Crash2, Britain’s Impending Implosion And The Rise Of Jeremy Corbyn
Just six weeks ago Chancellor, George Osborne, delivered his post-election Budget speech. It was bathed by the most buoyant of financial expectations as he confidently forecast a non-stop cycle of steady economic growth, rising employment prospects and low inflation.
He even went on to forecast -“Britain back in the black, and in its strongest position for almost half a century”. Of course, this is not the case at all.
In just five years, he crowed, the state surplus would return and deficit would vaporise, making little mention of the increasing inter-generational burden that is the national debt.
As he delivered these forecasts, Mr Osborne was cheered by Tory MPs with an expectation he will inherit from their executive corporate public relations officer known as David Cameron.
Osborne knew that stock markets would be crashing all over the world because the world is awash in credit and cheap money. He even mentioned it in his speech.
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Perhaps what he didn’t mention was that the S&P500 has gained 1500% in ‘value’ since 1982, yet the GDP of the United States is only up 250% on the value it recorded in 1982. Is this what he meant by “global economic risks are rising”.
House prices in Britain are now nearly 5 times incomes – a bubble if ever there was one. One that was intentionally pumped up to give the illusion of a prospering nation.
Contrary to what the government and mainstream press say, there are some startling facts and figures that point towards Britain being nowhere near as healthy as they would have you believe.
Britain is on the verge of a financial breakdown.
When the Coalition government formed, we were presented with the news of a huge mountain of debt. In fact, the previous government had left the country sinking under £700bn of debt, you may remember one politician joking that there was no money left at the treasury.
Britain’s national debt now stands at £1.5 trillion – more than double the amount that George Osborne inherited. Britain is now one of the most heavily indebted countries in the Western world in comparison to the size of it’s economy.
In addition and quite silently, Britain’s citizens, because of loose monetary policy, easy credit and a drive to consumerism as the engine of the economy are now the most indebted nation on earth.
All this state debt accumulated after the second word war. The peace dividend offered to the people was greater and greater levels of welfare. Politicians soon realised it was a vote winner and the road has ever since been a spiralling one.
It was the same in Europe, the USA and Japan – the post war powerhouses with seemingly endless growth and economic prospects made promises to their people that simply got bigger with scant regard to the longer-term economic future.
A wave of idealogical promise enacted within laws that included every fabric of life from birth to death. Education, health, police, social welfare, the list was endless and continues to be so. Politicians were, and still are too weak to deal with the realities of life – it’s simple, you can’t spend more than you earn.
Of course, one should not forget the endless tax-payer funded billions that has gone into saving irresponsible banks with an ever growing list of crimes that never ceases to amaze it’s population.
The state pension liability now stands at an eye-watering £5trillion with no real prospect of actually paying it when due. So desperate are governments of recent years to raise money, raiding private pensions funds has almost been a sport and will continue to be so. It has recently been suggested that in little more than a decade or so, state pensions will be means tested. That means that if you have saved a little and paid into the state pension scheme all of your working life, you won’t get anything back. The state does not have a pension fund – it’s just a promise, and it’s one they can’t keep.
Our much loved NHS, buckling under the strain of age-related illnesses and ever more expensive ways of keeping us alive longer is in the cross-hairs of the current political incumbents with their privatisation weapon. The ‘social protection’ cost in welfare alone matches that of the NHS bill to add to our financial woes.
In the last 30 years interest rates have been declining and that has allowed successive governments to borrow more. It is here that the real threat to our way of life meets us. Long-term interest rates have bottomed out and we are on the brink of a return to long-term interest rate increases. At what many would consider a normal rate of say 5%, the British economy is all but sunk as repayments on current debt would increase 300%.
As Peter Oborne has just said in his column – “However, this week’s stock market collapse in China, which has set off a chain reaction in global markets, has made the Chancellor’s rosy assumptions look dangerously complacent. Indeed, if China’s financial meltdown continues, that summer Budget statement might have to be ripped up. Instead of rising growth, we could face a vicious economic downturn. Instead of rising employment, we could have the prospect of a return of mass unemployment on a scale not seen since the Eighties. Instead of steady prices, we could risk rampant inflation that will wipe out the savings of millions and make home ownership increasingly out of reach for those not already on the property ladder”.
Admittedly, stock market prices rallied yesterday. But that short-term recovery (known in the City as a ‘dead cat bounce’) should not reassure anyone with the FTSE fully 1,000 points off its April peak of 7,100 or minus 14% in four months.
If financial crisis turns to economic calamity in China, almost every family in Britain will be affected, some brutally.
In that scenario, Britain would have no choice but wield a hefty axe through just about everything in social protection such as state pensions, funding the NHS, the police and looking after our needy and vulnerable, as if it wasn’t bad enough already. Osborne is already aiming to have the same public spending as the Victorians did.
Osborne confirmed this with the statement “For Britain is home to 1% of the world’s population; generates 4% of the world’s income; and yet pays out 7% of the world’s welfare spending”. He made no mention that 80% of the worlds population lives on less than $20 a day and that is about to get a lot worse for them, so the comparison is irrelevant.
In all of this debate one factor keeps being overlooked by both governments officials, the opposition and economists. Big corporations do not pay their fair proportion of tax. The government, G20 and OECD make the usual promises to tackle multinational tax avoidance, which here in the UK sits at an astonishing £120bn of theft per year. Even the under resourced and incompetent managers at HMRC have put it somewhere between £35bn and £50bn – what an embarrassing admission.
The ramifications for our national finances could be truly frightening. In five years at the Treasury, the national deficit stands at an unmanageable £70 billion. There is a serious risk it could go back over £100 billion. And remember, this is per year and adding to the national debt.
The banks, on a rapacious egregious rampage through Britain’s treasury have stripped clean our ability to assist them when they get into trouble again – and they will. For instance, RBS got a state handout of £45billion, lost every penny, then lost another £46billion on top.
Apart from a handful of very minor reforms, Osborne has achieved nothing to rein in a destructive banking sector that contributes little to society. They are in worse condition than in 2008; banks are still incurably ‘too big to fail’. This time, the debt bomb will implode through all asset classes, stock markets, currencies, property both domestic and commercial, bonds – the lot….and then what? Global indebtedness is up 25 percent since 2008 at over $100 trillion.
Osborne will blame international events, whatever they turn out to be. Thus, the ingredients are in place for another fiscal crisis
The Roman empire, like all empires, crashed as a direct result of fighting unpopular and expensive wars run by corrupt officials having created a society of have’s and have-nots amid a collapsing economy.
One major beneficiary would be Jeremy Corbyn, he will become Labour’s new leader. Just as the economy seizes, citizens of Britain will have tired of the years of lies, corruption and theft of state assets built up over the generations, thereby giving ample opportunity to politicians on the further edges of the left or right who would undoubtedly exploit the collapse just as they are in many parts of Europe. By then, Corbin and his economic policies would increasingly look very moderate by comparison.