From the Guardian based on today's inflation data:
Wages are back behind inflation. As was near enough inevitable after Brexit.
And now some of the loonies members on the Bank of England Monetary Policy Committee are more likely to vote for interest rate rises as a result, tipping millions in the UK into an even bigger household economic crisis and inexorably paving the way for the next banking crisis.
Philip Hammond has said no one voted for Brexit to make themselves worse off but I beg to differ: that's exactly what they did. They just may not have realised it, that's all.
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Dear Richard,
I have read a certain amount of your articles and you seem to speak with a certain amount of knowledge and authority, and therefore I wish to pose a direct question to you. Who does benefit from Brexit?, it seems clear who the losers will be but who are the likely winners?
That’d be banking crisis, not baking, although I’m sure there’s plenty of cooking of books going on 🙂 Anyhoo, I’d suggest Brexit hasn’t made us worse off, as it hasn’t happened yet. It’s our imbecile politicians and their endless dithering has made us worse off.
The exchange rate move was wholly Brexit created so to that extent Brexit has happened
I like the idea of a forthcoming baking crisis.
It’s the soggy bottomed version of what we’ll get
Baking crisis? Where’s Mary Berry when you need her?
I have added the missing n!
One would hope the MPC wouldn’t be that short-sighted but……
Don’t you believe it
Too many are ivory towered dogmatists
Horrified by Brexit, and long been sceptical that anyone really thought anybody at all would benefit as a consequence. (Surely nobody believed the NHS-millions lies.)
My gut feeling is that it’s a reaction to marginalisation and inequality: a lot of people who were on the economic, political and cultural periphery looked at those who were enjoying the spoils and thought ‘this might not make me any better off but at least it will wipe the smiles off their faces’.
But if you accept the arguments that poverty is relative and inequality has toxic consequences that over-ride any gains from rising living standards, is it possible to argue that Brexit could make people’s lives better if it reduces inequality (to some extent) even if it makes the country poorer?
Your middle para is consistent with the argument in the FT today. There’s a lot to it
I see not a hope that relative inequality will decrease because of Brexit: elites are mobile and have a habit of protecting themselves. I am sure they always thought this possible
So the 1 per cent’s share will continue to expand at the expense of the rest?
I think so
“elites are mobile”
That’s so true when talking about Brexit.
But not true when tax rises are discussed. Then elites are not mobile.
I wish people could understand the difference.
I have not the slightest idea what you mean
If that middle paragraph of Ben’s and the Times article are correct, what does it say about a society that behaves like that? Prepared to cut its nose off to spite its face? Talk about nihilistic! Awful.
All I would sat about Andy Crow’s bit is that I do not think that the US will relinquish any of the hold it has grabbed of the world economy over the years so easily. It’s deficit is so huge it relies on the value of the dollar to stay afloat.
Some may derive satisfaction from seeing the US falter like this but I would caution such enthusiasm – the results of such a shift would not be pretty. It’s known as ‘War’.
Pilgrim Slight Return.
War? Yes, that sort of ‘uncomfortable’ would likely come in to it. In fact let’s face it it already has: Afghanistan, Iraq, Syria. (Kuwait? – I don’t think Saddam would have gone into Kuwait without someone tipped him the wink he’d get away with it and supplied the moolah and the hardware) These may look like minor skirmishes in remote places, but the refugee outflow of fifty million (plus plus?) is by far the biggest number of displaced persons since 1945 and Brexit is the sort of closing the drawbridge you can expect.
Donald Trump’s proposed wall against the Mexicans is already in place in Bulgaria and other Eastern European states. He isn’t leading the charge here he’s just with the trend.
That ‘nice’ Mr Obama sanctioned troop concentrations on the Russian border (probably the quid pro quo for republicans allowing ‘Obamacare’ onto the statutes)
The US war machine is cocked and locked. Ready to go. All it needs is an excuse. There has to be an excuse even if it’s totally inane.
Did you suspect enthusiasm for this? Not from me I hope.
Time to stick the fork in America; it’s done http://russia-insider.com/en/politics/putin-brics-ready-challenge-us-dollar-global-reserve-currency/ri20805
See? https://www.thetrumpet.com/16266-chinas-new-gold-backed-oil-benchmark-to-deal-blow-to-us-dollar
You might think that people act rationally. But they do not.
A look at Game Theory is helpful. I’m thinking of the Question and Answer Game.
How would you register a protest if you thought the questioner was being unfair in sharing out the money per question they have?
Rationally something is better than nothing. But that is not how it pans out in reality.
People will, in fact, spite themselves in the face of perceived unfairness. This is especially so in the case where there is no alternative method to register a protest.
So I posit that the Brexit vote, in essence, was a protest against unfairness. The real shame is that the mechanism for the protest was an In/Out referendum. Thanks very much David Cameron.
I’m fairly sure that money isn’t everything.
Why say people will be ‘worse off’ when looking only at money?
I know many who have told me that they are very content to be financially worse off if it means freedom from the EU.
As a Quaker, I would have thought that you realized that there is more to life than money.
Of course I realise that
But I also have not the slightest clue what this freedom means
Perhaps you’d explain succinctly how it might benefit anyone, without resorting to racist stereotypes please and excluding any economic issue, which you have already dismissed
I’m fairly sure a lot of people voted for Bexit because they wanted to vote against Cameron/Osborne. If so they won the satisfaction of seeing them out of office, but at great cost. A sort of reversal of throwing the baby out with the bath water. Now nobody gets a bath.
Cameron/Osborne and their ilk don’t have to share their bathwater they have their own.
Increase in interest rates (which is inevitable: from the current historically low rate they can only go up because negative rates would cause a storm of chaos) will have a double whammy effect. Much ‘subprime’ consumer debt will become (more) unsustainable, but at the same time a lot of over leveraged corporations will also collapse, and SMEs will struggle too even if they are not over indebted they will find their customers have no money.
We could find ourselves looking back on 2008 fondly as the last manageable crash.
Meanwhile as money is cheap at the top of the economy (facilitating share buybacks and boardroom bonuses) and very expensive at the bottom (crippling the retail sector) the pressure builds. The elites have been squirreling their money away offshore.
The justification for bailing out the baking sect (ya all got me doing it now)…banking sector was to make money available to invest to stimulate the economy. This has not happened because there was no contract beyond a sort of gentleman’s agreement. There are no gentlemen in politics nor the banking sector.
BOE appears finally to be getting the inflation it claims to have been hoping for (despite policies which prevented it), but it isn’t the result of increased economic activity it’s all based on the fall of sterling increasing import prices. The flip side of that – increased profits for corporations with foreign earnings is not getting into the economy below boardroom level.
That’s my reading of the situation and I don’t hear any body saying anything in policy terms that leads me to believe we are headed towards anything other than a financial crisis of such magnitude (globally) that it will only be sorted by a complete overhaul of the international finance system. The IMF will have to act as defacto world central bank to facilitate that. It will mark the end of the US dollar as default world money.
That will change the world in a very major way and the Americans will fight hard to prevent it, but they are also bankrupt so I don’t think they will be able to.
The shift will be on a par with Bretton Woods, US coming off the gold standard and other seismic shifts. . A whole new era.
The transition will be greatly uncomfortable, particularly for the ‘squeezed middle’ and as ever the entirely crushed bottom.
Pretty much agree with all that
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Who has got an upside?
If I understand this correctly, I probably fall into your third category. I don’t believe in the neoliberal experiment (kick-started by Reagan and Thatcher, culminating in austerity and Trump) and feel I must oppose it in any way possible. The EU is a fundamental component of this experiment – witness the cruel imposition of austerity on Greece and the negotiation of secret multi-national trade deals. I think it is likely that ‘we’ will be worse off in the short term, but as you have frequently pointed out, who is this ‘we’ who have benefited so much from the economic status quo of which the EU is a major part. It is unfortunate that the timescale required and the punitive attitude of the EU (it may be necessary for the EU to punish the UK for their decision, in the same way as they punished Greece for their indebtedness) will probably leave us worse off in the short term – trying to exit a complex set of arrangements generated over several decades in just 2 or 3 years is ludicrous. A 10-15 year transitional period would be more realistic. I do believe we will be better off in the long term if we are able to de-couple our economy from the unquestioned pursuit of growth and wealth which has left the planet in a very perilous state. The EU was established to protect and promote big business (particularly steel and coal in Germany and agriculture in France) and remains true to its original aims. It was shown no inclination to reform or democratise itself and anyone who believes our continued membership might bring about significant reform has no evidence to support this view. I am for free movement of people around the world (not just expanding the fence to protect the privileged few within the EU); call me an idealist (I’m not sure that derogatory labels such as ‘ideologue’ are helpful) – I prefer far-sighted. Who has got an upside – possibly the planet.