I had a fascinating conversation last night. The theme was what will be the first crisis to hit the post May 2015 government?
The hypothesis was that since economic crises broadly happen once every seven to nine years another one must be due soon, and Osborne's luck suggests it will be just after, rather than just before, the next election.
Is it an interest rate rise tipping hundreds of thousands in the UK into bankruptcy and precipitating a house price crash?
Or will the inevitable Chinese banking crisis come first?
The obvious fact that fracking as a solution to the energy crisis is a complete myth will break sometime, and with it energy prices will rise, whilst energy companies may collapse into crisis as their investment strategies fail.
Maybe it's none of them: another banking crisis could deliver the blow and with no real reform post 2008 that has to be on the cards. With that tax revenues will collapse, again.
And it could, of course, be the Balkans.
Or could disputes over the newly independent Scotland create a sterling crisis?
All of these are possible. The one thing that seems very unlikely is that whatever that government is it will be able to ride its luck for long.
It was a good job the company at the table was invigorating. The outlook wasn't.
What you can be sure of is that the need for a Green New Deal will be stronger than ever.
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I think it’ll be another banking crisis – probably in around 2017 – and this time we will be looking at total systemic collapse or some kind of popular uprising, because the public won’t stand for another bailout on the lines of 2008. But I think this time the initial catalyst could be China where the banking system is hugely imbalanced at the moment.
“public won’t stand for another bailout” -Howard, I think you are over optimistic in regard to the public. As we have no opposition party there is no-one educating the public on these issues-witness the rise in the polls of the Tories, a party of unbelievable incompetence, yet ‘cooked’ GDP figures and a pension handout was enough to create a significant poll rise! I think you underestimate the degree to which people have been taken in by the neo-liberal myths -I’m now losing faith that there will be any wake-up call!
Much as I don’t want to, I tend to think you’re right Simon. But even if Howard’s view is closer to what might happen I find myself wondering to what extent any form of demonstration – much less an uprising – is possible. The draconian laws against any form of protest are largely unappreciated by the majority of the population, but would be much more widely and ruthlessly employed than they were against the well to do, home counties crowds who made up the bulk of those protesting fracking last year.
Nevertheless, I do think that the “establishment” expect unrest at some point in the not too distant future. Why else buy water canon, which I note Boris Johnson supported (on the assumption, that either as Mayor or future PM he’ll have ultimate say over their deployment). Then again, given how alienated from government I hear the police are nowadays, if protests do erupt it may come down to how committed police officers are to using their powers against their fellow citizens. That said, that’s never been much of an issue for them in the past.
Airports, runways and big shiny planes taking off and landing over the capital is going to cause some ruffled feathers.
For the last six years, the Western world has been in the grip of the longest and most serious economic slump since the 1930s. If individual health and economic climate are closely linked, as many would argue, then our political leaders and policy makers have responded to the Great Recession by placing all of us in what amounts, in effect, to a vast clinical trial; but one that is neither supported by firm scientific evidence, nor subject to the normal rules of informed consent. As the epidemiologists David Stuckler and Sanjay Basu point out in their new book, The Body Economic: Why Austerity Kills, in the one arm of this vast ‘experiment’, millions of people in America and Europe, including the citizens of the UK, have been subjected to ‘austerity’. Presented as a strategy to tackle debts and deficits caused by an under-regulated financial sector, it consists largely of amputation: swingeing cuts in government funding for public services, for healthcare coverage, assistance to the jobless and for housing support. It represents too an attack upon the wages and pensions of public sector workers. For those of middling and lower income — and especially for the poor, the sick and the disabled — austerity also means increased financial hardship and the spectre of homelessness. In Europe, the International Monetary Fund and the European Central Bank have pressured governments in Spain, Greece and Italy to dispense this bitter medicine, traditionally imposed upon developing countries in search of economic aid (Stuckler & Basu, 2013).
As the perpetrators of the previous crisis have done so well out of it, whatever it is will justify more of the same. The EU/US trade pact will bind the outstretched hands of the monocultural decadent,political class and the outcome will, of course, be further decay.
Gloomy, I know, but maybe that’s just this morning.
Thom Hartmann suggests that the banking crisis will be staved off until after the next US presidential elections so 2017… but the EU may explode before then.
I agree Paul ‘As the perpetrators of the previous crisis have done so well out of it, whatever it is will justify more of the same. The EU/US trade pact will bind the outstretched hands of the monocultural decadent,political class and the outcome will, of course, be further decay.’ And justify a more and more authoritarian, militarised State.
It’s bad enough that it’s cold and raining here. This is a very depressing conversation. I think I’ll go and open a bottle!
I don’t mean to depress anybody, I just think that until a majority realise the contempt and hatred they are regarded with, it’s going to be bad business as usual.
And even when they do, that’s just the start.
Look at the huge marches in Spain, the independence day (sic) bans on protests in Greece, they’ve got it, but the kleptocrats are obdurate. (You’ll have to look hard, the media here find them of little significance.
The vivisectionists in the eurozone ripping the copper out of society,seeing how much they can get away with.
It’s an awful lot seemingly.
They have taken Frederick Douglass’s words in a very partial spirit:
Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them.
Since the 2015 government is going to be a short-term one, I consider it likely that around the start of next year things will start to fall apart. Labour will be elected to govern a fast deteriorating economy locked into a death spiral.
If Labour continue with austerity-on-steroids their supporters will desert in droves.
And who cares?
With E Miliband we have a slightly pinkish conservative who insists on talking tosh….since the UK enjoys some of the lowest energy costs in Europe his freezing prices policy will be easily countered by closing uneconomical power generation. We now have the rather funny situation of the Drax complex converting to burning wood chips imported from the US and collecting large amounts of subsidy…other coal plant is not being mothballed, but destroyed. The next 15 years are not going to be pleasant.
Start to fall apart?
Are food banks, hospitals being driven off a financial cliff, widespread under/unemployment,energy cartels threatening blackouts and the full tilt enclosure of public assets not enough?
Let’s not forget the petrodollar’s on the way out…
Here’s ken Loach on labour: http://www.theguardian.com/commentisfree/2014/mar/27/ken-loach-labour-failed-left-new-party
There are two kinds of crisis that could afflict us. The first, based on the economic levers of power that control our domestic lives, can be (and is being) carefully stage managed by the forces of the free market, in order to produce the electoral result they desire. The taps of investment that were turned off five years ago are once again being turned on again. Energy companies are robbing the Labour party of their popular appeal by displaying restraint for the first time. Similarly, supermarkets, now engaged in a ‘price war’ are slashing prices at the checkout, temporarily reversing the squeeze on consumers cost of living. All of which will undermine Miliband’s strategy of focussing on ‘cost of living’ as the only tool in his box for fighting the election. The Governer of the BoE, whilst mindful that interest rate rises are a key factor for those who, under Thatcher, did as they were bid and saved for their future, also recognises the catastrophic effects such rises would have on home owners (many of whom are only a percentage point from disaster) and defers until after the election.
Meanwhile the ‘free press and media’, now no more than a factotum of the Neo-liberals assiduously trumpet the success of the Government’s economic policies without any hint of recognition that those same policies have simply transferred the public debt to the private individual, increasing not decreasing British levels of indebtedness by nearly 50% since 2010. Not everyone, of course can bear the cost of that transfer, with those that cannot simply going without.
And the abuses continue. The crisis in Ukraine, for instance, has now been seized upon to force through the fracking agenda in the face of very real concerns amongst those who have taken the time to investigate its effects across the pond, in much the same way that a property bubble in London is being turned into a speculative land grab across the country.
In truth the next big (domestic) crisis has already happened. It is called Neo-liberal economics, and its authors are simply managing the crisis until after election day.
The other crisis will not be managed. Look at a world map, tracing your finger around the boundaries of Europe, from the Levant to Finland. We are bounded by fire, destruction and militarism. As Libya descends into anarchy and Sisi’s government detains and tortures thousands of dissenters, North Africa becomes ever closer to joining Syria and Iraq in the chaos, just as Lebanon is drawn increasingly into the conflagration. In Turkey an increasingly repressive government is turning the country into our own ‘Pakistan’, nurturing those inside Syrian who oppose the Al Assad regime, almost regardless of their brand of politics and religion.
To the North Russia’s success in it’s annexation of the Crimea is now being hailed as a sign of military supremacy. Belarus, Poland and Ukraine look nervously to the east, as mindful of the lessons of history as they are of the toothless response of their ‘friends’ in the west. Even the Finnish foreign minister recalled the ‘Winter War’ of 1938 in a recent statement.
Britain needs a new politics that puts away the ancient rivalries of left and right, but instead focuses on the real battle- winning back democracy. There is more common ground in the fight against Neo-Liberalism than most people would imagine.
In the meantime, we just have to hope that history doesn’t overtake us
This, of course was all foreseen by the great sage.. James Marshall Hendricks (November 27, 1942 — September 18, 1970)
With the acute obsevation that.
“And so castles made of sand melts into the sea, eventually”
The banks are, once again, offering mortgages at 4.5* salary.
Actually, talking about the ‘next’ crisis is missing the point that we are already in a banking crisis. They just don’t want us to know it. Look at every other economy that had housing bubbles – USA, Ireland, Spain. House prices fell to sensible levels (i.e 1997 levels). A house that was on the market at $300k would sell for $150k. The UK didn’t have that level of fall, largely because the banks took a policy decision NOT to enforce closure on bad debts. So, the banks averted the imminent disaster by ‘kicking the can down the road’. They know that they are sitting on a vast loan book comprised mainly of people who haven’t a hope in hell of ever paying off their mortgage. Their only hope is that property prices will keep rising, so that people can sell up & meet their debt, but they are already absurdly high: too high for most young people to ever have a hope of buying a place of their own.
Martin
Very good analysis of the current situation