In 2008 I seriously considered the possibility that the UK banking system might fail, and that if that happened the economy of the country might go down with it. There was good reason to do so. I was painfully aware that banks were about to fail and that no one had any idea what the domino effect might be.
Thankfully we had a government and a Chancellor at that time who were up to managing the very real crisis that we faced. As a result of nationalisations, bail outs, QE and strategic support for the economy we made it through that crisis. Cameron, Osborne and all who have followed made sure the recovery was as weak as possible, paving the way for Brexit, but in 2008 the day was saved.
I think the crisis that we are in now is much worse than that we faced in 2008. That crisis was relatively simple. What was known back then was that if the banks could be kept functioning much of the immediate risk of meltdown could be avoided. That is not true now.
The crisis we face now is so multifaceted that almost anything could trip the economy over into collapse. Household energy bills are enough to do that. Business failures could do the same thing. The failure of many public services, from schools, to the NHS, to social care, is on the cards. Banks are not immune in the face of a massive private debt crisis that looks almost unavoidable.
Compared to a week or so ago when I write ‘Surviving 2023' there are welcome signs of progress in that the media are now beginning to appreciate the scale of the issues we face and that our problem is more than a cost-of-living crisis. There is, however, little sign that this perception is really permeating Tory consciousness. Nor is there, almost anywhere, discussion of the risk of the total failure of the economy, and yet that now seems so much more likely than it did in 2008.
By total failure I mean that we face the risk within months of having an economy where basic needs cannot be met. Markets could fail. Supply chains could break. Services are at risk of collapse. The infrastructure on which we rely, and on which we always depend as recovery begins, may simply no longer be there as too much will fail. And all will be for three reasons.
One, of course, will be a lack of money in the hands of those who really need it. So far there is no sign that is going to happen as a result of benefit and wage rises. If they don't happen we are in real trouble.
Second, there is no apparent planning for what might happen. At least with the risk of banks failing it was relatively easy to work out what needed to be done. In a sense it is this time too: nothing but serious doses of money injected into the real economy can solve this. But dogmatically that is denied and so we gather that the Treasury is spending its time wondering if GPs should prescribe small handouts when total support for the whole economy is required.
Third, there is political vision. No one could accuse Gordon Brown or Alastair Darling of being deeply left wing, but the idea of nationalising banks was at least within their dogmatic reach. No such intervention appears to be within the range of either Truss or Sunak.
I keep looking for what Ian Drury might have called ‘reasons to be cheerful'. The more I see of where we are going the fewer of those reasons seem to exist.
In 2008 we survived, just.
Will we this winter? I really am not sure.
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Share the same worries as you Richard, however I would fundamentally disagree with the role and vision of New Labour under Brown and Darling, however, those are political differences, not economic.
Just a reminder that you have to take care of your health this week, and that a date for the diary is this Friday (26th) as OFGEM will be announcing the October price cap.
Remember, as recently as beginning of June that was estimated to be around 40% and now stands at somewhere around 80%.
I think that it is going to be bad for us.
But for whoever is in charge at that time – once MPs inboxes fill up with the cries of discomfort I can see this destroying the Tory party too – I really can.
We may have to go down with them, but I think the Tories could self destruct here.
In the long run, it might not be a bad thing. But it’s not going to be pretty.
And behind this all, that shit Boris Johnson will be smiling. Hopefully someone will wipe the smile from his face one day with a proper public enquiry and a prison sentence.
The Express has a front page picture of Johnson and his wife in holiday clothes and the caption ‘Boris back at the helm”.
Do they really think people are fooled by this?
He has been partying on while the country has fallen into crisis.
What do we have do to have a newspaper industry which doesn’t -with a few exceptions- act as propaganda for the Conservatives?
Partying? Going on holiday? I thought that that was what Johnson would consider being “at the helm.”
Banging up Boris, yes, a nice thought but, in an environment where Epstein and Maxwell can be convicted of supplying underage sex partners to no-one at all ever apart from maybe British royalty once, this seems unlikely. Interesting chinks seem to be appearing in the FCA’s hitherto impenetrable lack of accountability though so perhaps all is not yet lost.
Hope this does it.
https://36085122-5b58-481e-afa4-a0eb0aaf80ca.usrfiles.com/ugd/360851_14d399accc1848cbb7649ad101546e66.pdf
They have produced their final report, and KONP have sent another letter to the Met, but I haven’t seen anything about that in the news. They name Johnson, May and Cameron, as well as Hancock and Hunt.
https://36085122-5b58-481e-afa4-a0eb0aaf80ca.usrfiles.com/ugd/360851_814bdd39d6134bb69927cdafbaf41c97.pdf
Thanks JenW for the links. The Peoples’ Covid Inquiry document is massive, so it’ll have to wait until later to be read, but I think it’s useful to state that it relates in the main to the NHS in England and actions/inactions of the UK Gov. The UK Gov involvement clearly had some impact on the actions of the devolved nations’ governments and health services, but the NHS in England and its patients were clearly more impacted.
Just by chance, on the Talking-up Scotland blogsite, I stumbled on an interesting aspect of the massively costly Test & Trace system set up in England: it wasn’t run under the auspices of the NHS, but rather it appears to sit under the control of the Joint Biosecurity Centre (JBC). I haven’t seen any mention of this anywhere in the media previously and wonder just how widely this is known by the general public. Quite how this impacts the transparency and reliability of health and costs data arising from the Test & Trace function, or the highly sensitive matter of patient data security, ought to be matters of public concern, but are likely to be hidden under the cloak of “Intelligence” (the JBC has indeed been rebuked for its failure to share data – see its Wikipedia entry). The info on Talking-up Scotland was contained in the below-the-article readers’ responses. Here they are:
Ronnie
AUGUST 16, 2022 AT 8:54 AM
The centralised model that the UK government chose to use for Test and Trace was never about helping people. It is a mass surveillance programme. It sits within the “Joint Biosecurity Centre” and was originally run by Tom Hurd, one of Johnson’s Eton mates. Test and Trace comes under the Intelligence Services and not the Health Services.
It may be a failed system in the public’s eyes, but it is actually an ongoing program which is still succeeding in what it set out to do.
aLurker
AUGUST 17, 2022 AT 9:53 AM
Interesting aside there Ronnie.
https://en.wikipedia.org/wiki/Tom_Hurd_(civil_servant)
A quick look at wikispooks:
https://wikispooks.com/wiki/Tom_Hurd
and one finds Tom Hurd listed as “Director General” “Office for Security and Counter-Terrorism” “from April 2016”
and one discovers that Dr Clare Gardiner who took over the
Joint Biosecurity Centre after Tom (son of tory grandee and Bilderberger Douglas Hurd) also identified as a seconded JCHQ spook:
https://wikispooks.com/wiki/Clare_Gardiner
British Establishment / Deep State to their core.
Obviously these reader comments could be the product of conspiracy theorists, but their concerns shouldn’t be dismissed without careful consideration: they relate to important matters of public interest which unquestionably ought to be in the public arena. And to what extent has the Johnson Gov ever demonstrated that it could be trusted?
It was widely known amongst those following Independent Sage
But I suspect that was not that many people, unfortunately
According to the “i” paper Truss thinks the recession can be defeated by “ambition”. It beggars belief that an allegedly serious contender to be PM just throws out meaningless slogans .
The 2008 banking crisis emerged quickly was difficult of most people to understand let alone explain. Government acted decisively and their actions trusted in good faith. The current multi-crisis is systemic has been building many years (argue decades) and there are easy to grasp explanations, once you move beyond denial. Relatively few families have no direct experience of the decline in the NHS. No-one is above polluted beaches and rivers and it’s similar regulatory failure which is allowing a very British version of the energy cost crisis which is costing us all more. Who to blame?
The phrase ‘consent of the governed’ is playing on my mind. It refers to the idea that a government’s legitimacy and moral right to use state power is justified and lawful only when consented to by the people or society over which that political power is exercised.
Contrast this with the current Conservative government which has increasingly conducted itself as if it were heir to the divine right of kings, whilst it has skilfully engineered consent. When consent breaks, society is in a potentially dangerous place.
However much Liz Truss believes in small goveenment she will immediately find herself in a crisis that forces big scale intervention.
1) Mass non-payment of utility bills will force nationalisation of energy companies as they go bankrupt.
2) Public funded services such as schools, hospitals, care homes, and libraries will all need massive bailouts, as will local authorities, and the money can only come from central government.
3) They will face unprecedented strikes from workers who cannot make ends meet. (Pensioners and unemployed will be less of a headache as they will simply die in large numbers, which Tories care about, not at all.)
4) There could well be a run on the pound, further boosting inflation, as foreign investors flee a UK where the government is just fiddling (literally) while the economy burns. Without firm government action the BOE will then respind with steep interest rate rises, further deepening the depression and causing a property price crash to boot.
I hope all this is avoided, but right now the government is not just asleep, but actually absent at the wheel, with no sense they understand the scale of crisis we are facing.
What concerns me equally as much as the effect on the public, is the viability of almost every small business. The public will have no money.. that much is evident.. and every small business will need to radically hike it’s prices (be that restaurants, pubs, takeaways, etc etc) to offset the gigantic energy bills they’ll be staring down – and who is going to be able to afford to pay for a bag of chips that now costs £7?! A pint that costs £8?!
It’s a terrifying time, frankly. I’m outraged that the government are so tightlipped at this point.. it’s a national disgrace. Where are they?!
Chips are going to be a real problem because the potato crop is really poor
I suspect that the poor potato crop won’t have as much of an impact on our access to chips as the mind-boggling energy prices. A large number of chippies will instantly become impossible to run economically when their energy prices are hiked to the levels expected. Fans of Chinese food should probably take the chance to eat their fill now as well. If you’ve seen the incredible jets of flame employed in Chinese takeaways/restaurants to cook in woks, I can’t imagine that many will remain open in coming months. The same probably goes for curry houses.
Kebab shops with charcoal grills will probably remain a going concern until the inevitable run on charcoal once all the other takeaways are forced to close, though they might not be using their deep fat fryers for chips either.
Though rightfully worrying about their domestic energy bills, I don’t think most people have really considered how things are going to collapse in the wider economy as businesses are hit with energy price hikes which dwarf those of domestic houses with ‘capped’ prices.
You get it
The Treasury don’t
According to an article in the i today, if beer had gone up at the same rate as energy, it could cost £25. That’s a projection from the chief executive of Octopus Energy. A shame they can’t keep energy prices down to the same rate as beer.
Re-Posted comment from Dr Tim Morgan’s blog.
“Tim Watkins latest Blog post touches on this and is worth visiting.
Further, my folks in South Wales, both elderly, have just received their energy price fix for the next 12 months – presently the folks have been paying £118.00 a month, as of October, if they do a Fix they’ll pay more than £500.00 a month – we’ll use the variable rate for the first time in 12 years. By contrast, in Hong Kong my electricity bill has risen 8% this year, whilst LPG costs have risen by about 80%, that said, my energy bill for the year is approx. £1,600 for a family of three, whilst in the UK pensioners and families are now expected to fork out £6,000 a year for a total systemic failure in our energy delivery system.
Here’s Tim’s latest Blog post that I hope persons will read and share: https://consciousnessofsheep.co.uk/2022/08/21/the-purpose-of-the-system/
This is entirely unnecessary
I agree that it is unnecessary, Mr Murphy, but it is happening, by design.
Everything you’ve said has a horribly high probability of coming to pass. Truss, and those who are pulling her strings in the background, haven’t got a clue about the coming catastrophe. If they do, and they’re purposefully letting this happen so that they can buy up bankrupted businesses, houses, land, etc on the cheap then they are the evil faces (faeces??) of neoliberalism.
A couple of sectors which I’ve not seen anyone looking at the impact of massive cost increases in energy are the rail and data-centre sectors. Rail is surely a significant user of electricity and data-centres certainly are. What’s the risk and impact of these sectors failing?
Years ago I read about Kondratief Waves, the theory of long cycles in economics. I wonder if we’re at a turning point, as described by Kondratief, now as it seems that the whole neoliberal ideology which has underpinned UK politics for about 40 years is failing. Communism failed why should neoliberalism continue for ever? It’s a bleak outlook there’s no-one in UK politics coming up with credible alternatives.
You are right…neoliberalism is now destroying itself
The PG / Bleeped version of this Honest UK Govt Ad is not available yet, so the humorous sweary version it is for now:
https://www.youtube.com/watch?app=desktop&v=qyt3Op2dTc0&fbclid=IwAR0ICVsKPk529AKwnQjI8yU-42SMSOFbw7YnQzaOp0QxsKwTHtvgb23r-Hk
Perhaps the oddest thing about our present situation is the relative “normality” of daily news coverage and the relative lack of public reaction.
It is not hard to imagine the full-on apocalyptic coverage and massive public displays of anger if half the same things were happening under a Labour government.
You do not have to be a cynic to conclude that most of the public still have not thrown of the shackles of four decades of brainwashing.
I wonder if this is going to be one of those situations where we are still at the stage of recognition little by little before suddenly it will be all at once.
I suspect panic will hit this Friday when the £3,600 is approved
I’m not sure what it takes to make people panic, or at least to do so publicly in large numbers.
I can remember during the Cuba missile crisis being struck by how we were still going to school and how everything else was carrying on apparently normally even though we could be minutes away from the whole globe being incinerated.
I can’t help feeling that the usual reaction is to carry on as best one can and hope that something comes up. From an evolutionary point of view this is not even a bad strategy, After all, none of my ancestors died before they could reproduce, so, given the high rates of infant throughout most of human history, fate must have favoured them in some way.
Cuba was remote
This one is not just close to home, it will actually be in our homes
That is very different
I’m 75 and remember the Cuba missile crisis. There was normality here principally
1) it was a long way away,
2) there was nothing that we in the U.K. could do
3) people were unaware of the widespread impact of nuclear war.
Sadly most people that I speak to appear to be of the opinion that they can double down as in WW2 and get through it.
What we do know is that we can’t protect fools against themselves.
Lack of public reaction?
More than 1.7 million households are considering or have already cancelled their direct debits according to an i poll. That’s a pretty good reaction, I would say. Listening to the radio last night and hearing women older than me saying if they die, they die was quite sobering.
Quite….
It’s as if, despite the mounting evidence of breakdown and collapse in the economy, energy provision, health services, climate …….. .. people just can’t take in that normal life might be suddenly disrupted by devastating, dystopian change. In the film Don’t Look Up nobody wants to know about the impending disaster.
True
I offer you something I could have written the script for. Not for those with delicate sensibilite.
https://www.youtube.com/watch?v=qyt3Op2dTc0
It sums up rather nicely the state of the nation. Of course one could heap all the blame on the Tories.
But, if you (the English) really want to see who is to blame – you need only look in the mirror – after all – it is English voters keeping the Tories in power, both in the properous South East and in the Shires.
Delenda est Tories
.
That was already scheduled to go up and now has
Christ!
Now that is a ‘full on’ video – even for me! Let’s hope it sums up the anger to come.
🙂
And on top of this i have been persuaded by your view that we are on the path to fascism and we will be denied the opportunity to vote in a general election to change the Government
I moved to Scandinavia about 25 years ago. I work and travel extensively across Northern Europe. After visiting the UK this summer my feeling is that things are going terribly askew in the UK. Nowhere else seems to be suffering the energy price hikes or inflation that the UK is suffering or is expecting to suffer. It is deeply depressing.
Is my viewpoint skewed by reading Richard’s blog and the Guardian?!
i left the UK to move to the continent in 2012.
ever since then i’ve seen how the west midlands has increasingly become scruffier and run down. things look shabby. way more homeless on the streets. the working class themselves look physically worse off and visibly deprived.
it’s all the more noticeable compared to where i live now where things seem to generally be improving.
that is before this crisis. i just hope that some meaningful change and improvement can come out of what is about to happen.
it’s particulary frustrating that many of us have been arguing for the need to move away from fossil fuels ASAP. I have been making the argument in terms of national strategic security for years now, seeing it as the only way to persuade those on the right of the importance. some people will never be convinced on climate change. But now that they see what happens when you are dependent on your geopolitical rivals for essential resources, I would hope that will change their outlook. Alas – that has not yet sunk in with the Tories with them discussing restrictions on windfarms. It’s like discussing the banning of lifeboats aboard the Titanic.
Tories out.
Green new deal.
Total constitutional review.
Full PR.
Abolish student debt & fees.
New social contract.
Part-ownership social housing scheme for all who want it.