I published this post on Substack yesterday, but feel it needs an outing here as well, given what I have written about Gillian Tett and the OECD here this morning.

The FT has earlier this week that:

Failure to resolve the energy crisis in the Middle East would plunge the world into a “dark scenario” of tumbling growth and sharply higher interest rates, the OECD has warned.

The Paris-based organisation said a “prolonged disruption” to energy flows that lasts into the second half of 2027 would cut global growth to 2.1 per cent this year and just 1.8 per cent next year.

Such rates are “extremely low outside of major global recessions such as the global financial crisis or the pandemic”, the OECD warned, adding that major central banks such as the US Federal Reserve would need to respond by lifting interest rates at least a half-point to curtail inflation.

To be blunt, nothing about this comment from the OECD makes any sense whatsoever.

If there is going to be, as the OECD implies is possible, a “prolonged disruption” to energy flows that lasts into the second half of 2027, that will be because the Strait of Hormuz will remain closed. If so, 20% of total global oil supplies might be disrupted, and a greater proportion of global gas supplies might be as well. In addition, the raw materials for around 30% of global fertiliser supplies will be disrupted, as will supplies of helium, sulphuric acid, and other key raw materials for a great many industrial processes, including the creation of the chips necessary for AI and its further development, including the construction of data centres.

If that were to happen, to suggest that the only impact on the world would be a cut in its global growth rate from 2.1% to 1.8%, which is an insignificant, almost immaterial and statistically almost irrelevant difference, is absolutely ridiculous.

Steve Keen published data to support his claim that there has historically been a direct and almost linear link between growth in oil use and growth in worldwide GDP. For every 1% increase in global oil consumption, there has been a 1% increase in GDP. Let me be clear, we do not know whether this will work in reverse, and as yet, the disruptions that have taken place have not resulted in a reduction in the consumption of oil because oil reserves have been released to cover shortfalls in supply.

However, if Steve is even partly right, the probability of a major recession in the situation for which the OECD is preparing a forecast is not a minor or inconsequential risk; it is near a full-blown certainty, and the scale of that decline in global economic activity will not be measured in minor parts of a per cent, but in terms of significant multiples of percentage points. What we will actually be looking at is a downturn on a scale unprecedented in the lives of most people now on this planet, for which we appear to be making no adequate preparation, largely because organisations like the OECD are acting in connivance with world political leaders to pretend that this eventuality will not happen.

This is, in my opinion, an act of gross irresponsibility. To pretend that we are not facing a catastrophe that will have its greatest impact on the world's most vulnerable people is scandalous. And those will suffer the most because they will have the least capacity to survive in a neoliberal world that looks as if it will manage the shortfall we are to face by price-based rationing rather than ethical needs-based rationing.

I now find the scale of this irresponsibility almost impossible to comprehend. There are already reports of major problems with food supplies in parts of Southeast Asia because, even if supplies of rice can reach Indonesia from places like Vietnam, fuel shortages within the country are impeding effective distribution. This, in itself, is indicative of the massive disruptions to supply chains that are going to become a feature of the world economy as this year progresses, none of which will go away in 2027, particularly because disruption to food supplies this year will have a significant impact upon the availability of seeds in 2027.

To be blunt, the OECD is not just wrong in that case; it is callously wrong. The consequences of the disruption we face will not be measured by fluctuations in GDP alone. The biggest impact will be in terms of the number of deaths that will unnecessarily arise because the world is going to fail to manage the distribution of adequate energy and food supplies to those in greatest need.

It is already clear that this will be the result of the deception being deliberately carried out by profoundly neoliberal organisations and governments. They are still pretending that markets will be able to overcome the absolute shortages in supply that will exist at unprecedented levels, creating physical supply shocks that will test the world's empathy and logistical capacity in ways never yet known.

When Trump and Netanyahu went to war against Iran, what we did not know was that they were beginning what might be one of the greatest human disasters in history. That the OECD cannot see this just proves how unfit for purpose they are.

Their reassurances also remind me of those we heard early in 2008, when we were told there was no risk of a global financial crisis. Some of us realised that a crisis was imminent at the time and said so.  Steve and I were amongst those who did.

But let me put that in context. A global financial crisis was just that: it was about finance. This time, we are talking about a crisis in the supply of the basic essentials necessary for people to survive. In that case, the scale of the impending catastrophe is entirely different, yet those in positions of responsibility are still pretending that we have nothing to worry about.

They were wrong in 2008. They are wrong now. One day, I hope they will be held accountable for what is about to happen because the charge sheet is going to be very lengthy indeed.

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