Thursday, 5 December 2013

Logic and politics - an oxymoron?

If anyone bothered to listen to the Gideot's Autumn fairy story and lasted more than the five minutes that I was reduced to before taking a hammer to my DAB radio - then well done. To listen to all the experts then spinning a silk purse out of this blatantly pig's ear of a concatenation of bluster and honesty free bilge turned my stomach into a tight knot of anger and frustration.

The whole situation is comparable to Alice's Adventures in Wonderland with Gideot as the Red Queen and the BBC pundits as the Mad Hatter's Tea Party. The UK Electorate are left slack jawed, like Alice, at the complete lack of logic being pursued while all the characters rush around convincing themselves this is the 'only way', the Red Queen must be pacified or heads are going to roll.

There is little or no evidence to support the Gideot's main contention that 'austerity is working'  and so we must continue on this track. There are few folk outside of the Gideot's political circle who agree with him, as day on day the spending power of the average wage in the UK declines so by 2015 this average wage will be worth less than it was in 2010 in real terms. The problem for the Gideot is the very conditions of austerity are in truth making the whole situation worse. It is almost as if the Gideot is consuming the eat me cake that makes the UK economy smaller and smaller overall and the reliance on the City of London more and more vital to the economy of England. In the meantime the failure to follow a plan B reduces tax income to the UK Treasury overall, increases the burden on the Treasury of unemployed and low paid which in turn is driving up UK Government borrowing in an exponential manner. UK Government borrowing is now twice as high as it was in 2010 - this is a success in the Gideot's eyes whereas it has more in common with the Red Queen having to win at croquet, no matter the actual result. At the BBC Pundit Tea Party Robert Peston continues to remind me of the Dormouse with Nic Robinson as the Mad Hatter - self aggrandising logic which has no meaning outside of their own restricted world view but to make them look and feel important.

Trying to find out what is actually happening to the UK economy untrammeled by skewed UK Government statistics is hard. The problem is most journalists unquestioningly use the UK Government figures so where are the hard facts to support the Gideot's fiscal logic and what do we actually know, outside of what we are told we know?

Logic dictates we create 'sets' of what we think we know based on the information available.

Set 1: UK's economic position:

Virtually stagnant economy, real value of wages dropping, retail sales depressed, housing market depressed, homelessness increasing, UK full time unemployment still increasing in real terms, only two economic regions showing any growth - Scotland and London  (the Scottish growth is based on tangible manufacturing and product sales from a more balanced economy - London is reliant on the capital fiscal bubble manipulating financial debt and future trading all the eggs in one basket), UK balance of trade gap is growing, UK Government borrowing is growing exponentially, individual debt being ramped up again through payday loans and Government scheme to re-inflate the mortgage bubble, major problems meeting the UK's energy needs by 2017 - especially in the London area.

Set 2 UK Government response 'Austerity':

Sell off remaining public owned services and utilities to raise short term capital, leave current business tax regimes as is, allow offshore company HQ's to continue to post UK earnings overseas, raise taxation burden on the poorest quartile whose spending is already reduced, allow continuing downward pressure on wages versus inflation by ensuring wages rises continue to be less than inflation, reduce benefit liabilities by moving the goal posts, privatise UK civil service functions by outsourcing to Capita, Serco, etcetera even though the cost saving projected are not and have never been delivered and the outsourced functions are understaffed with less competent people employed, taxpayers money lost to Capita, Serco and all's profit margins, fixation that leaving the EU will resolve the UK's problems, little or no infrastructure investment outside of London,

Set 3 UK and Multinational Industry's response:

Multinationals are holding onto Sterling surplus cash or returning it to shareholders as windfalls, little or no inward investment outside Scotland and London, reduced R&D and investment in new plant or premises, moving or threatening to move HQ's away from London on cost and political grounds, SME's stagnating because of inability to raise investment over most of the UK, price cutting war now threatening the long term financial stability of sales and manufacturing in an attempt to maintain turnover and cash flow, new car market awash with interest free incentives and deals, few new employment opportunities being created as existing jobs come under threat / short time working.

It does not take much of a genius to look at these three 'sets' to do with the UK economy to work out while sets 1 & 3 overlap to a large extent both sets 1&3 are completely enveloped and contained within set 2.

For anyone analysing what is happening in the UK on economic grounds there is only one conclusion; little will change and the situation can only get worse if the UK Government continues with its failed 'austerity' project. This is especially so as the reason claimed for austerity, reducing UK Government indebtedness, is not happening, in fact overall UK Government indebtedness is in a far worse position than it was in 2010 even given the defacto devaluation of Sterling by QE plus the need to make up, by borrowing, the shortfall between projected UK tax returns and actual UK tax returns. The same systemic failings of the UK economy remain, an over indulgence of and over investment in London. A failing which is strangling the economic life out of the majority of UK regions. A failing which may bring about an economic disaster for a newly independent England reliant on a London financial and trading sector, sitting on a £1.7 trillion debt bubble, for its economic growth and sustenance, worse if investors take cold feet and start moving cash and investments out of Sterling.

More of the same from the Gideot means only one thing - an even bigger financial crash when there is no UK family silver left to flog off. The systemic economic failure in the UK economy is not being dealt with and presently is covered up by the Scottish cash surplus which goes to the UK Treasury. 

Come September 2014 this Scottish surplus cash tap could be being reduced to a trickle before stopping completely in March 2016. Is it any wonder, this being the case, the multinationals are keeping their hands firmly in their investment pockets in England?

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