21 March 2020 — True Publica
By TruePublica Editor: Remembering this impending event and recalling it from memory to your friends is as easy as A, B, C, D. Broadly speaking it is about four interlinked events that have already happened but their combined effects will engulf the country within a year. Austerity, Brexit, CoVid and Debt will lead to a ruinous recession or a country and society so debt-laden it will be at the mercy of the ‘moneymen’ for decades to come.
When the banks in Britain blew up the financial markets and demanded half a trillion pounds to save their criminal enterprises, the economy contracted 6 per cent. The following recession, rightly called the ‘Great Recession‘ triggered a decade long government policy called austerity. And because we were ‘all in this together’ – the rich got richer and the poor got poorer. You see, austerity was an excuse, a lie, a deception – merely a choice by those walking the dark corridors of power. These people colluded with the suits in The City and ramped up crisis after crisis. Housing, health, education, personal debt, rising mortality, in-work poverty, child poverty and homelessness. All of these crises were the choice of a political and corporate elite. And some have made fortunes from it.
When austerity was really biting, tens of thousands of people were dying, public anger started to increase. So alarming was all this to the elite they even started preparing for riots. But then they came up with another great con. And just like all the great financial frauds of the decades before, that neoliberalism brought with it like; mortgage fraud, tax fraud, mass money laundering schemes, insurance policy misselling and the like – they decided to push up one of their own and made him masquerade as ‘one of us’ in the greatest fraud of all. We now have Brexit and the ‘people’s government.’
Britain’s most valued and respected institutions have been seriously undermined in this great fraud – the result is that the country is less able to cope in times of great need. The NHS obviously springs to mind, and so do the emergency services in general. But our own communities have been torn apart, NGO’s and charities defunded and the entire nation has been race-baited by our own government who encouraged the division of society as a whole as a means to their own ends. Much of the coming blow to our society will be a direct result of not looking after one another as the generations before us have.
The fallout of coronavirus only adds to Britain’s problems as the country tries to extract itself from 40 years of EU membership. Those negotiations have now stalled even though the terminus date of 31st December stands as confirmed by Boris Johnson recently. Journalists are no longer reporting about the biggest economic decision this country has faced since the last World War. That Boris Johnson and his team have failed miserably to provide a workable life-saving CoVid-19 plan only demonstrates that these people should not be in command of complex social, political and economic conundrums – let alone Brexit, which mixes all three into the same cauldron.
Johnson, in his usual ill-informed bluster, has said he wants a ‘Canada style’ trade deal with the EU. The problem is that he wants such a shallow relationship with the EU that he will accept a no-deal Brexit. This is referred to by Johnson as the ‘Australian option’ (even though Australia has no trade deal with the EU) if plan A falls through, which it will. In this suicide mission, the government has had its own beancounters come up with what it reckons will happen – and they said that 5 per cent of the UK economy will get wiped out in the government’s best-case scenario, and in the event of no-deal – it could be as bad as 9 per cent (albeit most economists have settled on 7 per cent).
Brexit is being negotiated with the two biggest trading blocs in the world. But as Nick Dearden, director of Global Justice says – “not content with negotiating one immense deal this year, Johnson has set himself a second mammoth objective – a trade deal with the USA. Some suggest that this is a negotiating ploy – to play off the world’s two biggest trading blocks against one another in their desire for a deal with Britain. Sinn Fein pointed out the “glaring contradictions” in “publishing their objectives for parallel talks with the US”. They’re right in that it isn’t possible to do deep trade deals with both the EU and US – let alone in a year. That’s because modern trade deals are less about the tariff reductions most people associate with ‘free trade’, and far more to do with how a government regulates its economy. EU and US regulations are very different, and as a relatively small country, broadly speaking, Britain needs to decide which system it will adopt, which block it wants to be closer to.”
As TruePublica has said so many times in the last two years, Brexit is a decision between two economic and political ideologies. You can have one, but not both.
Dearden again – “So it’s a choice. And from what we’ve seen to date, Johnson has already made up his mind which path he prefers. Johnson clearly favours the transatlantic relationship. And this shouldn’t surprise us. After all, a central driver for Brexit for a section of Britain’s ruling class has always been that the EU is an over-regulated bureaucratic nightmare akin to a communist dictatorship. Brexit, for them, represented a desire to break free from Europe, slash regulations and become a free market US proxy floating in the North Atlantic.”
But a spanner has been thrown in the works. Unexpectedly, coronavirus turns up and threatens humanity with its test of nature versus government experts. And nature is winning big time, especially in Britain. The problem with Boris Johnson is that he lacks one crucial element that’s needed in times of crisis – and that’s leadership.
And CoVid-19 presents his government with two major problems. The first is how to manage it and make people believe they are doing a good job. The second is the economic fallout that will follow. In terms of the former – they have already seemingly failed, the latter is yet to be determined, but will be inevitably devastating. It’s what happens afterwards that matters just as much.
In about two months time, half of all the airline operators in the world will be insolvent and so will overseas shippers. Supply chains will fall apart, which will cause factories to close and a growing number of workers will struggle to secure their livelihoods and pay the bills as the economic consequences of each broken link in the chain unravels. The government will have no choice but to practically nationalise the economy.
Many will be told to go home without pay, many more will lose their jobs. The choking of the economy won’t be felt for another three months. Local pubs, shops and small businesses will shut up shop and by the mid-summer, the economy will be in a dramatic tailspin. Tax revenues will fall quickly as companies attempt to stave off financial failure and fail to pay quarterly VAT bills or any other tax bills. HMRC will be unable to react as they are swamped with requests for delayed payments. Crucially, they won’t be able to demand payment either. By early winter, the economy will have entered a recession on a steep dive. Estimates from economists are already replicating a 15 per cent in GDP by the year end – it may well be worse. The government will provide low-cost loans, insurance to employers, lost income payments to employees and all manner of devices and interventions to make it look like it is in control.
Laws will be changed and Boris Johnson will be able to wield as much power as China’s president. Police will be given new legal capabilities and the mainstream media will be co-opted to fall into line. The sunset clause on these temporary laws will not arrive for two years. Whistleblowers, journalists and editors face years in prison for publishing any leaked documents – the public will be kept in the dark on matters relating to coronavirus infections and deaths and other matters, which will still leak through the colander of social media.
While the country haemorrhages cash, investment crashes and economic activity grinds to a halt, Brexit has already weakened the economy by £200bn in GDP alone and seen the largest outpouring of assets ever – the country is already standing on the brink of a technical recession – and then a pandemic comes along and sabotages the wider economy.
Meanwhile, in the background, something else is going on. Government debt, household, debt, unsecured debt and corporate debt were all rapidly rising – much of it on the verge of spinning out of control before the arrival of the virus.
The national debt is already an eye-watering 86 per cent of GDP at £1.8 trillion. The recent budget will mean Britain will be facing its national debt at £2 trillion by 2024 (without the additional £350bn+ coronavirus stimulus package) with no prospect of doing anything but continuing to rise for years to come. The debt-interest service cost at these historically low rates means the UK will be paying well over £1billion a week (currently £48bn a year). Household debt is already at a record high and set to explode over the next twelve months. By 2024 household debt was forecast to reach 150 per cent of household income – again, without the additional burden of lost income due to coronavirus. Unsecured debt will see two spikes, the first will be the scale of new loans, the second will be the scale of defaults. Car loans last year was a staggering £19bn, a 209 per cent increase on 2008. Many will default this year especially.
Corporate debt is also out of control. It has risen by 75 per cent since 2011. The debts of listed UK firms rose for the eighth consecutive year in 2018/19, and by the year-end will be not far off £500billion. Many listed companies used surplus cash to buy back their own shares to inflate the price in order that executives got paid more. The problem now is that share prices have now nosedived, so has revenue – and they can’t offload those same shares without taking a hit to the balance sheet, which will take a beating anyway.
To add to the loading, the global economy is slowing, meaning less demand for manufactured goods and services. Trump’s trade wars don’t help of course. To take up the slack the government will start rapidly spending, even going as far as printing more money and as the Bank of England base rate is reduced, fiscal rules are loosened – borrowing will increase, defaults will follow as will bailouts.
As the fog of the coronavirus crisis clears later in the year and we are still burying its victims, Britain will be standing in the headlights of the biggest truckload of threats to its already vulnerable position after a decade-long resource wasting class-war. In a year from now, maybe less, many people will come to realise what is really unfolding. Austerity undermined the proper functioning of society, Brexit has undermined our future prospects and COVID has all but destroyed the economy, loading heavy debts over all sectors. The debt deluge being built up needed only the slightest nudge – which has just happened.
In the meantime, the money men are running for the hills (for now) – the Pound Sterling has plunged in value against the USD to a 35 year low. It’s the sign of an economy staring over the cliff and ready to swan dive into the abyss. But make no mistake, the vultures (bankers, hedge funds, billionaires, etc) will be back when the country is at it weakest and from their lost profits will demand their pound of flesh.