Cost of Living Crisis: Who is to blame?

May 20th, 2022

A quick answer is world events. The pandemic recovery, labour shortages, supply chains, gas prices, Brexit, Covid surge in China, war in the Ukraine. The key point is that human history in one long chain of events, some good, some bad. What effect those events have on individuals or the society or country in which they live, depends on how the government of the day reacts.

The crisis we are now in is not just about the above list  of general causes. It is about the government’s ability to do something about it. Never mind whether you approve of the action, does it have the tools in the box to do it? The answer is no. At least not now.

With globalisation came the rise of the financial sectors world wide and the power of the  politically independent central banks. Since they were caught napping in the crash of 2008, when the entire financial system was on the brink, they have printed their way out of trouble and gone on printing. The initial effect was to inflate the value of fixed assets while inflation generally remained historically low. But now inflation has spread like a forest fire into every nook and cranny of the economy and has to be dealt with. How do you do that? You raise interest rates.

Not from nothing to nearly nothing. In real money. 5%, 6%, 7% or even higher. You squeeze the velocity out of the money system and make money expensive. It triggers a recession, allowing an economic reboot, but it is quickly effective.  Asset froth dissolves, inefficient companies go bust, new start ups grow to fill the gaps.

Decisions like this are inherently political. Who shall go to the wall? Who shall be saved? Where are the priorities? These decisions require control of interest rates, borrowing terms, social priorities, credit lines, inflation levels and a host of ancillary elements to be the remit of the treasuries, ie governments, not  central banks.

The Treasury is ultimately subject to a mandate from the people via the government they elect. But the banks answer to the markets and markets always act in their own interests and that of the financial sector. The Tories would say sound money is the core. It is. But under the stewardship of the seriously incompetent Bank of England and the hysteria of the markets, this is exactly what we have now not got.

Unless somebody gets a grip  soon, this will go from a cost of living crisis to a financial crisis. And then to an historic Great Financial Crisis. It is not too late to stop this, or at least make it manageable. There are millions already under financial pressures unknown in modern times. To deal with all this the government has to have a coherent joined up plan for containment, revival and ultimately production led growth. The march of the makers, which never got started after 2010, will be sorely needed.

So far the government has been over confident that inflation is just a blip and over pragmatic in its response. To many it is out of touch, with only a thin grasp of social priorities and cold to the suffering of the poorest. In the end it will be this economic storm which determines the future of Boris, rather than Partygate or war in Ukraine. As for the dream of Brexit? Too many have woken up to the reality of this crackpot project. It is no longer an electoral triumph propelling Boris along, but a millstone which, added to everything else,  might finally drag him down.

Ukraine: Don’t Box Putin In

May 1st, 2022

The West is making sure that Putin becomes the western world’s number one ogre. In its backing for Ukraine the West can see no bad in its new ally and no good in Russia, its old adversary. I have repeatedly warned of the dangers of this partisan approach to a humanitarian disaster on an epic scale.  The more arms that pour into Ukraine the more will die, not just in the military but ordinary men, women and children, old and young, too. Equally the more resistance Ukraine is able to offer, the more heavy handed the Russian invasion will become. Russia will not back down until it has something to show for its losses and Ukraine will not make peace until it sees it has squeezed the West dry. So a war of attrition will go on grinding down all civilised values in its wake.

To end it, Ukraine must feel that it has secured the independence and integrity of much, though not all, of its territory and Russia must be able to demonstrate that it has secured a neutral buffer between itself and NATO.

Unfortunately the initial Russian miscalculations about a divided West and a potential welcoming Ukraine heartland, have proved political blunders of historic proportions. Nothing unites democracies faster than the aggression of a dictatorship or autocracy. And nothing unites a somewhat divided nation faster than the full scale invasion by a foreign power. So a slumbering, fragmented NATO woke up big time and bonded back to a single formidable military entity. Moreover friendly neutrals, Sweden and Finland, are now likely to join fearing, I think wrongly, that Putin has his eye on them.

Meanwhile the feared Russian army appears to struggle at the tactical level when confronted by the professional elements of the Ukrainian military, relying a good deal on scorched earth bombardments of infrastructure with the inevitable collateral damage to civilian homes and lives. This increases both Ukrainian resistance and the West’s  willingness to provide ever more  capable weapons. The West now senses the Ukraine can work military miracles if armed sufficiently. Silly speeches by Liz Truss and other UK ministers,  in my view little better than ignorant war mongering, are evidence of a desire to humiliate Russia. This is a very bad idea.

I have  all my life admired Russia. It has been our ally against Napoleon, The Kaiser and Hitler. Its contribution in WWII was critical to the defeat of the Nazis and undoubtedly saved millions of allied lives, while costing tens of millions of Russian casualties. Russian science, literature, music and art is in the top league. Their preference for a  tough leader, a Czar however titled, is rooted in that history of trauma and sacrifice. This is not to say Russia is always in the right but it is to say Russia is not always in the wrong.

There can be no final peace in Europe unless and until all Europe is united together within a framework of common institutions and purposes. Put simply at some point Russia and all the component countries of the European parts of the old Soviet Union must eventually be welcomed into the EU and NATO. On the road to that goal are many potholes. Some kind of interim settlement requiring a lot of give and less take will be required between Russia and Ukraine and between  the West and Russia. But the goal of such a coming together must remain. It is the only one which makes sense, guarantees peace in Europe and offers real prospects of a better future for all the nations of the European continent, whatever their culture and history.

 

 

Ukraine Disaster: Time To Get Real

March 30th, 2022

The political entanglements and miscalculations which create the conditions for war are many faceted, nuanced and complex. But once war breaks out there are only two elements, depending which side you are on. The Good and the Bad. This is certainly the case in Ukraine right now. But if the suffering of the innocent is to be brought to an end, which surely is the priority, everybody has to come into the real world, not the distorted reality of the propaganda campaigns awash in the media.

Ukraine has for several hundred years been always a part of something bigger. It has been a sovereign country for less than three decades in total. It was a founding member at the creation of the USSR. So this current conflict is not just a fight between neighbours. It has many of the characteristics of a civil war. Putin believes that Ukraine is really part of Russia. The western half of Ukraine wants to be part of the West and its institutions. The eastern, Russian speaking Donbas looks to Moscow. Before the Russian invasion Ukraine was not a united sovereign country. While the ordinary people were and are as honest and genuine as any, Ukraine was bitterly divided and significantly corrupt in its governance. Political parties were constantly regrouping and appeared able to survive only one election cycle. A frightening far right element prospered.

Ukraine’s policy from the start of the conflict was to drag NATO into a war with Russia. which mistakenly it supposed would bring it independence. In truth millions would die and Ukraine would be erased from the map. NATO and the West have stood firm. Moral support, defensive and humanitarian aid, but no military engagement. No membership of NATO. So Ukraine, having fought Russia to something of a standstill in a conflict much tougher than the invader expected, now needs to strike a deal. Unrealistic demands, like full Russian withdrawal even from the east, or silly conditions like a referendum, will only lead to breakdown and breakdown will be bad. Very bad for the ordinary citizens of Ukraine.

What is there as a realistic objective, is a smaller, neutral, demilitarised Ukraine, recognised as an independent country, to which the millions of refugees  can return in peace to rebuild their lives and their homes. The world will be generous in its aid and support. Russia will celebrate its de facto acceptance as a power at the table, not  to be excluded with its interests ignored. It will also have leaned that a war of attrition on civilians in Europe is no longer acceptable to public opinion in the wider world. The FSB vision of Russia’s interests is not reliable outside Russia.

A lot of learning for everybody and victory for nobody.  But a compromise for the benefit of all. Because the point has been reached when the killing on both sides has to stop. From now on it is not war but murder. Time to get real. And NATO must broaden its doctrine of measured response to tension to include analysis of its cause.

Ukraine Disaster : A Political Failure

March 27th, 2022

It does not matter how many blue and yellow flags you hang, how much you demonstrate support for a brave and resilient people, how much you deplore the suffering of innocent civilians, how much you sing Zelensky’s  praises, how much you demonise Putin as a tyrant, butcher and war criminal. There is a fundamental truth at the source of this human catastrophe. It is a direct consequence of a string of political failures. Failures by NATO, Russia, Ukraine, the US, the EU, the UK. In other words all of us.

War itself is a crime. A crime which is almost always, in modern terms, originating in a failure to respond at a political level to the tensions building beneath the surface.  Whatever that problem is, it is never, never, the case that one side is all right and the other all wrong.

This war needs to end. There will be no true winners. There will have to be compromise. Almost everywhere the options open will be the least worst, rather than the best. Ukraine must survive  as a neutral sovereign state. But it will need to reach an accommodation with its neighbour, of which it was for generations a part, and with whom it has so much in the way of ties of culture, kith and kin. This will involve some re-drawing of borders.  Russia has to realise that this invasion was not a good idea and has politically backfired big. But it must not be humiliated. Russia is an integral part of Europe. It will not cease to be a threat by exclusion. We must surely have seen that is not a productive policy and it is a lesson that the West needs to re-learn.

Meanwhile the ultimate price is  paid in  the loss of human life, civilian and military. Grief is universal. It will be felt in Russian homes too. It springs from violence and destruction, the ruin of infrastructure, lives and livelihoods. There will have to be a great rebuilding, physical and emotional. The sooner that starts the better.

Above all there will have to be many wise counsels prevailing. Since the end of the Cold War they have, sadly, been few and far between. That is why we chalked up a string of nation building failures and why this awful suffering is unfolding now.

Ukraine Disaster: The Fighting Must Stop

March 20th, 2022

What is now happening to innocent civilians, women and children who are neither politicians nor in the military, is both heart rending and unforgiveable. The brightest part of this whole Ukraine disaster is the astonishing numbers of ordinary people across Europe and beyond, extending welcome, warmth, food and shelter to what amounts to millions in a desperate flight west. This is a stunning connection between human beings, caught in turmoil not of their making, to confront need with compassion and support, free of politics, red lines and dogma. The whole free world is now bathed in blue and yellow.

But we must also ask, who has  the responsibility for this catastrophe? The answer, uncomfortably, is not just Putin. It is is all of us.

The West was wrong to exhibit an arrogant triumphalism at the fall of the Soviet Union. I argued then that Russia was a European power and should be brought into both the EU and NATO. Or NATO should have been disbanded. Instead the alliance engaged in a string a nation building wars which failed, leaving millions surviving in ungoverned space. To its credit, NATO did not invade Iraq, that was the Anglo-American blunder to neutralise non- existent ‘weapons of mass destruction’.   But critically, in my view unforgivably, NATO expanded eastward, drawing into membership most of the Warsaw Pact, but leaving Russia out. Versailles 1919 repeated.  It was only a matter of time before a restored Russia would feel excluded and resentful. We forget its history of repeated invasions from western Europe, Napoleon, the Kaiser, Hitler. Tens of millions of Russians dead. No wonder they are nervous and do not trust NATO.

The various post 2014 governments of Ukraine could and should have resolved their problems with the  ethnic Russian regions.  The Minsk agreements offered a framework for doing this. But Kiev judged it could needle Russia and provoke the West into letting it join NATO, when in reality this was never in prospect. What was in prospect was that an authoritarian post soviet Russia,  lacking respect and engagement from the West, would lose patience. First the Donbas and Crimea, and as that did not gain attention as to why and what was Russia’s problem, the current all out invasion. This time Russia will not back down, at least not with its current government. And thoughts of coups are unlikely to happen .

So a deal must be struck to stop the killing. Ukraine will have to accept some form of neutrality. It has already given up any idea of joining NATO. It  can win battles, but it cannot defeat Russia. Certainly the Ukrainian armed forces, equipped with portable anti-tank and ant-aircraft missiles have unperformed expectations by a mile and taken everyone by surprise. Russian invading forces, equipped with mostly soviet era systems, have had a hard time. But Russia will now resort to new and frightening bombardments, launched from Russian territory involving hypersonic missiles and possibly tactical nuclear shells. If not nuclear, warheads of conventional explosive delivered at such speed can generate 2kt force, which is locally devastating. If they have to turn Ukraine into a rubble heap to get their way, the Russians will.

The West will not start World War Three to help Ukraine. Killing millions and ending modern civilisation is not the answer. Maybe Ukraine could come into the EU when it meets the criteria for membership. Russia will have to accept that the price of its special military operation is a beefed up NATO and a revitalised West. But spheres of influence could be recognised and red lines drawn, so that in the end we are back to the predictable order of a kind of Cold War Two. But the anguished people of Ukraine would be able to return to their lives in the country they love.

There comes a time in every war when continued fighting can achieve only a mounting death toll. When that point is reached, sacrificing lives to an ideal becomes not battle but murder. That time is surely now reached in Ukraine. Meanwhile the West, having made Putin into a hate figure akin to Hitler,  must row back on it demonisation of Russia and its people.  History teaches us that that no war is without root cause and that root is so often planted in ignorance by the ‘good’ side, which then begets a reaction, which becomes a threat, which leads to carnage. Nazi Germany is the modern example. The Western expansion of NATO is on the verge of becoming another. This has to stop. We need a realistic compromise of the kind politicians hate, but which gives priority to life and the living.

 

Has Boris Got Away With It?

February 2nd, 2022

Yes is almost certainly the answer.  There is just so long you can keep outrage about parties and lies brewing, as the driving force of the political agenda. Shocking though the saga is, it actually has very little impact on everyday life. People feel badly let down, betrayed even, having suffered terrible emotional pain and loss through the pandemic. Others lost their businesses sticking to the rules, which it turns out, most of Whitehall were ignoring.

Had the full Grey report hit the deck in timely fashion as expected, it could have caused a major political upset. Now it is already on its way to the long grass. In the end it will cause major excitement in the Westminster bubble, but the country has already made up its mind and moved on.

Meanwhile inflation is getting hot, causing the rising cost of living to become the hottest political potato, followed by energy price rises on an unimagined scale, tax rises, the NHS  on the brink, interest rates on an upward curve, not to mention Putin and his battle groups. And the pandemic rages on, even if in milder form. So Boris needs to be very busy dealing with all the things that matter to people right now. And by the look of it he is.

For the moment he will soldier on, ducking and weaving though a bombardment of outrage and anger as only Boris can, drunk on the elixir of his psyche, to be centre stage above all else. Nobody will successfully challenge him in a leadership election, nor I suspect does anyone now want to try. In due course the people will have their say and one day Boris will be gone. Unless something happens sooner. That we were not expecting.

As well it might.

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January 23rd, 2022

Political Spectacle: The Collapse of our Government

January 23rd, 2022

Mid way through last week I was telling friends that I reckoned  Boris could ride out partygate and reach the local elections. He would then run a personal campaign  to pull out Tory votes in May by travelling all over England to barnstorm and bribe with his usual false promises. If the outcome was losses but not as many as predicted, it would become Boris’s victory and he would be safe.

But now things look much worse. Organised government, at least in the traditional sense of what we mean by that, has ground to a halt. There are new parties to investigate, accusations of improper threats from Tory whips, accusations of Islamophoebia, cracks in cabinet unity, multiple accusations of lying and referrals to the police. And this is not an assault by opposition parties. It is all from within Tory ranks. Discipline as a coherent party of government has completely broken down.

This certainly cannot go on. Soon it must end. But it will not end until the author of all this misfortune, Boris the Clown, is removed from office. Whether this is with dignity and nice words, or kicking and screaming, is the only real question now outstanding.

Is It Over for Boris’s Government?

January 11th, 2022

The answer is firmly yes.  It is a  slap in the face to the notion, proclaimed by many Tories in 2019,  that like Thatcher, Boris would go on and on. Because it is now clear that his days are numbered. Too many lies, too much bluster, too little attention to detail. Chaos in the chain of command in Downing Street and widespread double standards.

Boris will cling on by his fingernails for as long as he can. When he falters his wife will urge him fight on. So getting rid of him may take time and it will be messy. But it will happen. It is now a national priority to restore integrity to politics.

The truth has dawned that he is fundamentally dishonest. A not to be trusted liar. Polls show he is no longer a winner. That is what will bring Boris’s premiership to a end. Not the lies themselves which the Tories may accept, but the fact that they make him a loser. He will be remebered by history more favourably than by his own generation. He bet the house on the vaccine and won. Important though the vaccine is, it is not the whole political story of the hour.

There is a country in trouble to be led, with a toxic mix of crises piling up. Inflation, energy prices, cost of living, interest rate hikes, failed Brexit causing trade mayhem, not to mention structural flaws in the NHS and education.  There is climate change and 5G. Within all that there is both disaster and opportunity, depending who decides what to do when.

Clearly Boris cannot provide the standard of leadership a long suffering country has a right to demand. Either the Tory party measures up or we do what we did in 1916, 1930 and 1940 and have a national government of all the mainstream parties.

A Decade Of Cuts Cripples The NHS

January 4th, 2022

Omicron is a super-spreader. It is sweeping the country. Anyone not fully jabbed or immune through recent infection, is likely to get it. Some  will need medical help and will require hospitalisation. A few will sadly die. Even those fully vaccinated can get this latest variant,  but although they can transmit it, they are unlikely to get other than a mild illness. We have to remind ourselves that this is a pandemic, not a plague.

We have, or claim to have, in the NHS the finest health service in the world. Yet it is on the brink because of Covid, not because the staff are not working well beyond the extra mile  making each and every one a hero of modern times, but because the organisation is under funded. It has suffered more than a decade of cuts in real terms. Both its funding models and organisational structures are deeply flawed.

The consequences are unacceptable waiting lists for non-Covid diagnosis, treatments and procedures, to the point where the system has in effect broken down. Even a GP appointment is nearly impossible in many areas. If Covid vanished tomorrow the crisis would still run on for years. Unless something radical is done. What that should be is for another time.

But meanwhile praise the people who struggle to maintain our health service. They are not to blame. The current political class, perhaps the most incompetent in our history, is. The first thing we have to to is make them own responsibility for a long building mess very much of their making.