but the fact that events in the real world seem to be stuck on infinite repeat is rather more unsettling. Almost exactly a year ago we were dealing with the disappointment of Christmas being cancelled due to the emergence of a new strain of coronavirus, and, well, here we are again.

Of course the outlook is not quite as gloomy as it was last December; the reasonably high rate of vaccination in the UK population does give some cause for optimism. Set against that however is the ever more obvious incompetence of the government, presided over by the increasingly ridiculous figure of Boris Johnson, lurching from scandal to scandal, his authority so diminished that he struggles to win the support of his own party for the measures necessary to head off the resurgent pandemic. In another echo of the recent past, a hazardous by-election this week, in what should be a safe Tory seat, seems likely to precipitate a fresh crisis for Johnson, potentially rendering him powerless at just the time the country needs decisive leadership.

It could be worse I guess; Brexit might be going badly

An unfair COP

I didn’t exactly have high expectations of the COP26 summit, which wound up this weekend, but I did think that it might produce an outcome a little more upbeat than the two main themes that emerged; namely that the climate situation is even worse than we thought, and no one is going to do anything about it.

Well perhaps some things are going to be done, and I suppose we should be thankful that full-blown climate change denialism seems to have gone out of fashion, but still, it’s difficult to be optimistic when one considers the scale of the political and economic transformation that would be required merely to limit the damage to near-apocalyptic levels. Just providing developing nations with the means to secure their populations against the disasters that are already unfolding would involve a transfer of wealth of almost unimaginable magnitude, and there is no sign that the developed world is ready to pay up, even though it would just be restitution for the resources looted since the dawn of the colonial era.

Instead of facing reality, we are invited to believe that capitalism, which got us into this mess, will get us out of it, by pivoting to a profit-driven green revolution, allowing we in the west to continue enjoying our high-consumption lifestyles, just as long as the world’s poor masses don’t mess it up by demanding to join us.

Unsurprisingly, countries like India and China are not on board with this, and even within the richer nations the increased inequality in wealth evident over the last 20 years means many citizens will be wondering why they are being asked to compromise already precarious livelihoods for benefits they are unlikely to enjoy.

The fundamental problem is the lack of democratic legitimacy of the institutions that have the power to influence the kind of global adjustments required to bring climate change under some sort of control. As long as people, and nations, see organisations like the IMF making decisions that clearly favour certain countries, and a certain class within those countries, then they will be reluctant to believe that the sacrifices they are being asked to make will really benefit some collective good.

So is there any solution? A world government, with a true mandate from the people, might have the authority to turn things around, but that’s obviously not something that’s going to materialise in the near future, so I guess we’ll just have to keep organising locally, make the changes in our own lives that we can, and hope that the common humanity of the masses will help us to unite to overcome this challenge.

Autumnal musings

In our last post I identified my earliest political memory as being of Margaret Thatcher’s first election victory in 1979, but that isn’t entirely accurate, since I also have a somewhat hazy recollection of the months leading up to the poll, subsequently known as the Winter of Discontent.

It’s a period mythologised by the Tories as a dark age of socialism from which the blessed Maggie delivered us, so it’s difficult to know which of my memories relate to actual experience, and which are just apocryphal tales that I’ve absorbed from the media; I would swear that during that freezing winter I played with my friends on streets cast into darkness by city-wide power cuts, but I can’t find any documentary evidence to back that up. Economic uncertainty and labour unrest were certainly at levels rarely seen since though, and, however Prime Minister Jim Callaghan may have been misquoted, it all added up to a crisis. As is often true of times of political realignment, the exact details are perhaps less important than the sense throughout society that the present arrangements are unsustainable, and that something has to change.

Anyway, I’m thinking about all this because there seems to be a general feeling around at the moment that the winter ahead is going to be a difficult one, what with the economy still hobbled by the twin shocks of Brexit and the pandemic, the health service in no shape to cope with any new wave of coronavirus, and surging food and fuel prices threatening a return to 70s-style inflation. On top of that we also have to worry about climate change, with no sign that the COP26 talks starting this week will produce any sort of plan to mitigate the looming environmental apocalypse.

Back in 1978 there was at least a powerful labour movement to give some protection to workers, and the political class of that time, though unequal to the challenge they faced, were far more serious and competent than the current administration. A decade of austerity has left millions balanced precariously on the edge of poverty, and the latest developments could push them over, with unpredictable consequences for the social fabric of the nation; “discontent” may turn out to be somewhat of an understatement.

Still looking at the stars

We already commemorated Yuri Gagarin’s pioneering space flight on the half centennial back in 2011, so we’ll just mark the 60th anniversary by linking to that post, and noting sadly that, despite our hopes a decade ago, capitalism is still going strong, and inequality is worse than ever. Perhaps we’ll have better news to report in 2031…

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