It's another day of gloomy economic news. The FT has:
Crude fell to a seven-year low, close to levels hit during the financial crisis amid increased expectations of a persistent global oversupply.
The Guardian leads with the expectation (which I share) that inflation will rise next year, wiping out any real wages growth.
Whilst the FT has clear indication that employers will be fighting back against minimum wage rises next year, headlining:
Raising minimum wage will cost private-sector employers £1bn
In an economy worth £1.7 trillion that is not enough to change anything at a macro level but that it's causing such resistance is some indication of micro stress. It will be a recurring theme of 2016.
The need for an alternative economic narrative is growing.
There's a risk I will be spending my Christmas holiday on the theme: a new book may be coming sooner than expected.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
The only question now is ‘Will people put up with it’?
I hope that they come to the conclusion that they have suffered enough already and then hopefully this will unmask Osbourne’s maladministration.
I do hope the PLP are aware of this and decide to go along with their Leader a lot more. Instead of disagreeing with Jeremy they need to disagree with Cameron a lot more IMHO.
Once the Labour Party stabilises, it might be in a position to create a coalition with the Greens and maybe others to form a counter-narrative – something worth voting for – especially for those who have given up voting.
As for me, I’m just hoping to be able to pay off my mortgage and get my children into higher education before they make me redundant.
As a result of the public sector cuts, we’ve had to abandon some of our housing development work. This is not just less work for me, but less work for the private sector contractors who build our properties!!
Austerity hurts everyone. That is what Labour should be saying – never mind openly stabbing their Leader in the back and arguing amongst themselves.
PLP:
Persistently Lacking Principles
Pursuing Little Politics
Too many in Labour prefer Cameron’s policies
Your strategy is sound except that you are embodying t he paradox of thrift
I did also wonder whether it was your children declaring you redundant
Mine have done that but there’s another near decade before I gave a hope of t hinting that they may nut be dependent
And even then I am gloomy for them
So, nil illegitimum carborundum time
She was talking about stabbing him in the front – new mouthy MP who thinks she knows much more than she does.
It was a pretty daft comment
Carol
Mouthy MP, I initially thought this until I read what she actually said:
“the day that it becomes clear that you are hurting us more than you are helping us — I won’t knife you in the back, I’ll knife you in the front.”
http://www.theguardian.com/commentisfree/2015/dec/15/balanced-debate-jeremy-corbyn-labour-media-attacks
Perhaps others in the PLP should be this honest.
“the day that it becomes clear that you are hurting us more than you are helping us — I won’t knife you in the back, I’ll knife you in the front.”
Surely this is what this MP should be saying to David Cameron & George Osbourne and their effects on the nation!!!
Oh dear?
Unbelievable!!
P.S.
Damn!
Another book!?
You are very engaging writer but I was rather hoping that you would use your time to enable us to vote for you instead?
The ‘Raging Sensible Party’ – something like that?
And before you answer – please – I was just being facetious.
I rather like the name!
Take care when reading crude prices: some of it is indeed low demand, but much of it is about the fading importance of Saudi Arabia.
In short: OPEC used to be about the threat that the Kingdom would pump oil at five dollars a barrel and drive everybody else out of business, bar a handful of low-cost producers in the Gulf…
…Who kept to their quotas, because who pumps oil for less than ten dollars a barrel when you can sell it for thirty?
That was forty years ago.
Ten or twenty years ago, the easy oil ran out.
The Saudis still have lots of oil, but it’s far more expensive to pump – their biggest fields are in ‘recovery’, a term of art describing the need for expensive technical procedures to extract the last 30-50% of the reserve.
Saudi Arabia is also a very expensive country to run: princes to pay, factions to buy off, thirty million unproductive citizens to subsidise in an economy of monopolies and sinecures and patronage.
And they have a very expensive war in progress to the South, in which the extermination of their racial enemies is leaving a large area of Yemen in a state of anarchy resembling Somalia or Syria. And we’re not giving them the ordnance and the aircraft spares for free.
In short: the Kingdom can no longer pump down the global price of crude.
The World called their bluff two years ago, and now it’s a free market: it turns out that the most efficient and geologically-fortunate producers can pump at thirty dollars a barrel.
The price will swing a bit, and it’s entirely possible that crude will settle somewhere higher – probably forty, and then rise gradually, over decades, as the easy oil goes into recovery and ever-more technical extraction brings the world’s *vast* reserves of hard-to-get-at oil onstream.
Meanwhile, cheap oil; and lots if it.
Bad news for high-cost producers with expensive rigs and pipelines – Alaska, Russia, the North Sea; terrible news for the engineering sector in Scotland; and pretty good news for the environment (for now) as some of the nastier ‘technical’ reserves – fracking, tar sands, oil shales – are uneconomical.
Good news for environmental resources under threat from ‘green’ alternatives like palm oil.
Good news for any economic activity for which petroleum’s an input, especially agriculture in developing countries.
Over time, we are going to get the price signal of expensive oil to drive investment in efficient energy use, and less carbon-intensive alternatives. However, that signal is absent at thirty dollars a barrel: only governments can act to reduce dependency on petroleum-based carbon right now.
And that’s your round-up of supply-side economics in petroleum.
Demand-side economics are harder to forecast: without the distorting effects of the Kingdom’s price-maintenance scheme, existing producers can vary their output and plan their investments. It’s not a completely rational market – no market is! – but I think that we can take the threat of oil price instability off the list of threats to the global economy…
Unless…
A large-scale conflagration – military or social – in the Gulf states and surrounding region is a possibility. One might even say: a certainty. But not, I hope, this decade; and maybe not before the oil price runs to fifty or sixty dollars, and the world is using much more of the expensive oil beyond the Gulf.
I like the analysis
You shoukd write a blog…..
I maintain two blogs: a numbingly geeky technical blog, currently on-hold due to the contractual terms of my employment; and a rambling personal journal of offbeat ideas and appalling limericks.
Were I to blog ‘properly’ – a regular, reliable, researched and referenced essay on points of politics and market economics – I would be identified, quuetly eased out of my lucrative day job, and blacklisted.
But clogging other peoples’ blogs with extended comments doesn’t count.
OK then
Also: Thank you.
While I am absurdly grateful for your encouragement, I am reminded of the time I was hauled, kicking and screaming, into performing karaoke. After my memorable performance of ‘Whisky in the Jar’ – I am particularly proud of my air guitar solo – everyone agreed, with the frantic nodding enthusiasm of hostages on camera:
“Nile! You should get singing lessons!”
Some time later, it occurred to me that this wasn’t *quite* the compliment I had taken it to be.
I assure you there were no such inferences in what I said
I thought with my cynicism the agenda is to bring Russia to heel by reducing oil prices. Unfortunately as Chris Smith writes in the Guardian the government have got their foot on the accelerator for shale and reversed from renewables. How environmentally disgusting is that. Less birds, especially raptors, less bees, everything in a cloud of neonicatinoids. All that oil engineering expertise could be used for renewables, not a quick enough return for the market I guess.
Bring Russia to heel. That was never going to work. We now have an Iran that seems to be heading China-direction (and its oil). We have Syria going the Russian route (and its oil).
We have Turkey going along with IS (and buying its oil) (while engaging in genocide with regard to Kurds) (who are fighting IS).
Yep, things are as clear as crude oil.
While you’re “at it” have a quick check on Energy Return On Investment…most renewables are bouncing along near the bottom, with nuclear at the top. Taken from a short-term economic viewpoint (which is as close to politics as we get), renewables are not top of the list…
I think you are being optimistic with regard to the potential for mid-east conflict.
Given the in-fighting going-on between those fighting (Turkey funding IS/Saudi funding IS/Russia supporting Syrian while the US undermines Syria.Turkey in conflict with Russia/NATO in conflict with, well, just about anyone/thing). Nuclear armed surface and undersea vessels, Russia stating that it cannot rule out nuclear conflict as a strategy to defeat IS (which (IS) was originally funded and armed multi-directly by the US).
There are far too many conflicts-within-conflicts for anyone to forecast any outcome over any time frame. One thing is sure: The potential for the situation to to slide into direct confrontation between NATO/US and the Russian/Chinese forces is extremely high. And with Russia already having nuclear carrying cruise missiles in that theatre already….
Agree re the complexity, JohnM, and especially on your “NATO in conflict with, well, just about anyone/thing”.
Frankly, NATO is little more than a front for the carrying out of the offensive doctrine of “American exceptionalism” (a doctrine that says America need not play by the same rules as anyone else, because of its “manifest destiny” as a nation “uniquely blessed and divinely favoured” – so a doctrine that would, if advanced by any other nation, be rightly characterised as ultra-nationalist, even Fascist), and the implementation of the abhorrent “Project for a New American Century”, a project that bears remarkable resemblance to another well-known crackpot’s aim to achieve “lebensraum”.
NATO is largely the cause, and not the solution, to a great deal of unrest in the world, so that I find myself fully in agreement with the American former Congressman, and one-time Presidential contender for the Democrats, Denis Kucinich, who said NATO was WAY past its sell-by date, and should be wound up, as a positive contribution to world peace.
You won’t be surprised to learn, hearing the above, that the arch gerrymanderers of the Republican Parry managed to redraw the district boundaries, so that Kucinich no longer had a District for which to stand, despite having been re-elected again and again for about 30 years.
Such ” dark arts” of gerrymandering are in process of being implemented by the Tories – ever the willing pupils of the TeaPublicans – here in the UK: welcome to the stitch-up Election of 2020!
I suspect that societal turmoil is not far off in Saudi-the hypocrisy of the west for support of this ghastly regime is now transparent (something Corbyn helped achieve-wow). There are signs of a bid for more democracy there- so things are rickety. If that happens, the region will be in terminal conflagration with America fighting to keep it;s reserve currency status – it’s a nervous breakdown writ large. Maybe it will have to be a case of ‘creative destruction’ as Schumpeter put it-if so we’ll be thinking along the lines of Woody Allen’s view of death:
‘It’s not that I’m scared of it, I just don’t want to be there when it happens.’
Ha Ha – my children having no use for me? ‘They’ means my employer Richard – a mid sized City Council in the Midlands somewhere.
I turned 50 last week and my kids or 10 and 12 year’s old. When we had our children, the world was not as it is now. 50 feels OK – but it’s what the employment ‘market’ makes of it isn’t it?
But seriously – back to my kids – ‘pensioned off’ – that’ll be the day given that their generation is likely to be the most hard worked, well educated but potentially wasted one in future memory?
How will they live in low wage Britain? How will they get on the property ladder (probably when Mum and Dad are dead or in a home of sorts)?
How much debt will they be accruing as what could have been higher wages for them is used instead by employers to invest in the banking sector – thus charging interest on the money they could have earned.
How much will their medical bills be when they are treated by the NHS, having been turned into another income stream for the rich investor by the necrotising effects of privatisation?
I can see me funding my kids for quite sometime yet – something I assure you that I will not be thrifty about meaning of course that I will have to be thrifty with my own hobbies and passions. Even though, after all that, because of the way in which this country is ran, it may still add up to less opportunity and security for them. It stinks.
Sorry – can’t read Latin – I did not go to a grammar school or a public school – just a bog standard comprehensive – and I’ve been struggling upwards ever since. In fact I am currently (and possibly permanently) stalled which is very frustrating to be honest.
Looking on the bright side – at least I’ll have something in common with younger generations (my children and most of their friends) i.e. I’ll be well educated, with little security, wealth and opportunity.
That’s Tory Equality Policy in a nutshell: less wealth and opportunity for the majority.
PSR
My children are only slightly older although I am 57 and I recognise all that
I often wonder what future they will have
The latin us ‘don’t let the bastards grind you down’ – just about the only thing I recall of three wasted years learning it
@ Pilgrim Sight Returns
Just to say, don’t worry about not having learned Latin. This “bon mot” that Richard has quoted isn’t even real Latin, but is mock, or “dog” Latin, and no Roman would have understood it, I hasten to add.
According to Wikipedia (see https://en.wikipedia.org/wiki/Illegitimi_non_carborundum – note to Andrew, from an earlier post _ I don’t “rely” on Wikipedia for my views, but merely quote it, as it usually expresses things in readable, easily comprehensible English) it was imaginatively dreamed up by British Army intelligence.
Actually, I had heard an alternative origin, that it was coined by some great, self-taught, Trade Unionist, like Ernie Bevin, as a means of getting back at the hoity-toity toffs in gowns and funny wigs, when he was appearing for fellow Trade Unionists in some Court case.
I really DO hope this is true, as it would thus be a piece of inspired working class humour, possibly way above the heads of those who heard it, and probably far wittier than anything they could offer in response. So, don’t worry: coming from a “bog” standard (where “BoG” is said to stand for “British or German”, and so actually referring to the VERY highest BS or DIN standards!) you’r actually doing fine.
I would love it if that was true
I was taught it by the man who in retrospect I consider to have been by mentor as a teenager. It was one if the many things on which he was right
He got to 95 before he was ground down
So you’re saying ‘don’t be crude about the crude’………..hmmm – ‘got a nice ring to it.
The only people who may gain from this are the Russians. The middle eastern producers may well run into difficulties caused by conflict and that’s when Russia can make up the difference in reduced production and pump up the price?
Maybe Russian involvement in the region is to provoke that?
I still believe that the Americans would love to get their greasy mitts on Iran.
With a lame-duck president, anything can happen!
However, events in the mid east seem to be getting out of US control, and very fast. Although since US policy in the area is highly suspect, one tends to worry just what endpoint US policy foresees.
Certainly, the Russian policy is clearly laid-out for the US, and its Euro-poodle, NATO, to see:
“If Ankara opts for a suicide mission of knocking out yet another Su-24, or Su-34, Russia will simply clear the airspace all across the border via the S-400s. If Ankara under the cover of NATO responds by launching the Turkish Army on Russian positions, Russia will use nuclear missiles, drawing NATO into war not only in Syria but potentially also in Europe. And this would include using nuclear missiles to keep Russian strategic use of the Bosphorus open”
Read more: http://sputniknews.com/columnists/20151215/1031786484/russia-ready-war.html#ixzz3uSqC9Kyv
Scarily, hedge funds are gating… (tra-la-la-la-la, la-la, la-la) 🙂
But what happens when everyone bets on the same outcome – zero hedge.
Given the time of year, Bill, should that not be “Ho, Ho, Ho?”