After 12 years of serious illness, Britain finally died
es, it’s true. After 12 years of Tory governments doing their best to destroy the country, they have finally succeeded. To all intents and purposes, Britain is dead.
Let’s take a look at the state of play
12 years ago, the Tory party told us that austerity was the only way to fix Britain. They also told us that a Labour government would bankrupt the country with their plans to borrow excessive amounts of money.
Fast forward 12 years and they’re now telling us that we need to borrow 2, 3, or even 4 times what Labour planned to borrow.
Labour plans to spend in order to create growth were just failed socialist policies, apparently. Now, Prime Minister Truss claims that we need those policies, but with a twist.
With Truss, the plan is to enrich the already rich and reward large corporations and city bankers. Energy firms that have been making record profits recently will be rewarded with tax cuts and free taxpayer money.
Meanwhile, the ordinary workers of the country are being rewarded with 3.6% pay cuts. Yes, that’s right. Pay cuts for individuals.
If you’re a banker, there will be no limit on how much you can earn.
No prizes for guessing how big banker bonuses will be this year. Truss is in power. She’ll be rewarding her friends. Make no mistake about that.
Her sidekick, Kwasi Kwarteng, is equally up for destroying the country. With inflation already close to 10%, he’s decided that it’s simply not high enough.
To sort this out, he’s making unfunded tax cuts for the richest in the country. He’s decided to smash the GBP so that imports become more expensive. That will mean higher inflation.
But there’s no need to worry, as he’s already taken care of his rich friends. It’s the 99% he aims to punish.
Push inflation up and keep wages low. That’s his plan. Let the ordinary man and woman suffer. He just doesn’t care.
Remember when covid first appeared? The Tory government decided to clap for the doctors and nurses that worked on the front line. No wage rises, but just a few claps.
Nurses, teachers, and other workers are getting derisory pay rises. Bankers and big corporations are getting free taxpayer money. Let the nurses earn less so that the bankers can earn more.
I have a better idea. Let’s pay nurses and teachers more. And let’s just clap for bankers. I’m sure they’ll be happy with a few claps.
So, what else is happening in Not-So-Great Britain?
Food prices are soaring. They’re up around 12% in the last year. Milk is up 28%. Butter is up 17%. Baked beans are up 36%. Source.
Energy prices are up.
Petrol prices are up.
Interest rates are rising. That means mortgage costs are rising. If you think it’s already bad, you ain’t seen nothing yet.
The more Truss and Kwarteng trash the economy, the more interest rates will rise. A few months ago, interest rates were forecast to peak at around 3.5% next year. A few weeks later, they were forecast to peak at over 4%.
Today, I’ve seen forecasts that show that peak at around 5.5%.
It looks like my decision earlier this year to hoard cash was a good one.
Even though rates were increased last Thursday by 0.5% to 2.25%, many are calling for an emergency rate rise of 1-1.5% as early as today. That’s just to undo the damage that the Truss and Kwarteng double act caused on Friday with their mini-budget.
Oh, I stand corrected. Just like the war in Ukraine is not a war but a special operation, it seems the Friday’s fiasco was a fiscal event and not a budget.
As an aside, the US is in a recession that’s not a recession.
Why are governments so intent on not telling us the truth?
The UK is in a recession, even though some are still trying to deny it.
But Kwarteng is not satisfied that the GBP has dropped to its lowest point against the dollar since 1971. On Sunday he said that Friday was just the start. There is more to come. Lots more. How much is he willing to borrow? He won’t say. Is he willing to bankrupt the country? Probably. Don’t take my word for it. Just look at his actions. Actions speak louder than words.
If/when the Bank of England makes an emergency rate rise, will Truss and Kwarteng try to remove their independence? I wouldn’t be surprised.
As Mohamed A El-Erian said in an article in today’s Guardian:
The resulting macro policy configuration would be equivalent to a car being driven with one foot on the brake and the other, “pedal to the metal”, on the accelerator — a method that increases the risk of both economic and market accidents.
Something has to give. We can’t have the government and the Bank of England going in opposite directions.
I’ve been warning for months of the coming economic Armageddon, but few people want to listen. The majority prefer to keep their heads firmly buried deep in the sand. It won’t work, folks. A better option is to face up to what’s happening and to plan as best as you can.
The recession will be deep and long. It’s not just me saying that. The Bank of England is also saying it, as well as many economic forecasters.
Interest rates will rise and rise and rise. They will then stay high for a long time.
We can expect a housing crash that’s also deep and long. I remember the 1990s housing crash. Luckily, I bought my first property in the depths of it. We’ll see similar bargains in maybe 2-3 years. Many that are buying now and that have bought recently will likely end up in negative equity for many, many years.
Rental prices will rise before also crashing. Many people will be made homeless.
Many people will die because of the economic situation. Yes, it will be that bad, especially when you factor in the increasing energy costs.
Many die from the cold during UK winters. It will be worse this year because few people can afford heating.
Many in the UK are already using their savings to pay for energy and food. Some do not have any savings, so have to choose between heating and eating. Some mothers survive on one meal a day so that they can feed their children.
And all this is before energy prices rise again later this week. By over 25%. That’s more than a 25% rise since three months ago.
Britain is being treated like a developing country by financial markets. That’s how bad the situation is. The government just plans to borrow, borrow, borrow. They just don’t care, even though they warned us that Labour doing that would destroy the country.
I expect that sooner or later we’ll see widespread disobedience on the streets. People can only take so much. From speaking to others, it seems that many are already being pushed past breaking point.
But what do Truss and her cronies care? They will keep pushing. They’ll make sure their rich backers will get all the rewards.
Unless people stand up for themselves, there’ll be no way back. Britain will be another Greece. Maybe even another Sri Lanka or Venezuela. If you think the politicians care about you, think again.
I’ve never seen Britain in such a bad state. If we had a government trying to fix the problem, I’d have some hope. Unfortunately, we have a government that’s hell-bent on making things worse.
Take care, folks. It’s going to be a rough ride for the next few years.
What can we do as individuals?
While there’s not much we can do about the major problems, there are things that we can do as individuals to survive the crisis. The following articles have advice on how to spend less and earn more.