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.... so that we may be free from corrupt representation, factional impositions and unjust settlements
Archive 1 Archive 2
This weekend's APEurope Correspondents' Pool Workshop consists of a review of the government mini-budget entitled, "The Growth Plan 2022
" and what can be expected from the OBR evaluation. The workshop will review the reasons that the OBR will be challenged to provide a precise and transparent evaluation of this policy proposal to an acceptable standard. The reason is that it is apparent that the Treasury in producing this mini-budget did not follow a structured decision analysis and due diligence procedure. This is particularly the case because the emphasis of this mini-budget on growth and productivity.
As background, a baseline model of a policy design due diligence procedure linked to establishing proposals geared to augmenting growth and productivity, will be shown. This starts with detailed information on the ranges of productivity of different sectors collected on the basis of enterprise surveys. Every sector consists of a very complex range of enterprises which can be classified in terms of their size or capacity for production and whether or not, in terms of state-of-the-art processes, they can be classified as operating within the terms of good, average or poor practice. Each of these categories has a different potential to sustainable growth rates. This distribution is a map of the actual potential sources of productivity growth in the economy.
On review, the mini-budget supply side initiatives consist of sweeping statements and lists of action categories with no associated quantitative indications or assumptions of their impact; no mechanisms are identified.
Because of the lack of a transparent quantitative baseline of evidence, it becomes necessary for the OBR to generate this quantitative evidence in order to provide a quantitative evaluation of this proposal. However, reviewing past OBR analytical reports there is no evidence that they apply this type of analysis. Their analyses and reports have such a high degree of abstraction, including their production function approach1
, that it is unlikely that the OBR will be able to undertake an adequate analysis.
We will post an article to report on the content of this workshop tomorrow.
Based on a Cobb-Douglas macro-model
30/09/2022: As has become a bad habit most mainstream media give a distorted overview of the recent referenda in the East of Ukraine. The Lugansk and Donetsk regions of Ukraine have always had a high concentration of citizens who are ethnic Russians and Russian speakers. Given the known strong anti-Russian community sentiment expressed by those who came into power as a result of the US sponsored coup in 2014, the populations of these regions voted to separate from Ukraine in 2014. Since then the Ukrainian military have attempted to invade these regions and in the process well over 14,000 people have lost their lives. A so-called Minsk Agreement promised to bring about a peaceful negotiated solution and Russia agreed to abide by this process whereby Lugansk and Donetsk would become autonomous regions within Ukraine. Between 2014 and 2022 NATO continued to arm Ukraine and train military personnel in preparation of an offensive against these regions in spring of 2022. Associated with this intent, the Ukrainian leadership declared they would not implement the Minsk Agreement. Later, Porosheko the ex-Ukrainian president admitted that the promise of Minsk was used as a cover to arm Ukraine and to dig in defensive lines for the expected military campaign. In an attempt to head off this offensive to reduce further bloodshed of the Russian communities, the Russian government decided to join this ongoing war on the side of the Lugansk and Donetsk regions.
This was carried out as a supportive role to the local militia using mainly contract military.
Because of the need to occupy and defend larger areas covering regions of largely Russian ethnic communities the Russian government needed to spread the load between area security forces and the active front. For this reason a call up of only conflict experienced reservists with specific skills, was completed involving around 300,000 individuals. The current fighting forces from Russia have been 150,000 personnel, so this call up will treble the numbers defending the communities and this will enable the now very experienced and increasingly effective font line complete the campaign.
The recent referenda within these communities, who have been under attack of the Ukrainian military for eight and a half years, naturally resulted in a vast majority wishing to join Russia so as to gain additional protection.
Notions that this vote took place "under the barrels of guns" in a situation where, in reality, the vote took place under a constant Ukrainian shelling and death of families, is somewhat ridiculous. The president of Ukraine openly declared in racist rhetoric that those of Russian origin should leave Ukraine from regions they have occupied for generations. As the Russian Foreign Minister commented, they are leaving Ukraine with these referenda and they are taking their land with them.
30/09/2022: As covered in a recent leader the overall opinion of informed military sources is that the USA carried out the Nord Stream attacks. They of course join and elaborate the calls for investigation to find out who did this. This is straight out of the play book of covert operations media coverage.
The American century is a concept of USA hegemonic dominance of the world on the basis of military and economic might. However, in reality, whereas the USA has considerable military capabilities their economic clout has declined in real terms as a result of the decline in industrial production, the creation of a Rust Belt, significant unemployment and transfer to lower paying jobs and a world's most negative balance of payments in goods. The world's highest balance of payment in goods has been Germany and this success, in reality, was founded on very cheap energy supplies (gas) from Russia. US authorities realized that the Russian/German collaboration on energy supplies was the source of Germany's economic success. As a result it was the US administrations that turned Russian energy supplies into a military weapon. As a result they began to voice "strategic concerns" about European reliance of Russian gas. They couldn't refer to unreliability of supplies given that Russia, since the Soviet times has been the most reliable and price competitive long term contract supplier in the world. Although NATO was brought in to further promote the "unreliability" narrative it became increasingly apparent that this was a means whereby the USA intended to undermine Germany's economic success and rather than compete the tactic seems to have become to create bankruptcies in German companies so that UK and British hedge funds can gain ownership of some very large industrial complexes which are major world players in their fields.
The USA has form on blowing up pipelines including one if Siberia several years ago. Biden also referred to an intent to take out Nord Stream 2.
The cutting off of Nord Stream 1 and 2 to Germany will see Germany tilt a wide range of their industrial and manufacturing enterprises into a state of bankruptcy, including major German banks.
The ECB will not be able to help given that under the misguided and incompetent leadership of the European Commission, it is not only Germany sliding into oblivion, but the whole EU economy.
This gives hedge funds plenty of time to observe which companies will come onto the acquisition slate first so as to organize their predatory actions all in the name of free market capitalism and their shareholder value.
Starting in 1772, Russia has maintained troops and naval personnel in Sevastopol Crimea for some 250 years including under legally binding leasing agreements with all Ukrainian governments.
In 2014 there were around 15,000 Russian military personnel stationed in and around Sevastopol with family members in Crimea, this is why the claims that Russia invaded Crimea in 2014 are factually incorrect. There was no invasion of Crimea and Crimea and Sevastopol became Russian without a single shot being fired.
"The Russian Squadron on the Sebastopol Roads", 1846
By the Russian, Crimea born, marine artist, Ivan Constantinovich Aivazovsky
Amateurism: Taking part in an activity for pleasure or status and image rather than applying the competence of informed decision analysis and professional discipline
Economics is a far more complex topic than many realize. However, the complexity does not arise from how the economy works but rather from the confusing and cross-purpose of interpretations of economic events and theories supported by academic schools of economic thought. Each school of thought and its assorted academics jockey for position to be able to contribute their version of economics to governance. However, there is a central reality that Keynesianism, monetarism and supply side economics all operate on the basis of the aggregate demand paradigm. All apply the same policy instruments of interest rates, monetary injections, taxation, government borrowing and expenditure. These are all geared to "controlling demand". Every attempt to apply these instruments in combination to tackling inflation have, in general, failed. This is because stagflation has nothing to do with demand-pull but is, rather, a conditions of rising costs and cost-push inflation.
Chancellors, who quite often have no economic qualifications whatsoever, rely on the available advice to shape policies and budgets. These are shaped by whichever school of thought prevails within the advisory group used by the Chancellor. Since none of these schools can record successful executions of their policies, it is obvious that Chancellors need to apply a strict due diligence procedure in order to test out propositions made by competing schools or by the particular school favoured by the Chancellor. Projections of outcome against existing conditions and the impacts of likely future events are crucial tests. In the latest preparation of the so-called mini-budget it is evident that no such precautions were taken.
It is important to replace rhetoric or debate-type approaches where whoever "sounds" convincing wins the day. For example Milton Friedman was a particularly aggressive individual who would use intimidation and humour to counter logical arguments. By making rational individuals appear to be silly he won his arguments. However, in spite of his influential status and Nobel Prize, there were significant gaps in his knowledge which in reality were of critical importance to upholding his monetarist theory. These facts have since been exposed by analysis completed by the Real Incomes Approach to economics and which have left considerable segments of the logic of monetraism in serious doubt.
In politics there is always the temptation by unqualified amateur politicians to be seduced by arguments that promise glory on the basis of poorly analysed rhetoric backed up by a chorus of academics or Treasury civil servants who belong to a particular school. This glee club somewhat irresponsible amateurism comes from an educational background that instills a somewhat arrogant level of self-confidence linked to the odd habit of British political parties of giving chancellorships to thoroughly unqualified individuals on the basis that they are "intelligent". It is more than evident that Kwasi Kwarteng, a sometime classics scholar, has a severely limited experience of economics and how the economy works. This is why we now have the issues of which all are aware. His flippant remark that markets will do what markets will do only reflected this gap in his knowledge. However, this is not the basis to criticise Kwarteng but rather is a criticism of the general acceptance in this country of amateurism being a byword for British political parties and their approach to governance. This approach to economics has allowed ideology to dominate a 50 years run of increasing decadence in continuing decline in the balance of payments and pound exchange rate, now worth about 1% of its value in 1945.
Typical unhelpful contributions come from individuals and institutions guilty of serious errors in the past. The IMF almost created financialization and the rising dominance of central banks as a result of its arrangement for the recycling of petrodollars in 1973 and supporting the seven-fold rise in petroleum prices by simply providing loans to low income countries while prices continued to rise. This led to a 20 year run of global stagflation between 1973 to 1993. IMF supported global financial deregulations delivered the 2008 financial crisis. Under the Bank of England's ruinous post-2008 12 year run under quantitative easing there was a massive asset price explosion under the governorship of Mark Carney. This created a systemic inflation well before Covid and Ukrainian issues turned up. Carney is right to criticise the current propositions by this government but he should also look himself in the mirror and weigh up to what extent his obsession with QE resulted in the Bank of England sinking our economy to levels of income disparity and falling real incomes never before witnessed.
Paradoxically, this criticism of the mini-budget was made in a period following the Bank of England declaration that it was terminating quantative easing. In the last 2 days the Bank of England had to resort, once again, to quantiative easing to sort out a corner of the bond market affecting mainly pension funds. At least the largely ignored Lords Economic Committee report on quantitative easing did not disguise the Committee's conclusions in the report title, "Qualitative easing: A dangerous obsession?"
The witness statements by the Bank of England in the Economic Committee evidence sessions were particularly fuzzy and they admitted that they were still learning about the effects of quantitative easing. This was after having imposed them for 12 years!! One witness correctly observed that quantitative easing is a policy with no theory.
Truss and Kwarteng are right on the importance of supply side productivity. However, it is in this area where their proposals are the most fuzzy. Sweeping statements will not do. Each specific action needs a well identified mechanism and time line to expected results. This is completely absent. What they have not yet realized is that supply side initiatives cannot be supported by top down policy instruments of the general type or just handing over cash. To fix a leak you need a plumber and not a town planner. Therefore raising productivity is a company-specific issue which can only be solved by each individual company according to their conditions and capabilities. Therefore policy needs to enable companies to become more price competitive while also raising productivity. The common mistake is to imagine prices can only become competitive after the time it takes for productivity changes to kick in. As a result the government needs to subsidize consumers rather than secure immediate unit price reductions. The only economic theory which provides a logical means of overcoming this apparent constraint and to gain short term price reductions, the current UK requirement, while sustaining productivity rises, is the Real Incomes approach. The Real Incomes approach is the only economic theory that is wholly supply side and that has disproved the monetarism quantity theory of money as well as explain why the aggregate demand paradigm has resulted in depreciation in real incomes.
Concerning "expansionary" elements on the mini-budget, Hector McNeill, the lead investigator of the Real Incomes approach explained that, "The only period the UK had unprecedented growth, full employment, rising real incomes, falling income disparity and a healthy balance of payments, was between 1945 and 1965 when policy was highly deflationary. Keynesianism was not applied because there was full employment. Companies invested in rising productivity initiatives largely based on their own cash flow. During this period bank finance was only a minor proportion of investment finance.
These conclusions are based on a detailed analysis of UK statistics by Robin Matthews and reported in the Economic Journal and the observation on the role of bank finance was made by Nicholas Kaldor. Matthews and Kaldor were professors of economics at Cambridge University."
Anthony Blinken and other spokespeople in Europe and various NATO members have created a misleading narrative accusing President Putin of threatening to use nuclear weapons. They refer to Putin's last speech addressing the "West" which can be found in English on the various sites. Because the US is sending constant threats in private to the Kremlin in an attempt to intimidate or unnerve Russia, Putin had to include in his speech a warning. He simply stated that if Russia is attacked with weapons of mass destruction Russia would respond using the resources at its disposal. Without referring to nuclear weapons, Putin affirmed that Russia has weapons against which NATO has no defence.
This is, indeed, a fact. Most of these weapons, including hypersonic missiles, are not armed with nuclear warheads but they can be. The kinetic energy of impact of these weapons gained from their multiple mach velocity is such that with small amounts of explosive they can sink even the largest aircraft carriers or penetrate hardened missile sites, the locations of which are well known
Fortunately, there are sufficient officials in the Pentagon that know that what Putin stated is correct and therefore are unlikely to respond to attempts by the irresponsible neocon hot heads in the current US administration or NATO to create an excuse to initiate a broader conflict.
Unfortunately, our lamentable mainstream media including TV, leading economic, financial and political publications are engaging in an extremely dishonest reporting reflecting their failure to check what Putin stated but rather to spread fear by taking the lazy way out by simply disseminating misleading content released by the US State Department or Ukraine. Media have a duty to inform the pubic of the truth but most have an agenda to willingly distort the facts which, of course, is totally dishonest and reflects a total disrespect or even distain for the readership that supports them. We are not quite sure as to
names of media who simply wish to pursue sensationalism based on nothing at all and since this is designed to impact the emotional state of the population it would seem that such identities as "the gutter press" or "rags", would appear to be appropriate.
The mainstream media are not reporting the full facts concerning the situation in Ukraine, but continue to circulate Ukrainian government propaganda. There has been much talk of counter-offensives and Ukrainian successes and advances but there are no details provided on the costs to Ukrainian personnel lives and loss of military equipment.
During the last 10 days alone, Ukraine, according to the MOD-RF, has lost 320 military vehicles and 145 tanks, 126 drones and other equipment to add to the now total of more than 18,000 critical hardware items lost since February 24, 2022.
We have lost count of the estimates of Ukrainian personnel killed but it would seem that the recent "successful" counter-offences that took place some three weeks ago, resulted in the deaths of more than 5,000-7,000 personnel.
Since Boris Johnson encouraged the Ukrainians not to negotiate in March 2022 well over 13,000 additional Ukrainian personnel have perished and around 55,000 were so badly injured that they are out of action see: Ukrainian stats
During the Greek financial crisis, created by corrupt politicians, Germany was particularly uncompromising in its insistence on a harsh treatment imposed collectively by the ECB, IMF and the Creditor German banks.
There was absolutely no concern, at all, for the suffering of Greek families. Valuable Greek infrastructual assets and services were lost at bargain basement prices.
Germany is about to go through a learning curve. It can hardly complain at the harsh treatment it will experience at the hands of those who, like Germany during the Greek crisis, have no interest in democracy or freedom of those who had no hand in preventing Ukraine from coming to a peaceful resolution before 2014; people, after all, are dipensable.
A SASI wire alleges that the attacks on the Nord Stream pipelines are the final stages of the US previously stated option of getting rid of it. This has nothing to do with removing "dependency"of Europe on Russian gas but is a final step in creating an industrial bargain basement for Wall Street and City hedge funds to pick up valuable assets at less than cost. This is part of a cynical neocon process of US catch up in creating an industrial base to compete with Russia and China. This would be supportive of the delivery of the American Century policy.
Until February 2014 Germany's industrial performance maintained this country in the world's leading balance of payments position in goods, even greater than China. At the same time the USA has the world's most negative balance of payments in goods which continues to get worse as a result of the economic policies during the last 50 years.
We have seen the growth in piracy and sequestration of assets and resources of others has become rampant in the last seven months, almost common practice in the foreign policies of USA, EU or UK all with central bank personnel and high court judges concerned about their status giving their "approval" of egregious acts and decisions by governments. However, in the case of Germany and other "allies", there is a need to create the market conditions to transform such piracy into the guise of "economic assistance" to gain the approval of the IMF and others.
This situation is a result of an irresponsible German government where the finance minister, an author of children's books, and the "green" foreign affairs minister have gone along the Liz Truss line of supporting Ukraine following the "leadership" of US/NATO and EU Commission. Their wilingness to serve the interests of alien countries rather than looking to the interests of their own national constituencies has resulted in German and British families facing increasingly serious economic hardship. It is unlikely this German government will last.
Germany's export success is largely the result of a handful of very large companies, the targets of the hedge funds, and around 1,650 SMEs of highly successful family-base companies. This strategy will result in the transfer of the larger industries to US/UK ownership and the family companies will go by the wayside.
The usual suspect media are blaming Russia for this event but all analyses completed to far point to a sole potential beneficiaries as being US and UK based financial conglomerates. Whereas NATO purports to represent a collective defence for Europe, this latest event shows that this is more of a front to dominate foreign policy on members in support of the interests of the most powerful member who just happens to be bent on world domination at the exclusion of the interests of the constituents of the other member countries. Why is it that our mainstream media continue to act as stenographers for the Ukrainian and US press releases? Media should be pointing to facts in order to provoke serious thought and actions by the people affected.
A troublesome tactic applied by US authorities to support "freedom" and "democracy" in different countries of the world is to train people in targeted countries through a string of Non Governmental Organizations, in methods of organization of protests. To coordinate these efforts "leadership" programmes are provided in the form of training of selected individuals. These individuals, sooner or later appear in association with any government opposition movements that might exist. The tactic used is to create the impression of spreading opposition to a government by preparing groups of people ready, at a moment's notice, to hijack some event to create street protests around that event and then spread these protests to other parts of the country provoking reactions by the authorities in the country concerned. A recent example is the case of a young Iranian Kurdish woman, in Iran, who died while in custody of the agents of the enforcers of compliance with religious dress requirements. This was immediately blown out of proportion by agents and provocateurs in other towns in Iran. This was designed to give an impression of a widespread protest against the Iranian government.
In other cases agents who are more aggressive or "goon squads" are used to act as agents provocateurs as was the case in the, initially peaceful, protests in the Maidan in Kiev in Ukraine in 2014. These agents created confusion by arranging for peaceful protesters and police to be shot in order to encourage more protests on the part of the public and a harsh reaction by authorities in an effort to create a spiral of violence. As is well known, this led to the eventual overthrow of the Ukrainian government in a coup.
Very often the funding and coordination of the creation of protest groups through NGOs is the Washington-based National Endowment for Democracy while the rough housing and goon squads are coordinated through the CIA and extreme violence by co-opted covert groups. The amount of funding involved in the 2014 coup in Ukraine was around $5 billion as announced by Victoria Nuland of the US State Department.
However, the Ukrainian case got out of control because of poor planning on the part of those involved. The track records of statements and advocacy for violence against Russian Ukrainians of those who gained key positions in this puppet government, configured by the USA, included members of NeoNazi brigades with extreme anti-Russian credentials. The nature of the change in government and its make up caused considerable fear of the safety and security of Russian-speaking members of the Ukrainian population in the East and especially in Sevastopol and Crimea where the majority were of Russian ethnic origin. Without any encouragement from Russia, the Russian majority administrative regions of Lugansk and Donetsk organized referenda to become separated from Ukraine as autonomous regions making no attempt to join Russia.
Starting in 1772, Russia has maintained troops and naval personnel in Sevastopol Crimea for some 250 years including under legally binding leasing agreements with all Ukrainian governments.
In 2014 there were around 15,000 Russian military personnel stationed in and around Sevastopol with family members in Crimea, this is why the claims that Russia invaded Crimea in 2014 are factually incorrect. There was no invasion of Crimea and Crimea and Sevastopol became Russian without a single shot being fired.
"The Russian Squadron on the Sebastopol Roads", 1846
By the Russian, Crimea born, marine artist, Ivan Constantinovich Aivazovsky
On the other hand, Sevastopol and Crimea went far further and not only held referenda to separate from Ukraine but organized a second referendum to seek agreement from the population to join Russia.
The type of actions feared by the people of these regions were to play out in Odessa months later when goon squads murdered around 50 Russian-speakers in the Union Building and set it alight. Those who jumped from the building were bludgeoned to death by goon squad members.
If the reader takes the trouble to look at the Rand Corporation master plan for this Ukrainian strategy, the risk of Crimea taking such a decision was unexpected. This was a pretty foolish oversight on the part of these highly paid "strategists". The reason Crimea moved so rapidly was the fact that since 1772 this zone was the home of the largest Russian naval base where some 15,000 Russian military personnel live and work. Through the 250 years of the existence of this naval base, the economy and families were closely linked to this operation. Although the Rand Corporation states that Russia "invaded" Crimea, it is self evident that they did not invade, given that such a sizable military presence had been there on a permanent basis since before the American declaration of independence. Following Ukrainian independence the Russian base had continued operations under leasing arrangements with Ukrainian governments. Throughout this process of referenda and final decision to transfer Crimea and Sevastopol to Russia, not a single shot was fired. However, this voluntary annexation to Russia anticipated the reaction of the puppet Ukrainian government which was to declare war, characterized as a "terrorist operation" on the Lugansk and Donetsk republics in 2014. It is remarkable that the Ukrainian government was prepared to kill its own former citizens and carried on this campaign for over eight and a half years.
Russia, in good faith, relied on the proposal for a peaceful settlement envisioned under the Minsk agreement that would have seen Lugansk and Donetsk become autonomous regions within Ukraine. However, this plan was scuttled by the US State Department, its "guarantors" France and Germany and by declaration from the Ukrainian government. It was later admitted by a past president of Ukraine that the Minsk agreement was used as a pretext for Ukraine to gain time build up armaments with the assistance of NATO countries and to prepare to invade these territories. The obvious build up of Ukrainian troops on the borders of the separated republics forced Russia's hand to need to defend these communities against further bloodshed by entering this ongoing Ukrainian civil war on the side of the Russian-speaking communities in February 2022.
The current referenda taking place in Lugansk, Donetsk and the other two regions are likely to result in these regions becoming part of Russia because the populations are fed up with eight and a half years of being terrorized by the constant shelling and fear of death at the hands of the military forces and militia of the Ukrainian government.
The plain dishonesty of our national media in reporting on the origins of the Ukrainian situation or the current Iranian riots, is to hide from the British public that these are the results of a proactive US strategy of interference in the affairs of other countries.
The basic strategy is to provoke target countries such as Russia and Iran with the known likelihood of there being a violent reaction resulting in many deaths. The deaths are of no relevance in this strategy be they Ukrainians or Iranians. These deaths are considered to be the price worth paying by others, to advance the US strategy.
The strategy is to harm the countries and the people of these countries to generate discontent, in the hope that this will lead to the overthrow of governments. The 2014 violent overthrow of the Ukrainian government was part of this strategy.
Of course, our media do not wish to risk explaining these facts for fear that they might be accused of being conspiracy theorists, editors would be sacked or replaced and advertising revenues dry up. However, the evidence for this is there for all to see in published play books produced by such institutions as the Rand Corporation or The Brookings Institution.
Our dishonest British media never mention who is to blame for these events so they misinform the public and simply pile in to shape British public opinion to convince them that all is the fault of Russia and or Iran. The reason why British media do this is to support the position of the UK government which works in direct support of this US strategy in the full knowledge that the result is many deaths of those the government purports to support.
If readers are in any doubt of what is stated here, they will not find any clarification in mainstream UK media or even High Tech social media. However, we provide access to the proof and invite our readers to access and read the documents whose cover pages appear above in this leader.
The theory of the role of money in the economy was changed radically in 2020 with the advent of the Real Money Theory (RMT) identity. Unlike the theory of the last 3 centuries centred on the Quantity Theory of Money (QTM), the RMT is a more comprehensive formula which includes assets, goods, services, offshore flows and savings. Alone, the RMT provides a map of where money flows but the details are important. According to the RMT, the recent mini-budget, is highly speculative because the Chancellor's actions will result in two types of growth which will take place at the same time. Growth can be split into two basic measures:
- A longer term raised productivity creating counter-inflationary goods and services prices and therefore rises in real incomes
- A short term rise in money volumes creating a growth in inflation and particularly in asset prices
The Chancellor and his adherents have pointed to what they call "supply side actions" aimed at promoting the first type of growth combined with an increase in demand arising from the second item.
Unfortunately for the government the next general election comes up in 2 years time and this does no provide enough time for the more important impact to gain traction. At a recent Agence Presse Européenne Correspondent's Pool Workshop, the economist Hector McNeill, a leading British expert in inflation, gave a short presentation of where the problems lie. McNeill has spent over 45 years analyzing inflation theory and policies at SEEL-Systems Engineering Economics Lab, producing over 200 articles and papers published on this topic.
McNeill stated that, "The fundamental requirement for this country is a significant rise in supply side productivity-based growth, because this is counter-inflationary. However, the supply side manufacturing sectors have a limited capability to deliver this growth because it is grounded in the current state-of-the art and relative dimensions of enterprises. The actual gains in productivity achievable are good but policies over the last 50 years have reduced the manufacturing sector to a small size. Therefore raising investment for productivity enhancing actions will affect, in realistic terms, about 20% of manufacturing to achieve practical returns within about 5 years. On the other hand, the government policy has created an inflationary environment around this fundamental need in terms of asset inflation, including assets used as supply side inputs. Financing costs will rise as a result of Bank of England base rate decisions. In rough terms add 6% to the base rate to form a guestimate of what banks will be charging for loans destined to good investments. The need therefore is investment returns of a least 10% p.a. In reality the notion of the role of "bank finance" is very much exaggerated because companies that manage to fund their innovation from their own cash flow are already on an increasing productivity trajectory. The Real Incomes Approach assists these types of companies. To this degree reducing corporate tax makes sense.
He continued, "The biggest problem is that banks, under the financializaion environment created by the Bank of England's quantitative easing, saw banks favouring asset purchase support, including on their own accounts, in preference to investment in the supply side processes. This bank behaviour has become standard practice. As a result there is not much hope that helping relax the operational condition of banks will change that mentality. In practice, bankers might well assume this removal of the bonus cap is an indication that the government approves with the way banks don't invest in supply side productivity but prefer dealing in assets. Therefore, there is good reason to expect the Chancellor's package to be the source of asset inflation. This will reduce the ability of the supply side identify profitable investment and thereby reduce the 20% of potential growth to well below this figure."
On the question of the pound exchange rate and the negative market response to the Chancellor's unguarded remarks concerning his intention to further reduce tax, McNeill stated,"The RMT shows that the economy contains no automatic regulatory mechanisms over cash flows in the national economy and until banks are required to apply realistic audited financial criteria backed by technical audits of investment proposals, confidence in this process will not improve. At the moment, banks are more interested in guarantees or collateral to secure loans and, of course this takes the form of assets, the value for which they are continuously increasing through their actions. This is why the levels of due diligence on the quality of loans has fallen. Internationally, around 35% of all loans fail involving loss of assets by borrowers and consolidation of bank asset portfolios.
The government needs to bring about legislation to require all banks to establish units whose role is to support productivity enhancement policies, based on a high standard of due diligence monitored by an appropriate oversight, rather than the current bank practice of taking advantage of lax regulations to the exclusive benefit of their own shareholders and executive bonuses."
it is so important
Because of its contemporary and future importance, our sister medium, Real News Online made this topic their leading theme back in 2018. However we note that now 4 years later, the significance of this theme has become more critical as societal wellbeing is becoming subjected to increasing threats resulting from increasingly ineffective leadership decisions.
The APEurope Correspondents' Pool has therefore recommended that APEurope adopt this topic as a core these for all APEurope media for 2022-2023.
There is a growing epidemic in media of all types in tendentious manipulation of information by the larger search engines and social media organizations and advertising systems as well as the so-called mainstream media. This data, information and knowledge manipulation, censorship and attempts to rewrite history is affecting the discourse in academia, in the professions and even business practice. Economic theory and practice and the decisions affecting our wellbeing, have become victims of this scourge.
Our editorial team is preparing articles to cover this critical topic in some detail and these will be added to this thread as they are finalized.
The most obvious gap in monetary policy theory is the Quantity Theory of Money (QTM) which remains the bible of academics and the Bank of England. The clerics in this temple still believe that altering interest rates can impact what they call demand and thereby impact inflation. In 2020, the British economist Hector McNeill pointed out why this is not true simply because the QTM is missing about 10 variables such as assets, offshore monetary flows and savings. As a result goods and service prices are affected by many more factors than interest rates because their absorption of monetary volumes does not feature in the QTM. He replaced the QTM with a more transparent Real Money Theory (RMT) identity containing the missing variables. Most academics and politicians and BoE staff will not have any knowledge of these facts because McNeill only published this in 2020 and has since added several advances to this analysis.
Associated work by McNeill initiated during the last energy crisis has established that the main cause of inflation is input costs, such as land, real estate, arbitraged energy and food commodities. Keeping these under control depends upon effective macroeconomic policies. However, in the case of the UK, these input costs have not been controlled but rather, intentionally driven upwards by the Bank of England's (BoE) 12 years of quantitative easing and the rising costs of imported energy. The rising energy prices are a direct result of a thoroughly inept UK foreign policy spearheading sanctions against our lowest cost source of imported energy and attempting to replace these supplies with "free market accessed" energy which is around 5 times the price or non-existent LNG imports which will end up being 45% more expensive than Russian gas. This has exposed and already reduced BREXIT Britain to an external market bonanza of rip-off artists. Therefore the combination of the BoE's QE intense financialization and complete lack of prudential oversight of asset inflation and a disastrous foreign policy have created a serious systemic inflation in this country.
Political parties, here we refer to the Conservatives, Labour and Liberal Democrats, to a man or woman, depend on not upsetting the City in order to keep the negative media coverage wolf from the door. Since Gordon Brown made the BoE independent in 1997 it has increasingly served the interests, not of the majority of voters in this country, but rather a tiny constituency of finance, insurance and real estate (FIRE). It will be noted even by the casual constituent exposed to our mainstream media, so-called, and high tech social media, that all party leaders, Chancellors and shadow chancellors, as well as assorted party members and MPs, and, of course, the usual suspects in the media, never lose the opportunity to repeat the mantra affirming the "Importance of Bank of England independence
in order to keep that media wolf and ire of the City away from their door. This is somewhat pathetic and reflects a lack of a robust understanding of economics or of why the 2008 financial crisis happened or any appreciation of the damage QE has wrought on this country. It reflects a tragic embarrassing groveling acceptance that feeding the wolf is the price of their administrative "success", at the expense of the majority of constituents.
We then need to look at the background of people in the Treasury, where the influence of the financial services sector predominates so the advice to chancellors and the orientation of bean counting has a strong monetarist orientation. There is then the revolving door reality of these institutions sharing people, company executives and retired MPs as part of their "expert" human resources pool.
The net result is that there is a close coordination of monetarist interests (read physical and financial asset holders and traders) between the BoE and the Treasury.
We have just witnessed an example of a hapless and ill-informed Chancellor making a show of breaking out of this mould on the basis of clearly very bad advice while the BoE continues on its suicidal trajectory of raising interest rates. Both the Chancellor and the Bank of England are pursuing actions for which there exists no theoretical, policy examples or empirical evidence to support them. Their acrtions represent an irrational gamble.
Monetary policy, first and foremost, needs to respond to the interests of the majority by ensuring that the volume of money remains close to constant while fiscal policies concentrate on raising the real purchasing power of the majority through incentives based on delivered rises in the physical productivity of goods and services, or more for less, so as to achieve import substitution.
This condition is attainable. The last time this was achieved was a 20 year period between 1945 and 1965. Britain experienced unprecedented growth, stable goods and service prices, the ability to purchase a home on an average wage, rising real incomes, declining income disparity and full employment. Monetary policy was highly deflationary and not expansionary (inflationary).
Since that time, which saw the establishment of the National Health Service, the two indicators of economic development success,
are a stable close to zero balance of payments in goods and falling income disparity (a balanced income distribution) have demonstrated how monetarism has resulted in a policy-induced decadence with Britain taking up the second worse negative balance of payments for goods position on the international balance of payments league table and, as we are all aware, raising income disparity to levels that surpass the conditions found in many depressed low income countries.
We therefore, have to ask the question, "When will the people begin to question the logic of politicians and political parties persisting in implementing disastrous policies based on out of control monetarism?"
and also, when will they demand an expanation of the purpose of the Bank of England and, "The reason why it should remain independent of pursuing the interests and wellbeing of the majority of constituents?
The chancellor's parliamentary delivery of his mini-budget was laced with the word "growth". He kept attempting to reassure the House that this was the whole objective of his propositions.
A sober analysis of his list of propositions draws us to the conclusion that they will deliver the wrong type of growth. Monetarists see higher volumes of money in the economy as a measure of growth. Therefore the rise in prices and therefore value of bought-back shares, of land and other assets were all considered to represent growth and policy success where a tiny faction of constituents actually benefited. However, the type of growth that is able to raise the general standard of living in a non-inflationary environment is not this nominal growth but rather real growth. One of the best explanations of this need was laid out by Nicholas Kaldor in 1966 in his inaugural lecture as professor of economics at Cambridge University. His argument was that investment in manufacturing productivity was the foundation of British growth resulting from innovation spreading throughout the economy based on the quality of manufactured products used by all sectors. Kaldor predicted the situation we now find ourselves in if we failed to follow an industrial policy.
Britain needs real growth which results from the entrepreneurial process of identifying how to use resources more efficiently to end up with lower unit costs of production so as to set prices at levels that are accessible to increasing numbers of consumers. Productivity-based investment tends to be counter-inflationary.
A good example is information technology where as processing power and miniaturization rise, power consumption, size, and prices decline. This results in increased purchasing power and a rise in real incomes.
All processes over time can become more productive through an incremental process of more output for less input. Operators descend learning curves where they become more proficient, make fewer mistakes, waste less and take less time to complete tasks. Real growth emanates from the learning curve that is associated with an evolutionary decline in unit costs.
Policies designed to encourage real growth need to be based on mutuality of interests of company owners and work forces as contributors to corporate operations and as being consumers. Policy incentives need to be based on the provision of proactive benefits arising from actual delivered results as opposed to promises. So, for example, the Real Incomes Approach, Price Performance Policy, compensates corporate profit reduction resulting from delivered output price reductions which benefit workers as consumers and raise real incomes, in order to support the company's descent of the medium to longer term learning curve augmenting productivity and lowering unit costs. This operates on the basis of a performance indicator, the price performance ratio which compares change in input costs with changes in output prices, and a price performance levy which varies with the price performance ratio achieved. This achieves a short term reduction in inflation and a constant medium to long term rise in productivity. Further information (pdf): Monetarism and the Cost of Living
Denis Healey's switch to monetarism led to Kaldor withdrawing his advisory support to the Labour party and he became one of the most outspoken critics of monetarism both as an academic as well as a member of the House of Lords.
Kaldor did not foresee the international petroleum price crises which created the stagflation in the 1970s through to early 1990s, and our own current drift towards stagflation the for the same reason.
Although monetarism substituted Keynsianism in the 1970s, the monetarism of the period applied between 1945 to 1965 gave rise to an unprecedented real economic growth, falling income disparity, rising standard of living and full employment. During this period policy was highly deflationary and Keynesianism was not applied because there was full employment. Growth came from companies investing to raise efficiency and rather than rely on banks, most investment funds (well over 60%) came from corporate cash flow and equity.
These circumstances changed with the recycling of petrodollars starting in the early 1970s following the 1973 OPEC petroleum price hikes. The recycling of petrodollars created an explosion in funds being injected into economies resulting in a complete alteration of the formerly staid monetary policy approach to a new form of financialization and computer-based hedging veering towards an economy where growth was not based on productivity and real growth but rather on the value of assets. It is notable that this replaced supply side productivity and real incomes growth by growth being measured in terms of the volume of money in the economy. This type of growth benefits and is under the control of a very small faction whose wealth increases as a direct function of the degree to which funds are injected into asset markets to generate speculative price increases with the intent of raising the monetary value of assets held. This led to the 2008 financial crisis. At that time, rather than prosecute the financial crimes that caused the crisis, the governments panicked. Rather than turn away from monetarism and financialization, under the weight of financial sector lobbying, the proposed "solution" was to intensify financialization and "asset-based growth" by introducing quantitative easing (QE). The analysis of the QE period (2008-2022) exposed an increasing tendency of banks and hedge funds not to invest in supply side productivity and preferring to invest in non-productive assets. With enough liquidity to force up asset prices, this became a process of "easy money", especially when the base interest rate, under QE, was close to zero. Bankers and hedge fund executives could easily increase their "sales" so as to lever their bonuses to very high levels. As a result the business rules of banks, hedge funds and other types of financial intermediation evolved into a system whose objectives had virtually no relationship to the former investment banks of the mid 20th Century. Banks and hedge funds are no longer there to service a national function in supporting monetary policy by investing in risky but important productivity-enhancing supply side initiatives. This is because they have manipulated the ground rules to operate at a close to zero risk to earn a guaranteed profit and dividends for their shareholders by speculating in assets. Foolish monetarist academics and indeed business lobbyists continue to convince politicians to equate these speculative rises in asset values with "economic growth" and policy success.
Although this government is using all the correct buzz words such as "productivity", "enterprise" and "growth" this recent mini-budget will unleash yet more financialization through banks and hedge funds by enabling them to gain limitless bonuses, heralding illusionary growth in the form of an explosion in asset prices. This will not improve Britain's competitive status or real incomes for the majority but it will intensify the already systemic inflation in goods and service prices and exacerbate the cost of living crisis.
Since Denis Healey, in panic, abandoned Keynesianism for monetarism, in 1975, the long term trend, a period of some 47 years, maintained by all subsequent Conservative, Labour and Coalition governments, has been a falling productive investment, rising income disparity, falling balance of payments in goods, falling real incomes of the majority. This disastrous trend has been accompanied by the rising contribution and political influence of banks, hedge funds, asset agencies handling real estate and insurance. The parallel rise in offshore investment sold as the way to lower the price of goods and services, undermined national industrial investment and deskilled the workforce whose real incomes as a percentage of the GNP declined, while overall, corporate profits,
as a percentage of the GNP, have risen.
The overall effect is the economic marginalization of an increasing proportion of the national constituency as members of the workforce and as consumers.
The lesson learned is that monetarism does not work to the benefit of the majority of voters but only to a tiny minority of physical and financial asset holders and traders. To understand how this inequity came about and is maintained by inappropriate macroeconomic policies see: The constitutional crisis created by monetary policy
. If you understand the explanation in this document and agree, why not write to your MP and ask why such policies are pursued. There is the question, of course, that each constituent needs to ask is, is it worth voting for parties who support such policies?
This morning's APEurope Correspondents' Pool Seminar reviewed the latest government mini-budget.
The conclusion, because there is very little theoretical justification for such an influx of funds, was that this is a pre-election attempt to shore up the Conservative party election war chest by feeding funds into the City. However, the price paid by the majority of UK constituents will be an exacerbation of the cost of living.
Concerning the theoretical reasoning criticizing the policy aspects, the take aways were as follows:
- It will be recalled that the 1972 Anthony Barber budget was introduced along similar lines just as we entered the stagflation crisis in 1973, arising from energy prices and it failed.
- The Geoffrey Howe's 1981 Conservative budget also tried to combine marginal tax reductions with rising interest rates to tackle the rump end of stagflation and this also failed causing hundreds of thousands to lose their homes through repossession and without compensation.
- At the time of the 1981 budget the full fallacy of monetarism was exposed in exchanges between Milton Friedman, Nicholas Kaldor and Robert Neild where it became very obvious that the monetarists confused "nominal volumes of money" with "demand" and this with the spur for "growth".
- Frankly the theoretical justification at that time was weak because monetarists could not explain the transfer mechanisms between money volumes and inflation, including Friedman. Constant reference was made to the Quantity Theory of Money to explain policy objectives
- The mythology of this approach became evident with the extreme monetarist policies of quantitative easing (QE) imposed by the Bank of England and which did not result in investment creating higher productivity but rather funds were "invested" in non productive assets creating a massive asset price bubble.
- Under QE "growth" was mostly taken up in rises in the speculative prices of assets rather than increased higher productivity supply side output
- The Bank of England was unable to explain this outcome or the creation of a systemic inflation in goods and services
- The economist Hector McNeill showed in 2020 that the reason for the confusion amongst monetarists was the fact that the monetary policy tenet, the Quantity Theory of Money, is flawed. This is because it contains no variables representing the main asset classes, offshore flows or savings. McNeill proposed an alternative Real Money Theory (RMT) which contains all these variables.
- The RMT enables economists to map out the flows of money resulting from QE or any monetary or fiscal policies
- The current mini-budget is a peculiar mixture of Barber and Howe's budgets and QE in an environment of stagflation arising from energy prices. Therefore, it is unlikely to achieve real growth but rather speculative rises in the prices of assets including: land, domestic and commercial real estate, arbitraged commodities including food and fuels, financial assets, bought back corporate shares to boost bonuses and rising investment offshore.
- As these asset price rises feed through into supply side input prices and the price of goods and services, the result will be increasing inflation and exacerbation of the cost of living.
- There will be little investment leading to raised productivity, higher paying jobs and rising employment.
- Productivity, real incomes and employment are likely to decline.
In the question and answer session the subject of fracking was raised in the light of the government's decision to lift the embargo on fracking. There is little evidence that fracking is profitable. 80% of the US fracking units lost significant amounts of money during a low interest period. One reason is that the volumes produced within short production cycles of many fracking sites did not compensate for the very high investment. It is likely that UK efforts facing higher interest rates will not make a profit. On the other hand the environmental damage to aquifers, pollution, public health hazards and geological and soil mechanics stress is likely to result in property damage and reductions in land quality and values raising insurance premiums.
With such a number of major changes in fiscal operational structures, government ministers have all insisted that Kwarteng's "mini-budget
" is a "plan for growth
Referring to the normal necessary provisions of information for growth plans it is notable that the government did not provide any Decision Analysis Brief (DAB) to justify any part of the changes. The normal analysis undertaken to design a policy should include, at the minimum, the application of a stepwise advance through a set of due diligence design analyses including:
- Gaps and needs analysis
- Risk analysis of the options available as policy action components
- Plan specifications - component actions performance targets, inputs, outputs and human resources
- Monitoring and evaluation provisions to maintain traction
Most of this information is missing from the government announcements.
It should be emphasized that in order to complete the steps outlined above there is a need to analyse the decisions taken, in following the design procedures, to build a determinant decision analysis model. This is based on the cause and effect mechanisms whereby policy instruments and changes work through to benefits or prejudice for constituents. Besides these fundamental cause and effect relationships, particular attention has to be paid to the quality of information used, including evidence for the cause and effect relationships used, as well as the probability of events affecting the overall range of options which model simulations can generate according to the policy options.
In terms of cause and effect relationships related to the effect of cutting taxation there is no evidence this will result in investment to generate increased productivity. Most investment, based on the record of monetarism so far, will go into assets rather than productive investment designed to improve productivity and counter-inflationary growth. The energy price cap is a temporary measure more designed as a preparation for the next election than having anything to do with the reality of the energy markets. This is because, this mini-budget takes place against a background of a significant dependency of outcomes on what happens in the international state of affairs in energy and commodity markets beyond the control of this government. There are real possibilities of counter-embargoes preventing this country from accessing cheaper energy in the foreseeable future and the current foreign policy of this country is geared to exacerbating the state of affairs of the British energy markets through 2023 and beyond.
The removal of the bankers' bonus cap will result in some foreign bankers setting up boutiques in the City of London to participate in the easy money activities of purchasing high end real estate and land so as to drive up the prices of these assets and exacerbate the UK land, domestic and commercial real estate markets and to also participate in corporate share buy backs which do not contribute to real growth for the constituents of this country but will surely increase banker's bonuses.
In the meantime the disoriented Bank of England insists on undermining all of this by raising interest rates. The reaction of seasoned market analysis is that this government has no credible plan. As a result the British pound has reached parity with the dollar and has fallen 35% against the Russian rouble in just 8 months.
This is why the announcements made today are an irresponsible gamble with the lives and wellbeing of the constituents of this country. It is not a plan for growth.
The conditions of disorder, randomness, or uncertainty. Asset entropy: The worsening of real income conditions arising from the impact of asset inflation on the prices of goods and services.
Monetary policy logic is centred on a simple-minded Quantity Theory of Money:
Where M is money volume; V is money velocity; P is average prices of goods and services; Y is real income.
The Real Money Theory (RMT) elaborated by the Real Incomes Approach to economics includes assets, offshore monetary flows and savings is as follows:
Where: l is land, r is domestic and commercial real estate, p is precious metals, m is commodities, a is rare art objects, h is shares, f is financial instruments, c is cryptocurrencies, o is offshore monetary flows and s is savings.
The state of the "cost of living" is directly related to the impact of asset prices on Y i.e. consumer prices and production inputs prices and overheads, or:
This function is notional because actual structure has been assessed by our Editorial to be too complicated for most readers. Where Y is total transactions (worker income/consumption = corporate revenue), t is corporate profit or individual savings, w is work force wages or corporate revenue, vc is consumer variable costs such as essentials or variable inputs for companies and fc is fixed or overhead costs such as domestic rentals or house prices and any fixed equipment durables or commercial mortgage or rentals or prices of commercial properties and capital equipment.
The impact of selected asset prices on each of these items can be observed below:
the speculative investment in financial assets and increasing offshore flow results in lower employment in supply side production of goods and services and this depresses real wages as follows:
References: BRS Special edition 2022:Monetarism and the Cost of Living"Why the Bank of England cannot solve the cost of living crisis"
Teaching resources from Boolean Library: Slide set for lecturers
According to the financial analysts at the British Strategic Review (BSR), today's budget seals the plight of the British economy to slide towards stagflation. This is because under the current circumstances the safest investments are assets and not supply side investment. This reality is a direct result of monetarism and financialization over the last 50 years but in particular the impact of 12 years of quantitative easing (QE).
The Real Incomes Approach to economics is an alternative economic theory and policy which is based on the lessons learned from the last energy crisis in the 1970s and the outcomes of QE during 2008-2022. Inflation is not caused by excessive demand or money volumes in the economy but rather by rising input costs. Amongst the most significant causes of rises in critical input costs such as land, domestic and commercial real estate and arbitraged commodity trades, such as food and energy, caused by the direct participation of financial institutions in these markets as a quick way to bolster their shareholder's value.
The removal of the cap on banker's bonuses and removal of the top rate of income tax will create a rush for asset purchases as a guarantee of future worth based on future inflation in these speculative markets. The same is true of the "reinvestment" of any profits arising from enterprise zones. In the meantime the internal markets for goods and services will face rising costs and therefore inflation.
Recent studies by the BSR have demonstrated that the central theory of monetary policy, the Quantity Theory of Money identity (QTM) is flawed because it does not include assets, offshore monetary transfers or savings (see box on the left - please note this is a very simplistic summary of the state of the art knowledge on this issue).
A bizarre situation is the Bank of England's concern with this current mini-budget when the mentality and practice of excessive asset investment creating a systemic inflationary spiral was caused by the Bank's obsession with QE. And yet, today the Bank "cautions" that the mini-budget could cause the economy to enter into recession when this is the result of Bank of England policies. The Bank of England assumption that raising interest rates will reduce inflation is completely wrong. As can be appreciated from the Real Incomes Approach, this will only accelerate the economy's slide into stagflation and recession as witnessed as a result of the 1981 budget of the Thatcher government. This resulted in widesprerad house repossessions and raised unemployment.
Already British media a misrepresenting what Vladimir Putin stated in this recent broadcast. Rather than waste time checking the inventive nonesense that journalists and TV anchors have involved themselves in, we will simply fact check what Putin stated.With regard to nuclear weapons:
Putin referred to the willingness of Ukraine with the support of the West in attempting to cause a nuclear accident at a nucelar plant.
Comment: Liz Truss at one point, irresponsibly referred to the possible use of nuclear arms at which point Russia went onto a state of nuclear alert (some months ago). With respect to retaliation if Ukraine uses NATO supplied arms to attack Russia including any ceded territories:
Russia will respond.Russia has arms for which NATO has no defense:
This is true. Russia can easily use its advanced weapons for which NATO has no defense including non-nuclear hypersonic weapons. The kinetic energy developed by these missiles can take out any naval vessels including aircraft carriers or hardened armoured protected aircraft hangars, military sites and areas where NATO members are training Ukrainians. This statement is not a bluff:
There is no reason to doubt this. Having stated this, the Russian population would expect this to be acted upon on the basis that the conditions are met to justify action.Number of reservists:
The MOD stated this will be 350,000 of individuals with recent military experience and with specific skills. Such a group probably can be updated within 2-3 weeks unless there are specific requirements for recently introduced new hardware. This number represents a trebling of the current troops deployed signifying a major build up in effort facing a heavily depleted Ukraine force.Use of reservists:
This was not that clear, but the MOD has confirmed that only those with operational military experience will be asked to participate. Following training, their role will be to man defensive positions along what has become a 1,000 km front while the currrent operational troops would be moved to the advancing front to take over the rest of Donetsk. The risk to the reservists: This was not raised by Putin
but according to our own assessments: Given that Russia has the most advanced air defense systems in the world across the whole range of possible forms of arial attack, the operational risks to reservists is relatively low. Russia now has a sophisticated networked communications between fixed and mobile units enabling rapid responses to any ground attacks on fixed positions.Why now?:
What Putin did not say:
- This was not stated by Putin but according to our own assessments: The state of depletion of Ukrainian military personnel and equipment renders them now to be a significantly spent force and reduced hazard to any fixed positions.
- This was not stated by Putin but according to our own assessments: This tactic will "stabilize frontiers" and enable the mass of the now experienced Russian force concentrate on Donetsk. The remaining Ukrainian forces will need to amass along this front or lose Donetsk within a short period. The likelihood is that the remaining force will collapse within a short time.
- This was not stated by Putin but according to our own assessments: The significant rise in Russian operational troop concentrations and systems is likely to result in significant damage to Ukrainian units and hardware and widesprad surrender or abandonment of positions is likely.
Putin did not threaten anyone with nuclear arms but simply stated they would use what is at their disposal where hypersonics come to mind as the most obvious option.
Genera observation: On balance Russia has far better defenses against nuclear attack of any NATO country, including the USA.
For the constituents of the United Kingdom to remain well-informed it is of importance that the so-called 4th estate, or the media, disseminate facts while not only passing on the justifications made by those taking decisions as well as the counter-arguments. This applies to all forms of information domestic as well as that concerning events abroad.
Yesterday, Vladimir Putin recorded a speech concerning decisions being taken in relation to the situation in Ukraine. Recip Ergodan the Turkish President has observed that the "West" continually misinterpret what Putin says first and foremost because of an innate bias on the part of Western politicians and media which is characteritsed by a complete lack of respect for the leader of an important country. What Putin states needs to be taken at face value because Putin chooses his words with care in an attempt not to create any confusion in interpretation.
This ingrained cynicism in the "West" has been very much promoted by the United States and, to an increasing degree, by UK politicians.
Today a range of government ministers have commented on Putin's speech only to expose completely biased interpretations of what Putin "means" and "why" he stated what he did while adding a range of insulting characteristics to a man speaking on behalf of his own people and in defense of the communities in the Donbass. This scandalous behaviour of people who are supposed to be representatives of British constituencies only set a very bad example by exposing an abject lack of objectivity, capacity for serious reflection or any ability to focus on what is important. There is no longer any objectivity simply image-building based on a censorship of facts.
The most misleading and dangerous interpretation is that Putin is afraid of losing the military campaign because of recent Ukrainian successes. Ukraine has only advanced where Russia retreated from an area which is of little tactical advantage and where no administration had been established. The losses of Ukrainian personnel in these "successful counter-offences" has been excessive. The truth is that today Ukraine has very little remaining capability. As a result, the only way they can continue this fight is with imncreasing assistance from NATO countries who have no qualms about encouraging Ukraine to sacrifice more military personnel rather than negotiate.
Since this state of affairs means there will be frantic attempts to extend Russia, the Russian government is taking precautions to augment the defense of the communities who have been the subject to Ukrainian shelling and misile attacks, including illegal butterfly bombs scattered in Donbass housing estates, designed to blow unsuspecting people's feet off.
It is worth looking at the videos covering the 2007 Munich Security Conference when Putin delivered an address explaining the concern Russians had of the absense of mutual strategic security agreement that included Russian communities. The response by leading NATO staff and member leaders was overt sniggering and smirks which carried on in a disrespectful manner throughout Putin's speech. This lack of attention to Russian concerns simply grew with the expansion of NATO causing this exended military coverage of a communtiy with leaders who had no concerns about the lives of Russians. The trip wire for the Ukrainian military event was for Russia to join the campaign raging since 2014 on the side of the Donbass.
Rather than be dealing with an Iron Curtain, the population of Britain was exposed to a rising regime of ignorance caused by the government banning the reception of specific Russian media such as Sputnik, RT and others. Fortunately those who wish to read these media still can online but subject to incessant attempts to interupt these broadcasts. These media, at least provide reasonably balanced reports on events and decisions taken by Russians and more importantly expose what is really going on in the Donbass which has been under constant bombardment from Ukrainians. Little of this is reported in the UK media, but the wanton murder of these citizens at the hands of the Ukraininan forces is horrific. For example, this week, reports from Donetsk city where 13 people died including a woman whose body had been sliced in half lying on the road with no legs; two children were included in the slaughter. Naturally, our government does not want the public to see what the military we are training at tax payers expense and supplying with arms at even greater tax payer's expense, are accomplishing by supporting Ukraine. The paradox is that such murderous actions come at the cost of many Ukrainian military personnel losing their lives in response. All ofthis is quite horrific and futile but our government doubles down on this insanity, insisting they will continue to support such killing.
As part of the government's ongoing imposition of its regime of ignorance has been the "cancellation" of Russian artists, shamefully forcing them to lose their employment and income and a broadside of cancellation of anything to do with Russian culture. This is a deliberate attempt to dehumanise Russians as people so that they pass for no more than diposable objects rather than a communtiy with an amazing history and rich culture. By understanding more of their culture we can interpret more exactly what Russians state and understand why, from time to time, Putin makes historic references. Many ignorant commentators suggest this habit means Putin lives in the past without realizing that what he refers to remains very much in psyche and levels of current awarness of today's Russians.
This tendency to want to rubbish the relevance of the intricate weave and patterns in the carpet of Russian history, is championed by a country that attempts to steep the population of this country in a history of prowess of British military exploits and pride in colonialism and exploitation of indigenous people, starting with Ireland and Scotland in the early 1600s and speading to the Charter territories on the East coast of America. The lessons learned by those manging these Charter territories, from the Irish and Scottish experience, was that for colonialism to succeed it was necessary to exterminate the indigenous peoples and bring in colonists from Europe and slaves from Africa to make a success of these commercial ventures. This legacy is apparent today in a broken and violent American society that sets no example to the world and whose leaders pursue an international agenda to prevent other countries from "competing" with their declining power. A habit of transgressing and cancelling important international agreements and attempting to force countries obey American wishes has resulted in a major decline in the image of the USA as a credible and trustworthy leader for the West. Britain traipses along in a sycophantic manner and with each step diminshings the standing of BREXIT Britain. Today, our military are simply civil servants who happen to wear gaudy uniforms and walk in formation, but who, of late, have not served much purpose other than absorb a good deal of public expenditure in buying over-priced military equipment, planes and faulty aircraft carriers and spend time training Ukrainians to kill people in the Donbass while also getting themselves killed in the process.
To cut through this regime of ignorance it is as well that the people of this country dwell on the benefits of peaceful coexistance and what is required to maintain such a state from which all peoples can benefit. This starts with satisfying curiosity about people from other countries and not accepting censorship, attempted government impositions of states of ignorance. It is necessary to reject cancellation of people simply based on propaganda and demonization. The culture and history of all people is of importance and not a play thing for politicians and political parties to rearrange as they fit so as to promote their own interests. We risk sliding into a default state of being afraid to counter such ignorance and injustice as poor governance makes the state of all citizens more precarious and dependent so as to become maleable and controlled so as to end up tolerating government outrages in silence. Freedom cannot be defended by demonizing well-meaning people or by deciding to no longer learn about humanity but rather to become self-obsessed and self-congratulatory by shutting out concern for marginalized communities. Since the collapse of the Soviet Union appeals to terminate the marginalization of the people of Russia were constantly rejected because the collapse of thr Soviet Union was intepreted to be a victory for a West. The USA, in particular, took on the attitude that they would not permit the "vanquished" rise again. Rather than outstretch our hands to seek ways and means to help bring a lasting peace an unqualified sense of superiority began to dominate decision making in the USA and NATO with respect to Russia.
Today, the efort is to fill western media with stories of failure on Russian military actions as a way to influence the Russian population. In the last 12 months the British pound fell 30% against the Russian rouble. Our balance of payments for goods, remains the world's second most negative while Russia will take up second position behind China with the highest positive balances of payment. As our standard of living continues to sink, the hyperbole from our government rises in a folorn attempt to blind people of the truth. But we can see and feel what is happening and the cost of living reminds us of the incompetence of this government in its support of sanctions against Russia which have seriously back fired on the British economy. The current actions by the government reflect a government in panic taking decisions to shore up the party war chest and buy off constituents ready for the next general election. To achieve this they will remove bonus caps for bankers in the hope of juicy contributions to the party and by sinking the current account with debt through a cap on energy prices in an attempt to please constituents, while not resolving the inflation problem as a result of failing economic strategies which, as stated, cannot solve this crisis which has resulted from a failed foreign policy strategy with respect to Russia.
Ivan C. Aivazovsky
Predictably, UK politicians and media analysts have responded to Vladimir Putin's presentation concerning Ukraine, recorded yesterday (see below previous leader), in a typical short sighted parochial manner reflecting a denial of reality. There is a proactive attempt to rewrite history in the face of the facts.
What is conveniently overlooked is that the intensification of the anti-Russian and sometimes violence against Ukrainian Russian speakers started with the illegal violent coup organized by the USA in 2014 against a democratically elected Ukrainian government. Knowing the nature of the forces put in power by that coup, the Russian speaking population panicked and sought to defend themselves initially by voting to become separate from Ukraine. At this stage Russia was not involved. Indeed, the areas with the highest proportion of Russian speakers were Crimea, Lugansk and Donetsk naturally sought some form of protection. Lugansk and Donetsk did not seek to become part of Russia but wanted to become separate republics. The new Ukrainian regime initiated military action against these areas in 2014.
Starting in 1772, Russia has maintained troops and naval personnel in Sebastopol Crimea for some 250 years including under legally binding agreements with the all Ukrainian governments.
In 2014 there were around 15,000 Russian military personnel stationed in and around Sevastopol with family members in Crimea, this is why the claims that Russia invaded Crimea in 2014 are factually incorrect. There was no invasion of Crimea.
"The Russian Squadron on the Sebastopol Roads", 1846
By the Russian, Crimea born, marine artist, Ivan Constantinovich Aivazovsky
The case of Crimea was different with the representatives there, quite early on, expressing the wish to cede to Russia. The referendum at that time (2014) on this had a 98% support. Russia did not "invade" Crimea given that around 15,000 Russian commandos and naval personnel were stationed in Sebastopol and such a presence has been there since the port fcilities were developed being initoated some 250 years ago in 1772. This presence of commandos and naval personnel in Russia's main naval base meant that at the time of the referendum Russia did not have to invade. Indeed after 250 years of families depending upon employment associated with the Russian naval base the percentage of the population of Russian nationality was very high. Indeed, the US strategists' ignorance of history meant that they had not fully understood these facts and to this day UK media still assert Russia "invaded" Crimea.
The constant killing of Lugansk and Donetsk residents by Ukrainian forces since 2014 has convinced these populations that the desire to become independent republics will be of no avail since they cannot protect themselves without Russian help. The only solution is to become part of Russia. Russia had supported the incorporation of these republics as autonomous regions within Ukraine but Ukrainian and US State Department obstinacy and focus of military violence directed against these communities have driven these people to the obvious solution. This is the result of the US State Departent and Ukrainina government's intentional destruction of the peaceful resolution proposition in the form of the Minsk accord.
Today, a SASI-Southern Atlantic Strategic Intelligence delivery pointed out some poorly appreciated facts concerning the current military conflict in Ukraine as a proxy affair between Ukrainian troops backed by NATO and Donbass militia backed by Russia. An important fact is that is the degree to which President Putin adheres to agreements and process and delegates responsibilities to the military, or anyone else, on the basis of their compliance to agreed conditions. However, the conditions of support agreed with the Donbass have tied Russia's hands behind its back. this is because most tactical decisions are made by the Donbass militia with Russian air and artillery/drone/missile with the Wagner Group and Chechen team field support. Russian commentators have made the point that Ukraine is intent on continued aggression against the Donbass having refused to implement the peaceful solution under the Minsk Agreement and upon which Russia had depended to resolve the conflict by peaceful means. Since the Ukrainian declaration not to implement Minsk in February 2022 and since Boris Johnson's intervention in March 2022, with Liz Truss's support as Foreign Secretary, Ukraine has declared its intent to carry on fighting rather than negotiate a peaceful settlement. It is therefore necessary to remove the constraints on the Russian military. The intended referenda in the Donbass complies with the West's rules based order applied to Kossova. Although, Russian intervention was declared at the time, not to incorporate Donbass territory but simply to consolidate the administrative areas of the republics of Lugansk and Donetsk, the constant Ukrainian shelling and murderous missile attacks of purely civilian targets have caused unacceptable levels of deaths in addition to those recorded since 2014. NATO tactical support/advice has led to sporadic attacks on Russian territory, also killing civilians, crossing definite red lines. This has brought about the realization that in order to respond under the conditions of international law, there needs to be some game changers.
The game changers are the referenda about to take place in the zones that wish to become parts of Russia within a week. The Russia deputies will accept referenda results which are bound to be in favour of becoming parts of Russia. During the last two weeks Russia carried out soundings with the main world leaders outside the "Western orbit" on their positions if the Donbass voted to become part of Russia. The general consensus seems to have been that, if this will end the conflict more speedily then there would be no objection. The only leader to hint at what was going on was the mischievous Ergodan of Turkey.
President Putin will be making a speech addressing these referenda sometime today.
However, under international law this would immediately change the military conflict into a one between Ukraine backed by NATO and Russia. All of the control of the action will come under the coordination of the Russian military complex leading to a significant change in the tactics applied with respect to NATO countries and Ukraine. Because of Johnson and Truss's influence to have Ukraine not negotiate, the United Kingdom along with its "allies" of mainly NATO countries will, under international law, become legitimate targets and, in particular, all supply lines to Ukraine are likely to be destroyed both within Ukraine and in international space. There is some doubt as to the continuation of supplies of gas and petroleum to NATO countries supporting Ukraine or imposing sanctions on Russia. This will have even more serious implications
|What? No guns?|
for the economic state of all NATO countries, including Britain.
Today, the CEO of Saudi Arabian Aramco, Amin Nasser, stated that the solutions drawn up by the EU on capping oil and gas prices will not work. In the UK, Karteng and Truss's notions of securing competitive growth by removing the cap from banker's bonuses and lowering taxes is also doomed to failure rendering the massive gas price subsidy untenable as a financially viable solution. Trickle down economics failed during the last energy crisis and will fail again. With the out of control Bank of England raising interest rates, it is notable that the Treasury will not been able to produce an acceptable projection which demonstrates economic/financial viability for this irresponsible development. There seem to have been no preparations of the possible implications of the fact that we will soon be in a technical state of war with Russia as a result of decisions taken by this inept government.
No one in this country voted for any of this evolving governance incompetence in following our military advice and following NATO (US) dictats, as the de facto foreign policy of aggression rather than tactical diplomacy and striving for peaceful settlements. While always putting on a show, a la Johnson or now Truss, our leadership, so-called, is clearly out of its depth in an increasingly precarious world, a condition, in good part, the result of their incompetent decisions. Such decisions have taken place as a result of there having been too little account taken of the wellbeing of the constituents of this country.
In defining truth, William James explained that "Truth is what happens
". We rely on facts to take sensible decisions be these in relation to personal relationships, family or community affairs, in our work and in national decisions involving such things as economic and foreign policy.
Rather than become embroiled in the here and now exchanges concerning policies it is well worth following William James advice on finding the truth upon which to base the increasing imperative of taking the right decisions. No matter the spin politicians and the media wish to apply to distort plain facts, it is not as if we cannot observe what has happened or what is happening.Read more ....
The current economic crisis, of which the cost of living crisis is the main obvious symptom, is the result of a lack of resilience of the British economy. This is caused by our economy having too many dependencies over which economic policies have no ability to control. This is reflected in the serious imbalance in the balance of payments for goods and specific commodities where we export far less than we import.
In 1966 Nicholas Kaldor, in his inaugural lecture as Professor of Economics at Cambridge University, explained why Britain needed an industrial policy to respond to supply side production needs to increase productivity to maintain the rates of innovation and change to affect the whole economy and to drive a constant rise in real economic growth. With the switch to monetarism under Denis Healey in 1975, Kaldor, in 1976, withdrew his consultative support for the Labour party and he became the main critic of monetarism. The state of affairs we now face in the United Kingdom is what Kaldor stated would happen if we abandoned an industrial policy.
In 1973 and in 2022 Britain faced an energy crisis and stagflation creating a serious cost of living crisis for voters. In each case this was the result of British governments acting without the approval of the electorate to support an intentional refusal to engage in an effective international diplomacy to avoid conflict.
Before 1973, and long before 2022, the conditions to avoid military conflict, many thousands of innocents killed and a debilitating energy crisis were made apparent. However, our government made no attempt to avoid these consequences.
Because the governments fail to take into account the interests of the national constituency and have more interest in augmenting and sustaining arms sales, the unconsulted public are transformed from being subjects to become the subjugated, to endure the consequences of the imposition of irresponsible political decisions.
Now for 50 years, monetarism has depleted our industrial and manufacturing base and Britain has become increasingly reliant on products produced in other nations to keep the economy running. The economy became heavily "financialized" following the flow of petrodollar recycling after the 1973 sanctions imposed by OPEC in the form of raised petroleum prices. This financialization saw financial services becoming more interested in acquiring and maximizing the value (price) of physical and financial assets. This was associated with a declining interest in "risky" supply side investment to increase productivity. The rise in the "financial services" sector and its effective lobbying resulted in the IMF actually providing petrodollar loans to low income countries to purchase petroleum whose prices rose seven-fold within a decade. The debt burdens of poor countries have increased even since. Another effect of the rise in financial services influence over political decisions was a decline in interest in resolving reliance on hydrocarbons and planetary ecological carrying capacity.
In an attempt to prevent our balance of payments collapsing under conditions of intensifying stagflation with rising inflation and unemployment, and as a result of a miscalculation by the Treasury of the borrowing requirement, Healey requested and obtained an IMF loan. The Managing Director of the IMF, Johans Witteveen and the assertions of people like Milton Friedman, convinced Healey and then Margaret Thatcher to view the balance of payments to be a purely monetary issue as opposed to being a physical productivity issue. As a result, since that time, Britain has seen its balance of payments plummet and the economy becoming increasingly dependent on goods and commodity imports. With time the country lost significant degrees of national economic resilience against any international shocks.
There is a blind faith of our political leadership in the global market and the currently unjustified assertion that BREXIT Britain is competitive enough to compete in a world where several countries have long since overtaken this country as the workshops of the world. The argument that financial services help make up the balance of payments deficit overlooks the fact that financial services support only a small proportion of the constituents of this country. The majority of the 95% working in supply side production and service industries have seen their real incomes decline. During the last 12 years of quantitative easing, financial services became increasingly obsessed with purchasing and driving up the prices of physical and financial assets as opposed to investing in British industry and manufacturing. It was this obsession that caused the 2008 financial crisis. Even the House of Lords Economic Committee entitled their report on quantiative easing as, "Quantitative Easing: A dangerous obsession?
Kwasi Kwarteng seems to want to encourage the financial services sector to intensify this trend to further transform Britain into a declining economy with very little economic resilience. Our economic development requires increasing productivity to reduce our obscene level of income disparity and to reverse the ridiculous trend in our balance of payments.
Unfortunately, Kwasi Kwarteng appears to have misunderstood the type of growth needed in Britain under the current dire circumstances. It would seem that in order to secure "economic growth" he is looking to encouraging more international banks to set up in the City of London. His reported intent is to remove or relax the cap on bonuses on bank executive bonuses which are a form of commission for performance measured in terms of sizes of transactions undertaken. If this is the case, Kwarteng joins the group of misguided monetarists who think that by advancing money this will create demand and as a result economic growth.
Milton Friedman made such claims in the late 1960s. Nicholas Kaldor drew attention to Friedman's error in an article in the Lloyds Bank Review in 1970 entitled, "The new monetarism
". Kaldor observed that Friedman had got the sequence out of order or the wrong way round. Real economic growth arises from productivity enhancing investment. Such investment arises from the needs of supply side industry and manufacturing wishing to improve performance. Therefore the demand for money arises within the corporate sector and banks simply respond to this need. Most such investment is non-inflationary because it supports change which brings about lower unit costs, and an ability to sell at more competitive prices and thereby enhance the real disposable income of constituents as workers and consumers. Therefore, consumption rises as a result of more competitive prices which are the result of a demand for funds to invest by companies. Such funds can come from current cash flow, equity or bank loans1
For the record, Nicholas Kaldor had a far broader and practical experience in economics, than Friedman, advising several governments and in particular the role of technology and technical change. He had a good grasp of economic development. Friedman, for example, could never explain the mechanism as to how monetary volumes influences inflation in goods and services when their prices are, in fact, set by companies. His standard response was always, "It happenes in the long run!
" which, of course is not a mechanism.
Friedman's erroneous assumption was that money injections by banks create demand and this leads to growth. The questions that remain unanswered are: Injecting money for what purpose? To create demand for what? and, How is growth to be measured?
The experience with quantitative easing witnessed banks avoiding a response to supply side corporate needs and indeed injecting money into the economy on their own account. This was to serve their own shareholder interests by purchasing assets whose prices rose as a direct function of increasing purchases. This activity was far greater than any support for corporate productivity-related investments. Thus the answers to the questions above are:
- Money injections were made by banks solely to support bank shareholder value.
- The banks created a rising demand, and prices for assets.
- Growth was measured in terms of asset price inflation
During this process, investment to promote supply side productivity declined along with productivity, funds flowing into assets drained funds from supply side production demand because real wages also declined.
There is an erroneous belief that allowing bonuses to rise will result in more risky lending. Banks consider supply side production companies as risky investments whereas their own injection of own funds into assets helps raise prices and thereby guarantees a profit. This incurs less risk for the banks but the resulting inflation creates serious risks for the constituents and the economy. This is because asset inflation feeds back into costs of supply side production creating cost-push inflation.
Kwarteng appears to believe in the out-dated aggregate demand paradigm which over the last 50 years has created a systemic inflation caused by asset price inflation. For example the rentals and prices of land, domestic and commercial real estate, corporate shares and financial instruments and commodity speculation. Failures to maintain financial regulations brought in after the 1929 New York Stock Exchange Crash, caused by excessive financial speculation, have been systematically eliminated over the last 50 years and it would seem that Kwarteng wishes to go yet further (See: "The journey from 1971 to 2020 - the consolidation of financialization"
This form of nominal growth is not what Britain needs, we need investments in supply side production industry and manufacturing to augment our ability make things people want at increasingly competitive prices and to correct our deplorable negative balance of payment for goods by import substitution and exports. It is in these sectors that innovation and growth can generate well-paid jobs in growth activities of the future.
Expanding the banking sector will only see banks and hedge funds purchasing land, real estate and speculating in commodities, shares and financial instruments on their own account with the intent of driving up prices so that they can make even higher profits and executive bonuses. This will greatly benefit that faction of the British constituency who hold and trade assets, around 1% of the working population, and this will further exacerbate the state of systemic inflation and will prejudice the remaining 95% of the British constituency who don't hold or trade assets but want their real incomes to stop declining through policies that encourage rising productivity in the supply side economy.
The more basic point being made by Kaldor was that demand originated in company requirements as interal or endogenous demand whereas the general assuption of monetarists was and remains that demand originates in external or exogenous injections of money. Endogenous demand, responding to corporate needs, tends to be counter-inflationary whereas exogenous injections of money is usually inflationary since much exceeds and by-passes supply side production needs and results in speculative asset price inflation.
In a time when economics is still referred to as political economy, the hand wringing and complaints that Kwasi Kwarteng and Liz Russ are politicizing the Treasury by removing a senior Treasury civil servant from his position, needs to be analyzed with more care. During the last 50 years, since the switch to monetarism under Denis Healey in 1975, and its intensification by the switch to quantitative easing (QE) under Gordon Brown in 2008, Britain's balance of payments in goods has continued to plummet to the second worse in the international balance of payments league table. During the last 30 years, productive investment has declined together with productivity, with funds flowing overseas to offshore production, industrial and manufacturing jobs being lost in the UK, a de-skilling of the workforce and a steady decline in real incomes, especially amongst lower income constituents.
The Treasury's advice seems to have been to support these approaches to economics. On balance, monetarism has favoured the interests of banks, hedge funds and asset holders and traders in general. Gordon Brown's decision to make the Bank of England (BoE) independent in 1997 essentially replaced all of the constituents in the United Kingdom by allowing the BoE to respond to the smaller financial services sector which makes up a tiny fraction of voters. As a result the Treasury has worked with the BoE of England to favour a particularly small faction of the British constituency.
Recent developments in economic theory have demonstrated, on the basis of the outcome of QE, the core reference model of monetarism, the Quantity Theory of Money is next to useless and it not a transparent function that shows any relationship between money volumes and the prices of goods and services. The QTM makes a direct association between money volumes and the prices of goods and services and it ignores the prices of assets and the money flowing overseas or saved - see insert above right. As a result it ignores the prices of assets (See: "Why the Bank of England cannot solve the Cost of Living Crisis"
). Therefore the rapid rises in the cost of living items of rents and prices of land, domestic and commercial real estate do not appear in the QTM. This is why QE exacerbated the state of affairs for those on average wages while assisting a small wealthy minority (See: "The constitutional crisis created by monetary policy"
). As if by magic, the QTM relates total money volumes to the prices of goods and services but takes no account of where most money, in fact, ended up under QE or the prices associated with these factors. A Real Money Theory (RMT) is a recent replacement of the QTM which contains 14 variables, including assets, overseas money flows, savings, goods and services while the QTM has just 4 variables and shown up to be quite useless. One of the causes of the systemic inflation created by excessive asset price inflation was the preference of banks for asset purchases as opposed to becoming involved in the more complex tasks of supporting investments for SMEs and companies in a declining market. Any further financial regulation liberation to augment domestic or foreign bank activities would simply exacerbate the state of affairs by causing further asset price rises.
As observed in evidence sessions for the Lords Economic Committee review of QE, it was pointed out that QE is a policy with no theory. With the assistance of the RMT, this has been extended to stating monetarism, as a whole, is a policy with no theory at all. In other words, monetarism is an ideology devoid of any objective justification. It is not without reason that the Lords Economic Committee report was entitled, "Quantitative Easing: a dangerous obsession?"
This lack of a robust theory renders monetarism to be an ideological pursuit which renders the Treasury and BoE, as the proactive promotors of this approach, to be highly politicized. Therefore Kwarteng's actions could be a first step in de-politicizing rather than politicizing the Treasury.
However, the duo of the Treasury and BoE still express their justifications for decisions in relation to a defunct QTM.
The most significant overlap between the BoE and the Treasury is the mutual failure to understand the difference between growth based on money volumes and real economic growth based on increasing productivity in supply side activities. The BoE clings to the QTM and the Treasury to national budgetary analysis. Both are zero-sum game approaches resulting from a lack of understanding of where real economic growth comes from.
Media reports have referred to Kwasi Kwarteng's dissatisfaction with the Treasury's poor performance on the growth front. Commentary has been made on the alleged resistance of the civil servant in question to the distribution of Treasury functions to the North (Darlington) and to running a very poorly run grants and incentive scheme under Covid-19 where considerable funds were lost. These simply acted as vote harvesting techniques.
In basic terms it has been alleged that there was no check on the real growth resulting from government outlays and the same can be said for Rushi Sunak's so-called super-deductions, which were apparently approved by the Treasury, had disappointing results in terms of achieving any quantitative changes in productivity. However, these give-aways probably had the desired vote harvesting result.
Kwateng and Truss have mouthed the right sounds referring to the need to "grow the economy" or emphasize "growth". If they are referring to aggregate demand based nominal growth no good will come from this. For example, this would normally be associated with lowering the higher marginal rates of income tax or giving companies tax breaks or further financial deregulation to attract foreign banks to London. This would only result in a further deepening of the existing systemic inflation rising from the preference of banks for asset purchases or hedge fund practices of purchasing companies to lay off workers and asset strip. This country needs to address the imperative of supply side productivity increases.
We understand that Kwarteng is toying with the idea of removing the cap on financial service executive bonuses, somewhat like a marginal reduction in taxation in the higher brackets, as a way to attract more foreign banks and hedge funds to become based in London. This would exacerbate the already systemic inflation created by the underlying asset inflation the main result of continuing monetarism.
This would bring about a completely wrong sort of "economic growth" in terms of the interests of the majority of constituents. However, the thinking could well be that this course of action would ensure generous contributions to the Conservative party war chest for the next general election to pay for the shaping of public opinion by think tanks and a willing media.
On the other hand, if they introduce a Real Incomes Policy, (See: "Monetarism & The Cost of Living Crisis"
) which ensures that government only outlays funds when productivity increases and real growth occurs, this could steer Britain in the right direction. However, this would require radical changes in the Treasury since no economists there will have studied the Real Incomes Approach. Also the mandate of the BoE would have to change.
Beyond the ludicrous European Commission US State Department proposal of a price cap on Russian petroleum, which is already backfiring and
bringing more misery to UK constituents (see previous leader below), the European Commission President, Ursula von der Leyen, is now on another Kamikaze mission proposing an even more ridiculous price cap on Russian gas.
The European Commission has become a useful coordination centre for the State Department and NATO to use as an unelected institution, undermining European participatory democracy by centralizing control over the member countries of the Union. The excuse is the Ukrainian debacle. The European Commission and Court of Justice have taken the role of the European Commission in initiating European legislation far too far so as to take on decisions and coordination roles well beyond its brief such as coordinating military help for Ukraine in behald of NATO. No constituents have been consulted on this and the media do an effective job in moulding public opinion through what boils down to propaganda. This abuse has led to a series of disastrous decisions for the people of Europe and, indeed, the rest of the world. The UK, no longer part of the EU, had the opportunity to break free of this significant constraint inposed by the unelected Commission and Court of Justice over our sovereign decision making, however, by default, the UK governments have been so weak and lacking in indepdence to resist the absurd instructions of the State Department of an alien state. This has been witnessed in the proactive efforts of the Britsh government to appear to "lead" in supporting Ukrainian military efforts or to impose barmy sanctions on Russia which only backfired and prejudiced the economic circumstances of British constituents.
von der Leyen, is at it again, attempting to introduce caps on the price of Russian gas supplies, under the tutelage of the US State Department and cynically attempting to pass this off as a strategic and magnanimous action to assist in reducing the cost of living for constituents. This virtue-signalling is dangerous to the prospects of our economy and social stability because it will not work.
While the price of energy in Europe, UK and USA rises and inflation is heading for 15% and we are enterig a state of depression, Russian inflation it projected to drop from the current 15% to aound 5% within the next few months as the US dollar, pound and Euro fall against the Ruble. In the meantime the UK, US and EU balance of payments plummet and the balance of payments of Russia rises rapidly to take up second position in the world after China and it is on course to take up pole position, ahead of China. In the meantime, the diplomatic and commercial efforts of Russia have already resulted in around 80% of the gas that was supplied to Europe being possibly
assigned to identified potential clients and contracts under negotiation with East Central Asian and countries in other regions whose demand is rising faster that the ability Europe to reduce consumption.
Any country attempting to apply the cap will receive no gas, period. This will simply mean further disruption and rises in global gas prices and deepening of the recessions in the UK and the EU that is likely to occur as a result of the Bank of England, European Central Bank and US Federal Reserve rises in interest rates. One simply could not make this nonsense up. All of these decisions on energy resources and the continuing insistence of supporting fighting in Ukraine increasingly emphasizes the toxic nature of the current "leaderships". They need to find the courage to actually defend the interests of their constituents and their own survival by pursuing an early peaceful and non combatant solution to the Ukrainian situation.
The latest "idea" coming out of the EU, USA and UK is a price cap on Russian petroleum and sanctions on ships and freight insurance covering Russian petroleum. Anyone with experience in bulk commodities knows that this will play into the hands of commodity traders who will make a killing on the difference between the cap and a rising world market price resulting in chaos and even higher prices as a direct consequence of applying the cap.
|From the original dust cover|
From the Author's Note
It seems to have been forgotten that whereas OPEC "controlled" the international price of petroleum in the 1970s, in reality the New York Mercantile Exchange (NYMEX) came to control both the market and final transaction prices of worldwide petroleum sales. This process has been ably described by Leah McGrath Goodman in her book, "The Asylum
" (see box left).
The same process will take place with this cap. The result is that all will probably end up paying more for petroleum from any source. Insurance services do not have to come from the established dollar-based providers as de-dollarizaion of a rising proportion of service agreements is under way. There could be a boom in ship building but more likely changes in the flags of vessels.
Behind the scenes who is pushing for this ill-thought-out scheme are the commodity brokers in such trading floors as NYMEX and some others, who aim to make a killing. The governments know this and so this constant practice of political decisions being taken in favour of political party funding, continues.
This corruption masquerading as wise collaborative strategic decisions will only exacerbate the situation of wage-earners in Europe, USA and UK all of whom will continue to pay the price of rising energy bills.
OPEC learned their lesson as a result of the NYMEX experience while politicians in Europe, UK and USA clearly did not. Since the EU movement on this cap policy, internal OPEC discussions have resulted in decisions to restrict output to maintain higher prices and to squeeze potential gains to brokers. As a result this cap initiative has already backfired as in the case of most other sanctions. At the same time OPEC members, and in particular Saudi Arabia, are considering joining BRICS and moving away from the dollar trade to avoid the risks and disruptions arising from potential US dollar-based sanctions as well as to further limit potential gains of certain classes of brokers and trading floors. Petrodollars are becoming a thing of the past. As a result, those taking this cap "initiative" will pass into a weaker strategic supplies position in an increasingly complex international petroleum regime whose structure provides them with diminishing influence or strategic advantages.
The recyling of petrodollars contributed to the quasi-invisible "Grey Market
" in derivatives growing in value exceeding the turnover of national economies, out of the control of the central banks. This resulted in the 2008 financial crisis.
Now, sanctions have given rise to the "Blue Lagoon
of stateless petroleum from where world prices will be transacted in national currencies rather than the dollar, out of control of central banks and over which national economic policies and sanctions can have no effect. The lesson is that value lies in the physical commodity not in the value of declining fiat dollars, Euros or pounds.
There is something seriously wrong with the rationality of the leadership in Europe and UK in pursuing this type a sanction which, like all of those applied against Russia, will backfire on the constiutuents of this country. This leadership's grasp of the connection between national security, energy and economics and the actual workings of the petroleum market is abysmal. This situation has been exacerbated by their lack of independence and declining freedom resulting from a slavish following of the paranoid directives of NATO and the US State Department in the formulation of foreign policy. NATO has no responsibility for economic strategies, it does not pass for more than an arms bazaar. However, this combination of weak political leadership and too-influential civil servants in the European Commission and Union, with no military brief, have blindly led us to follow NATO "leadershp" to a disastrous economic state of affairs. Like environmental issues, the fact that the UK is now in the BREXIT world, we are not in any position to manage our energy prices independently in the short to mediumn term or protect constituents from a policy-induced and socially destabilizing cost of living crisis. As a result, far from acting to provide security, we have faced a declining economy and likelihood of recessions as a direct result of irresponsible decisions which have undermined any collective security. The most logical explanation for this poor decision making is that it arose from US trader and armament company lobbying pressure and that politicians intend to feed their own interests and those of their benefactors many of whom are commodity traders or armament companies.
Governments collaborating on this disastrous course are unlikely to last very long as constituents begin to realise the cause of the current economic chaos has been the collective incompetence of the very governments voted in at the last general elections.
In all such matters, the best solution is based on a realpolitik of seeking peace and thereby being able to plan the needed future transitions to the benefit of constituents in Europe, the UK and Ukraine.
"Physical petro-derivatives", Internal note, British Strategic Review, March, 2022. "The Blue Lagoon - the evolving response to sanctions", Keynote presentation at the APEurope Correspondents' Pool Seminar, May, 2022.
We probably receive the same content in wires as all UK media but we pass on what we receive while others censor the information of slow up its transmission to the national readership. This form of censorship is evil because it prevents the constituency of this country from being informed of events carried out in their name or from bringing pressure on the government. We have reported in the latest leaders, see below, the disaster that is unfolding in Ukraine. Overnight we realized that the situation is far worse than we reported with multiple thousands of Ukrainian troops being eliminated in a completely ridiculous advance. Hundreds of recently supplied Polish tanks led thousands of Ukrainian infantry into battle, across relatively flat, open and exposed land, in World War 1 fashion, and with no air cover. This led to most troops being killed or injured and well over 50% of the hardware being destroyed. Other irresponsible actions was to lead assaults with boats including speed boats crossing rivers and reservoirs and exposed to the same Russian defence resulting in a similar fiasco.
It is alleged that this action was ordered by President Zelensky under the encouragement of Boris Johnson. The British parliament continues to support this type of needless sacrifice of young lives and still resists encouraging Ukraine appeal for peace and to negotiate. Clearly no one has any interest in this as long as their are Ukrainians still available to be slaughtered. This blood soaked cowardice of our politicians needs to be terminated. The action to remove this parliamentary rabble will remain in the hands of the British electorate at the next general election.
The Ukraine military simply followed orders and carried out this insane action. Only a single Ukrainian general has reported the truth.
Needless to say the stability and future of the current Ukrainian government and its leadership is in doubt.
On the 5th of September, this country will have a new prime minister. The candidates for this position made irresponsible statements concerning the UK support for the Ukrainian debacle. They both advocated further Russian sanctions which, so far, have exacerbated our cost of living crisis. This country needs a rational leadership able to demonstrate an independence from the failed United States and NATO tactics against Russia. These have cynically used Ukrainian lives as a battering ram. The government needs to take proactive steps to terminate military support and action and to seek a peaceful resolution.
The last three days has seen a repeat of the First World War type chaos and slaughter witnessed in the Somme, playing out in Ukraine. This was the result of attempts to apply World War 2 tactics on the Ukrainian side resulting in well over 1,000 Ukraine military killed and perhaps 5,000 injured or around 6,000 of the remaining elite troops put out of action. This is no longer an infantry or tank warfare battle, but Ukraine and NATO have no idea how to progress. The default operational basis of calculating the price of initiatives on the basis of potential loss of troops in World War 1 fashion, has become the reality. Ukraine has insufficient experienced troops and effectiveness has all but vanished and troops becoming no more than sacrificial offerings will increase, as long as hostilities continue.
Given the odds, there is a serious build up of a significant resentment against both the Ukrainian government and NATO countries on the part of the remaining conscripted Ukrainians and their families. At the end of the First World War and the Somme experience, this type of resentment led British troops operating under similar conditions, to murder some of their own officers by putting them in gun carriage boxes and throwing them into canals in the North of France.
In the last 48 hours in relatively small areas of engagement, besides high personnel losses, Ukraine lost over 349 major hardware items including tanks and military vehicles, over 30 drones and 10 planes and helicopters (see: Ukrainian Stats on losses
The death and destruction witnessed in Ukraine was clearly described as a risk associated with the US policy of provoking Russia in a 2019 RAND Corp paper entitled:
The best review of this RAND policy paper and its intent and why this policy has gone so badly wrong to the point of the non-admission of having lost this battle as a replay of the recent Afghan military intervention fiasco, can be found at The New Atlas
We asked SASI to review this RAND report and their conclusion was that RAND completely over-estimated the economic impacts of sanctions as a "harrassment weapon" because of a very out-dated and poor understanding of the operational basis of the Russian economy. This out of date notion of Russia being totally dependent on energy resources ignores the resilience arising from Russian capabilities in a wide range of technologies and techniques, from agriculture to high tech, enabling them to fund and rapidly develop economic sectors of the economy that have been sanctioned.
As a result, after a relatively short delay, Russia is able to bring forward new or expanding sectors rapidly. A recent example was sanctions preventing critical agricultural commodity imports to Russia. The Russian response within 4 years was to overtake the US as the world biggest wheat exporter as well as adding a range of other essential commodities.
So far sanctions have proven to strengthen the economy of Russia and weaken the competitive position of countries imposing sanctions. A good example is the case of the United Kingdom that faces a serious cost of living crisis and a likelihood of depression during 2022-2023 or even 2024.
This is why NATO, in following the RAND Corp proposals, has created a situation that has condemned the European and US economies to an evolving serious financial crisis throwing these economies into a serious cost of living crisis. This is the result of the rebound of very poorly thought out sanctions.
The very obvious lack of concern for the plight of Ukrainians on the part of the USA and UK while feigning concern, has resulted in a rapid decline in the status of these countries as international leaders. Financial sanctions have resulted in an evolving decline in confidence in the international financial system based on the dollar. The impact has been a rapid acceleration in the de-dollarization of international trade and a re-alignment of the countries with the majority of the world's population and the highest potential economic growth, with Russia.
The sub-title of the RAND report is, "..Competing from Advantageous Ground
". However, these crude and scandalous tactics have only imposed prejudice on the USA and its "allies". Any imagined advantages have been lost or are melting away and considerable ground has been lost. The USA and UK can only recover by competing commercially on an honest basis in open markets rather than applying these mafia-style spoiling tactics attempting to disrupt competing economies. The ongoing demonstration in the Ukraine of NATO's failing military hardware undermines, on a daily basis, the lack of real significance of NATO to European defence. It is becoming clear that NATO does not pass for little more than a very expensive mafia style protection racket.
01/09/2022: During the last 36 hours, it is reported (MOD-RF), that a "counter-offensive" and a tactical commando attack at the Zaporizhzhia nuclear plant, by the Ukrainian military, has been carried out against Russian holding positions, to encourage the "West" to think it is worth sending more arms to Ukraine. A secondary aim was to demonstrate that Russia could not defend the nuclear plant. As a result of these poorly planned and executed efforts well over 1,450 additional Ukrainian military personnel perished, we have no idea how many were wounded. A small number did lay down their arms and were captured. Over 170 significant items of miltary hardware were destroyed.
The Ukrainian military, or what is left of it, has not been in any position to fight effectively. This is mainly due to in excess of 150,000 of the well trained personnel having been put out of action (either dead or severely wounded).
Providing more military hardware and amunition and even short periods of training cannot compensate for those lost and who needed at least 2 years training to bring them up to required levels of capability to operate hardware. The current mix of NATO hardware has only created coordination/integration problems. The longer this campaign continues the more apparent it has become that the over-hyped NATO-supplied arms are quite ineffective. And yet, European countries keep purchasing increasing quantities of this over-priced scrap metal from the US and UK suppliers for their own "collective defence" against proven superior military capabilities. This makes the need to take heed of Russia's mutual strategic security framework objectives a priority requirement because NATO is in no position to defend Europe or the UK. In reality this is all Russia has required as a basis for establishing peace throughout Europe. This has been more than evident since Vladimir Putin's presentation at the Munich Conference on Security Policy in 2007. This set out the conditions for lasting peace. Looking back at the videos taken during his presentation it is notable how leading NATO officials were smirking and not taking Putin's presentation seriously. This arrogance has extended up until 2021 when the same treatment was given to serious proposals to sustain peace were sent by the Russian government to both NATO and the USA in December of that year. Rather than respond to secure peace, NATO countries ramped up armament supplies to Ukraine to support their intent to carry out a major attack on the Donbass against the Russian speaking minority.
To prevent further bloodshed, it is imperative that the UK and Europe encourage Ukraine to declare an end to fighting and to enter into negotiations with Russia.
To understand the origins of this irrational and insane militaristic approach we encourage readers to watch the Democracy Now Video which interviews Jeffrey Sachs, of Columbia University - click on the announcement below left to access this video.
If you lie to desperate people your obligation to redress this situation is significant. Boris Johnson has been accused of dishonesty and lying, this is why he is on the way out. However, his most heinous lies have involved his pronouncements affecting the people of Ukraine. By siding with a fascist regime he has made promises he cannot and will not keep while at the same time exacerbating the situation of people in Britain. His fanatical attacks on Russia in support of sanctions has only delivered for this country a deepening energy deficit and rising prices to levels people on average wages cannot afford. This means many families are no longer able to afford to support Ukrainian refugees with ease. The large number of Ukrainian refugees was caused by Johnson encouraging Ukraine not to negotiate and to continue to fight. As a result many Ukrainian families both here and Ukraine have seen wives lose their husbands and children their fathers, around 15,000 in all, since Johnson intervened.
What is his message for these families?
Johnson promised to support Ukraine with arms for as long as it takes. Another lie, or was it an incompetent miscalculation? Because of the economic shambles the UK does not have the resources to continue throwing money away on a battle that was lost many months ago. The UK government will run out of budget for this escapade.
Johnson has a surreal child-like imagination. He imagines he is leaping into the breach to defend Ukraine against impossible odds. He obviously enjoys the momentary high he experiences from the media spotlight that arise from his inveterate habit of making promises he cannot keep.
Very soon, sooner than most expect, his lies will come back to haunt the Conservative government that will have to tidy up the unholy mess he has created. Anyone still supporting the shoddy and shameful Johnson line will find that this horror show will become increasingly toxic as the people of Britain begin to realize the dreadful mess the leadership of this government created. This, as yet unreported additional string of lies, has seriously undermined the wellbeing of the people of this country.
The unimaginable level of suffering of the people of Ukraine, caused by this irresponsibility, is something that will remain as a major diplomatic disaster and an indelible stain on the image and record of international relations of this country.
In a surprise visit to Ukraine on their Independence Day, Boris Johnson made the cynical and absurd declaration that the British taxpayer should bear the cost of funding the war in Ukraine, as the Ukrainian people are "paying with blood
." The cost of funding the war is even greater as a result of ill-judged sanctions enthusiastically supported by Johnson and Liz Truss, as a calamitous foreign policy, having back-fired on the UK economy causing a seriously out of control rising cost of living crisis. This is likely to result in deaths of older constituents in this country as a result of fuel poverty this winter. The poverty causing this type of situation is the result of over 12 years of austerity and falling real incomes of some 40% of the British workforce. The blood spilt by Ukrainians has been far greater than it might have been if Johnson had not interfered, in yet another foreign policy disaster, with the progress of negotiations between Russia and Ukraine in March, 2022. He actively discouraged Ukraine from negotiating along the same lines as fanatical elements in Ukraine and the USA. As a direct result of this irresponsible foreign policy action at least 15,000 additional Ukrainian military personnel have perished in the 5 months following this advice. We have been training Ukrainian troops to return to suicide missions.
All of this talk of defending Ukrainian independence conveniently overlooks the fact that Ukraine lost its independence in 2014, as a result of a bloody coup engineered by the US State Department and assorted goon squads in the Maidan and which up until December, 2013 had cost the US $5 billion as confirmed by Victoria Nuland to a US-Ukraine Foundation event in Washigton, on 13th December, 2013.
All of this talk of defending Ukrainian democracy conveniently overlooks the fact that the puppet regime in Ukraine has imprisoned opposition politicians and murdered others, it has closed down independent TV stations and runs an online hit list on which are named anyone who criticises this regime, to intimidate them.
Many on this list have already been murdered including Darya Dugina a young academic and daughter of Aleksandr Dugin who has been demonized falsely by our irresponsible mainstream media, as "Putin's brain". In reality there is no record of them ever having met. The photograph of Ms. Dugina on the hit list has been recently marked as "eliminated". The circulation of videos of Ukrainian militia murdering Russian POWs was designed to encourage a revolt in Russia against the war but when the fanatics involved were informed that this was creating a negative image for Ukraine, they removed these videos from social media. This is the regime for which both Boris Johnson and Liz Truss have openly and enthusiastically declared their unwavering support.
The "help" being provided by the USA in their latest package of assistance announced by the Biden administration on Wednesday, is made up of nearly $3 billion in additional military aid to mark the Ukrainian Independence Day. Most of this will be contracted for production and it includes the equivalent to about a week's worth of the number of artillery shells fired by Russia in a normal week, and other products which will take up to 2 years to deliver. This cynical virtue signalling is seen by most to be a last chance saloon for getting money to arms suppliers before the Ukrainian show collapses. We don't know the arrangements in the UK between arms suppliers and political parties, if any, but in the USA they are less bashful about this form of corruption.
A recent letter from a Ukrainian soldier, defending Peski and who, contrary to instructions, describes the reality of the front has been presented by Mark Seboda an ex-USA military with family in Ukraine and Russia. "A Ukrainian's Letter from the Front"
was presented on the 8th August, 2022 and Russia announced their over-running the Peski defence on 13th August. The writer of the letter is likely to have joined the other 15,000 dead, each of whom could have written similar letters and who have our government to thank, amongst others, for encouraging Ukraine not to negotiate.
The Guardian Newspaper has an editorial entitled, "The Guardian view on Liz Truss: a Little Englander PM risks running a Little England."
This, correctly, warns of the danger of Liz Truss, in particular, acting in a way that will undermine the Union. A recent article in the same medium by Andy Beckett, "Thatcherism is an obsolete ideology – but it’s the only one that Sunak and Truss have"
pointed out that
Whereas this leader criticizes Conservative policies, Labour, supposedly the main opposition to this government, has slid, under the leadership of Keir Starmer, into exactly the same policy paradigm. Starmer fears the negative media coverage if he does anything that might upset the City who essentially control the media. The Conservatives have learned this lesson.
The Gordeon Knot is the independence of the Bank of England (BoE). Notice how both Conservative and Labour proclaim their steadfast commitment to defending the independence of the BoE. However, the BoE actions and policies support tiny faction of constituents who are asset holders and traders. Essentially, the BoE acts as the banker and hedge fund trades union. The BoE has no ability to impact productiviy and corporate price competivity to the benefit of the other 95% of the constituency. See: Why the Bank of England cannot solve the cost of living crisis
Truss and Sunak are promoting the same Thatcherite play book in their approach to economics. Indeed, the division of the Union started with the disastrous policy of increasingly financialized monetarism introduced, paradoxically, by Denis Healey of Labour in 1975. A subsequent IMF loan tightened up the conditions in a structure very much approved by the Conservatives. The basic problem is that monetarism ignores the vital elements of competitive price-setting by companies which depend upon the levels of productivity. The vacuous logic of monetarism that altering interest rates, raising or lowering debt or tax rates has an impact on "economic growth" is simply ridiculous. The growth the whole of the national constituency needs rises in purchasing power which come from rising productivity and competitive price-setting to, at least, enable constituents access basic essentials. During the last 30 years, increasing numbers of people, throughout the Union, have found themselves in work but being unable to even purchase basic essentials. House prices have risen to beyond the means of those on average wages. Monetarism has undermined the very basic factor that might maintain the Union, that the Westminster government has been deploying economically destructive policies for the majority of wage-earners while arbitrarily shoring up and increasing the wealth of that small faction of asset holders and traders. The asset holders, financial services sectors and their
large corporate customers support media and political party funding of the Conservative party whose policies have operated on the basis of hanging labour out to dry for the sake of incremental gains in profits
Because Scotland, Ireland and Wales have their own political parties it is only natural that their significance has risen as a direct function of destructive Westminster policies. It is not just Scotland, Ireland and Wales that have suffered under this awful regime but also the result is evident in the so-called Red Wall areas in England. The trick played by Boris Johnson was to blame this economic destruction on the European Union. Those in the depressed, previously industrial zones and largely made up of Labour supporters, were duped into voting for Johnson's deception providing the Conservatives with an 80 seat majority. The Conservative policies are not only dividing the Union but also separating the North from the South and the West from the East of England. Conservative policies are highly toxic to the health of this nation. Like the Berlin Wall, the Red Wall needs to be torn down, but monetarism stands in the way.
Neither Truss or Sunak have presented coherent and rational policy propositions and the whacky faction of 0.25% of the constituency, making up the membership of the Conservative party will, quite arbitrarily, decide who commands economic policy for the remaining 99.75% of voters. No wonder the Union is falling apart under this tyranny.
The tragedy of the Ukrainian state of affairs is more than evident from the disastrous military stats
on the current state of this conflict. This useless war which should have been resolved by NATO in December 2021 in response to Russia's plea for a strategic security agreement to avoid this conflict. NATO's insistence in continued support and UK government's role in this event has resulted in the deaths of thousands of Ukrainians for no justifiable reason. The United Kingdom's government spearheading of sanctions against Russia has contributed to a deepening of the cost of living crisis facing the constituents of this country. A close to negotiated settlement, in March 2022, was canceled as a direct result of the intervention of the UK government resulting in the additional deaths of thousands of Ukrainian personnel since. This is likely to come back to haunt this government when Ukraine has to negotiate to end this blood bath. This same government wishes to sacrifice the wellbeing British constituents for the sake of a war the government wants to pursue. This government has a serious problem of balancing its desire to swagger in play acting as a "world player" well beyond our means, oblivious of the continuing death and destruction, when its priorities should be to focus on solving the dire circumstances its foreign and economic policies have inflicted on the people of this country. The degree of toxicity of this government increases on a daily basis.
Andy Beckett has posted a statement of fact in his recent Guardian article entitled, "Thatcherism is an obsolete ideology – but it’s the only one that Sunak and Truss have"
which point out that in reality Truss and Sunak have nowhere to go for lack of coherent, effective policies to tackle the impending stagflation.
To access this article click on the title or image on the right.
There is a very limited range of policies that can help get the UK out of a devastating crisis created by the current policy-induced decline. However, the latest posts on the Real Incomes site explains in more detail how this crisis arose and points to a specific solution in a two part article under the series title: The Cost of Living Crisis (COLIC)Lessons from the past as the foundation for the present - Part 1
Lessons from the past as the foundation for the present - Part 2
In today's pod cast anchored by John Harris on the Guardian's Politics Weekly UK involved a conversation with RMT general secretary Mick Lynch and Miatta Fahnbulleh, the chief executive of the New Economics Foundation, reviewing how to tackle this social emergency. At least some people are picking up on just dire the situation in this country is. Certainly the conversation was more interesting and relevant than what is coming out of government nowadays. The now tedious daily exposure of two very unimpressive candidates for the prime minstership of this country does not settle the rising anxiety of increasing numbers of constituents in this country. The drought and realization of all of the cross-related consequences of this example of an early taste of the impact of climate change is met with inadequate response by government.
Dr. Fahnbulleh seems to put some faith in Keir Starmer in coming up with something this summer but as long as he remains under the spell of Peter Mandelson, this is very unlikely. What is apparent at the moment is that both the government and the remoulding opposition are both fearful of the potential media reactions orchestrated by the City in response to any proposed changes to economic policies which the financial services sector and hedge funds do not like. Their general orientation is against unions so Starmer has made not supporting them on picket lines a way to keep on side. The other taboo is to question the independence of the Bank of England. Therefore a self-serving survival tactic is to keep repeating the mantra that the Bank of England should remain independent. Rather than acquiesce to this mantra it would be more productive to carry out a moratorium to assess the impact of Bank policies over the last 12 disastrous years raising the wealth of a minority and prejudicing increasing numbers of wage-earners with falling real incomes. The levels of income disparity in this country exceeds that of low income countries as a direct consequence of monetarism and the policies administered by the Bank of England (see previous posts). SAXO Bank have recently assessed the state of the UK economy as reverting back to that of a transition economy.
It is very evident to any serious analyst that the distribution of income in this country is unacceptable. This is why Mr. Lynch is talking about redistribution and food poverty becoming demands for action by increasing numbers of the constituents of this country.
The state of the economy, advancing stagflation and climate upheaval and apparent paralysis of an out-of-ideas government and lost leadership contestants, sees a rapid decline in the image of a government who do not appear to be on the job.
However, Mr. Lynch raised some interesting suggestions as well as intentions with which we would agree. Given the drastic economic circumstances facing increasing numbers of people, Lynch suggested that unions should be assisting people organize themselves in action groups so as to enliven our drab close to non-participatory democracy and bring about a wider public awareness of shared needs. This would fill a widening gap in public participation manufactured by a system that increasingly marginalizes the electorate. Indeed the recent policing legislation was oriented to prevent the type of public participation, which would be bound to involve protests, from taking place. As a result things could get ugly as a direct consequence of a government who does not engage with the issues of working people and, in spite of strikes, does not bother to participate in negotiations, at least to gain a better understanding of the issues.
Reading between the lines, as the current zombie government and party marionette show drags on for another three weeks and this alone is bringing many to the end of their tether. As Geoffrey Howe mumbled when attacking Mrs Thatcher in parliament, " .. the government is in office but not in power"
. It would seem that the only people hopeful of a miraculous delivery from all ills is the miniscule faction making up the membership of the Conservative party.
A tenet of constitutional economics is that a country's constitution should serve the interests of the state, the community and the individual. A second tenet is that policies developed under the terms of the constitution, clearly need to meet the same test of satisfying the interests of the state, community and individuals. Because Britain does not have a written constitution the ability of policies to transgress the need to meet the needs of all constituents becomes problematic because of party politics. As a result, the real incomes approach to economics, as a branch of constitutional economics, has the tenet of "Positive Systemic Consistency" (PSC) i.e. policies should benefit all constituents. This is a major challenge in a partisan world. There is therefore a need for politics to be organized in a way that facilitates the achievement of PSC. Is this a criticism of the British constitutional settlement and resulting system of democracy? Yes it is.
The common failure of conventional economic policies is their creation of winners, losers and some who remain in a policy neutral impact state. This is because conventional policies introduce a differentials in impact created by a zero-sum approach to policy assuming that if some gain, others have to lose. This assumption is rejected by the real incomes approach to economics, a contemporary extension of constitutional economics.
This article reports of the exchanges in the Saturday sessions in a recent weekend APEurope Correspondents' Pool Workshop (06/08/20022-07/08/2022) consisting of presentations prepared by SEEL-Systems Engineering Economics Lab on "Positive Systems Consistency". These workshops are sponsored by the George Boole Foundation.
The Sunday sessions will be covered in Part 2 of this article.
A favourite statement by the current leadership of this country is that Britain now has more people employed than ever before .... but they fail to mention the state of real wages.... the real wages of 40% of the constituency have been declining for 30 years. The evidence is apparent in the growing numbers of people who are in work and who cannot afford bare essentials.
The reality is that the term "full employment
" has no meaning without due consideration of the levels and state of distribution of real wages.
The leadership candidates Rishi Sunak and Liz Truss are having trouble handling topics concerning illegality by failing to understand the causes of the symptoms they wish to attack.
Rishi Sunak is attempting to establish just how effective he will be in handling "illegal immigration" while not explaining why this exists. Symptomatically it exists because the UK provides no legal routes for such people intentionally so that they can be classified as illegal immigrants. This in itself is not legal. More importantly this flow of people has been caused by Britain joining in illegal invasions of countries in the Middle East and elsewhere, helping to destroy the economies of these countries, murder close to a million people and destroy livelihoods. As a result we contributed directly to the flow of immigrants but do not wish to face up to our responsibility in creating this crisis.
Sunak's desire to look tough simply avoids reference to the fundamental illegality of the UK government's actions; this is a man who keeps declaring he is honest with the public!!.
Liz Truss is forthrightly defending a puppet regime in Ukraine created by an illegal violent coup in 2014. A government that has closed down independent TV stations and media, imprisoned opposition politicians, had some killed and maintains a kill list of journalists who have criticised the country, several of whom have since been murdered. Russia entered the ongoing war carried out by this dreadful regime, against the people of the Donbass after the deaths of some 14,000 people and a build up for a major invasion of the Donbass. The British government decided to impose sanctions on Russia and to carry out a series of illegal confiscations by looting the assets belonging to private Russian citizens. These sanctions, enthusiastically supported by Liz Truss as foreign secretary, have resulted in international gas and petroleum prices rising to such high levels that this has created a serious problems for British constituents who cannot afford to cook or heat their homes. Contrary to the government propaganda, Russia maintained its adherence to legal contracts for gas supplies so those countries who did not break contracts continued to receive gas at the original and far lower price. The continued series of incompetent decisions by EU countries and the UK have ended up with less Russian gas being delivered and prices rising to higher levels. It has not been Russia using gas as a weapon but rather the UK government imposing sanctions together with EU countries leading to constraints on this commodity trade.
Truss is struggling to invent economic policy solutions to an energy crisis which in good part has been created by our foreign policies which she managed bolstered by her over-sold assertion that she is the one who stood up to Putin. This woman needs to realize that sanctions are illegal and just because the USA revels in the use of this weapon, does not mean we need to follow like sheep and prejudice our own constituents, and then attempt to blame Russia for the boomerang blow-back on British voters. To claim that this hardship is the price of defending democracy is simply a way to maintain the corruption surrounding the billions of dollars that have flowed into Ukraine with no effective oversight under a regime that has absolutely no democratic credentials.
The Bank of England's quantitative easing between 2008 and beginning of this year, diverted funds into assets away from vital investment for rises in productivity in the supply side production sectors. The Cameron Conservative government doubled down on this lunacy with Chancellor George Osborne imposing austerity in order to accelerate their desire to reduce the public sector leading to around 75,000 firemen, police and nurses departing so as to place the NHS in an impossible position when Covid-19 turned up. This process was enthusiastically supported by Bank of England excessive tranches of quantitative easing boosting asset prices under the governorship of Mark Carney.
Covid-19 only further exacerbated the state of affairs creating supply chain issues from which we are slowly recovering now. Now the Bank of England has decided, in its inexplicable wisdom, to further depress the economy by raising the cost of investment, mortgages and supply side production.
In a recent interview, the Bank's governor said the reason the Bank is raising interest rates is to suppress inflation mootimg that "we could be heading for a depression
" and perhaps 13% inflation. As usual the Bank has taken the wrong decision by speeding our entry into, and the degree of, depression and with inflation now likely to top 15%.
By analyzing mechanisms involved in inflation and money movements the real incomes approach established in several analyses and papers such as, "Why the Bank of England cannot solve the cost of living crisis"
that the Bank of England's guide in the form of the Quantity Theory of Money is wrong and incapable of establishing the effects of money volumes or interest rates on price inflation in goods and services. So why does the Bank continue to attempt to apply disproved solutions to the country's detriment?
It is very apparent that there are significant gaps in the practical economics knowledge of the functionaries and management of the Bank of England that calls into question its "independence", mandate and behaviour. First of all its policy instruments are not fit for purpose in the context of inflation control. It is notable that after over 12 years of relative chaos and a declining real economy that neither of the leading political parties have raised the question of "What is the Bank of England for?
" and "Who does it serve?
". Based on the track record of the last 12 years is seems to be there to serve the interests of asset holders and traders, banks, hedge funds and the rentier economy.
This weekend the APEurope Correspondents' Pool Workshop entitled "Positive Systemic Consistency
" is reviewing how policies can ensure that all constituents benefit as a result of good policy design. The current problem has been that conventional policies have no such objective but invariably result in the creation of winners, losers and some who somehow remain in a neutral policy impact state. The result, therefore, is, invariably, a rising income and wealth disparity amongst constituents. This Workshop is using the behaviour of the Bank of England as a case study in how wealth distribution can be influenced by policy through the creation and support of a tiny group of constituents who deal in assets. At the same time, this same policy has undermined the real wealth and income of the majority of wage-earners. The irrefutable evidence created by quantitative easing demonstrates that this serious constitutional structural problem was created by the inherent bias in monetary policy. In reality, this effect was identified and commented on by Mervyn King, the former Bank governor, in 2013 when he was retiring. However, the media gave very little attention to what was and is a constitutional scandal. Mark Carney did nothing to use his "indepedent brief" to correct this unacceptable trend. Of course, the government whose main benefactors are to be found in the financial assets community, looked the other way and continued to devastate the wellbeing of growing numbers of constituents. In the meantime, Carney simply overplayed the role of the Bank in expanding its "prudential regulations" into and oversight of consumer interests in relation to private banks and other financial intermediaries. This, of course, only served to direct attention away from the fact that the Bank's policies continued to impoverish a large proportion of constituents. There have been discussions on whether the Bank maintained an independent brief under the Osborne tenancy of the Chancellorship. It would seem that in reality, it acted in a fashion to assist the government deliver on its objectives beyond the constraints of its mandate.
One of the revealing documents in the information pack for this Workshop explains this shocking result of the Conservative government's "management" of the economy. It is entitled, "The constitutional crisis created by monetary policy"
Brian Bereltic and Mark Sleboda are two ex-military Americans who provide a realistic analysis of the situation in Ukraine. In the latest edition of The New Atlas they review the current situation which confirms Ukraine has lost this campaign. Notably they consider NATO member-supplied arms to have made no difference to the direction of this conflict. UK arms supplies are only symbolic and waste of money and the training is considered to be immoral, or even cruel, since most of the trainees will return to a known situation where they will not have enough tactical support, strategic oversight or field support to avoid death. We are convinced that this level of incompetence on the part of the UK government and the inevitable outcome will prove toxic for the Conservative government and especially those promoting this useless support. Jingoism, flag flying and the Battle of Britain spirit have a feel good dimension but they are to no avail and represent an irresponsible and suicidal approach for those facing a modern superior forces. This attempt to appear valiant, given that it is poorly trained Ukrainians in the battle is exceptionally craven and serves no other purpose other than virtue signalling.
An important observation is that the Russian front line troops are on a constant rotation so remain rested, fresh and alert while Ukrainian front line have hardly slept for 5 months, are out of ammo and in a desperate state.
There are convincing arguments put forward as to why Ukraine liquidated some 50 Azov battalion POWs; their own people. It seems that they were spilling the beans on Zelensky and the government and military corruption and incompetence. This risks destroying the gravy train cash flow enjoyed by armaments companies and politicians in Ukraine and in the West, while Ukrainians continue to die willy-nilly. Zelensky's life was always in danger but now potentially more so at the hands of Ukrainian ranks. This attack was via a system for which all targets and actions are vetted by the USA military, and thereby hangs a tail.
The last leader has turned out to be somewhat controversial causing some discussion amongst the economics correspondents in the APEurope Correspondents' Pool. There is agreement with the general statement that much of economics taught at university is too close to politics, philosophy and ideology as opposed to the objective mechanics of economic relations. By relations, we refer to those between factors of production including management and work forces. This is why the last two candidates in the Conservative party race for leadership have been able to propose diametrically opposed proposals as solutions to the cost of living crisis. This, it is also agreed, is not confusion in the Conservative party as such, but rather reflects the lamentable state of economics and as a result, its teaching.
This weekend's APEurope Workshop will therefore delve into this topic under the general title of "Positive Systemic Consistency
", a phrase coined by the real incomes approach to economics. This is a datum line, benchmark or test of the quality of a policy and the underlying theory to be imposed on analyses and models. Positive systems consistency is the condition where all constituents benefit from a policy. Many famous economists have asserted that such a condition is not feasible and, as a result, the last 50 years has witnessed zero-sum game policies generating winners, losers and those who remain in a policy neutral impact state. The last 12 years in particular, under Conservative rule, has seen a minority of constituents who are asset holders and traders multiplying their wealth, in some cases multiple times, while increasing numbers of wage-earners have been driven into poverty.
As a result of partisan positions and ideological objectives, there is for many constituents, an overly cynical approach to the notion of attempting to serve the whole community. This is because political parties respond to their financial benefactors and, as a result, in spite of the wonderful sounding rhetoric about democracy and serving the people, our economic models never achieve anything near to a state of positive systems consistency. The only time we came close to this ideal was during the period 1945 through 1965. This period was notable for rising real wages across the board, declining income disparity, rising productivity and full employment. Of note is the fact that policies were deflationary, there was little financialization and Keynesian policies were not applied because there was full employment.
We don't know how the Workshop will cover the related topic of how to improve university teaching of economics, no doubt for some a sensitive topic. There are some strongly held views on this subject so it will be interesting to see what emerges.
Conventional policies applying not-fit-for-purpose instruments remain intact. It is therefore feared that neither of the "solutions" advocated by our illustrious would-be-prime-ministers will change the underlying zero-sum game of monetary and fiscal policies associated with balanced budgets or tax reductions - these particular suggestions make no difference to the fact that inflation is out of control. We will report back on the Workshop proceedings.
The continuous counter-claims of what they will do to improve the economy, by two people trained in economics at Oxford University is the most obvious indication of much of what they were taught has little practical application. This continued confusion transmitted by Rishi Sunak and Liz Truss in the leadership programme organized by SKY is not so much their fault because they know no better. Economics was taught at Oxford more or less as an ideological rhetoric so this is why we see two reasonably intelligent individuals making completely comntradictory propositions. This reflects negatively on the state of economics and, of course, the state of teaching of economics which evidently remains at some distance from a transparent practicality. Given the importance of sound economics to the wellbeing of the constituents of this country it is imperative that discussion needs to move away from frivolous "ideas" to "practical solutions".
The same can be seen in the Bank of England's humming an harring over interest rate rises without realizing any rise will be damaging. In his Reith Lecture, Mark Carney, the ex-governor of the Bank of England, referred to the lack of physical relationships in economics by referring to the concept of "Physics envy"
. This sort of statement could only come from someone with a similar economics educational background in Harvard and Oxford. Since the teaching of economics almost assumes economics to be a philosophy, what else can be expected?
The recent demolition of the Quantity Theory of Money (QTM) by the advent of the Real Money Theory (RMT) (see previous leaders) is an example of monetary policy having relied on a useless but revered identify that represented no more than supposition for centuries. With monetarism coming to dominate macroeconomic policy since the mid 1970s we have seen steadily declining real wages and rising income disparity. This also represents a failure of the economics profession to create deterministic quantitative policy models that work. For a long time the economy and companies have operated in spite of policy. However, corporate decision-making relies of quantitative decision analysis and not rhetoric or philosophy.
The approach to economic theory and policy design needs to be founded on microeconomic principles since it is companies that, in the end, establish output, product quality, prices, wages and investment for productivity. Similarly the cost of living, or prices, are set by companies and not be central banks. Starting from the ground up i.e. work groups and companies it is easier to identify practical solutions. On the other hand the conditions of each work group or company are all completely different and this is why grandiose top down notions by poorly trained economists can never work.
With these caveats in mind, on the basis of many "...What I will do....
" type unqualified assertions, Truss became repetitive and running on empty whereas Sunak branched out a little more this time, folding in "innovation
" to the conversation, perhaps something he picked up at Stanford. However, he still doesn't quite explain the role of innovation. Indeed, both candidates make a fuzzy reference to "growing the economy" but so far, neither has actually explained how. In reality the explanation is simple and it sould help clinch the issue. It is notable that neither has done this, so far.
The notions of the effect of interest rates on inflation were disproved in the stagflation crisis of 1970s-1990s. Raising interest rates simply exacerbated the crisis. The Bank of England (BoE) is considering raising interest rates by around 20% (i.e. 0.25% over the existing 1.25%) or 40% (i.e. 0.5% over the existing 1.25%) over a low base, a legacy of quantitative easing. No matter which level is selected the impact will be to exacerbate the state of th economy by raising mortgage rates, outstanding loan premiums and killing off investment in needed productivity. As a result we will seen business failures, families losing their homes and productivity stalling.
Ever since the appearance of the substitute for the Quantity Theory of Money, in the form of the Real Money Theory in 2020, it has become apparent that a critical logic of monetarism has been proven to be wrong. In spite of this, the BoE remains wedded to completely out-dated and prejudicial policy instruments. The BoE's mandate and policy toolkit are simply unfit for a competitive world where the nation's survival depends upon rising productivity based on increasingly sustainable climatic-responsive economic production and service activities at competitive prices.
Contrary to intuition, this has nothing to do with monetary policy. Prices, productivity and wages are all matters under the control of private companies or the public sectors, and not central banks. In order to assist these sectors move the economy in the right direction there is a need for completely different policy instruments.
Companies and the public sector need to be compensated for decisions that lead to moderate, or even reduced prices, maintained through incentives to promote productivity. This can only be managed within fiscal space not by blindly going for balanced budgets or lowering taxation but gearing taxation to delivered productivity results in the form of lower unit prices. In this way purchasing power of wages will rise across the nation and this will generate real economic growth. At the moment there is a negative real growth, very much apparent in inflation heading for 10% and the BoE is about to exacerbate the state of affairs plunging more people into a state of poverty. If in doubt, readers can review the copious material establishing what has been stated in this leader by visiting the "British Strategic Review"
website and the follow up Notes section where they will find a Note entitled: "Why the Bank of England cannot solve the cost of living crisis"
The rising cost of living and inflation have no connection to balanced budgets, the Sunak tack, or lower tax rates, the Truss tack. This is because inflation is caused by an inability of companies to respond to rising input costs through adjustments through input substitution or rising productivity fast enough to maintain prices at accessible levels. This issue is therefore totally dependent on corporate price-setting in response to rising costs and levels of productivity and the prospects for raising productivity. Inflation arising from imported petroleum, gas and derivatives such as fertilizers become an issue to the degree the country relies on imports. The fact that the UK might not import a large amounts of such products from Russia is immaterial since the UK foreign policy has joined forces with several major gas and petroleum importers to sanction these Russian products. This has created international shortages and as a result, the international prices paid by the UK for these products from alterative sources, have increased steeply. Therefore, across the board, our inflation is cost push inflation generated by rising input costs.
This cost push inflation is the main cause of the cost of living crisis. However, this cost of living crisis is exacerbated by the results of quantitative easing (QE) which led to a significant rise in house prices as a speculative asset, as well as some commodities on which banks and others take speculative positions. As a result some commodities are more expensive as a direct result of QE and house prices and rents have moved beyond the ability of an increasing proportion of the UK constituency to be able to afford to purchase a home or even pay rent on family-sized houses. Therefore the cost of living crisis is a direct result of a poorly thought out foreign policy causing international price inflation and disastrous Bank of England monetary policy flushing excessive amount of money into speculative markets to cause domestic inflation.
Although there is an assumption that the Covid-19 supply chain disruptions also caused inflation, these effects were more related to supply disruptions, these are not the same as the structural issues cause by our own government. These supply chain issues are working themselves out.
Balancing the national budget has no effect on cost push inflation or the cost of living. All of the attempts to solve inflation by lowering marginal taxes, did not work, This was experimented with in the last international petroleum price crisis under the name of "supply side economics
". The result was that corporate shareholders, owners and executives became more wealthy and income disparity rose.
The solutions advocated by Rishi Sunak and Liz Truss have absolutely no connection to corporate level price setting and productivity. Their proposals are purely conjectural because there is no historic or current evidence to support their propositions.
This somewhat, extraordinary state of affairs has something to do with their educational backgrounds. Both Sunak and Truss studied Philosophy, Politics and Economics (PPE) at Oxford University which rather than teach the mechanisms of how the economy works places emphasis on economics as a political administrative resource. This causes the whole topic become a victim of rhetoric and non-quantitative and non-deterministic unsubstantiated arguments which are more ideological than linked to any comprehensive and transparent tested economic model. This lack of deterministic rigour is what gives rise to the possibility of two individuals who have followed the same economics course, at university level, ending up with different policy propositions to a problem which cannot be solved with either of their "solutions". There is, here, a demonstraion of a sloppy approach to policy and a definite lack of rigour and analysis on their part arising from gaps in their fundamental economics knowledge. In spite of the fact that the real incomes approach to economics surfaced as a solution to inflation and stagflation in 1976, Oxford University PPE courses have, to this date, not included this branch of economics in their courses. Amongst other important developments, this approach has shown the Quantity Theory of Money to be flawed while supporting coherent and tranparent propositions on how to reduce prices in the short term while and sustaining productivity development. This could tackle our cost of living crisis now.30/07/2022:
In the woke world of cancellation of people with whom one disagrees and the cancellation and sanctioning of whole nations, our leadership, so-called, is creating an increasingly unmanageable governance of this country. The willingness of the government not to become involved in such matters as the negotiations on railway workers' pay and their offering nurses a pittance we witness a denigration of constituents who are classified as labour. The problems facing labour are incompetent governments who have been unable to manage the nation's economic affairs in a way that respond to constituent's needs. While the media provide too much time covering court cases involving footballer's wives or even giving time to report the details some actor who had slapped an individual at some award ceremony, and stuffing their content with sport, there is far too little concern and coverage of how to correct the decadence in our standards of behaviour in dealing with people facing problems.
With a heading for 10% inflation and being offered 3% pay rise, train companies are expecting these workers to accept a cumulative 40% reduction in real pay over a 5 year period, as prices of basic essentials continue to rise. This is completely unacceptable. There is a need for government and companies to state the facts surrounding this undignified treatment of labour by admitting the extraordinarily precarious state of affairs for most working people. In taking this step of sustaining the recognition of the dignity of labour rather than attacking their unions or "union bosses", who happen to make sense, our mutual relations slide towards a murky place. Several media take an abusive and insulting stand reflecting a lack of responsibility on the part of the journalists concerned and their editors. Anything to produce a eye-catching headline and scrub the needed objectivity for informing the public of the facts.
This country is facing a far more serious socio-economic downturn than our political parties admit and it is more than evident that economic policies need to change on a radical basis before we face more contentious situations with increasing numbers needing the support of food banks. Although this is apparently absent from the Conservative and Labour leadership DNAs, there is a need for a forum where labour, industry and manufacturing, service and public sectors and government need to meet in order to better understand the fundamental issues as a basis for identifying sustainable policy solutions, rather than continue to promote confrontation. This could lead to a repressive state of affairs with political parties taking up more extreme positions to gain or remain in power.
A coherent and transparent economic theory cannot support opposing points of view on our predicament or the solution. The very fact that the leading contenders in the Conservative party leadership contest are advocating different "solutions" is the clearest confirmation that neither has a grasp of a coherent economic theory. If they did they would both be advocating the same policy. The reality is that neither Rishi Sunak or Liz Truss actually know what to do but both advance assumptions that have no theoretical or practical foundations. In such circumstances it is who is most effective in asserting a position who wins while not imparting any rational evidence-based justification for the position. The only economic theory that remains coherent, evidence-based and comprehensive is the real incomes approach to economics that concentrates on how to reduce prices in the short term while steadily raising productivity. However, both Truss and Sunak followed conventional university courses on economics which are too theoretical and advocate paradigms which the real incomes approach has demonstrated to be invalid.
Mrs. Thatcher's assertion that , "We are all working class!
", rings hollow, it still remains a sham in our political domain. In constitutional terms with each being concerned for others, yes, reaffirming that there is a society, the baseline for mutually beneficial communication is to respect the dignity of the other. Not along the lines of "Respect agendas" laced with hierarchical constraints and imposed obligations, but rather on the basis that as members of a single community accepting that our mutual interest really does lie in seeking mutual solutions designed to benefit all, with no one left behind.
Too many in government see the successful economy as being one that operates on the basis of greed or avarice. This was a favourite Boris Johnson tack. But it is exactly this attitude at the heart of government that sees those unable to meet their basic needs, even although they are fully employed, as being lazy and in need of pulling their socks up and working additional hours. This dreadfully arrogant attitude reflects an ignorance of equal dimension which expresses itself in the lack of effective economic policies to resolve the nation's problems. These strange people are unable to see reality, they are in an irresponsible denial of the fact that our current policy toolkit is spent and offers no solutions to our current predicament. There is a need for alternative policies where the dignity of all constituents remains intact and in respecting the importance of this condition we begin to address the nation's needs.29/07/2022:
The British political scene is dominated by just two political parties, Conservative and Labour. The last, almost 50 years, has witnessed one party, Labour, taking bad decisions which were then upheld by the Conservatives to create a slid row politics. Skid row politics is one that undermines the economy and efficiency and generates run down areas and destitution for an increasing number of constituents. During that almost 50 years two policy switches did most of the damage. The first fateful decision was taken by Labour Chancellor Denis Healey a supremely confident intellectual bruiser, who switched to monetarism in 1975 and abandoned a wages policy. This was because stagflation had taken hold after the OPEC petroleum price hikes starting in 1973. A mistaken request for an IMF loan only meant even more stringent conditions imposed on the country than those Healey had already imposed. Rather than reject monetarism the Thatcher Conservative government relished monetarism as a way to roll back the state even further, while attempting to apply monetary policy to control inflation. This failed because the reduction in inflation took time and was based on depressing the economy as well as at the cost of thousands of families losing their homes through repossession. The outcome was a rise in offshore investment and a decline in UK industry and manufacturing, the de-skilling of the workforce, falling investment and productivity and declining real wages.
Parallel dedications to monetarism in the USA and several other "advanced" economies, riding on the excessive concentration of petrodollar recycling after 1973 and financial deregulation, led to a rapid expansion of hedge funds and computer-based options trading creating a Grey Market several times the size of national economies. The monetary policy "managers", the central banks, lost oversight and regulatory control over widespread corrupt dealing leading to the 2008 financial crisis. This coincided with the end of the Blair Labour administration and so the fateful decisions to take another policy direction coincided with a Labour administration again.
Power maps were developed by Anthony Sampson (1926–2004) to reflect where the power over decision making lies in Britain's constitutional complex. He used these in the later editions of his outstanding series of books on, "The Anatomy of Britain
As his first act in 1997, Chancellor Gordon Brown had made the Bank of England "independent". He had witnessed how the previous Conservative government's handling of interest rates and the ensuing house repossession catastrophe had lost that government the election. Brown did not want this for Labour, and so it was prudent to make the BoE solely responsible for interest rate policy based on a string of mumbo-jumbo justifications. The main problem, however, was that this also moved monetary policy out of the hands of parliament and of course the voters and this augmented the influence of the financial services sector over the BoE. The BoE might be "independent" of government but it cannot remain independent of the what became its main constituents in the form of the financial services sector. In essence, Brown privatized the BoE. As a result, monetary policy vanished from party manifestos and public discussion.
In the wake of the 2008 financial crisis all of the decisions on the solution as quantitative easing (QE) were taken by the Chancellor Gordon Brown and the BoE under extreme pressure from its constituency of hedge funds, banks and the like. Such organizations do not like independent savers which they consider to compete with their business. Therefore an essential component of QE was close-to-zero interest rates and massive influxes of money through banks. In this way fixed income streams of pensioners from private savings were killed off. The banks began to pump cheap QE funds into the hands of the asset holders and traders by various means as well as using the fund on their own account to purchase assets and raise their own "shareholder value". At the same time they abandoned their traditional monetary policy function of supporting SME and supply side goods and service production sector loans. This resulted in supply side wage settlements almost stalling associated with falling investment, productivity and declining real wages. Again the Cameron administration under Chancellor George Osborne, once again took advantage of a bad decision by Labour to repeat of the first leg of monetarism between 1975 and 1997, a 22 year stretch, with a second 12 year stretch of a yet more intensive destruction under QE. While multi-billions flowed into assets holder and traders the government imposed austerity on the rest of the population and continued the Conservative drive to cut down on public services. This resulted in thousands of firemen, police and nurses being lost to their services only to create the current crises in these services.
The problem with British politics is that there is no opposition to rationalize policies. Labour cannot blame the Conservatives for applying their policies while the Conservative can thank Labour for setting agendas that have helped them destroy the economy while helping sustain the growing wealth of a minority who support the party.
This skid row politics continues and nothing will change under a Truss or Sunak premiership and as long as Starmer leads the Labour party nowhere.
The track record, especially during the last 12 years under an "independent" BoE, by far the main beneficiaries have been banks, hedge funds, asset holders and traders and these organizatons have most funds for supporting political parties and the media. It is therefore notable that all political representatives across the political spectrum from the so-called die hard left to rabid and extreme far right, all repeat the same mantra that they intend to, " ...maintain the independence of the Bank of England."
. This is in spite of its impositions of policies that have resulted in economic prejudice on the majority of constituents in this country.
One has to ask, after all, just whose interests do these Labour and Conservative politicians think they represent?politicians think they represent?
Stella on DW
Stella on UnHerd
While Britain lectures other countries on the topic of human rights it continues to hold the world's most famous political prisoner in complete contravention to the very ideals the government pretends to uphold. This a matter of believe that I profess but ignore what I do. This only encourages those who carry out the types of arbitrary, murderous and criminal actions that Julian Assange exposed.
Julian Assange has been subjected to kangaroo fixed conclusion courts the same as those he would face in the USA if extradited.
There is no doubt that this case is turning out to be a potentially toxic topic for a government that hopes to maintain an image of fairness and justice. Fairness and justice are founded on the truth and the only person who has upheld the truth has been Julian Assange and his legal team while the USA has changed its pleas and brought pressure on several people to create false testimony. This case should hav ebeen thrown out some time ago.
Most British mainstream corporate media ignore the Assange case in an affront to Britain's once proud tradition of establishing the facts so that truth can remain the foundation of justice in this country.
This level of media cowardice in losing the ability to speak to power is testament to the failure of a so-called independent and free press. Our media is patently not independent or free but revels in self-censorship for fear of becoming conspicuous for rebelling against an obvious injustice. The media wish to remain silent while the government administer torture and the selective arbitrary exclusion from the universal protection of habeas corpus for Julian Assange whose only "error" was to report faithfully the truth.
Where do the people stand on this abusive treatment of an innocent person in our capital city?
Where is the proud tradition of the role of the community conscience in deciding someone's guilt or innocence? Julian Assange is innocent and should be freed forthwith.
Placed in support of "Don't Extradite Assange" campaign
Stella Assange's eloquent appeal for the release if Julian Assange
Stella Assange has made an eloquent appeal on behalf of her husband Julian Assange. She explains why it is in no one's interests to extradite Julian assange lated to a higher appeal to the importance of truth. We all suffer as a result of the distortion and hiding of truth which is an the essential ingredient of justice for all. To access click on the image of Stella below.World's apart - Oksana Boyko interviews Greg Barns, Assange's Australian Lawyer
On Contact - Chris Hedges interviews Nils Melzer, UN special rapporteur on torture, concerning the treatment of Juian Assange
The abusive delays and slovenly treatment of Juian Assange is destroying the image of British justice in its palsied efforts to shore up his continued imprisonment following the open and shameful rendition of Assange from Ecuadorian territory to please the US administration, whose case has evidently fallen apart. In spite of the fact that they are being spied upon by paranoid government agencies, several investigative journalists are working on the already known facts behind the central witness' admission that his testimony against Julian Assange was false. A justice system with no independent agency or urgency to actively follow this up reflects very badly on "British Justice" which in reality, under this government, is becoming increasingly inept and a diminishing force in our constitution. Its past image of fairness, on the international stage, was dispelled long ago by the bungling, scripted behaviour of the management of proceedings. Such injustice is of no concern to an obsequious government too eager to serve the demands of an alien state.
The US and UK governments have worked together to ensure a conviction. Assange has faced systematic due process violations, judicial bias, collusion and manipulated evidence.
He has been the victim of constant surveillance, defamation and threats. Consolidated medical evidence proves that Assange has suffered prolonged psychological torture.
Justice, in the Julian Assange case, see purposely time-wasting prolongations of the imposition of stress-based torture. He should not be in prison. The drawn out consideration of the potential treatment of Assange in US prisons is an example. Justice should check the veracity of the US case against Assange, where the central assertions have lost all credibility.While imposing stress torture on Assange in London the judges accepted assurances that his treatment in a US prison would not result in a suicide risk; but the stress, as in London, could kill him at any moment. Judges are content that he be extradited and placed into the hands of the assassins who were exposed in their acts by Wikileaks with undeniable evidence produced by the assassins themselves, and who have repeatedly declared that Assange should be killed. It is alleged they considered carrying out such an act in London; a valid question is, "Was the Conservative government aware or party to this?"
The CIA and US Military Industrial complex wish to make an example to Julian to intimidate and discourage those who wish to hold governments to account. There is always the convenient option of Julian being found lifeless as a result of an "unexplained" suicide, or more conveniently, having suffered from a stroke or fatal heart attack in a US prison. British Justice remains unconcerned with the murderous track record of those seeking his extradition. Since the actions exposing the USA have been extra-juidicial, the ploy of placing British Justice in the middle of a political case has only exposed the devious nature of our government. This requires a political decision, the responsibilty for which this Conservative government wishes to frame in a judicial decision context. As a political decision the Conservatives know that the all apparent truths surrounding this case are known to the electorate. The credibility of this government is plummeting and if Julian Assange is extradited, this government is unlikely to have a future as far as the constituency of the UK is concerned. But who in this government has the necessary commitment to the truth and courage to take the right decision?
Click on the image of Sigurdur Ingi Thordarson ("Siggi"), on the left, to listen to the recording of his statement that the "key FBI evidence" provided in the court by the FBI, in the case against the WikiLeaks co-founder Julian Assange, that Assange asked him to hack FBI computers, is in fact false. He also admits that he is "... not allowed
" to state why the FBI evidence presented in court is different from what he has stated!! The recording is in the Icelandic language but an English text translation is provided.
img src="fja.png" width="333" height="171" alt="">
img src="fja.png" width="333" height="171" alt="">
In a SEEL-Systems Engineering Economics Lab workshop on COP 26 a summary declaration reads,"Climate change and rises in temperatures have a far more insidious impact than those discussed at COP 26. The most serious issue is that the human population is growing while the falling accessibility to water in the soil, due to temperature raising evaporation rates, means food crop yields, in most production zones, will fall and there will be more frequent intense droughts, food deficits and deaths from starvation."
"Already the "Green Revolution's" miracle rice (IR8) has faced a 15% drop in yield. Some crops cannot be produced in their current locations because there is no longer viable production. It is regrettable that COP 26 has dwelt too much on "technologies", "climate science", "finance" and "carbon trading" at the expense of the vital topic of food production practice.
29/07/2022: In this week's "Summer double issue", the Economist newspaper posted an article on the declining image of the Bank of England (BoE), entitled, "Dreadneedle Street". The Economist was always hooked on monetarism, glorifying "financial engineering" as some sort of glamorous solution to the world's ills when in fact this has been the cause of most of our current problems.
The notion that interest rates can have any effect on externally generated inflation was disproved between 1973 and 1995.
In 1971 when the Gold Standard was abandoned the International Monetary Fund (IMF) was expected to close down. However, Johannes Witteveen the new Managing Director and a Sufi Moslem, took advantage of the OPEC sanctions on petroleum importing countries imposed by the Arab members. Witteveen arranged for the rapidly accumulating petrodollars in OPEC countries to be recycled through the IMF to advance debt to low income countries destined to purchase petroleum at ever-increasing prices. Nothing was done to prevent OPEC from increasing its prices. This recycling of petrodollars soon included private operators and the development of sovereign wealth funds. As a result of this influx, the IMF was saved and with it the rise of the role of central banks in macroeconomic policies, which became increasingly financialised. An unnecessary IMF loan to the UK in 1976, was the largest loan every advanced by the IMF. This was negotiated by Witteveen alone and the UK government with Witteveen insisting a reduction in public expenditures. As a result of this experience, the IMF published a book, with a foreward by Witteveen dated April 8th, 1977 entitled, "The Monetary Approach to the Balance of Payments". This is a ludicrously theoretical text. However, having bagged the UK as an IMF loan recipient in the context of sorting out the UK's rising inflation and stalling balance of payments, this added some momentum to this new dimension of IMF policy. The UK loan did not in fact fix the UK balance of payments which has been in a slow free fall since that date until today. In fact the loan was not needed since it had arisen from a cock up in Treasury calculations that exaggerated the borrowing requirements. This is why, in reality, the UK only drew down part of this IMF loan facility although this was misrepresented as the UK having paid back the loan in full within 12 months. However, the hype surrounding this event as a "successful" IMF intervention went to Witteveen's head and the tiny minds to be found amongst senior staff; thus the book referred to. This launched a disastrous period of increasing financialization through central banks to this day and a massive rise in worldwide debt.
Source: The Economist.
The confusing mumbo-jumbo contained in the BoE Governor's statements and the extraordinary gobbledy-gook interpretations published by the media, including The Economist, the emphasis remains on the singular totem pole of "interest rates".
According to the British Strategic Review detailed assessments of inflation, starting during the petroleum price crisis in the 1970s, gave rise to a what amounts to a new school of economic through, the Real Incomes Approach to Economics and its proposed policy, Real Incomes Policy (RIP). This development work has established several major facts that have exposed the futility of monetary policy. At the most simple level, most inflation is cost push and the underlying paradigm of the BoE, and other central banks, is that inflation is demand pull. This is why interest rates and all of the other policy instruments cannot tackle inflation and the cost of living crisis. The basic go to theory used to justify any BoE decision is the Quantity Theory of Money (QTM). This, it is asserted shows the relationship between money volumes injected into the economy and the prices of goods and services. The Real Incomes development work has completely disproved the utility of the QTM. It contains a massive error which even although a theoretical mistake, is very easy to understand. The QTM was unable to explain the results of quantitative easing (QE) because it is missing some 9 variables of assets markets, savings and offshore investment, where most QE funds ended up. This resulted in funds being drained from supply side production and wages under George Orborne's austerity running down public services. During the Lord's Economic Committee evidence-taking on QE, the BoE admitted that on QE they were still learning about its effects. This is after 12 years of QE imposed on the country. The title of the Economic Committee's report was, "Quantitative Easing: a dangerous addiction?", not exactly a vote of confidence. It would seem that reviewing the findings of the Real Incomes work, QE is a policy with no theory, in fact monetarism falls into the same category of prejudicial policies backed up by no rational economic or financial logic. The BoE's QE contributed to the creation of a serious constitutional crisis by increasing the wealth of asset holders and traders who make up no more than 5% of the UK constituency while prejudicing most wage-earners, making up the other 95%, including increasing numbers who can no longer purchase basic essentials.
The Real Incomes school places emphasis on price moderation based on productivity and completely different policy instruments which proactively encourage lower risk pricing strategies and effective unit costs reduction methods, through incentive policy instruments that maintain a sustainable rising productivity trajectory. As a result, prices begin to come down immediately while productivity continues to rise. In this way this idle article content and talk of where interest rates should go, becomes an irrelevance since this is very definitely barking up the wrong totem pole.
27/07/2022: Poland appears to be falling into an entrapment. It is procuring massive supplies of arms for its own defence consisting of second grade USA cast-offs all proven to be vulnerable against modern or asymmetrical warfare and definitely to current Russian evolving capabilities.
SASI has suggested that this appears to be in preparation for the inevitable collapse of Ukraine and loss, while preparing to manipulate events to maintain the violence and shift it Westwards into Europe. Poland seems to be destined to take over the principal function of the sacrificial lamb in NATO and the USA's quest to "weaken Russia".
Poland has got itself into this predicament as a result of an extreme and paranoid leadership, a perfect mindset for the US to sell scrap metal through high profile political deals, as opposed to a serious attempt to provide Poland with meaningful security.
NATO, in overseeing this second rate and exceptionally expensive armament of Poland, only draws our attention to the fact that its principal function is to act as shadowy souq, a multi-billion dollar bizarre arms bazaar enriching, mainly, US arms manufacturers and, as a result, extending the devastation of the lives of the people and the economies of Europe.
27/07/2022: Germany and Europe have enjoyed a steady flow of very cheap gas from Russia for almost 50 years. The only problem that occurred was when Ukraine began stealing gas from its main transit station. Otherwise Russia was a completely reliable source. Germany in particular, with what was the highest balance of payments in the world has relied on Russia to minimize its energy costs and to succeed economically. The USA's decline during the last 30 years has created a paranoid foreign policy which aims to undermine competing nations, including Germany and several European countries. For some time the USA kept lecturing the EU about their strategic reliance on Russia for gas. However, there was no evidence that this was an issue since Soviet times. Rather than organize their economy so as to compete in goods and services, the USA began to apply economic sanctions to spoil the economic advance of sound projects and countries they imagined to oppose the power of the USA. The attack on North Stream 2 directly affecting the future competitive status of Germany became a major target, as part of this spoiler foreign policy. In 2014 the USA organized a violent coup in Ukraine at the cost of around $6 billion, to create a puppet government and began to send considerable amounts of arms to Ukraine. The Donbass region of Ukraine populated mainly by Russian speakers, entered into panic and declared independence. The puppet Ukrainian government declared those involved to be terrorists. This started the war which Russia finally joined in 2022 on the side of the people of the Donbass.
The fact that this was a special technical military operation and not general warfare could be seen in the continual supply of Russian gas to European countries at low contract prices. In the meantime most countries in the EU under US and NATO goading applied sanctions on Russia. The typical technocratic EU Commission's response has been to establish plans for EU countries to begin to substitute Russian gas for noncompetitive alternatives thereby sacrificing future economic growth and competitive status of the EU. This is just what the USA wants. Russia, for a series of technical reasons related to problems with delays in the maintenance of turbines and related equipment, caused by the antics of countries applying sanctions, has had to reduce gas supplies on occasions. Those refusing to renew contracts do not receive gas from Russia anymore. The EU has entered into panic because gas supplies are declining as a direct result of their own actions of making energy a weapon through their sanctions and their expressed and agreed intent of their strategic energy plans.
Schizophrenia is a state where the intellectual state does not square with reality. This is the state of affairs here with EU imagining that they can continue to undermine Russia and yet expect Russia to keep supplying them with cheap gas. The paranoia, emanating from the USA and transmitted through NATO, is expressed in the somewhat idiotic fear and rising panic that Russia is about to cut off all supplies. So these high income countries want to sanction Russia, send arms to Ukraine and allow Ukrainians to die, it would seem, for no good reason at all, other than to "weaken Russia", and yet continue to enjoy the benefits of cheap Russian gas. They have actually expressed the opinion that Russia should only do this when the EU has had time to organize themselves to be able to use alternative sources of energy sometime in the future. The sheer gall of all of this is quite astounding and reflects a bizarre form of self-anointed exceptionalism of people who consider themselves to merit special consideration by Russia. Given the capitulation to State Department wishes and showing no appreciation of the contribution of Russian gas to European economic growth and stability for almost 50 years, Russia, it would seem, would be justified in cutting off gas supplies. However, this is what the USA State Department wants. This would lead to social instability and economic chaos which would help dessimate what are considered to be international competitors; all well and good. But, as is normally the case, the State Department has no follow up strategy. The aim worldwide has been to simply abandon theatres as simply geographic regions containing failed states and ruined economies. However, this could cascade into a major falling out of member states with the EU and the USA and a final realization that following NATO's strategic security mirage is leading to economic suicide and absolutely no security. With government's already failing, one wonders if any countries will react to safeguard the interests of the security and economic prospects of their constituents, before it is too late.
26/07/2022: The BBC Conservative candidate for leadership debate on BBC probably left most people none the wiser as to just what the two would do to change things. Both failed to link up growth in a transparent way to their economic plans. Neither candidate referred to real growth or more for less arising from increased productivity. What seemed to substitute for real growth was talk about regenerating town centres, which normally does not generate real growth, simply some nominal increase in cash flow and temporary employment on refurbishments or some construction, but no long term real growth arising from increased productivity. Truss made some sense in the line that lower corporation tax will attract foreign investment. But like Sunak there was a lack of qualification of what investment does.
Truss is also right in her taking aim at bean counting which is what gave rise to austerity starting with George Osrborne and ended up stripping down the police, fire and health services of personnel and which the government has since been trying to build up again. Simply securing more investment does not necessarily result in more productivity which is so necessary for the country to make its way in the world.
Sunak made some statements concerning China which, in spite of this being a line followed by the intel people, is in fact completely wrong. He was misleading the public.
China has led the world in patent filings since 2011. The World Intellectual Property Indicators 2020 report from the World Intellectual Property Organization (WIPO) reports, China filed 1.4 million patents, or 43.4 percent of the world’s total patent applications that year. That is more than twice the number of filings in the United States. China accounts for even larger portions of world total filings in utility models (96.9%), trademarks (51.7%) and industrial designs (52.3%). China passed the United States in 2019 to become the top country in international patent applications under the Patent Cooperation Treaty (PCT) administrated by WIPO.
Source: Centre for International Governance Innovation
China, in terms of the registration of completely original patents, has led the world since 2011 (see box on the right) and in numbers of engineering and high tech graduates beats India and leave the USA and UK falling behind. The known learning curve relationships place China, as a direct function of the size of its internal market, without considering the international market, way down the unit costs curve in many vital areas in terms of continuing innovation to place the UK, USA and most of Europe playing catch up. A good example of where the UK government following intel bad advice, canceled Huawei 5G equipment contracts under pressure from the Mike Pompeo when CIA chief. Huawei is a mutual owned by its workers formed in the early 1980s. It is an outstanding example case study of the impact of the learning curve and continuous innovation over 40 years. The British government's actions meant that British engineers have lost the opportunity to work with exceptionally rapid and dense transactional systems putting us behind the advances in 6G currently being introduced in China and Russia. In terms of industrial and manufacturing process control systems, a growth area for Huawei based on 5 and 6G, we see our own capabilities falling behind. The paranoid perspective voiced by Sunak is not something an economist should be passing an opinion. This topic is an advanced systems engineering economics topic and experienced engineers willingly acknowledge China's rapid advances and innovation as world-beating. The strategic approach to this is to work with it so as to at least keep up with leading edge applications as well as participate in more advanced developments. The following of the USA's paranoid America first policy is what has led to our future gas prices being 35%-40% higher than those of China placing us at a very serious costs disadvantage. Following this paranoid US lead will only distance our engineers from where the action is. Indeed this is part of the USA strategy of spoiling opportunities for others. For example the sanctions on NorthStream 2 and Russia has already turned the German economy with the largest balance of payments in the world into one with a middling negative balance of payments. The USA has always moved to avoid Germany becoming too influential. Oddly enough, both Johnson and Truss both had promoted an approach to China that was correct but this was undermined by our intel leadership which lacks experience and is tending to follow the CIA's' lead on just about everything, to this country's detriment.
Liz Truss held her own better in this last debate while Sunak became extremely irritating in his constant interruption and talking, out of turn, over of what Truss was saying. She was usually unable to finish her answers before Sunak would butt in. The mediation on this score failed to manage this dreadful behaviour in an effective fashion.
On balance Sunak fell behind in this debate and Truss maintained her cool under what were difficult circumstances created by Sunak's bad manners. But in the end both failed to get their messages out in a structured and coherent fashion.
25/07/2022: A previous leader concerning the lack of standards of evidence linked to policy, mentioned the use of terms of reference to limit the scope of enquiries.
The Forde Report into the scandal surrounding the leak of a long report into corruption surrounding the events leading to the demise of Jeremy Corbyn's leadership, has just been released, it is a case in point. In terms of the context of the events leading up to the false accusations that Jeremy Corbyn is antisemitic, by far the most significant was the official policy of the Israeli government's international campaign to undermine Corbyn.
Therefore, through a very limited terms of reference (see box left), the Forde Inquiry was supposed to discover who leaked the said report. This was a "Don't get mad, just get them!" action that the Labour "right" who, under Keir Starmer, hoped would expose their opponents within the Labour party who had exposed the right's coordinated attempt to undermine Jeremy Corbyn. Clearly the intent was to expose them and punish them.
All of this was, in typical British style, disguised as an "independent enquiry". Having ignored the responsibility of the Israeli government's setting of the context for the demise of Corbyn, the 138 page Forde Report is of mild interest informing us of things whch have been circulating in the alternative media for some 2 years now.
Because of the encapsulation of the agendas and media content by our tiny private political parties whose membership in total does not surpass 1.25% of the electorate, a fundamental form of censorship persists. A more relevant enquiry would have been an investigation into the frank and virtually open interference in our national affairs and party politics by an alien regime in the form of the Israeli government. But neither of the leading parties would even venture so far as to expose the degrees of compromise that exists on their part on this quetion. It is better to minimise any access to the facts on the part of the electorate on this hot potato.
Terms of reference are used to "set the agenda" and in this context the current leadership contest for the Conservative party has purposely limited their agendas to extraordinarily narrow assertions focusing on limited policy solutions as opposed to reviewing the broader context of what is causing our problems; this way it would be possible to identify realistic solutions. Two items have emerged as priorities. One is tackling the cost of living and now, the other, illegal immigration. In this typical parochial and out of context discussion, no one is trying analyse why we have these serious cost of living and immigration crises. The reason is that the government seems to be incapable of joining up the dots between strategic economic and strategic security components in the domain of foreign policy. The immigration and "illegal asylum seeker" crisis was caused by the government's enthusiastic support and participation in particularly violent and destructive Middle Eastern military ventures which laid to waste whole economies and have slaughtered over 1 million people. Since there was no economic development follow up for the constituents of these countries, with no other options, millions have left these countries and many have attempted to enter Britain. This problem was, in good part, created by this government and previous governments. However, rather than learn the lesson, our foreign policy continues in its out of control manner.
An example is this government' military support for Ukraine. Since Johnson persuaded the Ukrainian not to negotiate, with Liz Truss' enthusiastic support, constructive diplomacy was abandoned. Into this dreadful void, Johnson, and now Truss, has claimed that Britain is "leading" the West's support for Ukraine. This has come at the horrednous cost of ans additional 120,000 Ukrainian personnel hving been put out of action since that fateful decision. This slaughter continues at the rate of aver 120 personnel per day or at least a further 1,200 up until the final leadership vote in 10 days time. But who cares? After all this can be ignored in order to gain the serious business of gaining support of around 100,000 people who happen to be Conservative party members.
This government has enthusiastically imposed sanctions on Russia which have back fired and directly contributed to the international energy, fertilizer, food and other essentials price crisis in the form of inflation. This has exacerbated the state of affairs of the lowest income constituents in this country. Both candidates are deploying a responsibility displacement ploy by stating that, "...oh...inflation is an international crisis, all countries are facing this problem!!", or that all of this has been caused by that wicked "Putin". In reality it is our incompetent foreign policy which has resulted in the blow-back from Russian sanctions causing such economic chaos in this country. Russia and Mr. Putin have stated simple facts that those under contract for Russian gas will continue to pay the very low prices. However, incompetent strategies have disrupted this energy flow through a range of bad decisions with the USA, EU and UK having destabilized the world markets. This has set the course for all of these countries to operate on a more expensive less competitive alternatively sourced energy base in the future, exacerbating our already disatrous balance of payments. US and other LPG substitutes for Russia gas are around 30% more expensive than Russian gas. Although our parochial politiians shout that Russia is using gas as a political weapon, the record shows that it is our government that is doing this with distastrous impacts on our economy. The cheap Russian gas has always been on offer under contract throughout the military action.
It is more than evident that both Liz Truss and Rishi Sunak simply cannot admit to this complete government incompetence in the handling of foreign and economic affairs and this is why they continue to attempt to focus our attention on irrelevancies such as balanced budgets or tax cuts rather than how to handle the collateral human suffering created by our irresponsible foreign policy by threatening to ship people to a country that has one of the lowest per capita incomes and has recently experienced a horrific genocide. This is a shabby solution to a problem created by MPs of both parties in parliament who voted to support unacceptable foreign ventures.
Liz Truss is beginning to become a bit repetitive in stating that in foreign policy she has been getting things done. The problem is that the issues of millions of displaced suffering people and the surging cost of living crisis, what was done has prejudiced everyone in this country and the thousands of mourning Ukrainian families in a collapsing economy.
It might be that to 0.35% of the electorate that make up the full memebsrhip of the Conservative party are taken in by partial information and will vote in one of these two as Prime Minister while the other 99.65% of the electorate looks on, having no say on this matter.
24/07/2022: We have withdrawn the last two posts because they contained misleading information arising from our interpretation of information given to us, some of which was incorrect.
Two and half months ago Charles Michel, the President of the European Council, stooped very low to make a disgraceful statement to the UN Security Council (Monday 06/05/2022) by voicing in a somewhat ridiculous pseudo-dramatic manner, an irrational and mendacious smear. He said several things about Russia that are patently not true. He stated that Russia was using food as a weapon against Africa. As the world's largest world wheat exporter Russian wheat has been on offer throughout the conflict but increasing numbers of countries were afraid of NATO sanctions if they permitted Russian ships to dock. Marine insurance companies were refusing services, fearful of NATO sanctions if they provided insurance on Russian ships or cargoes. For effect, Michel stated that Russian ships can dock in the EU while ignoring the reality and being intentionally misleading. The State Department rhetoric did not clarify matters. At that time, Odessa could not export Ukrainian grain by the sea route because Ukraine had mined the harbour. Already at that time negotiations between Russian president Putin and Ergodan of Turkey, almost three months ago, had proposed that Turkish navel experts clear Odessa harbour of mines and provide safe passage for Ukrainian wheat carrying vessels which would also be guaranteed by a Russian naval escort further down the chain. The Russian navy therefore was not preventing Ukraine export grain. As in the case of all such proposals Zelensky rejected the idea. Ukraine wanted to blame Russia for lack of exports and to prevent Russian grain exports at the same time. As a result the grain supply deficits facing Africa lie at the feet of Zelensky and NATO.
This impasse imposed by NATO was broken by the diplomacy of Russian Foreign Minister Sergei Lavrov in the export agreement signed yesterday by the Russian Minister of Defence.
Whereas we stated that the Odessa event was a false flag event, it turns out that military assets had been placed close to the grain silos in Odessa port and Russia eliminated these. The assets in question were stored US-supplied Harpoon missiles, a naval repair facility and a naval ship. In a state of military action where Russia has declared its intention to hit military targets, it is clear that Ukraine needs to distance any military assets, personnel and facilities away from the grain export facilities and systems including silos and handling warehouses. In this way it will be possible not to provoke attacks that could disrupt grain exports. Ukrainians reported that the attack did not affect any grain infrastructures or silos. This attack also has not affected preparation for grain exports.
Given the repeated amateurish and promoted to be high profile false flag events, arranged by Kiev during the course of this military conflict, many informed observers had imagined this event was also a false flag. This was the erroneous conclusion contained in our retracted posts.
However, what has transpired is that the United Nations was quite prepared to resolve the Ukrainian grain export issue and leave the larger Russian grain exports to a later date. This would not have resolved the problems facing the South. Russian had to insist that the Russian exports be part of this agreement, for it to go ahead. Although the recent grain export deal agreed between Russia and Ukraine under Turkish mediatorship and UN backing is promoted to be all about Ukrainian grain exports "to feed the world", it ended up containing the vital provisions to terminate aspects of sanctions that were preventing the export of Russian grain and fertilizer. Although Ukraine is an important grain exporter, Russia is by far the world's largest grain exporter and Ukrainian exports alone cannot resolve the problems of the "South". Until this agreement, NATO and others were accusing Russia of using grain as a weapon while failing to admit their sanctions made transport insurance and servicing impossible. Therefore the grain export issue was caused by NATO sanctions and Ukrainian mining of their own port in Odessa.
Vladimir Putin explained this issue in face to face meetings with Recep Erdogan months ago (see box on the right) and they reviewed solutions via video link more recently. Erdogan therefore made sure that the agreement also removed the restrictions on Russian grain and fertilizer exports. Without this, the global grain shortage, caused by NATO and Ukrainian actions, would not have been solved. Now Russia and Ukraine can begin to export their grain.
The United Nations has admitted that by removing sanctions on these shipments from Russia and having mine sweeping crews remove the Ukrainian mines from Odessa harbour, will allow the dozens of foreign ships, impounded by the Ukrainian military, to set sail. The combination of Russian and Ukrainian exports will result in prices falling significantly on the world grain market and help countries in the South import their needs.
23/07/2022: In the previous leader (see below) Simon Jenkins stated that it is becoming easier to double check economic policy propositions made by politicians. Jenkins referred to the ability of journalists to keep things in check based on today's enhanced resources available on the net and through contacts. The problem with this is that a good deal of economics contains a considerable amount of ideological content so that if a politician's inclinations and assertions agree with a leading expert's inclinations and assertions then the journalist thinks he has done a good job by comparing the two.
During this weekend's workshop at APEurope Correspondent's Pool the British Strategic Review (BSR) group explained some very preliminary findings they have made in the preparation of a Note 7 entitled, "The Nolan Principles & economic policy administration." Michael Nolan (1928-2007) or Lord Nolan, was a judge who was the first chairman of the Committee on Standards in Public Life (1994/1997) which drew up the seven Nolan principles. On the event of Nolan’s death, the Guardian newspaper obituary referred to Lord Nolan as having " ... made a profound mark on national life by substantially cleansing the Augean stable of corrupt politics as founding chairman of the Committee on Standards in Public Life.". However, it is likely that given the experience of the whole BREXIT saga and latest events that most would assume that the Augean stable has filled up again to become overflowing with a sort of fetid dung.
The preliminary BSR findings are that whereas the Nolan principles might be applicable to civil servants they don't work in the case of politicians for several reasons. Politicians first and foremost operating on two, often mutually incompatible bases. One is attending to constituent concerns. The other is as a representative of a political party and the "selling" of ideologies of sorts, protecting collective government wisdom and the image of their party. This involves attempting to convince people and organizations to support their efforts in terms of finance or votes and the underlying sense of such support is that those offering support will benefit. Some individual politicians seem to consider themselves to be the embodiment of their parties and as a result consider the pay they receive for "consultancy" work is very much in the spirit of party support and the valuable contributions they make to the success of their clients. After all parties are made up of the members.
This whole transactional nexus inhabited by politicians is therefore somewhat complex involving self-promotion, aspiration, the ability to hold onto their seats, emotions and often visceral responses to anything threatening this pack of cards. This is why, for many people, politicians are such a put-off, although, of course, they are much admired and very much appreciated within their own bubbles. Charles Dickens who had been a parliamentary reporter never presented politicians in a positive light but rather as self-serving individuals who made promises they never intended to keep. They have the bad habit of making statements according to the particular circumstances surrounding the statement so as to maintain an acceptable image of being in control. The very wide interpretations within political parties or individual politicians of what are acceptable means of promoting all of these interests is why the Nolan principles are regularly ignored and considered not to be particularly relevant.
However, there is a concept out there that politicians are elected to serve the general public. In this context, it is evident that there is a need for basic standards of evidence to be applied as the foundation for any policy analysis, policy planning and statements of policy justification. This can be organized to strip away ideology, lies and misrepresentations by imposing on politicians and governments the requirement to provide testable models of policies including all feasible options before embarking on the usual non-delivery and policies that lack traction, usually based on clever but irresponsible rhetoric. Minimum standards of evidence, albeit, set at a high level, can make policy analysis, options and relative benefits transparent so that when it comes to voting, constituents have a better understanding of what is really on the table. It is not as if such standards of evidence need to be invented. They already exist within the discipline of decision analysis and systems engineering economics. There are even techniques, for the confused, to specify what data is required to build policy models. In the name of rigour and exactitude, these techniques, at the outset, can assess the "terms of reference" provided by politicians on any particular policy development, to detect imposed factual or procedural bias; a common trick. This is the usual technique deployed in the countless "independent" enquiries that go nowhere because governments know they can ignore the conclusions because the tendentious terms of reference will ensure that they will not be implicated and some poor sod/s lower down the hierarchy somewhere, anywhere, will be held accountable. This is often the case where political parties do not want specific types of evidence to be investigated or policy solutions considered in an act of self-preservation or for ideological reasons.
However, in systems engineering economics all options are reviewed since quite often what could be excluded as a result of presumptuous limitations on an enquiry can end up being a far better solution than those which might have been favoured by the "party". This more thorough, neutral and, in reality, more productive approach to policy is an essential requirement in support of the Nolan principle which states, "Holders of public office should act solely in terms of the public interest". To illustrate why Nolan principles map over political functions with some difficulty, this phrase refers to "Principle 1.1: Selflessness". Within the context of the systems engineering economics exercise in serving public interest, the quest is to find the best solution for constituents based on a complete analysis of gaps and needs and the identification of the different ways to address them. This exercise is dominated by the collection of information, knowledge of cause and effect relationships affecting outcomes and the probability of events influencing outcomes. In basic terms these exercises are a quest for facts which when brought together are testable. This has very little connection to selflessness.
We understand that Note Number 7 reporting on this interesting and topical issue has become quite extensive. Those working on it admit this review has been quite revealing. We understand it will be released at the end of this month in the Notes section of the BSR website.
22/07/202: Simon Jenkins, a journalist who tends to write sensible pieces, makes some important points in today's Guardian Newspaper under the heading "Being 'economical with the truth' has a long history in British politics – but enough is enough"
"... Rishi Sunak believes fiscal caution, honesty and responsibility are the truthful way to appeal to the Tory members. Truss disagrees. She promises what a chorus of economic commentators declare to be fiscal nonsense. She assured the BBC that her tax cuts would reduce inflation. Asked to justify this statement, she could only cite Patrick Minford, economic architect of the Brexit disaster. I have combed the columns of the financial press and found not one supporter of her thesis."
If Liz Truss’s big idea really is to remodel monetary policy, expect markets to take fright"
The point being, and we agree, that with Boris gone, the lying will continue in an attempt to dupe the constituents of the United Kingdom. Our own position is that this is not just a moral question in will also exacerbate our state of affairs from the cost of living crisis, foreign affairs and national security to climate change.
But moving away from economics, just to record a fact, this exaggerated assertion by Truss that she gets things done avoids mentioning that she does the wrong things. For example, her assertion that she "stands up to Putin" ignores the fact that by encouraging the Ukrainians to fight to the last Ukrainian is immoral and a strategic mistake. Since Boris Johnson, with her avid support, encouraged Ukraine not to negotiate, Ukraine has lost more than 25,000 military personnel and around 75,000 injured resulting in around 100,000 personnel now out of action. This is a price paid by Ukrainian families and not by us. Truss’s encouragement of citizens to fight in Ukraine has no doubt resulted in additional deaths. Words matter. As a result of the Ukrainian debacle, novices now go to the front facing a professional army and they face a spiralling death rate. All of this talk of UK providing arms and training is wholly irresponsible virtue signalling. Not realistic at all. Russia's demands, at the end of the day, are intended to reduce the likelihood of war by making Ukraine neutral so that the mutual strategic security arrangement can be extended to Russians and thereby reduce future tensions and any likelihood of war in the European theatre. This is to our benefit. Liz Truss prefers to continue to peddle the Boris lie that we are helping Ukraine and defending our freedom. Nothing could be further from the truth.
Foreign policy, first and foremost needs to look to the interests of our country. This requires a good deal of Realpolitik and cold rational logic. Applying sanctions on Russia that predictably backfired to exacerbate our cost of living crisis is a sign of economic strategic illiteracy. This has provided Truss with the excuse to cancel green levies. In this vein there is an illusionary assumption that since Net-Zero is 50 years off so we can catch up later. This ridiculous point was made by Kemi Badenoch and is completely wrong. The current rate at which billions of tonnes of Carbon is being returned to the atmosphere in forest fires, all over Europe, involving biomass that has stored this Carbon over periods varying from 25 -100 years, is reducing the time frame available for climate action. In any case, Net-Zero does not reverse temperature rises because there is a need to reduce the absolute concentration of greenhouse gases (GHG) in order to reverse this temperature movement. Therefore Net-Zero has always been a fantasy. What is required is a Net-Negative state to begin to drain GHG from the atmosphere and bring temperatures back down to less destructive levels. Liz Truss insists on an irresponsible and inflexible stand based on ignorance and lack of understanding of the dynamics involved with respect to what is necessary on climate action.
Most alternative media reported on just how out depth Truss was in her meeting with the Russian Foreign Minister Sergey Lavrov. She was lost on questions concerning named territories not being able to distinguish Russian from Ukrainian territories but, of course UK mainstream media did not report this. This of course is not a particularly serious point, but it reflects how the UK media participate in painting a misleading picture for UK constituents and, in particular, the 160,000 Conservative party members, of Truss capabilities and performance.
"The art of political mendacity is to concentrate on what cannot immediately be tested – to lie about the future. The lies that led to Johnson’s downfall might have been relatively small but they were about the present and instantly falsifiable. They were Houdini lies, securing escape from one entrapment even if only leading to another. They eventually erode trust all round."
"I believe that veracity in public life is actually on a rising curve. Political statements can be verified by the media with ever greater ease. The shroud of secrecy that has long hung over government – petty corruption, lack of audit, planning bribery – is proving vulnerable to ever more intensive digital penetration and monitoring. Craven falsities and pledges are easier to disentangle and test."
Jenkins seems to have altered a previous stand since one of his former criticisms of the jury system was less optimistic. Here Jenkins refers to a vital issue. This is the absence of adequate standards of evidence to be presented in making any case from a court of law to a policy justification. At the moment this topic is being analyzed by the British Strategic Review economists in response to numerous queries related to their last Note 6 entitled,"The constitutional crisis created by monetary policy"
It would seem that this analysis has realized that the seven principles presented in the Nolan Principles are simply too fuzzy and open to personal interpretation. This was often the Boris problem with his considering types of behaviour as normal. For a man who thinks the economic success relies on avarice, what else could we expect? So Nolan's Principles simply don't cut it; so they are usually ignored. More mileage could be gained from the 2007 proposal for the adoption of Decision-Analysis Briefs (DABs) proposed by Hector McNeill as a transparent analysis of proposals based on standards of evidence, in his book, "The Briton’s Quest for Freedom.. Our unfinished journey…".
The referred-to Note 6 describes the constitutional state of affairs and cost of living crisis that has resulted from run down industry, a deskilled workforce and horrendous balance of payments as a direct result of monetarism. All of this decadence had taken place before the advent of Covid-19. Monetarism was introduced by Denis Healey and intensified by Margaret Thatcher and coasted along by Tony Blair and Gordon Brown ending up with the financial crisis in 2008 and the insane "solution" called quantitative easing administered by the Bank of England. This resulted in a stark division in society of roughly 5% of constituents who hold and trade assets and who have benefited handsomely from monetary policy, and the rest who rely on wages and who have seen real wages fall for over 25 years with many having been driven into poverty. All of this was delivered over a period of 50 years bolstered and delivered on a sequence of misrepresentation and false promises by politicians, of both major parties, as a result of some very bad habits which Simon Jenkins justifiably criticizes.
Jenkins end his piece stating:
"If politicians were unable to promise the earth – or claim to have created it – democracy would be dull indeed. Yet there must be limits. When Rishi Sunak says two plus two equals four and Liz Truss says five, I have no option. I have to go for Sunak."
We have little faith in Sunak related to his seemingly lack of understanding of several important economic issues and he appears to be very much under the thumb of the very inflexible monetary policy through-and-through Treasury and BoE. However, Sunak comes out streets ahead of Truss as far as we are concerned. So on this occasion, Jenkins' conclusion, given the very stark options, is one we agree with.
In 2021 we covered some aspects of the problem of climate change. Letters sent to organizations never received adequate replies and the current weather confirms much of what was stated. The UK is not immune from the impacts of rising temperatures and they are set to rise even further based on the current projections. This will impact crop yields negatively in a country that can only produce 50% of food requirements. Based on World Bank data on its own project portfolio, already 45% of international agricultural projects fail and the population continues to grow. The generalized political inaction on climate action and human population planning is committing ecocide and human suicide.
Why not visit our coverage here: Declining carrying capacity brings population growth back into focus
Something had to be done about the behaviour and performance of Rishi Sunak and Liz Truss in these Conservative party debates. In fact they should have both been advised after the Channel 4 debate to avoid a repeat performance of their dreadful antics in the ITV debate. The men in grey suits, being of a parochial mentality, do not seem to be aware that the whole world is watching this soap opera. It is making a mockery of British democracy, so-called. If these "managers" were more on the ball, someone should have been tasked with giving instructions to all candidates before any of them entered a debate studio, to avoid the type of mess that ensued. Yes, this is a free election and candidates should be free to shape their own presentations. But the image of the party surely is of some significance following the fiascoes of the last year. Having said that, the calibre of these two is well below par when they assert that are ready to "lead" from day one but are incapable of enduring a few minutes in some pretty simple debates.
The Sunak-Truss tussles were a sort of battle between an overly optimistic marionette emulating a feather duster and a compact guided missile with no feedback in its control mechanism. As a result there were repetitive assaults causing the feather duster to run out of Treasury script and sound bites and be reduced to a slightly nervous confused blinking stick. It is more than evident that neither of these individuals are leadership material.
Calling off their participation for now, is the least that could be done to save to prospects of the Sunak and Truss camps. However, this is completely unfair to the other candidates and, indeed the British voters.
The Conservatives, following the typical Johnsonian instinct, when things affect any of their anointed, just change the rules. Watch this space
The second debate for candidates for the leadership of the Conservative party on ITV, has become increasingly unedifying. In an attempt to impress viewers or MPs some candidates have shown a particularly nasty streak and a good dose of egomania. As in the last Channel 4 debate Rishi Sunak and Liz Truss managed, yet again, to lower the whole tone of the occasion by arguing points of irrelevance but hoping to impress through their ability to repetitively assert banalities. The balanced-budget-lower-tax discussion is completely redundant and, in reality, has no connection securing needed growth and productivity. It is of particular concern that two people who would like to be the prime minister of this country have participated in an extraordinary display of ignorance and unnecessary forcefulness. Hardly leadership material.
Unfortunately Badenoch did herself no good at all this time and flashed similar visceral characteristics.
The only two not partcipating in this type of embarrassing exchange were Tugendhat and Mordaunt.
Tugendhat did not perform so well this time, but became rather repetitive failing to spell out his plans.
Mordaunt was clearly aware of the negative public spectacle being created by the Rishi-Punch and the Liz-Judy Show. Mordaunt has suffered at the hands of unfair and some untrue briefs largely generated by Truss's team. But she has shown maturity by rising above this without any catty counter attacks. Mordaunt made clear that no one in her team was doing this against the others. As she stated at the time of her launch, it is less about the leader and more about the ship. People with the egos of Sunak, Truss and Badenock don't seem to understand this. In this particular debate Mordaunt came out as someone emphasizing a sensible team approach, the need for better government service organization and more effort to facilitate the lives of constituents. All very sensible stuff as were her clear suggested proposals for assisting constituents in the current cost of living crisis. The Conservative party is on show here and Maudaunt seems to understand this more than the others. In terms of decorum, trust and credibility, on this showing, Mordaunt has moved way ahead of the others.
At this stage the voters are Conservative MPs and it will be revealing to see how the vote goes today. As it is, Sunak and Truss, and now Badenock, have paraded some behaviour where their egos have got in the way of decorum and they have promoted an unnecessary negativity, confusion over policy and the image of a still divided party.
Observation: CybaCity and APEurope have no connection with any of the candidates mentioned in this leader.
17/07/2022: The presentations of Rishi Sunak and Liz Truss, both of whom dominated the time in the Channel 4 debate, have been reviewed by Nevit Turk the lead economics correspondent of APEurope. He is of the opinion that rather than address the actual mechanisms of how to solve the cost of living crisis, both have made statements that referred to outdated and discredited theories and practice. Unfortunately these seem to have an apparent logic that appeals to the uninitiated; they are just populist statements.
Turk says that, "If the evidence of the last 50 years is analysed, both here in the UK and USA, the supply side economics "tax reduction" argument has always been based on exaggerated growth forecasts which have never been achieved. Over the last 50 years real growth has simply flatlined. On the apparent "other side of the argument", balanced budgets do not have any impact on growth either."
"Growth in not a monetary issue. It is linked to relative pricing and physical productivity. However, as a populist politician Sunak launched his so-called super-deductions to "get growth going" which are simply populist give-aways. These are tax reductions associated with specific capital investments. However, Sunak failed to insist that there be a linkage of such trax reductions to quantified rises in productivity and/or price moderation or reduction. Therefore his formula for "going for growth" is a sham, even on the basis of a review of the Treasury documentation on its intent and oversight. This has been just another populist concept that might get him elected but it will not solve the county's problems."
It would seem that Liz Truss rounded off this exhange of ignorance on all matters economic, by stating she would remove green levies.
Turk says that,"These arose from the monetarists' view that to create incentives you tax and raise costs to herd companies in the right direction. So once again, the policy formula largely shaped by the bean counters in the Treasury reflect an out-dated and passé understanding of the economics and growth."
Nevit Turk says that the dominance of the Bank of England and Treasury in policy questions has become a serious problem because they work on the basis of a zero-sum national accounts basis where the movement of funds creates equivalent deficits and credits. Unfortunately this mentality constrains decisions because there is no thought on how to grow the real output as opposed to "demand led debt".
The British Strategic Review (BSR) makes use of "power maps" to indicate where the weight of decisions lie on macroeconomic (monetary) policy. This technique was developed by the journalist Anthony Sampson (1926–2004) and used in his outstanding series of books on, "The Anatomy of Britain
. The BSR is an annual and more of an "Economic Physiology of Britain""
"Growth boils down to quite obvious and basic requirements. One is that market penetration under inflation requires a relatve moderation or even reduction in the prices of certain companies. The combination of lower prices generates natural growth arising from the price elasticity of demand. This is the degree of rises in demand or consumption associated with price reductions. Because we are dealing here with lower prices, this immediately augments the purchasing power of all. Of vital importance if that this automatically helps the lowest income segments. This growth in demand, and therefore revenue, compensates, to some extent, for the corporate unit price and margin drops. By subsidising the deficit in margin remaining, the risk to companies is reduced. The ongoing penetration of the market is normally associated with more efficient, lower unit cost production as a result of increasing capacity utilization and improving product quality.", he said. He added that, "This learning curve effect is not a whimsical notion but has been an effective means of projecting unit costs based on increasing throughput and deployed by process engineers and operations managers for almost a century. It is a reflection of economics courses and some of the best universities that today's politicians, who have such quanlifications, do not appear to understand these basic points or have any experience in applying them." Before this fundamental real growth relationship was formalised and established empirically in 1936 by Theodore Wright, most of the innovation and industrial growth in the UK had relied on this simple formula.
Turk stated that,"To actually develop the so-called high tech and green industries and employment this same formula needs to be applied."
In terms of the existing range of economic schools of Keynesianism, monetarism, supply side economics and modern monetary theory all of which rely on the instruments of interest rates, monetary injection based on debt, taxation, government borrowing and expenditure. Turk emphasied that, "If the main foundation texts of these schools of economic thought are reviewed, it becomes apparent that the needed growth referred to, based on learning, innovation and increasing productivity, feature nowhere in these documents. This is why they do not have the means of bringing about such growth to address the cost of living crisis, levelling up, the balance of payment crisis and climate change."
Nevit Turk has followed the development of the alternative real incomes approach which has come up with the proposition of Real Incomes Policy (RIP). The development work on this started out in 1975 as a development programme to address the then stagflation crisis. Learning, innovation and growth in physical productivity is the central plank of this policy along with what is referred to as price productivity. In his opinion, "This has become a general macroeconomic theory and seems to be the only policy proposition able to address our main challenges."
There is a dedicated website on the real incomes approach at: Cambridge-economics.net
The BSR-British Strategic Review 2022 provides a background to this policy and as a result of the current crisis a Special Edition entitled, "Montarism & The Cost of Living" will be released today or tomorrow. In the meantime, several BSR Notes are worth looking at and the respective links are provided below:
No.3 - 15th April, 2022 Why the Bank of England cannot solve the cost of living crisis
No.4 – 17th April, 2022 Technology, technique and real incomes
No.5 – 11 July,2022 Sustaining growth in real wages by investing in results
Nevit Turk has also called attention to what he considered to be one of the most important Notes which has been released today:
No.6 – 17 July,2022 The constitutional crisis created by monetary policy.
This spells out why monetarism has been so destructive to the degree of creating the serious socio-economic divisions that we now face including severe income disparity and rising poverty.
16/07/2022: The APE Correspondents' Pool completed a preliminary assessment of the Channel 4 debate of prospective Conservative party leaders. The conclusion was that it was quite revealing. The losers were Rishi Sunak and Liz Truss ""who in any case had been given too much time in comparison with the other candidates and therefore were able to expose their weaknesses. As we have always contended Sunak is quite naive about the relationship between policy and constituent interests and the practicality of some of his policies. During the debate he was constantly wavering. This is a result of his having absorbed his Univ Oxford and Stanford lessons without adequate questioning or understanding and assuming in politics one just repeates what professors stated. Tom Tugendhat's statement that Sunak admitted to him that be was doing what the "boss" wanted was quite revealing and devastating for Sunak. This arose when just a minute before Sunak had insisted that raising the National Insurance was his way to help the NHS. It turns out that Sunak was challenged on this by Tugendhat in a private conversation, who had asked why this had been necessary, Sunak had replied, "...because the boss wanted it!" It is also revealing that Sunak did not deny this. Tugendhat was clearly telling the truth.
Liz Truss seemed to be whacked and continued in an assertive monotone at just how effective she had been and is, in taking on the world and someone called Putin. However her image during the course of the debate shrank because of her prolonged seemingly inflexible repetitive monotone delivery.
The disagreements between Truss and Sunak on economic issues only served to undermine any credibility in the past government cohesion on economic strategy and showed that the rifts that existed during Johnson's administration persist.
The interesting contributions came from Tom Tugendhat, Kemi Badenoch and Penny Mordaunt. Of these three, Tugendhat and Mordaunt came closest to presenting an alternative and rational economic plan to tackle inflation but neither of them gave examples to help the audience understand. Badenoch is an effective communicator but frankly is not well known enough. Some of the statements she made about stripping things down from the engineering sense to "get to the problem" is correct but this needed to be unpacked with examples.
Our economic advisers concluded that the person who homed in on the essential solution was Penny Mordaunt in her reference to competition and growth. She avoided the sterile tax reduction-balanced budget discussion between Sunak and Truss which ended up as unqualified assertions as opposed to informative statements. These exchanges generally lowered the standard, tone and flow of the debate. Mordaunt needs to give examples of her solution to help audiences in the next debates understand why her approach is distintly different from all of the others, except perhaps Tugenhart. Certainly, by making incentive payments conditional on delivered improvements in competitive status, expressed in the form of unit price reductions, Mordaunt's approach could tackle inflation on a broader scale and help deliver real growth as a result of an enhanced purchasing power of all wage-earners.
On balance the ACP concluded that the momentum of Sunak and Truss is likely to decline, Mordaunt is likely to move up with Sunak still leading. Judging from Tugendhat's performance he is likely to gain considerable support. The ACP was unable to determine how far up Badenoch might move, but her performance was convincing so she will gain some additional support. It is thought that based on the current state of knowledge Sunak will still lead with Mordaunt closing in while Truss is likely to have stalled. Tugendhat is likely to surprise people with a good score.
15/07/2022: Voodoo economics is a popular and now widely-used phrase to dismiss ambitious economic pledges made by politicians. However, it is worth remembering where the phrase came from. This derogatory phrase was used by George H.W. Bush to criticize President Ronald Reagan's economic policies, referred to as "Reaganomics" in an attempt to control stagflation caused by rising energy costs. In 1980, Bush argued that the president’s supply-side reforms would not be enough to rejuvenate the economy and would greatly increase national debt. Bush's criticisms were shown to be correct. The Reaganomics theory was based on the new-fangled supply side economics developed by the Canadian economist Robert Mundell and contributed to by another economist, Arthur Laffer. The theory was that by reducing marginal income tax rates there would be more money to invest in "growth" and "productivity". This "trickle down" theory has never worked for over 50 years, but some economists and Conservative party candidates cling exactly this this strand of voodoo economics. The result has always been a futher rise in income disparity, the highest earners gaining more money and wage-earners falling behind.
The first Conservative to dabble in this nonsense was Margaret Thatcher leading to an erosion in the economy undermining industry and manufacturing, too much money invested abroad, de-skilling of the British work force and a regime of constant reductions in the real incomes of wage-earners. The only criticism of signifcance came from the economist Nicholas Kaldor who, remarkably, predicted our current predicament over 50 years ago.
The main problem is that there is a serious confusion between real growth achieved through price and physical productivity increases and "demand-led growth" generated by debt. Monetarism advances debt to generate demand and then recoups the debt via later taxation, because this approach does not achieve price and physical productivity rises, real growth is always emaemic and the country continues in a widening debt-taxation trap.
Under Johnson, Rishi Sunak introduced super-deductions which are simply tax reductions linked to certain types of capital investment. But like marginal tax rate reductions this has had almost no impact. Those supporting the Johnson administratin line on "tax cuts" or even "balanced budgets" could come unstuck because they dont't know how to achieve real growth. As a result promised growth will never be achieved as we continue with voodoo economics.
Many have been disappointed in Jeremy Hunt's declared support of Rishi Sunak when he was eliminated from the leadership elections.
Most remember Penny Mordaunt going out on a limb to support Jeremy Hunt in this attempt at leader against Boris Johnson. Her reward was, of course, Boris Johnson removing her from government for a while. She was later brought back because several realized she had a good level of competence as well as presentation to go with it. Of course, we do not know what Sunak promised Hunt but it is likely to have been a specfic minsterial role. Many saw a Hunt-Mordaunt as a winning combination but this is not how things turned out; Hunt probably made a miscalculation here.
David Frost, otherwise referred to as Lord Frost, made some disparaging remarks about Penny Mordaunt the other day. He referred to her time when she served under him with respect to Brexit negotiations. When overseeing delicate high profile negotiations, managers need to take care to know what people under them understand and some additional attention needs to be taken to understand their modes of expression and presentation. On this basis they can provide such people with a sound orientation so as to make it easier for them to follow essential instructions. Tied to these basic requirements, it then becomes an essential function to request feedback from staff concerning any doubts and to anticipate issues by knowing where they are and what they are doing on the job.
It therefore was quite revealing when this man who was head of Brexit negotiations had the affontery to state that Mordaunt, did not master the necessary detail in the negotiations, did not emphasize essential points enough and often he did not know where she was. These comments do not reflect negatively on Mordaunt but they do expose the fact that Frost seems to have been a poor and somewhat of a dilettante manager who had placed himself at the centre of negotiating a poor Brexit deal, including the Northern Ireland protocol. Frost oversaw it becoming part of a legally binding international treaty, and then following this high profile effort, realized, far too late in the process, what a mess he had made. In addition to this astounding level of incompetence he even went so far as to consider the only way to cover all of this up would be to attack the NI protocol by breaking the law, something Boris Johnson was, and now, Liz Truss is very keen to do.
It would seem that any dismissive comments coming from such an incompetent performer who finds himself in an embarrassing predicament with respect to his own image, might be taken as a complement for someone who perhaps realized that he was someone with no presence as a manager and preferably avoided at all costs. Such managers, yes they do exist, usually have the atrocious habit of blaming others when knowledge of their own incompetence catches up with them.
14/07/2022: The negative briefing and leaks against other candidates by managers of the Rishi Sunak and Liz Truss campaigns has become excessive and simply reconfirms the nature of the Conservative party MPs who are in need of a new approach and some party discipline. Of course Sunak and Truss play the roles of the innocents being above the fray of such dirty tricks but nothing goes out without their tacit approval
The Truss foreign secretaryship was not a success with her confusing Russian and Ukrainian territory in a sensitive meeting. She unforgivably stated she would suppot individuals from the UK volunteering to fight in Ukraine in a war is almost a certain death sentence to volunteers, misled enough by leaders who should exercise more caution in their pubic declarations. Words matter, and Liz Truss has a problem, somewhat like Boris Johnson of speaking before thinking.
As far as foreign policy under Johnson and Truss is concerned, this has been a resounding failure. It has resulted in a rapid decline in trust on the reliability of the word of the UK leading to a rapid expansion of BRICS. At the moment BRICS is considering the applications from significant new members including Iran, Argentina, Saudi Arabia, Turkey and Egypt all moving away from the increasingly untrustworthy US-UK axis and integrating by far the largest and rapidly growing segment of the global economy by joining Brazil, Russia, India, China and South Africa. Outside the EU, the UK has an increasingly diminished image and bargaining power in this new global structure. Today, at her campaign launch, Truss asserted how she has led on sanctions on Russia but failed to explain this is a significant factor in exacerbaing the cost of living crisis by raising energy prices. She did not explain just how increasing numbers of Ukrainian military are perishing manning British weapons following a campaign to actively discourge Zelensky from stopping the bloodshed by negotiating. This irresponsible and loose cannon foreign policy has certainly confirmed the abilty of Johnson and Truss to take decisions, unfortunately they were the wrong decisions. Each day of this Conservative party election around 150 Ukrainian personnel perish and around 750 are injured and put out of action. British media have of course painted things a jingoistic and different way, gloss over such realities and attempt to project Sunak and Truss as saviours. In reality they have delivered, togther with Johnson, a failing economy and precarious internationl economic scene leading to a dangerous depreciation in the image of this country.
The campaigns which do not appear to be associated with dirty tricks are those of Penny Mordaunt and Tom Tugenhart. Amongst Conservative party members, Mordaunt remains by far the most popular amongst all candidates. This is because she is considered to be the needed unifying candidate, not only of the party but also for a good deal of the British electorate who find Labour and the Social Democrats wanting. The next election, after all is of some importance.
13/07/2022: A YouGov poll on the Conservative party memberships' views on the candidates confirms the Agence Press Européenne Correspondents' Pool assessment posted 08/07/2022 (The unifying candidate?) - see below - that Penny Mordaunt would win against any other opponent, including Rishi Sunak or Liz Truss.
The question is to what extent Conservative MPs realize that their futures depend more of such a unifying candidate as Mordaunt because she also carries a certain admiration amongst some Social Democrats and even ex-Labour voters. With Sunak or Truss as leaders, most Red Wall areas are likely to switch to the Social Democrats. CybaCity and APEurope have no connection to Penny Mordaunt and these opinions are based on widespread sounding of opinion.
The parochial character of the priorities of candidates means really serious international issues have become muted and discussions circulate round irrelevancies such as balanced budgets versus tax cuts and the assertion that growth will save the day with no proposals on how that can be achieved. The more fundamental issues of levelling-up and the cost of living crisis await rational workable proposals. Amongst this word salad, Sunak and Truss have images that ride on an exaggerated mainstream media promotion of their abilities.
In reality Sunak has made a series of very naive decisions including his £200 prejudicial loan for energy bills to his wasteful "super-deduction" give-aways which have no impact on productivity or growth at all. These mis-steps appear to be the result of lack of government experience and because he remains firmly under the tutelage of the Treasury, from where most of his support comes. The Treasury has a particular liking for ministers who go native.
Liz Truss is bullish on most of Johnson's more doubtful ideas from tax cuts to support for Ukraine. However, Ukraine is becoming toxic for the Conservative party because of the excessive deaths of Ukrainian military personnel resulting from Johnson's meddling in this affair. These deaths increased to unacceptable numbers following Johnson discouraging Zelensky from any further negotiations following the Russian-Ukrainian Ankara meeting in March 2022. This meeting was the first one that held out the promise of progress in bringing the conflict to an end. The world had looked on in hope, only to be dashed by Johnson's interference.
Since Johnson's intervention took place, enthusiastically supported by Truss, something like 10,000 additional Ukrainian personnel have been killed and in excess of 35,000 injured. While the Conservative party decides who will be the next Prime Minister and installs him or her, at least a further 5,000-6,000 personnel will have perished and another 20,000 will be out of action because of injury. Those dying, include those manning British-supplied arms and who have received training under UK instructors. There are serious questions to be asked to what extent Truss would continue to support this insanity and how much more money Sunak would waste to prop up "Johnson's Ukrainian Folly"
11/07/2022: This weekend's ACP workshop covered some topics of relevance to the current Conservative party selection of a new leader. This is related to the issue of balanced budgets against low taxes being a complete red herring. This relates to government expenditures. One of the reasons for the relatively wasteful investments by government is the uncertainty of the actual outcomes in terms of economic and social benefits, for example, those accruing from the HS2 rail system whose costs continue to rise beyond the original estimates. Invariably government information technology contracts have overrun original budgets. In these cases investments were made on the basis of cost-benefit analyses that assume the state of knowledge used to take decisions is advanced enough to enable estimates that take into account possible changes in conditions. In other words, investments are made with no clear or reliable idea of the results. On the other hand, besides having to deal with changes in conditions, there is the question of the competence of those contracted to carry out the work.
In spite of leaps of faith by Labour and Conservative governments over the last 50 years, promising to grow the economy under monetarism, they have always failed to do so. This half century lack of coherence between the promise and the outcomes causes the current declarations of most Conservative party candidates for leadership of the party, to have a whiff of fantasy about them. The Conservatives have an ideological fixation with the concept of small government and tax cuts counter-balanced by the continued assertion that this can then "grow the economy". This is the 1970s supply side paradigm which has never worked out in practice. In any case the main issue facing the country is inflation and increasing income disparity with many being unable to buy basic essentials. The main attempts to apply the supply side, small government and low tax formula were the administrations of Ronald Reagan in the USA and Margaret Thatcher in the UK. In both cases this depressed the economy, led to widespread repossessions of homes and family farms and income disparity increased. The result of Reagan's experiment with supply side economics can be observed in the diagram on the right. Under Reagan income disparity rose with the highest income earners, the top 5%, seeing their incomes rise by 47% and those on lower incomes by just 2%. Under Bill Clinton, who terminated supply side economics, results were far more balanced with all income levels rising by around 20%.
The grave assertions by candidates that they can "grow the economy" under low taxation regimes is simply not supported by the evidence. On the other hand, a balanced budget does not advance the case because neither Labour or Conservatives have ever grown the economy in real terms even when they had more balanced budgets.
The only time the UK had unprecedented real growth marked by falling income disparity and rising real wages was in the period 1945-1965 when monetarism limited to interest rates and quite deflationary, the budget was in surplus and Keynesianism was not applied because unemployment was so low.
The reason this changed was the OPEC petroleum price crisis, stagflation and the recycling of petrodollars launched the world into monetarism driven by financial deregulation. Denis Healey was the very early adopter of monetarism in 1975. Ever since, the macroeconomic management of this country has remained in the clutches of monetarism. As a result politicians and economists confuse rises in the amount of money in the economy with growth when, in reality, real growth is what is important and this only takes place as a result of price moderation and continual rises in productivity. Under monetarism and supply side economics investment and productivity remain low. Therefore all of the predictions of what the results of policy will be invariably turn out wrong and create winners, losers and those who remain in a policy neutral impact state. These policies always lose effect and therefore traction.
The economist Hector McNeill, who has led the development of the real incomes approach, has observed that macroeconomists usually have some difficulty understanding the real incomes policy paradigm as a result of what appear to be preconceived fixed ideas which seem to have become embedded during their university training. He recalls that the least convincing aspects of his own university training was monetary policy and the Quantity Theory of Money (QTM) which he has since shown to be flawed in recently published papers.
On the other hand, process engineers, cost accountants and plant managers who have a more direct involvement with the practical issues have no difficulty in understanding the concepts involved in the real incomes approach.
It is therefore notable that the development of the real incomes approach to economics can turn this paradigm on its head by ensuring that government actions can secure exactly what is intended. It is possible to gain precise cost-benefit analyses of the actual benefits of government actions precisely. In other words, the real incomes approach is not based on investments based on notions of results in the future but rather it is based on providing benefits after the desired result has been achieved.
This procedure is set out in a very simple form in the latest "Note on Monetarism & The entitled, "Sustaining growth in real wages by investing in results". This explains in remarkably simple terms how the Real Incomes Policy (RIP) operates. Rather than provide a loan or grant on the basis of a "project" or "proposal" that promises to lower prices and raise productivity sometime in the future, RIP only provides the compensation of a reduction in tax against actual delivery of price reductions. Companies, to remain viable under competitive conditions, need to deliver on the subsequent required rise in productivity or receive no further benefits. RIP is very different from the normal systems of grants and loans designed to "encourage" investment, many of which have no eligibility criteria of financial criteria and no evidence that the monies will be invested in higher productivity actions. For example, the so-called “super-deductions” for the purchase of goods for companies provide a tax relief which is not checked against any progress in productivity. Indeed, like many development projects, those in receipt of funding quite often consider this as income as opposed to funding to bring about beneficial change. This has been the case with "super-deductions" which in reality are a naive initiative and significant waste of government resources since there is no guarantee of results. Indeed, this initiative with or without tax cuts or under a balance budget is an example of policy failure.
Even in those cases where investment projects are funded against detailed project proposals, the World Bank (WB) figures on their own project portfolio have registered a 35% failure rate and, in the case of agricultural projects around a 45% failure rate. This failure rate is the percentage of projects that were unable to deliver the promised benefits. The annual waste worldwide on WB development projects is around $79 billion. On the other hand, the WB has admitted that whereas in the mid-1960s around 85% of WB projects were subjected to Cost-Benefit Analysis (OQSI 2021) as a basis for approval, by 2010 this figure had fallen to 20% (Independent Evaluation Group of WB).
Therefore, RIP is unique in that rather than risk such failure and waste of funds, the delivery of actual results as the degree of unit price reduction achieved is what controls the degree of incentive funding received by companies in the form of a reduced levy to compensate the company for enhancing real incomes growth of the workforce and consumers. In this way, RIP sustains growth in real wages by investing in delivered results through the provision of an incentive to moderate or eliminate inflation in the short term while also sustaining medium to longer term increases in physical productivity through innovation. This provides an operational basis for a policy to sustain growth in real wages.
10/07/2022: The Conservative leadership contest has shifted from the contentious to the acrimonious; now including some particularly negative briefings. Maybe this type of behaviour is not just a Johnson trait. There is a binary divide between the balanced budget Sunak camp and the various candidates amassing around the trickle-down lower tax totem pole. 50 years of experience with monetarism and the detailed analysis of it impacts, tell us that neither approach works, and on balance, brings increasing income disparity as a result of declining real investment. It is difficult to deny that there are some intelligent candidates, but the problem is that those schooled in the leading academic institutions for PPE and economics, cling onto theories and policy propositions long shown to be flawed. The balanced budget is static and nothing improves and lower taxation, in the name of innovation and productivity, also does not work because most of the windfall gains go into the pockets of executives.
Solutions to this binary fission so far have not been advanced.
Today, Penny Mordaunt announced her candidacy. On the economic policy front she has a blank slate which is a definite advantage. It is important for all Conservative MPs that a proposal is made that appeals to the whole of this increasingly divided country and this does not include a balanced static budget or tax cuts but rather a dynamic and growing budget based on short term price reduction combined with medium to long term rises in productivity across all sectors of the economy. Such an approach can tackle income disparity, improve labour relations and support levelling up, in one go. Keynesianism, monetarism and supply side economics have not succeeded on this score but the real incomes approach to economics, a new alternative and more practical school of economics holds out the promise of offering policy frameworks to achieve such a comprehensive solution. Much of the background to this development can be found in the 2022 edition of the British Strategic Review, which carries the sub-title, "Monetarism & The Real Economy". We understand that a Special Edition of the British Strategic Review with the sub-title, "Monetarism & The Cost of Living", containing a more detailed explanation of real incomes policy, will be published next week.
09/07/2022: Since Boris Johnson resigned the likely contenders for taking his place has been fairly obvious. Agence Presse Européenne Correspondents' Pool completed a sounding to attempt to determine which potential candidate would be able to unify a seriously divided party and, indeed a seriously divided nation.
In this assessment the potential appeal of the unifying candidate to Labour voters was also taken into account. Many candidates are tainted by their close support of Johnson and although there were differences between Sunak and Johnson, his "accountancy" and "book balancing" approach reflected a lack of imagination. During the energy payment scheme discussions, Sunak reflected a naive lack of understanding of real incomes and inflation in denying that his scheme amounted to a loan. SDAC calculations showed that this scheme would have been prejudicial to low income families. Since then Sunak did a U-turn on this and converted the funds into a grant.
Strong advocates for the Johnson's' policy on Ukraine will become toxic when it is realized just how expensive and destructive of Ukrainian military personnels' lives this rapidly failing policy has been (see data on left). The next leader will need to manage a difficult transition to a modified policy of supporting a negotiated settlement. This has already ruled out James Heappey, Ben Wallace and Liz Truss as being people with inadequate foresight as a result of being hoplessly unrealistic about the reality in Ukraine. This process has been significantly complicated by the extent that UK media have tended to rely on Ukrainian-sourced information and have tended to ignore the reports from the more than 20 independent correspondents operating in the Donbass and whose accounts on the same events differ significantly from those sent from Ukraine.
Sajid Javid's approach to his job as Chancellor reflected a conversion to the Treasury school so it is unlikely that he would come up with anything original. Nadhim Zahawi appears to be serious but he remains an unknown quantity in terms of general appeal.
The candidate who came out top in terms of having the qualities of being a unifying candidate and who has sufficient Cabinet experience was Penny Mordaunt, with Jeremy Hunt coming a close second. In terms of being a person whose demeanor and lack of what might be considered to be "extreme" views, sufficient to attract many Labour voters is still Penny Mordaunt. Mordaunt is particularly popular with younger voters, something most other candidates lack.
The question then becomes how Mordaunt would address the single most important question of the state of the British economy. None of the candidates's track records show any hope on this score but Mordaunt's experience to date has been linked to trade deals but any overall approach to the recovery of the British economy remains undefined. It is here where she has an opportunity for some strategic thinking to come up with practical suggestions with respect to stagflation and levelling up. Certainly it is possible to replace the current "Leveling Up" policies inroduced by Michael Gove with something more appealing and practical. Part of the solution is very much tied up with entrepreneurialism and real growth and these were topics Jeremy Hunt referred to in his last bid to be Leader; maybe there is a potential partnership here.
08/07/2022: The economist Nicholas Kaldor's collected arguments criticizing monetarism were made into a collection and published as a booklet entitled, "The economic consequences of Mrs. Thatcher." Kaldor resigned from his position as adviser to the Labour government when the intellectual bruiser, Denis Healey, the then Labour Chancellor, switched to monetarism.
So the rot started then, as a panic reaction to a plummeting balance of payments and stagflation caused by the sharp rises in international petroleum prices imposed by the Islamic members of OPEC in 1973. This was to retaliate against countries who has supported Israel in the Palestinian-Israeli related conflicts.
|1973 OPEC sanctions|
The title to this piece might seem to be little unfair since this monetarist scandal was started by Labour but, during the subsequent 48 years, the Conservatives held power for 30 years and Labour for just 18. Maybe the title should be,"The economic consequences of Britain's leading political parties". The main point is that they have both been equally incompetent in managing the economy.
Since 1973 the leading economists and political parties have failed to improve macroeconomic theories and derived policies to be in a position to eliminate reduce greenhouse gas emissions, to reduce income disparity and tackle stagflation. The failure to control stagflation in 1973 resulted in it enduring more than 20 years. This was the result of the International Monetary Fund providing finance to low income countries to purchase petroleum at ever-rising prices and doing nothing at all to encourage OPEC to lower prices. As a result, global debt rocketed. The British Strategic Review explains that these pradoxical decisions by IMF were the result of the Managing Director being a Moslem of the Sufi sect. The recycling of petrodollars, also an IMF initiative by the same Managing Director, meant financialization took off in earnest without anyone analyzing the likely consequences.
The consequences were an accelerating globalization to shift excessive volumes of cash, and the UK entered a transition marked by de-industrialization the de-skilling of the workforce and the creation of a treadmill of ever declining real wages, tolerated by largely economically incompetent Conservative and Labour governments.
Beyond Covid, what has exacerbated the current rising stagflation is, of course, the rising international prices of petroleum and gas. However, the destruction this is dealing to the UK economy was not caused by any OPEC sanctions this time, but rather has been caused by sanctions imposed by NATO countries on Russia. The sheer incompetence of the collective NATO membership in not understanding the likely economic consequences of applying sanctions against Russia has undermined the credibility of the organization. NATO has shown itself to be unable to take strategic decisions in our collective defence but, rather, has taken decisions that have undermined our collective economic security. Both British political parties have always been stout defenders of NATO without considering the actual need for this organization beyond its function as an arms bazaar. Our politicians lamely shrug their shoulders and state, "Oh, stagflation is a world wide phenomenon!. This is true, but this worldwide phenomenon has been caused by the policies pursued on an international basis and supported by our government.
The Ukrainian crisis continues and as a result some of the Conservative candidates for the current leadership campaign will become toxic for the Conservatives in the near future. Any Conservative MPs who have been particularly active in supporting sanctions and the ongoing provision of arms and training to the Ukrainian military campaign will be found to have been creating the circumstances for additional tens of thousands of Ukrainian military losing their lives. Very soon, there will be a reckoning on this matter. This would have affected Boris Johnson, but he has now "departed" but this reality would have caught up with Ben Wallace marking him as someone pursing dubious and unachievable objectives and at great expense. This is because Ukraine has no chance at all and has very obviously lost this military action and should surrender as rapidly as possible and meet Russia's demands. These are simple and consist of allowing the populations of Lugansk and Donetsk to gain their independence from Ukraine, something they voted for in 2014. Crimea also separated on the basis of a vote in 2014 but also, in a separate vote, sought and received support to become annexed by Russia. Ukraine's demand that these territories be "returned" when Ukraine has been shelling the Donbass since 2014 or to expect Russian-speaking Crimeans to allow themselves to be pushed back into Ukraine is just ridiculous and beyond serious consideration.
So the Conservative MPs, and indeed, members of the opposition, who have been conspicuous in their support of Ukraine's suicide mission, based on an appeal to a Battle of Britain spirit, will be marked as being out of touch with reality and therefore unreliable decision makers.
The last item of global survival and therefore of vital economic interest to the global population was COP 26 largely considered by those involved, to be an outstanding success. But as a result of the irresponsible NATO sanctions, COP 26 has already failed because increasing numbers of countries have been forced to return to coal firing of power stations on an unprecedented scale. A notable mistake highlighted by COP 26 was the all round satisfaction that the assembled politicians, including members of the British government, had established a timetable to achieve Net-Zero, sometime in the distant future. The problem is that Net-Zero does not solve the issue at all since the CO2 concentrations will, at that point, then remain the same and temperatures will continue to climb. The strategic aim should always have been Net-Negative so as to continue to drain CO2 so as to reverse temperature rises. There have been, therefore, no sound strategic decisions made on this question of climate change; we are still in a deepening hole. Of course, the financialization lobby was active in the shape of the concept of Carbon Trading where light oversight, as in the case of those light financial regulations that led to the 2008 financial crisis, is a salient characteristic of this system.
The economic consequences of Conservative governments have been particularly destructive and it is difficult to imagine that the current bunch of leadership candidates will have any clue as to how to set this ship on the needed direction.
08/07/2022: The lack of Realpolitik has brought this nation to a low pass under the Conservative government, largely because of a lack of attention to real economic factors and holding onto ideological interpretations of economics and notions of freedom. This has resulted in support for an external political process that led directly to the Ukrainian crisis.
The lack of RealEconomik in these decisions can be recognized in the deepening cost of living crisis exacerbated by the international attempt to isolate Russia. The outcome has in fact been the isolation of the USA, Europe and the UK from the rest of the world whose level of trust in the "West" has been seriously diminished.
The removal of Boris Johnson from decisions affecting this country provides the opportunity for leadership candidates to map out a beneficial path for this country by recognizing that Ukraine has lost the battle and any continued military support will only result in serious accusations of incompetence or even lack of ethics and serious recriminations, later, related to the number of Ukrainian military people who have lost, and continue to lose, their lives at an unacceptable rate under impossible odds. A realistic candidate needs to get this message out to the people of this country as a preparation for supporting Ukraine in negotiations; any other proposal will fail and reflect on the candidate.
On the national front the problem remains, "It's the economy stupid!" but unlike Bill Clinton's economic follow up, this appeal should not lead to legislation and economic policies that further ravage the economy leading to the 2008 financial crisis. Just as there has been a lack of realism and RealPolitik any candidate serving the interests of this country needs to transition to a stark RealEconomik approach by admitting that past monetarist policies have ravaged this country trough deindustrialization, deskilling and creating a major decline in social and economic conditions as real wages have fallen. Policy has created a nation of shopkeepers and as a result the UK takes up the second worst balance of payments position in the world. There is a need to stop finding excuses but rather to identify the rational explanations as a basis to identify solutions. It is evident that this country needs a return to a one nation balanced approach to the opportunities of all. The useless Levelling-up agenda consisting of a series of minimalist ad hoc arbitrary interventions will have no durable impact of real growth. There is a need for a macroeconomic policy that significantly reduces the role of the Bank of England which does not have the appropriate mandate nor policy instruments to contribute to a solution. There is a need for policy to emphasize the role of price and physical productivity and applying incentives to impact prices in the short run to alleviate the suffering of the lowest paid and to ramp up productivity and innovation in methods to lower costs, over the medium to long term. The industrial revolution developed under this formula and it still can be applied to set the country on a recovery path for manufacturing and rises in real wages. Between the policies of Keynesianism, monetarism, supply side economics, modern monetary theory and the real incomes approach, the only policy to address our specific plight is Real Incomes Policy (RIP).
07/07/2022: The urgency of controlling inflation is that everyone is losing more of their purchasing power because their disposable incomes purchase less and less goods and services. For lower wage categories there is the issue of being unable to purchase basic essentials.
Net loss of income associated with
inflation rate durations
|5%||- 23%||- 40%|
|7.5%||- 32% ||- 54%|
|10%||- 41%||- 65%|
|12.5%||- 49%||- 74%|
|15%||- 66%||- 80%|
Explanation: Inflation is the equivalent to an earning capacity compound discount, so that each year the amount that can be purchased declines by the inflation rate if wages remain fixed. Real incomes, what can be purchased using wages, declines each year under inflation.
SEEL-Systems Engineering Economics Lab is an international centre dedicated to the development of counter-inflationary economic theory and policies. They have developed the real incomes approach and a policy proposition Real Incomes Policy (RIP). This work was initiated in the mid 1970s to identify policies to control the stagflation, the combination of inflation with rising unemployment. This had been caused by the OPEC sanctions imposed by raising the international price of petroleum.
The damage done by inflation can be measured in terms of wage-reduction-equivalents over 5 and 10 year periods, as shown in the table on the right. The higher the inflation, the longer it takes under conventional policies to correct the situation. However, under conventional policies inflation is not corrected systemically, but rather by depressing the economy. In real incomes terms, this simply makes matters worse before inflation resides and the systemic issues remain unsolved.
Britain is already experiencing an inflation rate of 10% and this is likely to reach 15% by year end. This is already an unacceptable state of affairs because the decline in real incomes are very high. Britain's prospects across the 10% to 15% inflation ranges are shown in the cells shaded in grades of red. At the minimum this signified equivalent falls in wages of 40-60% which is untenable. Generally speaking private firms and government cannot afford to raise wages by the amounts already lost because policy does nothing to correct the cause of inflation. The government needs to concentrate on policies to reduce inflation, that is, to solve the systemic defects in the economy which have been created by 50 years of monetarism. Subsidizing consumers to help them afford rising prices is no more than an unsustainable palliative. As far as we are aware, Real Incomes Policy (RIP) is the only policy in existence to control inflation with effects in the short term and promises to correct the systemic problems over the medium to long term.
06/07/2022: The sacking of Michael Gove has been suggested to have been a condition of Nadhim Zhahawi accepting the Chancellorship and wanting to sweep the decks clean to make a fresh start on the econmics front.
After all, Gove's Levelling-up document was an embarassing amateurish effort with little practical content. The Red Wall communities are still waiting 3 years after BREXIT for some action.
The spend factor associated with the Levelling-up "plans", for someone who might be bent on reducing taxes, would be something to avoid. This makes the anticipated economic plans, to be presented next week, something of interest. It looks as if the economic plan will be an electioneering blitz designed to attract funds to the Conservative party as a tax cutting "trickle down" policy. We hope this is not the case since this has never worked and it has always exacerbated income disparity. This not exactly what the Red Wall communities need.
It is to be hoped that Zhahawi will introduce practical solutions. He has experience in business but tackling a cost of living crisis, stagflation and poverty created by 50 years of de-industrialization, requires a completely new approach.
06/07/2022: One of the drawbacks of Wikipedia is that it only permits content linked to published information and "recognised" sources and this has created issues for individuals who have been advancing important theories and propositions and cannot get this information out. For example such as alternative economic theories and policies. The process of preparation, peer reviews and publications in this field is slow. As a result, important ideas that are emerging now, and largely out of sight and reach, might make it to Wikipedia's pages in five, ten or fifteen years time.
Cambridge Economics Network (CEN) is a new form of collaborative development dealing with leading edge economic theories and propositions. This process has been initiated with a run down on the emerging new economics school, the real incomes approach to economics theory and its main policy proposition, Real Incomes Policy (RIP). CEN has selected this as the chosen development topic because, currently, it is the only known alternative showing promise of possibly addressing the combination of issues facing the British economy. These include a cost of living crisis, inflation and stagflation and income disparity.
CEN has published a "Working Paper" entitled, "Contributions of the Real Incomes Approach to economic thought - A resumé" which provides a reference document for a collaborative review and further development. This provides an annotated list of the main differences between RIP and conventional policies and the policy advantages. Anyone can dowload this documents (PDF) and send in comments subject to the conditions set out on the "Network operations" page of the CEN website. Those providing useful comments that are used in future editions of the text will have their names added as contributors and those who provide substantial additional content (critical or supportive) and that is deemed an advance in the current levels of understanding, will have their names added as co-authors.
This process doubles up as a review process and the final paper will be published by HPC and posted in the publications section of the CEN website. A CEN spokespeson stated that, "This is an exciting initiative involving a truly international collaboration in advancing a promising alterative economic theory and policy. It will act as a stern test to see if more expert and lay opinions agree or disagre with the contents of the document.". Already suggestions have been provided and will be included in the forthcoming updates to the document. CEN hopes to complete this first "prototype test" with this document by the end of July 2022. The current working languages are English and Portuguese and efforts are being made to extend this range. To find out more click on the CEN image above right.
04/07/2022: This weekend's ACP Workshop reviewed some of the impacts of Western sanctions against Russia on Western economies. A few weeks ago SDAC reported that Germany would lose its leadership position in world balance of payments rankings and that Russia and China would take up prime positions. The state of affairs of Germany has worsened more rapidly than expected. Its balance of payments veering into the negative during the last reporting period. The declarations, policies and decisions of the German government concerning Ukraine have had a catastrophic impact on the Germany economy. It is as if the German political "elite" are bent on satisfying the US State Department's objective of keeping Germany down. Paradoxically the German Green party has been instrumental in sinking this economy as a result of an inclination to align its foreign policy decisions with those advocated, behind the scenes, by the USA cash diplomacy.
The rest of Europe, including the UK that carries the economic injuries arising from BREXIT, face rising inflation and a likely entry to a state of stagflation.
A recent paper by Cambridge Economics describing the UK's lack of economic resilience and predicament in being unable to pay decent salaries also reflects the situation in Europe and USA.
This paper can be accessed here: The consequences of being a nation of shopkeepers
Economists during the last stagflation crisis of the 1970s were unable to manage this situation. Monetary policy tools simply exacerbated the state of the economy, precipitating a depression and rising unemployment. No lessons were learned, today policy makers are attempting to work with the very same policy tools. In fact since then, financialization and transfer of manufacturing to lower income countries has hollowed out manufacturing sectors of high income countries, except for Germany. As a result, Europe does not have sufficient resilience because of an over-dependency on imported manufactured goods as well as energy resources, which in turn means that these economies have no natural real economic growth sources. On the other hand, Russia, under President Putin has been increasing its economic resilience as a direct result of a major diversification into manufacturing. This is why sanctions cannot work because Russia is self-sufficient in energy and agriculture and petroleum derivatives and has an expanding manufacturing sector. In the meantime, the rest of the world's economies, most of whom have not sanctioned Russia, are expanding and taking up the market gaps created by sanctions, so Russia's balance of payment is rising rapidly. As a direct result of former sanctions, Russia has become on of the largest agricultural producers and grain exporters able to make up for any deficits in the world markets but, of course, only supplying countries that have not imposed sanctions.
The dependencies of the Western economies on vital imports and the slow speeed of any practical transitions to complete substitution does not permit Europe and the USA enough time to avoid an economic depression resulting from the very sanctions they impose on Russia.
03/07/2022: The New Atlas provides geopolitical analysis by Brian Berletic (aka Tony Cartalucci) and this has incuded a regular briefing on the Ukraine affair. He usually makes use of the Ukrainian territorial occupation balance maps produced by a Ukrainian moniitoring group. These maps record the progress of Russian efforts to assist the Donbass republics secure all of their territory following their declaration of independence from Ukraine in 2014 and having suffered attacks by the Ukrainian military in 2014 and sporadically during the last 8 years.
Berletic's focus however is more widespread covering Eurasia. His latest briefing is:
"Replacing Ukraine's Dwindling Air Defenses & Kiev's "Managed Retrogrades" in Donbass"
on YouTube, where he analyses the content of the latest Pentagon briefing on the situation in Ukraine. To access this video briefing click on the blue link or The New Atlas logo.
Stringer mobile videos have emerged on alternative media showing the mall in Kremenchuk at the beginning of the fire. When the fire was essentially smouldering and building up there were no people running out of the mall but rather some curious people who had turned up to observe the event. There was no obvious panic and the car park was empty apart from the cars of those who had turned up to look at the fire. Zelensky's assertion that there were 1,000 people in the mall at the time, given that the videos show about 15 people observing the fire seems to be far fetched.
On a technical point, a so-called CCTV footage shown on UK media showed the outline of a rocket or missile super-imposed on a scene somewhere behind the mall. The velocity of the rocket or missile would not have permitted such as clear outline of the projectile but rather there would have been an indistinct blurred streak as has been seen in all other events where CCTV footage was captured. Someone has been busy creating a rather poorly put together false flag event, even more amateur than those White Helmets in Syria, Boris Johnson's favourites.
This propaganda effort is amateur and tedious sideshow and has no effect on the events on the ground. There is overwhelming evidence that our government should stop supporting actions that are resulting in the deaths of over 200 Ukrainian personnel each day. In our valiant efforts to "help" we are training people which makes nice TV footage of Salisbury plain. It spreads a feel-good atmosphere of Britain assisting a brave nation. However, the reality is that most of those we are training are destined to perish or be seriously injured or incapacitated for the rest of their lives. It really is beyond the time that we should demand that Ukraine seek a negotiated settlement. 01/07/2022:
Fanciful assertion and propaganda influences public opinion but it does not alter things on the ground in Ukraine. When wishing to find out the truth it is best to take William Jame's advice that "Truth is what happens
". However, the spin, inversions and distortions, the stuff of politics and, it would now seem, diplomacy and the media, obscures the truth from the public. Journalists "on site" are targeted by agents to ensure that they are misled into reporting distortion with respect to who did what to whom. And so this macabre movie continues.
However, what is happening is very different from the propaganda emanating from the G7, NATO and the US State Department. The data in the table on the left is basically from the records of the MOD RF which are updated regularly and although vehemently denied some weeks ago, the Ukrainian military are beginning to admit that this data is, if not accurate at least correct in terms of the order of magnitude. As a result it is evident that the majority of professional military personnel are out of action and untrained individuals are taking up positions that they cannot hold. The daily death toll of Ukrainian military personnel has risen from something around 50 per day six weeks ago to 100 per day two weeks ago to something around 200 per day now. The price of NATO's support to Ukraine can be seen in the amount of military equipment destroyed and the number of deaths and injured on the Ukrainian side. Ukrainians are suffering from too much friendly fire as a result of communications problems, increasing use of people with no experience and increasing tendencies of personnel to panic arising as a result of running out of ammunition and food. Too many Ukrainian troops are abandoned by their superiors during retreats and allowing logistics to break down. The Russians have succeeded in approaching fixed Ukrainian fortifications from unanticipated directions and methods. During the last month Ukrainian efforts were almost entirely dedicated to attacking civilians and housing in the Donbass and attempting to blame Russia for this damage and deaths. If Ukraine is supplied with longer range artillary and missiles they will use these to continue to attack civilians and civilian infrastructure so that NATO will become the willing supplier of equipment used to carry out wars crimes. This would not represent a change in the behaviour of NATO given their attacks and killing of hundreds of thousands of civilians in the Middle East and Afghanistan. All of this is done, of course, to support the "...international rules based order.
A good deal of local independent reporting on all of this is available but it is not shown in our media as a result of censorship. During the last week Russia has been able to neutralize most of the equipment and units responsible for the attacks on civilians but there remain some isolated sources of this type of attack.
In conclusion, the Ukrainian campaign has defaulted to a Kamikaze mission driven on by the UK, USA, Europe and NATO.
The Russians have been provided with an unprecedented practical laboratory within which they have been able to refine their tactics on how to find and destroy NATO supplied equipment and the attendant personnel. As a result SASI are of the opinion that they have perfected techniques to make most existing troop-based NATO equipment configurations completely redundant in any other military campaign NATO might venture into. Although new tactics have been developed to handle the NATO based systems. However, the more effective have not been deployed because their tactical actions are being observed and recorded by Ukrainian, US and UK personnel. Therefore Russia, for the moment, is continuing to use conventional methods while attempting to minimize their own personnel losses and this involves a slower but effective process. However, the repetitive success in taking over an increasing front within the Donetsk republic has caused enough panic amongst Ukrainians to create what is in reality a slow-moving rout. The Russians are in no hurry and they are achieving their original aims of liberating the Donbass as declared on the 24th February, 2022. Their only demands are that Ukraine become a neutral country, that they do not join NATO and they allow self-determination on the part of the people of the Donbass as expressed in their referenda in 2014. Compared with the price NATO has imposed on the Ukraine this is a more than reasonable option to bring this insanity to an end.
In terms of our national politics our MPs across the board and government needs to be questioned on why their actions and advicacy amounts to the sacrifice of so many Urainian lives (now 200 each day) by providing so much publicity to the fact that we are training those who are likely to perish and continue to supply armaments destined to be destroyed. This constitutes a criminal disregard of the truth.28/06/2022:
The timing of the mall incident where media and the Ukraine government are stating this was a direct attack by Russia leads to the question of who has most to gain from this event as can be seen from Zelensky's address to the heads of state meeting. Clearly for this to happen during a heads of government meeting raises suspicion that this event might have been taken advantage of to mount a false flag event. In a world where everyone knows the tale of the boy who called "Wolf!" too many times, it has to be stated that Ukraine now has a habit of attempting to use high profile false flags to appeal for increased help from the West. So far there have been five major false flags all of which turned out to have been "arranged" by the Ukrainians such as the three in Mariupol where subsequent interviews with the local populations and visits to sites were sufficient to dispell these as propaganda to generate Western support. The others have not been analysed independently because they were located where the Ukrainian government still controls the geographic space and narrative. Boris Johnson is in his element in such environments where public opinion of swayed and controlled through misrepresentation. He has been instrumental in using such events to bolster the British government line for some time. This was amply demonstrated by the government funding of the White Helmets (WH) in Syria when he was Foreign Secretary and who came up with a range of false flag videos used as an excuse to attack Syrian installations and personnel. It is understood that there was going to be an equivalent group in Ukraine referred to as the Nightingales, or a name to that effect. However, this was so obviously a UK concept that it was abandoned in favour of organizing false flags in other manners.
Our most recent update from a local stringer is that the mall was closed down some time ago because the rentals under the emerging economic situation were beyond unit earning power. Therefore Zelensky's claim that there were 1,000 people in the mall would therefore appear to be an intentional misrepresentation to impress impressionable heads of state. Because the mall was closed its location meant there were no cars using the car park. This can be observed from the video footage and this does not align with the claim that there were 1,000 people in the mall. Incident analysts have commented that the videos are very similar to WH productions involving a lot of activity designed to give the impression of confusion and effort but usually difficult to discern just what the people are doing and why. Also like WH productions the camera personnel appear to be in the centre of the people apparently tackling the situation rather than being asked to stand back for their own safety. The MOD RF have also stated that their risk assessment took into account that the mall had been closed and that it was not operational.
Along the same lines, the recently sacked Ukrainian ombudsman, Liudmila Denisova, admitted to having invented accusations concerning Russian troops raping Ukrainian women and children. She even justified this on the basis that it brought Italians round to supporting Ukraine with military support. However, the bizarre nature of these totally absurd accusations was even too much for the Ukrainian government because they became totally ridiculous and reflected on a somewhat bizarre imagination on her part. In addition, follow up investigations by Ukrainian investigators have not been able to secure credible evidence or testimonty to support her accusations.
A smilar story of an attack on an apartment block in Kiev is a repeat of the lack of coordination on the part of air defense systems operated by the Ukrainians. Russia attacked the Artyom rocket plant near Kiev activating S-300 and Buk defence systems. We understand that, as a result of a lack of coordination between the two systems the Ukrainians ended up creating cross trajectories of S-300 and Buk systems, a Buk system shot down one of the S-300 missiles that fell on the apartment block concerned. Similar incidents occured before in Kiev as well as in Mariupol.
Unfortunately our mainstream media, so-called, continue to disseminate the propaganda emanating from Ukrainian government to stoke up anger against Russia. They would be better advised to attempt to analyse data more closely and inform the British public in a more rational and honest fashion. They continue to misinform the public, acting as blind stenographers issuing content in support of a government led by Boris Johnson. He has become the world's most notorious supremo in misrepresentation. What amazes most is how he relishes this status because in a world promoting freedom democracy and the rule of law he has been able to circumvent normal procedures to base his power on misrepresention. He is enthusiastically supported by a decadent and wholly parochial Conservative party and its MPs who embarassingly and shockingly remain devoid of the moral courage to free Britain, and now the world, from his increasingly dangerous scourge.26/06/2022:
Boris Johnson appears to have found a foolproof way to prevent his needing to resign by declaring that the only thing that could cause him to resign would be the government's support for Ukraine being terminated. Since he persuaded Zelensky not to negotiate but to carry on fighting an estimated 7,000-10,000 Ukrainian troops have died. With each passing week this number increases by around 600-1,000 personnel. This is the price of Johnson's position on this question. On the other hand, his somewhat naive Chancellor Rishi Sunak continues his micro quantitative easing handing out of subsidies for people to pay their energy bills. On the other hand he does nothing to incentivize companies to reduce prices when policies exist to achieve this. As a result the government falls further into debt, a debt which the government will call upon the constituents to pay back in taxes downstream. Investment declines, real wages continue to fall and inflation is likely to rise to 15%.
In the alternative media people are commenting on the gung ho nature of the UK in its piling in of arms and training of personnel in support of a completely lost cause. Britain cannot afford the expense involved since in the end the British public will have to pay for all of this while Ukrainians continue to lose their lives at an accelerating rate. By terminating the fighting, thousands of lives will be saved. But Johnson's ridiculous Churchillian complex of shaking his fist Canute-wise at the inevitable loss is an extremely irresponsible and foolish attempt to foolproof his position. This fiasco has been ineptly encouraged by UK media, and irresponsible government members such as Ben Wallace and Liz Truss. Ukraine which has banned opposition, imprisoned and/or assassinated opposition politicians, has a kill list for journalists and others who criticize government and has been attacking Russian-speaking Ukrainians for 8 years, cannot be considered to be a democracy worth defending, ever since the bloody coup orchestrated by the CIA and financed by the USA State Department in 2014. This is why Johnson feels safe in attempting to outdo other countries in "supporting" Ukraine. But Ukraine should face up to its own responsibility for refusing to seek a peaceful resolution to their Donbass war before 2022, by declaring that they would not deliver on the Minsk agreement signed in 2014 and again in 2015. Subsequently it was admitted Minsk was agreed to by Ukraine as a smokescreen to give Ukraine time to prepare to invade Donbass and continue to kill former Ukraine citizens who wished to gain autonomy for their people, similar to Scotland or Wales.
All of this has nothing to do with democracy but rather the continuation of a US-inspired violence in the heart of Europe and which Europeans never refer to because they have capitulated to desires of US as opposed to Europe's needs. Ukraine was purposely selected by the US as the vehicle for this destruction of European peace as part of the overall USA NATO strategy of "..keeping Russia out, Germany down and the US in
". The fact that Europeans die or suffer economically is of no concern of the US strategists. The fact that the UK government and European leaders magnify this violence when they should be working against it reflects the degree to which Europe has lost any autonomy in defending the people of Europe from political interference and regime change. Defending Ukraine has no connection with the defence of Europe, democracy or freedom but rather serves to uphold a horrendously corrupt regime bent on the elimination of their ethnic minority. Their mistake was that this minority has a Russian identity and as a reflection of "Europe's humanitarian values"
there was no effort made by Europe to help them. This is why Russia had to initiate its actions to defend the people of the Donbass so they can attain their desired autonomy safe from any further Ukrainian aggression.
Therefore, Ukraine needs to be left to face up to its own responsibilities in bringing this current fiasco onto its own head and expecting others to help it advance its malign objectives with arms and training, that will only result in more deaths. Ukraine needs to request a termination of the fighting and to negotiate for a long lasting peace in a format of mutual interest to Europe and Russia. Russia, with considerable patience, has been asking for peace since 2007 and again in specific documents sent to the USA and NATO in December 2021. The response of the USA and NATO and Europe was to ignore these requests and continue to support a country bent on ethnic cleansing. Russia had no other option than to confront violence with violence.
Boris Johnson is very clearly out of his depth and, in reality, has no options. Continuing his current suicidal path in relation to "assisting" Ukraine will, in any case, represent yet further evidence of a defect in his character. With the Houses of Parliament tolerating such an out of control leadership and not being able to remove him reflects negatively on the value and credibility of democracy, so-called, in this country. In the meantime our government needs a new leader and someone who understands modern counter-inflationary economics and who can set about serving the interests of the people of this country. A leader who understands and is brave enough to act to maintain a state of conflict avoidance would be an enormous benefit since conflict resolution always comes too late at great expense in terms of lives and money.25/06/2022:
Yesterday the Managing Director of the International Monetary Fund (IMF) declared that the USA and by implication, the rest of the world, will have to suffer pain to bring inflation under control. She stated that the "cure", through monetarism, could result in a depression.
This has been the pedantic lock, stock and barrel response of the IMF to inflation ever since the IMF realigned its orientation towards promoting the false logic that inflation is an entirely monetary phenomenon. This realignment occurred in 1973 when the IMF was about to be closed, having lost its role under the Bretton Woods accords because of the abandonment of the Gold Standard in 1971. In 1973 when OPEC Arab menders imposed the sanction of rapidly rising petroleum prices on petroleum importing countries. Johans Witteveen, the recently appointed Managing Director of the IMF, leapt at the chance to resuscitate the IMF. He did this by agreeing with OPEC Arab members to recirculate petrodollars through the IMF to finance the purchase of petroleum by low income countries. Although the US government had wanted Witteveen to work out a scheme to invert the rapid price rises by working against OPEC, Witteveen did quite the opposite and did nothing to reduce the rate of increase in petroleum prices that increased seven-fold within a decade. As a result of his "initiative" the recirculation of petrodollars spread to the private sector financial intermediaries initiating the almost half-century of financialization. His decisions resulted in a maintenance of inflation and stagflation involving rising unemployment and an IMF-facilitated worldwide depression that lasted over 20 years following the IMF's resuscitation in 1973.
Because of the financial sector lobbying and cash diplomacy, most governments and assorted politicians accepted this state of affairs, after all the economists proffering such irresponsible advice were "experts" and even Nobel Laureates, never to be questioned by mere mortals. However, this involvement of the political elites, so-called, resulted in a serious bout of corruption and massive non-transparent deals in the fields of armaments including within the UK in the Thatcher and Blair governments dealing with Saudi Arabia where Tony Blair ended up closing down an investigation by the Serious Fraud Quad. In the meantime funding of green petroleum substitution technological advances remained off the agenda for almost 25 years helping exacerbate the evolving climate crisis.
The serious mistake made in the 1970s was a failure not to pick up on the Real Incomes Policy (RIP) which had been developed to tackle the cost-push inflation caused by OPEC and facilitated by the IMF. RIP offered a rational alternative to financialization by taking advantage of the fact that 100% of real economic growth, that is, falling prices and rising real purchasing power of disposable wages, emanates from learning and innovation and the process of reconfiguring the advancing state of the art technologies into useful actions throughout all economic sectors. The effect is to slow down and reverse inflation and raise real wages. The font of real economic growth is therefore industry and manufacturing. However, the result of IMF and World Bank efforts has resulted in an imbalance between the service sectors and industry/manufacturing, not only in the USA and UK but in many developing countries resulting in an inability to generate real economic growth.
The notion of aggregate demand management through monetarism operates in economies that make little or metaphorically are "nations of shopkeepers
" which have no means to secure sustained real economic growth but remain seriously exposed to global market turmoil. The latest publication of the Cambridge Economics Network, "The consequences of being a nation of shopkeepers"
provides a rundown of the issues. The details of why Witteveen chose to help OPEC in their imposition of sanctions to generate a world wide depression is contained in the now free 2022 edition of the British Strategic Review
The progress of the Russian and Donbass units has illustrated the out-of-date NATO based strategy adopted by Ukraine during the military preparation they undertook under the cover of the Minsk accord. After 8 years of carefully honed preparation the underlying strategy has been shown to be of little value in terms of defence. Having fixed dug-in positions, a World War 2 concept, has proven to be a nightmare because these represent fixed, easily identifiable locations. Against mobile and airborne attacks they have proven to be fatal. The ease with which they have been splintered and then surrounded has resulted in around 3,750 Ukrainian troops currently surrounded and now it is a waiting game for them to give up or die. Counter-offensives are extremely risky because their routes are completely predictable. Indeed, many of the counter-offensives given wide coverage in the UK media, never took place but were simply public relations stunts to maintain an image of valiant Ukrainians to muster increasing Western support.
Of those who have surrendered, increasing numbers have no ammunition, inadequate kit and sometimes no weapons and most have not eaten for days. There is obviously a significant supply logistics problem. This, in part has been caused by logistics oversight and coordination having been withdrawn as senior commanders have abandoned those under their command.
In late March Boris Johnson discouraged Zelensky from negotiating and to fight on. As a result an additional estimated 7,500-10,000 Ukrainian personnel have been killed. Johnson has a gung ho and irresponsible approach to this conflict attempting to evoke a Battle of Britain spirit which does not apply to the reality on the ground. This is something the enthusiasts in the Houses of Parliament need to weigh up as opposed to calling for Ukrainians to fight to the last Ukrainian. This is a macabre and unacceptable cowardice on the part of members of the UK parliament whose grotesque virtue-signalling with blue and yellow lapel ribbons simply signify their willingness to impose more death and destruction.
Russian and Donbass personnel have not been "slowed down" in their rate of progress by any resistance from plucky Ukrainian troops but rather by a self-imposed discipline to avoid killing civilians whom the Ukrainian forces are using as human shields. Where Ukrainian personnel have withdrawn from Donbass sites they have then, from a distance, carried out a Blitzkrieg on civilian areas attempting to kill and injure members of the public and destroying considerable numbers of dwellings. They then state this to be the work of the Russian and Donbass troops. Of course our "free press" provides a widespread dissemination of such Ukrainian propaganda.
For everyone concerned, the UK government needs to encourage Ukraine to request a cease fire and pull back to the Donetsk border.21/06/2022:
The regents and Board of the George Boole Foundation, in agreement with Hambrook Publishing Company, have sponsored the free distribution of the 2022 British Strategic Review.
The free copies are available in EPUB and PDF formats.
Each formatted copy is in a ZIP file to facilitate the handling of downloads on some browsers. Files sizes are: PDF version 1.573 k and the EPUB version 1.830 k.
Readers wishing to download their free copy can do so by clicking on the appropriate buttons, indicating the formats, on the right.18/06/2022:
In an Agence Presse Européenne Correspondents' Pool workshop this weekend entitled, "Real Incomes Strategies
", a paper on, "Globazlization mythology
" explained why much of the theory of globalization is wanting. In practice the notions of sunrise industries and sunset industries as being the beginnings and ends of production cycles of goods adapted to the particular stage of development and wage levels of a country was shown to be false in many cases. The reason is that the tacit knowledge built up in refining a product line is often not transferable to the new sunrise industries. On the other hand the further refinement of tacit knowledge of an existing successful product line including the gradual integration of digitization or materials technologies of various types can extend the profitable production putting off the sunset until sometimes never. In most sunset industries of the 1990s and 2000s the further refinement has resulted in increasing ranges of inputs from then sunrise industries resulting in the production of highly competitive products today.
Sometimes, in a policy initiative similar to "infant industry protection clauses
" it will become increasingly necessary to introduce "industrial transition support clauses
" even in high income countries, in order to give time for companies to raise their competence in integrating essential technologies. In the case of Britain, recent discussions on ethics mentioned in passing a reference to subsidies for industries being contrary to the law and somehow the suggestion of entertaining this was unethical. On this particular question, these matters need to be reassessed in the context of Britain being in a position to level up and generate higher paying employment based on the expansion of successful manufacturing production lines. Attempting to leapfrog to high performance in the high tech sunrise activities involves greater risk. Existing products have better specified improvement requirements and as a result the high tech inputs have a higher likelihood of implementation and operational success. It is better to reassess products that have established markets and to work on expanding production and sales through enhance quality and worker accumulated tacit knowledge.
An interesting set of risk considerations relates to the dependency ratio of the economy on manufacturing and then on the mix of nationally produced and imported goods. This provides a general indication of the degree to which exposure of national economies to external conditions determines the rate of real growth arising from price and productivity advantages. The same measures also determines the degree to which national policies have any effective management control over the innovartion and real growth in the whole economy. Certainly the conventional policy instruments of interest rates, money injections, government borrowing, taxation and expenditure have very little impact on bringing about the necessary changes in the sector mix (structure) of the economy as well as innovation and associated real growth. On the other hand, Real Incomes Policy (RIP) can bring about the necessary structural changes to reduce dependency and improve the resilienceof the economy. A recent paper concerning RIP and its potenial contribution to solving the cost of living crisis can be accessed here15/056/2022:
The 25th St. Petersburg International Economic Forum (SPIEF) takes place this week. It involves over 1,500 companies and high ranking delegates from around 40 countries. SPIEF includes the signing of many business deals and always provides a good insight into Russian development and direction in the international context. This year President Putin's address on Friday is likely to be about the development and benefits of an emerging multi-polar world.
Almost 4,200 journalists have registered with this event. In this weekend's preparatory meetings within APE's Correspondent's Pool there has been a general agreement that SPIEF Valdi Club briefing papers are of an outstanding quality. However, in contrast to this upbeat assessment there is a general feeling that the self-imposed economic chaos, arising from inappropriate NATO and government decisions, will shift the West towards a state of hardship, social and political instability regressing into a Dark Age while Russia's increasingly resilient economy lays the foundation for a Russian Renaissance. This is based on simple and practical issues such as selective import-substitution by the development and local state-of-the-art production operations in critical industries and high tech manufacturing. Some learning is involved but this process has already an established track record in the Russian agricultural sector which, within just a decade, is now booming. This year's harvest predictions are for the highest wheat crop ever, raising the prospects for an increased availability for export.
Nevit Turk, the APE senior economics correspondent, observed that Russia appears to be applying a form of Real Incomes Policy (RIP) but without the refinements of targeted incentives that this policy contains. In spite of this, Russian ventures in this direction have turned out to be very successful. An important advantage for Russia is a significant, and in most cases absolute, industrial and manufacturing energy costs advantage over the petroleum and gas importing countries (PAGICs) including the USA, Europe, Australia and New Zealand. These countries have all permitted their manufacturing sectors to transition into rust belts and depressed areas and thereby into a relative uncompetitive manufacturing oblivion. Inappropriate sanctions are likely to generate a 20 year depression and thereby create extreme difficulties for these countries in expanding this sector if they continue to apply monetarism and ignore the significant opportunities offered by RIP.14/06/2022:
Religious leaders in the United Kingdom are questioning the United Kingdom's government agreement to send so-called "illegal asylum seekers
" on a one way trip to Rwanda.
Most of those who arrive from Iraq, Libya, Syria and Afghanistan have been forced to flee unacceptable conditions in their countries as a result of mass killing and chaos created by the participation of this country in military actions combined with NATO and the USA. In all cases there was no thought given to a development follow up to the bombing and destruction to the economic conditions created by our military venture. This failure to initiate development resulted in an increase desperation and lack of hope leading to more families and individuals seeking asylum. Although many such people are labeled as economic migrants as opposed to asylum seekers, their reasons for leaving have a common root linked to our Foreign and Home Office policies and style of military and intel interventions. The Foreign Office has funded such dubious groups as the fraudulent "White Helmets
" in Syria whose main job was to work alongside the terrorist group ISIS creating false flag events with which to tarnish the image of either the Syrian or Russian military. The Home Office is also listed as supporting "democracy groups
" alongside the US "National Endowment for Democracy
" which basically foments "colour revolutions
" by training individuals to organize pseudo-spontaneous "revolutions
" in Ukraine, Hong Kong, Syria, Belarus, Chetnya and Xinjiang in China. This general behaviour has created instability and, in some cases such as in Syria and Iraq, the USA and UK have worked alongside the terrorists such as ISIS to bring about regime change in a more violent fashion. If Russia had not stepped in to the Syrian conflict at the request of that government, it is likely that today Syria would have become the main ISIS Caliphate in the Middle East and we would have been flooded by millions more Syrian refugees.
It is perhaps fitting that the Home Office handles asylum seekers but this odious agreement struck between Priti Patel and the Rwandan government will see asylum seekers fleeing from countries with a per capita incomes which have been reduced from around £10,000 to around £2,700 as a result of our military interventions, to be sent to Rwanda with a per capita income of £1,200 where, in spite of the assurances of a Rwandan government official they have a safe future but frankly few prospects in a country with a history of horrendous ethnic violence. The the current global economic crisis also linked to NATO's and this government's sanctions against Russia will impact Rwandan stability under the strain. This government does not appear to be able to connect the dots between sanctions and this horrendous worldwide cost of living crisis. The limp assertion by ministers is that it is a global phenomenon. That it is, but created by inept foreign policy decisions. Not only has this government ruined the prospects of several countries and offers no development support, it has contributed to a more generalised global economic crisis. This same government is unwilling to provide such asylum seekers with safe routes and thereby can brand them as "illegal asylum seekers
". In the end many will argue that this country cannot accept "so many
" asylum seekers but there is an urgent need to recognize that this government has spent too much time upholding irresponsible militaristic foreign policy decisions that, incidentally never won anything but helped murder large numbers of civilians and create misery for the millions left, including those who seek asylum.
The Foreign Office does of course provide humanitarian aid to the Yemen in an extraordinary act of hypocrisy when we have supplied arms and military tactical support to Saudi Arabia in their destructive bombing and murder to Yemeni civilians.
The apparent flow of arms to Ukraine will not even replace lost hardware. The average attrition rate of Ukrainian hardware has remained at around 100 items each day including all major classes of military equipment listed in the regularly updated tabulations on the left. Of late, drones and tanks have been the main items. This signifies that just to replace destroyed equipment, Ukraine requires 3,000 major items each month whereas the West is providing just odd handfuls of disparate items which are usually destroyed when they find their way to the lines of engagement. Unfortunately, the Ukrainian side concentrates on targeting civilians and their dwellings in the Donbass as a result of an almost fanatical desire to punish and liquidate former Ukrainians who are Russian speakers and Russian passport holders. Western assistance is helping keep this process alive and thereby supporting war crimes. This whole saga is a tragic mess and as a result of NATO's strategic illiteracy in not understanding the impact of their ill-thought-out "sanctions against Russia
" decisions would create a serious economic crisis in NATO countries. NATO "planners" clearly had absolutely no idea of the degree to which sanctions would backfire on NATO country constituents.
Western governments need to ask Ukraine to stop sacrificing its troops and negotiate. Adopting a neutral status is not a significant cost to Ukraine since it would guarantee a long lasting peace and stability. However, the USA has other objectives and it does not wish to see a backwards step for US military hegemony. In this crucial decision it would seem that so far Europe does not have the freedom to defend the interests of its own citizens. Ukraine also needs to abandon any hopes of reintegrating the Donbass or Crimea into Ukraine. The Ukraine's horrendous treatment of the inhabitants of these regions and the fact that they voted overwhelmingly to leave Ukraine in 2014, and now with thousands dead over the last 8 years resulting from Ukrainian attacks and assassinations, they would never accept reintegration.
The longer this insanity continues, the more it becomes apparent that NATO, in reality, has no hardware, strategies or ideas to challenge the Donbass and Russian units who are advancing slowly. This slow advance is a result of Ukrainian units placing their equipment within residential areas, schools and even hospitals and preventing civilians from moving away from their weapon emplacements. However, Russia has considerable experience in overcoming such tactics which were used by ISIS terrorists in Syria and Russia succeeded in ridding Syria of these elements.
The longer this campaign lasts the more drastic will become the state of the economies of NATO members. Persisting in encouraging Ukrainians to fight to the last Ukrainian is a cowardly crime in itself. The emotional state of Ukrainians is such that many are willing to risk sacrificing themselves but it makes more sense to discourage them by allowing facts on the ground to enter this equation. The facts are that Ukraine, with or without any NATO support, is losing badly and just a small amount of realpolitik-based analysis would conclude that this madness needs to be terminated because the losers so far have been Ukraine and NATO countries. Serious consideration needs to be given to Russia's demands made in diplomatic communications in December 2021 to NATO and the USA and which were typically ignored by NATO and the US State Department. When Ukraine declared their intent not to pursue the peaceful solution based on the Minsk agreement while cynically demonstrating their intent to continue to attack Russian-speaking civilians in the Donbass, in February 2022, a response by Russia was inevitable. However, this state of affairs was created by a trail of refusals of Europe, the UK, NATO and the USA to respond seriously to Russia's request to include the people of Russia within any mutual strategic security agreement. NATO's irresponsible response was to increase their arming of Ukraine since 2014, to assist them in pursuing a bloody military campaign targeting the civilians in the Donbass.11/06/2022:
The NATO of the cold war period is not the NATO of today. In the 1940s through 1960s there was a strategic balance between military and economic questions. The economic questions to a significant degree dovetailed into the Bretton Woods settlement. However, post 197l with the USA abandoning the Gold Standard there followed a long period of increasing financialization characterized by so-called globalization of offshore investment in lower wage economies. Following the 1989 collapse of the Soviet economy was greeted with satisfaction by many in the West. At the same time financialization was undermining manufacturing and jobs in manufacturing in the West. By 1990 there should have been a reset on both the Western as well as the Russian economies. However, the hawks resisted expanding the concept of the hoped-for "peace dividend
", which in the 1990s included the concepts of Russia joining a replacement for NATO as an expanded mutual strategic security framework with joint projects on sustainable economic development.
Just as the European Community began to expand by accepting Central and East European countries so did NATO move eastwards. NATO became confused with what became the European Union, leading to a loss of an overall strategic overview of the European economic questions. Or rather, economic questions became mixed up with military strategies on questions where there were no particular risks. The Soviet Union and the Russian Federation proved to have been the most reliable suppliers of gas for Europe. In spite of this the USA/NATO began to pressure for Europe to replace Russian gas alleging that this was a question of security. The last US administration brought this to a head by sanctioning NorthStream 2, a project which had been requested by Germany. Another indirect attack on Germany was the notion of "paying" for NATO by raising contributions for defence to at least 2% of national income. The combined process of NATO advancing eastwards in spite of undertakings not to do so, if Germany was reunified, was combined with a direct attack on Germany's economic interests. This became more critical as a result of an illegal coup in Ukraine in 2014, overthrowing a democratically-elected government and promoted openly by the USA State Department was followed by the arming of Ukraine as this government began a military campaign against Russian-speakers in the Donbass.
Knowing the nature of the imposed government which included a close-to-fanatical hatred of Ukrainian Russian speakers and the tendency to not protect their own citizens who were Russian or just Russian-speakers who were attacked by nationalist elements, Crimea, Lugansk and Donetsk (Donbass) all declared themselves independent from Ukraine as a first step in protecting themselves. These acts were not instigated by Russia but by the people concerned in Ukraine. Miners and others set up militias to defend themselves against he Ukrainian military. The puppet government of Ukraine declared these zones as terrorist and initiated an "anti-terrorist" war against the Donbass. A large proportion of the Ukrainian regular forces refused to fight and as a result this military campaign was taken over by nationalist neo-Nazi brigades. The peace agreement propositions under th Minsk Agreement convinced Russia that this killing, which by this year had reached in excess of 15,000 people, that this conflict would be settled peacefully. With Ukraine abandoning Minsk in February 2022, Russia, at the request of the Donbass, joined this ongoing fighting on the side of the Donbass population.
It was at this point that NATO made its greatest mistake by becoming involved in the encouragement of NATO members and the EU to impose sanctions on Russia and to attempt to complete the removal of Europe's reliance on Russian gas and petroleum. Russia, in spite of this, continued to supply gas under the terms established under their supply contracts while the USA, European governments and the UK introduced a regime of piracy of impounding and confiscating assets belonging to Russians. Russia, to avoid the impact of dollar-related sanctions switched contract payment terms to roubles. Countries who NATO encouraged to refuse this basis had their gas supplies cut off. The result of NATO and European sanctions has been a significant rise in gas and petroleum prices on the open market and in several cases shortage of supply. Therefore NATO's lack of understanding of the economic circumstances has forced onto NATO members an accelerating stagflation which is likely to last several years (see previous article below). It is likely that NATO members who are supporting the underlying out-of-date European strategy of the USA as, "... keeping Russia out, Germany down and the USA in"
will end up with serious economic, social and political instability as a result of the cost of living crisis leading to stagflation and the potential for rising unemployment.
President Biden has attempted to assign the blame for inflation to President Putin of Russia when the central cause has been ill-thought-out sanctions applied to Russia caused by the West following the dictats of NATO on economic questions.
Far from being a defensive alliance NATO has turned out to be an incompetent strategic organization because it has failed abysmally to ensure economic security as a result of following an out of date militaristic stance. It is not as if the weapons supplied by NATO are up to much in practice. Most of the weapons supplied by NATO members to Ukraine have been destroyed as proof enough of out of date notions of what is required. And yet the West continues to scrape around to find additional economic sanctions rather than place the wellbeing of their constituents as a priority. The West's ill-defined "mission" will ensure a significant economic collapse in the West and which will be longer lasting than most realize. Watch this space...10/05/2022:
Irrespective of the predictions that inflation will slow down early next year, ill-advised political decisions on the collective foreign policy front (USA, UK, EU), have set in motion a process that will cause a cascade of effects that will drive inflation to at least 15%. 15% inflation is equivalent to a drop in real incomes of over 80% in a decade. This was is the conclusion at a mid-week workshop at SEEL. SEEL is the leading international centre for the development of research into real incomes and Real Incomes Policy (RIP). RIP was developed specifically to reduce inflation. This work started in 1975 in the wake of the 1970s stagflation crisis caused by rises in the international price of petroleum imposed as a sanction by Arab members of OPEC.
It is instructive to understand that then the stagflation crisis and recovery took over 20 years. Rather than tackle the central issue of real incomes preservation through price and physical productivity incentives, resort was made to monetarism by raising interest rates which further depressed the economy and increased unemployment.
The inflationary cycle is characterized by a multi-layered cascade of price increases. Fiscal policy and Bank of England decisions can have no impact on this trend. Based on the 1970s-1990s experience, Hector McNeill explained that there were four general phases in inflation growth and the extent of its impacts on prices:
- An immediate impact on the principal commodities subject to scarcity created by market imbalance imposed by sanctions, petroleum and petroleum derivatives;
- A lagged broader dissemination of cost-push inflation throughout all sectors of the economy;
- A realization that monetary policy and central banks cannot control inflation because real incomes is not the principal policy target and no conventional policy instruments were designed to target real incomes;
- An attempt to compensate for the inability of policy to lower inflation occurs by businesses adopting a price-setting logic that is designed to maintain their real incomes; this can lead to hyperinflation.
Although several analysts have stated that inflation will come back down next year, this is very unlikely. Initially, as a result of under-estimates of inflation rises and over-estimations of policy's ability to reduce inflation by government, business holds off raising prices or minimizes price rises. As a result, the immediate impact of energy prices does not feed through into prices in the rest of the economy, it is most evident only in the sale of energy products (electricity, gas, lubricants and petrol).
Then later, depending upon the costs structure of different sectors the impact of higher cost logistics, transport and petroleum derivatives, such as fertilizer, begin to affect medium to longer term production cycle industries, such as agriculture, heralding much higher prices with a 12 month lead time to harvest. Following lower agricultural harvests, the different hemispheres enter their cold periods when the impact of energy price becomes critical. In the UK SEEL estimates that petrol and heating energy and food prices will impact the purchasing power of 40% of the population in a significant fashion.
At this stage most constituents will realize government cannot do anything by applying conventional policies by taking into account two important facts:
- Monetary policy and fiscal policy cannot do much to stem the inflation other than by creating more unemployment.
- The fall in currency value due to inflation and policy failure, means that businesses need to act in their own interests and accord by setting prices to compensate for this loss. This is achieved by anticipating next-period inflation by building into prices at least this expected rate of price increases.
In Brazil, in the late 1970s, these realizations and resulting business actions led to hyperinflation. This is because being the equivalent to an interest rate that is paid to no one, inflation reduces the purchasing power of the currency so that less can be purchased in real terms on fixed nominal incomes. As a result consumption and demand will decline. Therefore, there is a lower volume of output. Fixed overheads increase internal costs, in addition to input costs due to inflation. The business procedures applied to establish output prices become oriented to maintaining net real incomes and margins. This is achieved by anticipating expected inflation by raising prices more than the expected inflation in each subsequent trading period. As a result the driver of inflation is no longer cost-push but includes a psychological speculative element to price setting. This feeds back into the economy to drive inflation even higher. This results in an upwards price spiral or hyperinflation and an eventual monetary and economic collapse involving widespread to mass unemployment. However, the financial logic giving rise to this phenomenon is financially sound for each business but disastrous for the economy at large because overall purchasing power of consumers is destroyed. This fortifies the overhead costs spiral making short term price or physical productivty decisions to lower prices, virtually impossible.
On reviewing the limitations of the existing policy options deployed by government it is evident that inflation needs to be controlled through policies that align the interests of companies with consumers who make up the work force. This requires the creation of a macroeconomic environment within which companies are encouraged to adopt business rules that change the price-setting procedures. Price setting needs to maintain a balance between associated gains by shareholders and work forces based on a shared benefit from a combination of price productivity in the short term and made financially feasible by phyisical productivity improvements gained over the short to medium term. In this way it is possible to achieve immediate impacts on the upward movement of prices to alleviate the cost of living crisis faced by an increasing proportion of the constituency.
The only policy that deploys appropriate policy instruments to achieve this form of transition in the short term on a sustainable and profitable basis for companies, is Real Incomes Policy (RIP). Last week, a Cambridge Economics Network paper provided an outline of RIP: Options worth considering to solve the cost of living crisis
State Department's bootcamp for NATO members on the "Rules-Based Order"
Credit: Illustration from Francisco Goyas' "El Caprichos" 1799.
There has always been controversy on whether or not Britain needed to sink the Argentinean ship the Belgrano with the loss of over 300 Argentinean sailors during the Falklands conflict. The arguments on this decision have since faded into the mists of time. However, today we see the results of Boris Johnson's maverick encouragement of Ukraine to fight on in the spirit of a ridiculous out of place Battle of Britain mentality. Since that decision was taken, the casualty rates and deaths amongst Ukrainian military have accelerated. Ukraine will become Johnson's Belgrano in the sense of becoming a basis for raging disagreements over the objectivity of Johnson's decision to encourage Ukraine not to negotiate. This decision has led to the deaths of thousands of Ukrainian troops in attempting to fight against overwhelming odds. This realization will come home in just a few weeks when the extent of Ukrainian casualties breaks through the ridiculous propaganda barrage designed to hide the true facts which are stating such things as Ukraine is winning and completing successful counter attacks; this is simply not true. This propaganda is designed to encourage the US and UK and others to supply more armaments all of which simply generate targets whose destruction kills more Ukrainians. This does, of course, make a lot of money for the over-priced US and UK armaments company products and who no doubt will feel obliged to make generous contributions to the Conservative party coffers in preparation for the next election.
Keeping public opinion on the side of government decisions has become the role of media by supporting a biased propaganda which lies through omission of critical information so as to greatly exaggerate the sagacity of government decisions and attempts to hide the full extent of their negative consequences.
"Shock and awe" content in media is a technique of exaggerating dangers to the public and thereby creating an apparent dependency on sound government decisions, is a common technique applied. This was developed by the Fascists in Japan and Italy as mind control and perfected under Goebbels in service of the Nazi regime. It is pertinent to ask how our constitution permits this form of media abuse targeting the constituents of this country.
Credit: Illustration by Francisco Goya
This is all the result of Johnson not resigning on the basis that he needs to ".. get on with the job
"; what a job!!
The Russians have developed effective ways to handle dug-in field fortifications liquidating all troops in a wide areas in seconds using barometrics. The slower process is the handling of the situations where Ukrainian troops have placed their armaments in residential areas. If Russia had been less concerned with the civilian population they could have occupied the Donbass within days using carpet bombing just as NATO has done in most of its Middle Eastern exploits, killing hundreds of thousands of civilians. In the case of NATO's exploits, together with the US, it lost every campaign while Russia successfully prevented ISIS from taking over Syria and is winning in Ukraine. There is of course, always the excuse, that, "... we were so badly advised
" or switching from "... we are following the science
" to "... we are following the the advice of our world-beating intel
"; and thereby hangs a tail. There is always someone else to blame for illogical and reckless decisions and therefore, of course, none of this would be a matter for resignation of anyone taking the decisions.
In the meantime our policy remains that of enthusiastically encouraging Ukraine to fight to the last Ukrainian, after all it is only Ukrainians dying and it is good for the British armaments business and, above all, this criminal and bloody shambles meets with the approval of the US State Department. The fact that this, combined with sanctions against Russia, is helping sink our economy into a serious cost of living stagflation crisis, leading to increased unemployment, does not appear to be a real concern of a highly paid and somewhat smug cabinet. After all, the Conservative MPs have just provided Johnson with a vote of confidence forcing the country to endure this continued mismanagement. What could go wrong?06/06/2022:
The general understanding of diplomacy is that is the management of relationships between countries and it involves an ability to maintain a due diligence in basing statements of on mutually agreed facts in order to maintain a dialogue and avoid upsetting anyone when dealing with difficult situations. It is often the case that in order to make progress quiet diplomacy as opposed to public accusations and threats is the most productive tactic so that public declarations are able to register progress, no matter how small, in the resolution of an issue. This requires an effort on all sides to gather evidence which needs to be shared to enable an adequate verification of what is factual and what is without merit.
"Cackle diplomacy" does away with such considerations. Cackle is the collective noun for hyenas whose natural habit is to hunt in packs. In the wild they each attack a quarry by each attempting to bite them and then retreating until the quarry is injured enough to be unable to resist any further harassment so as to succumb and be savaged, killed and eaten by the cackle members. Of course, places such as the United Nations Security Council have yet to witness such gory scenes, but cackle diplomacy is there for all to see. Cackle diplomacy is a technique that is based on the practice of US attorneys throwing as much mud as possible to see if anything sticks with the judge or the jury. There is no particular attention paid to facts and verified evidence. The mud to be slung is distributed to each member of the chosen cackle diplomatic corps, see right, as a long list of negative accusations to attack, rather than enter into a productive dialogue, with a particular country. It therefore becomes a show piece to be disseminated by a willing media. Rather than present measured evidence-based reasoning for other parties to respond to in an equally measured manner, "Cackle diplomacy
", being organized around a pack mentality, is meant to be intimidating as well as generate an impression of each member of the cackle is of the same opinion.
The UK authorities stated that Sergei Skripal a Russian double-agent was poisoned by the nerve agent Novichok in his adopted hometown of Salisbury in March 2018.
The UK accused Russian agents of having carried out this act. The Russian government requested evidence on multiple occasions, for them to provide a structured response.
After 4 years, the Russian authorities are still waiting for this evidence to be sent to them from the UK.
No matter how small a group makes up the cackle, they refer to themselves as representing "world opinion" which greatly impresses the media who dutifully report the cackle statements. However, it is notable that each member of a cackle seldom expresses an independent opinion, arrived at as a result of an unbiased analysis but rather, they repeat the same list of unverified accusations even using the very same terminology; in all cases, read from a prepare script.
In the exchanges between the representatives of the Russian Federation and those members of the Security Council
The Ukrainian government accused Russian troops of shooting several members of the public in Bucha when they left. There is a considerable amount of logical evidence to establish these accusations are false. Some satellite images turned up showing the locations of the bodies in a single road in Bucha were reviewed by a SASI expert. This "evidence" directly undermines the case emphasizing it's false flag event" characteristics. In actual shooting events, there are very typical characteristic patterns of distributions of clusters and dispersions of bodies of those killed in relation to those shooting. In the image bodies are regularly spaced out in two lines, as if dropped off at intervals from a transport of some kind. In other words it is highly unlikely that these people were in fact shot where they lie. The question therefore arises as to why the Russians would shoot civilians and then transport them to the road concerned and place them there.
and other UN members who are in the US State Department cackle, all of the presentations are essentially the same and all are accusatory as opposed to being queries to enable the Russian representative to reply. The tactic of making very long lists of accusations without any accompanying evidence is intentional. This is because any serious diplomat would have some difficultly dealing with untrue statements. Without evidence there are no grounds for a response. As a result, the impression left is that the Russian representation is "failing to respond". Since most accusations are false, no reply should be expected, but the public, observing the proceedings will not be aware of the reality. In any case, when the Russian representatives do reply to specific issues, the members of the State Department's cackle tend to be dismissive, without offering evidence to justify this. Being dismissive is a displacement tactic to avoid analyzing or responding seriously to what the Russian representative has stated.
In his statement to the UN Security Council on Monday 06/05/2022, Charles Michel remained true to the form of cackle "diplomacy" by sustaining a pseudo-dramatic irrational and mendacious smear. He said several things about Russia that are patently not true.
Russia has not used food as a weapon against Africa or anyone else. As the largest world wheat exporter its wheat is available but several countries are afraid on sanctions by permitting Russian ships dock. Marine insurance companies have also expressed concerns, fearful of US sanctions if they provide insurance on Russian ships. Michel stated that Russian ships can dock in the EU which is not relevant. The interpretation of recipient countries is causing confusion and the State Department rhetoric does not clarify matters. Russia has nor stolen Ukrainian grain although the nationalists in Mariupol set 50,000 tonnes of grain on fire in a silo, before they left. Odessa cannot export by the sea route because Ukraine has mined the harour. As a result of negotiations between Russian president Putin and Ergodan of Turkey, Turkish navel experts have offered to clear Odessa harbour of mines and provide safe passage for Ukrainian wheat carrying vessels which will also be guaranteed by a Russsian naval escort further down the chain. The Russian navy is not preventing Ukraine export grain. Apparently Zelensky has rejected the idea.
Finally, Michel made the mendacious claim that Russia was exporting grain stolen from Ukraine. In tracing back the origin of this accusation it turns out to refer to an absurd report, photos and all, of a grain cargo loaded in the Sevastopol grain terminal and taken to Lebanon. The grain concerned was produced in Russia and the ship was also Russian. This simply serves to demonstrate that Russia is not holding up grain exports.
So Michel's false diatribe was just another show piece for the benefit of the grinning assembled cackle diplomatic corps consisting of a very dishonest smear to obscure the constructive work completed by Russia to compensate for Ukranian incompetence and EU inaction.
Because of the lack of serious intent to verify the truthfulness of statements made by cackle members, many events in the Ukrainian affair, which were set up intentionally to reflect badly on Russian activities, have since been shown to not have occurred.
However, they remain part and parcel of cackle accusations, even today, as if they were established facts. The Western media, in reality, in fear of the cackle and being kept on the "inside track", continue to spread disinformation. Thus the West's diplomatic missions are major participants in an international cancel culture designed to intimidate anyone who dares come up with alternative narrative to their verbal mud.
It is very evident that there is, therefore, absolutely no attempt to mount a dialogue that is both informative and constructive leading to degrees of positive resolution. There is no attempt to demonstrate the value of intelligent and informed diplomacy in contributing to global peace, security and wellbeing. Recent examples of persistent misrepresentations include a list of atrocities invented by the recently sacked Ukrainian Ombudswoman who had descended to inventing events and atrocities that never occcurred or her assertions were so bizarre, as to be unbelievable even by the Ukrainian authorities. The Bucha event, see right, is also one that never took place as stated, but remains an assertion of the members of the cackle. This is why the Russian representative, Vasily Nebenzya, was justified in walking out when the EU cackle member Charles Michel, repeated several such misrepresentations (see box on the left) for the sole satisfaction of the assembled members of his cackle, in a speech to the UN Security Council on Monday 06/05/2022.
The outcome of this unseemly behaviour of these elements making up the cackle diplomatic corps sets a very bad example to the world constituency and, in particular, to the world's youth. Why on earth would any intelligent student aspire to become a diplomat? To see highly paid and apparently highy educated adults acting like a bunch of hyenas and somehow expecting so be accorded some form of respect on par with their assumed status as "diplomats", is a tragicomic scenario to behold. What hope for the future can such people bring through their frank demonstrations of building time-wasting destructive show pieces that make a mockery of the United Nations. We need governments that instruct and enable their diplomats to maintain well meaning progressive dialogues designed to map out our futures founded on a vision of the importance of a collective security. 06/05/2022:
In researching details on the Ukraine-Russian conflict we were pleased to discover the work of the Crimean, Russian marine artist Ivan Aivazovsky; it is most impressive. Below are some examples of his work. Some of his paintings have a romantic, "Turneresque
It is important to reflect on the fact that our government, in following the blind alien "cancel culture" of the United States has sought to "cancel" everything Russian. The United States has a lived culture that is fundamentally alien to that of Europe. It is based on a foundation involving the genocide of indigenous peoples and slavery based on capture and mistreatment of people from other countries. The violent remnants of his inhumane mindset flicker within that society in a commitment to guns, regular mass shootings of innocent people, including school children, a horrendous growth in the homeless, accelerating inflation and a legacy of military exploits which since 1945 have resulted in deaths of in excess of 20 million people, most of whom were civilians.
Our lost, immoral and weak leadership in Britain, in both major political parties, willingly bow to this monstrosity and proactively participate in a frenzied denial and attempted throttling of the self-evident amazing contemporary and past contributions of Russians to sport, art, literature, science, technology, space exploration, and other domains, to European and world culture. No individual from any country, should be subjected to public declarations of their support, or otherwise, of their governments. To demand that individuals from Russia sign documents declaring their opposition the acts of the Russian government, as a basis for allowing them to express themselves freely, is a tyranny. This crime directed against such individuals is an affront to the people of this country, who are constrained for fear of becoming conspicuous and, therefore, targets for rebelling against such injustice. While the government wishes to introduce sanctions against acedemic institutions to prevent the de-platforming of people with contrary viewpoints, it sets no such standards in practice. Our leadership, so-called, behaves in an embarrassingly craven manner, fearful of the very culture it has generated, in support of the artitrary notion of a so-called "values-based and rules-based order
" promoted by the USA. We are expected to tolerate the expanding cultural desert in our political landscape where leaders lie and people are no longer expected to have the courage to seek and express facts, to be honest and to take decisions that are ethical.
Why do politicians in this country support a government that assumes that the people of this country should accept such moral decadence?
Stormy Sea at Night, 1849
Among the Waves,1898
View of Constantinople, with the Nusretiye Mosque, 1856
Battle of Çesme at Night, 1856
As the USA, and now the UK, wish to supply longer range missile systems to Ukraine the logical response of Russia is to extend the width of the final buffer zone to reduce the likelihood of these devices being able to reach Russian or Donbass territory. A 100 km range system simple adds around 60,000-100,000 square kilometers of territory lost by Ukraine, depending on what Russia decides are the final demarcation lines beyond the administrative boundaries of the Lugansk and Donetsk republics. This is equivalent to 25%-40% of the area of the UK. Russia has already demonstrated the ability to detect and eliminate over 450 such weapons. To add such weapons to the Ukrainian inventory, just as it is obvious that Ukraine has lost the military campaign, will guarantee heavy casualties amongst the individuals being trained in the UK to handle such systems.
Painting of the Russian squadron in Sevastopol by the Russian marine artist, Ivan Aivazovsky (1846)
On the constitutional questions of territory. On February 22, 2014 there was an unconstitutional and violent coup against the democratic government of Ukraine openly supported by the US State Department. This action was openly assisted by representatives of factions with a violent intent with respect to Russian-speaking Ukrainian citizens and those with dual Ukrainian-Russian nationality making up the majority of the Ukrainian populations in Crimea and Sevastopol as well as the administrative regions (oblasts) of Lugansk and Donetsk. As a result of the fear of the likelihood of violence directed against this minority by the "new government", Crimea, Donetsk and Lugansk declared themselves to be independent of Ukraine. These declarations were later confirmed by referenda. On 11 March 2014, the Republic of Crimea and the city of Sevastopol declared their independence from Ukraine. They went further, however, requesting annexation by Russia in which case Russia required that a second referendum be undertaken to ascertain whether or not the population would wish such an annexation by Russia. On 16 March 2014, a referendum was held in Sevastopol to receive votes on the question:"Are you in favour of the unification of the peninsula of Crimea with Russia as the subject of the Federation?
" With a 89.51% turnout and 95.6% majority voted Yes. Then on 17 March 2014 the councilors of Sevastopol City Council voted in favour of the integration of the city into the Russian Federation, with the same status as the cities of Moscow and Saint Petersburg. Sevastopol was annexed by Russia in 2014 with the rest of Crimea and since then has been administered as the federal city of Sevastopol. As a result, this population of around 2.5 million people, were saved from the onslaught and murderous attacks suffered by the other communities who had voted for independence in Lugansk and Donetsk. Since 2014 some 15,000 people have been killed. Following 8 years of violence aimed at the people of the Donbass by the Ukrainian government, the likelihood of the population ever contemplating becoming reintegrated to Ukraine is zero. Therefore, on the basis of the fact that the Ukrainian government initiated a military campaign, accusing the Donbass Ukrainians who voted to become independent of an illegally created government, of being "terrorists", the reintegration of such regions is without any constitutional or democratic foundation.
The record shows that the guarantees drawn up for a peaceful solution under the Minsk agreement signed in 2014 and again in 2015 with United Nations approval, were wrecked when Zelensky declared that Ukraine would not carry out this agreement in February 2022. As a result, Russia, who had relied on the Minsk agreement to bring abut a peaceful resolution to the Ukrainian government's military aggression, at the request of the people of the Donbass, recognized the "republics" of Donetsk and Lugansk and agreed to help defend them against the Ukrainian government forces. This undertaking also included recapturing the full extent of these administrative regions. Russia did not initiate this fighting, Russia joined an ongoing war initiated by Ukraine in 2014 and which Western media has largely ignored including the lack of reporting on the massive scale of slaughter of civilians in the Donbass.
The other intent spelled out at the beginning of Russia's campaign was to de-militarize Ukraine and take on the extreme Ukrainian nationalist brigades which have an underlying Nazi genocidal attitude towards Ukrainian citizens who are Russian speakers or of dual or Russian nationality. Their genocidal intent has been born out by the 8 years of violence in the Donbass where military effort has been concentrated on domestic dwellings and the people of the Donbass and this characterizes the current crescendo of Ukrainian efforts on their receding frontier with the Donbass, where their efforts concentrate in targeting civilians. Unfortunately, the continual supply of heavy weapons to Ukraine by the UK, USA and others only means this genocidal campaign will continue.
The sooner Ukraine negotiates seriously the sooner we can return to the important topic of the establishment of a mutual strategic security framework that guarantees the security of all.
Vilfredo Pareto was an Italian engineer, sociologist, economist, political scientist and philosopher.
He contributed to the understanding of relationships that determine the distribution of benefits in an economic system. He developed the concept of Pareto efficiency. This is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off. However, Pareto was not reflecting on the impact of productivity and as a result ended up with a zero-sum identity. This is somewhat paradoxical since Pareto was an engineer.
RIP dismantles this concept by establishing a positive systemic consistency principle based on the promotion of productivity to raise and distribute real incomes.
Pareto pointed out that income tends to follow a Pareto distribution, a probability distribution. His principles on income distribution have appeared today in the slogan concept of "the 10%", who have benefited more from conventional economic policies while the rest of the population have been prejudiced. This has morphed into "the 1%"
He made important contributions to economics, including income distribution and in the analysis of individuals' choices. Choice theory is an important underlying component of constitutional economics and to which the Real Incomes Approach contributes.
As the government struggles to pop rabbits out of a hat within the vice of the debt-tax trap
created and maintained by conventional economic policies, it is worth referring to some slogans that go beyond "It's the economy stupid
" to stating what it is, about the economy, that needs to be fixed.
The policy debt-tax trap imposes on government a zero-sum game not only of, ".... if we help you today tomorrow you pay it back in tax tomorrow"
, to a policy-imposed Pareto efficiency. Pareto efficiency is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off; the zero-sum game referred to. However, Pareto was not entirely correct - see box on the right.
Real Incomes Policy (RIP) is based on the concept of a move towards a positive systemic consistency
. In order to unpack this sentence the following terminological definitions help clarify things: Positive
- that which is deemed to be beneficial
- affecting all components of the economic system
, that is, individuals and economic units, in a similar fashion; and Consistency
- having the same directional effect
, that is, benefits accrue at all levels but the degree of benefit will normally vary. Pareto did not take productivity into account whereas RIP actively promotes productivity and the distribution of the gains in terms of pricing to achieve a positive systems consistency. RIP moves policy beyond the zero-sum debt-tax trap, maintained by the government, and provides a coherent basis for tackling the cost of living crisis.
03/06/2022: We have received a very surprising number of emails containing questions on the document refereed to in this leader. We have forwarded these to the author. Since there appears to be considerable interest in the content and just two basic questions, we have asked the author to provide us with his responses so that we can publish them in this medium.
We are pleased to announce that the promised document, "Options worth considering to solve the cost of living crisis"
has now been published by Cambridge-Economics Network. The contents are an edited version of a presentation at the Cost of Living workshop organized by Agence Presse Européenne last month.
This document sets out the justification as to why there needs to be a major change in direction in policy to escape from what is termed the "debt-tax trap
" created by monetarism. In other words, increasing government direct support only means later rises in taxation which is infeasible for increasing numbers of working constituents. This state of affairs is made far worse by inflation trending towards stagflation where unemployment is added to the negative balance which rises as a result of falling real wages. Government policy needs to concentrate on the means of reducing the rate of increase in prices and to stabilize, and then reduce, prices. Current policy is no more than a palliative in that it relieves the burden of low paid constituents, to some extent, but does not solve the fundamental issue of price rises whose effects are becoming more profound and destructive.
Another document entitled, "The consequences of being a nation of shopkeepers
" is in preparation.31/05/2022:
The Cambridge Institute for Sustainability Leadership (University of Cambridge) has released a report, authored by Anna Barford and Jane Nelson, entitled, "The case for living wages
". This document (pdf) can be accessed by clicking on the image on the right.
Alan Jope, CEO, Unilever writes in its introduction,
"Capitalism is evolving to incentivise businesses to create better outcomes for more stakeholders.
Living wages are an important part of this evolution. They strengthen businesses by improving employee engagement and productivity, and align corporate conduct with customer expectations. A living wage economy would dramatically increase consumer purchasing power – uplifting millions from poverty and creating a prosperous market for consumer goods companies like Unilever. This would also be an important step to healing inequalities in our fractured society, and increasing the odds of success in tackling the biggest challenges that the world faces today."
This statement encapsulates some of the thinking behind Real Incomes Policy (RIP) which, of course, is also geared towards eliminating inflation.
A document covering the issues of living incomes and inflation was produced by SEEL in 2020 can be accessed by clicking on the image on the left.29/05/2022:
This week's Economist Newspaper has a short article concerning the flip-flop of the Conservatives in, at first opposing Labour's plan for a windfall tax for energy companies and then applying it (which seems to have happened after the Economist edition had been signed off to print). The original opposition was put down to such taxes preventing needed investment so a windfall tax would be "... un-Conservative
" and the Economist mentions that in some government circles consideration of applying similar taxes to electricity generating companies has occurred. The Economist note that this is "... not very Conservative", in spite of the fact Thatcher applied a windfall tax on banks being justified in terms of their profits being the result of the then government policy of high interest rates rather than the result of increased efficiency or better services to customers.
The significant rise in bank profits under the Thatcher government and in energy company profits under this Johnson government are both the result of Conservative government policies, both are linked to ideologies. On the one hand, monetarism and, on the other, a commitment to sanctions against Russia. Under Thatcher thousands lost their homes as a result of high interest rates through bank repossessions of mortgaged homes. In reality such an arbitrary decision resulted in sound mortgage contracts taken out in good faith, being transformed into sub-prime mortgages by government policy in the middle of a serious cost of living crisis and stagflation. In spite of this disaster being the result of government policy no one was ever compensated. Monetarism continued to hollow out the economy after the Thatcher government fell. The situation now is that as a result of monetarism creating a long drawn out bubble in land and real estate markets many constituents in this country cannot afford a mortgage, even at low interest rates. Now the Bank of England has just begun to make matters worse for constituents aspiring to purchase a house by raising interest rates which will also raise costs all round. The Bank of England's policy of quantitative easing (QE) created massive profits for banks and asset holders and drove funds away from supply side investment. There have been, therefore, plenty of asset holdings and profits that could have been taxed because the massive 12 year run in rising profits was a direct result of QE. In addition, without any strategic analysis to identify the core economic interests of the constituent wage-earners in this country, in the middle of what was a rising stagflation caused by QE, our foreign policy has exacerbated the state of affairs by creating a significant rise in the prices of energy resources and derivatives such as fertilizer. This has significantly worsened an already serious policy-induced cost of living crisis for constituents and created an unwelcomed rise in input costs for the overall services and productive sectors of the economy. Whether one wishes to refer to any of this as not being very Conservative when it is in reality not very anything but wholly arbitrary and aimless, indeed, very destructive. Sunak's decision on the windfall tax seems to be a somewhat thoughtless panic move by a government trying to show resolve on the economic front to mimic the equally absurd resolve on the foreign affairs front.
Although the Conservatives keep repeating the cliche of the need to have a "prosperous" economy to be able to afford essential changes, the fundamental perennial gap is the complete lack of a sustained productivity-enhancing policy to bring about a deceleration in price rises and an eventual decline. This latest decision relies on excess profit taxation to bolster real incomes of people in work to be able to afford basic essentials. This is not sustainable since it does nothing to slow down the rate of increase in inflation. Governments of this country need to structure macroeconomic policy to address supply side pricing, wages and margins.
The measure of productivity needs to shift from shareholder value to the balance between the real values of wages and shareholder income, both of which should rise by the similar percentage. With moderated or even reduced unit output prices, real growth can rise from consumption fueled by incremental wages and shareholder value. Contrary to the general drift of the economic theory which appears to permeate government thinking, such price changes can be secured in the short term rather than long term by applying Real Incomes Policy (RIP). Such an approach can hardly be expected to emanate from the Conservative policy stasis because for some 40 years they have been locked into the monetarist paradigm, along with Labour. It was under Labour in 1975 that Denis Healey opted for monetarism to try and solve the balance of payments problem. All subsequent governments have failed to solve our balance of payments problem. It has steadily fallen deeper into negative territory to become the second worst in the world. This is the direct result of a fixation with monetarism having created severe constraints in the form of a debt-tax trap as opposed to the freedom offered by an innovation and real incomes growth approach to economic policy.28/05/2022:
Two workshops covering the current cost of living crisis were held the last and previous weekends by Agence Presse Européenne Correspondents' Pool. On review of our article reporting on these workshops, we were advised to modify specific details and to submit it for publication. Cambridge-Economics have accepted the draft document for publication subject to possible adjustments resulting from review. We have been informed that this publication has been released. Click on the image on the right to access the document.
In the meantime we provide the salient points concerning the cost of living crisis and the logical solutions.
It will be noted that the government's proposals do nothing to encourage companies to control prices, this is why energy companies have so-called excess profits. Therefore the onus for handling inflation lies with those who produce and set prices, companies. The trade off is that moderating prices helps slow down the rate of inflation which SDAG-SEEL predicts will have reached around 12% by the autumn because nothing is done to stem the rise in prices. Bank of England interest rate rises will only depress financed investment and lower turnover as a result of the declining real incomes of constituents; this will raise operational costs.
The government makes a plea that energy inflation is externally generated affecting all countries. However, the ongoing cause of exogenous inflation linked to energy, fertilizer and some other essential commodities is an unrealistic foreign policy which, at the moment, is exacerbating the state of affairs. Although the UK consumes little energy inputs from Russia, advocacy that other countries should sanction Russia impacts the price across all sources and markets.
The solution is a Real Incomes Policy (RIP) which is able to:
- create a lead price reduction
- stimulate market penetration
- encourage productivity-enhancing investment
- enable increments in wages
- expand UK manufacturing
- secure substitution of high cost inputs
- secure import substitution
Because the Chancellor applies static "affordability" criteria to outlays, based on national accounts, there is a failure to apply real incomes growth concepts by applying compensations paid to companies to lower prices. However, these are not subsidies but are applied to provide companies with the opportunity to improve productivity to justify those prices over the following period. This technique is common practice in supply chain contracts. In other words government funding has a demonstrable impact on real incomes growth unlike the so-called "super-deductions", which constitute little more than a vote harvesting technique with no guarantee of any productivity impacts. RIP is a more direct and effective way to tackle inflation at the main point of input inflation transfer, than allowing prices to rise and then subsidizing consumption at higher prices. This is inefficient and has little impact on inflation. The current macroeconomic policy framework contains no incentives for companies to act in a more responsible fashion. Contrary to statements concerning energy companies, most of this investment is low cost and incremental and in many cases would not involve having to raise loans which, in any case, the Bank of England has made more expensive.
Price caps are a blunt instrument and do not contain the necessary support framework to provide the flexibility necessary for companies to adjust to avoid bankruptcy.
RIP is an alternative paradigm to "Aggregate Demand Management" and is based on "Production, Accessibility and Consumption Management" within which demand comes from rising productivity and wages and not from money injections and rising national or private debt.
One of the important issues raised in the workshops is that the British economy has a limited ability to absorb input inflation because it is largely made up of a service and logistics sector distributing mainly imported goods over which we have no price control capabilities. We also have a diminished manufacturing sector as a result of inappropriate policies over the last 50 years. Unlike any other sector, manufacturing is the main source of innovation and options for sustained real growth in employment and wages. The details of why this is, is explained in another Cambridge Economics paper, "The consequences of being a nation of shopkeepers
" to be released at the same time as the policy document, "Options worth considering to solve the cost of living crisis
". We will post links to these documents when they are released.
Correction: 27/05/2022: The previous headline to this leader mistakenly stated the rate of elimination had risen by 20%. In fact it has remained the same throughout the campaign.
Over the last 90 days of the campaign the rate of destruction of major Ukrainian military hardware assets has been roughly 100 items each day. This rate has not diminished. During last 2 days the number of major hardware items destroyed since 24/05/2022 was 212 items or 106/day, consisting mainly of tanks, vehicles and drones.
SASI reports that many Ukrainian personnel in the Donbass are surrendering, largely because commanders have abandoned troops made up of increasing numbers of inexperienced and untrained civilians, most of whom do not have any combat experience. Many have been found to be without ammunition. Most had no body armour. As a result the numbers of captured personnel are beginning to create a management problem which is being temporarily resolved by rapid transport to safety, some distance from the combat zones. It is also evident that most of the destruction of private properties in the Donbass is the result of Ukrainian rather than Russian shelling.
SASI has also reported that, given the reality on the ground, there is a strategic rethink on the part of many countries' foreign policy and diplomatic personnel. Currently these discussions are secret and limited to in-country groups, but within a very short time there will be an attempt to coordinate an identification of a way to back away from offers of military assistance to the Ukraine. There will be pressure brought to bear to initiate negotiations for peace. Ukraine's rhetoric concerning refusal to cede territory has been assessed as being unrealistic. As a result of 8 years of targeting civilians by the Ukrainian military and an estimate of between 13,000-20,000 killed by Ukrainian action, the vast majority of the populations of Lugansk and Donetsk will never accept reintegration into Ukraine. Crimea, with an overwhelming majority (exceeding 95% in favour), decided to leave Ukraine in 2014. Ukraine, as a result, has little realistic claims over these territories and attempting to enforce reintegration is unrealistic.
The current unrealistic momentum for continued military action is maintained by the USA, UK and Poland. However, the domestic state of affairs in most countries in Europe, and including the UK, is giving rise to resentment of the economic hardships that have resulted from poorly thought out US and UK-inspired sanctions against Russia. If the US and UK maintain their current strategies, there is likely to be a serious fall out between the USA, UK and most other European countries. The failure of the NATO block to handle this affair in an effective manner is llikely to place the future of NATO on the table. 26/05/2022:
Our deficient economic policies are failing to prevent many British constituents, faced with a serious cost of living crisis, from being pushed over the edge. The Ukrainian government, realizing that they are losing in the Donbass, is contemplating legislation to permit their officers shoot personnel who wish to surrender.
It would seem that the cosy relationships between our government and that of Ukraine, has created a significant policy-induced economic disaster in the field of energy. This sees politicians, made up of people who are well paid and in a comfortable financial position, being quite prepared to allow the state of affairs deteriorate to an unacceptable state and are willingly allowing constituents to be pushed over the edge. This is all for the sake of wholly illogical ideological ends.
In the case of Ukraine, this is likely to lead to troops killing their officers as was witnessed within British forces at the end of the First World War.
In the meantime, our inept economic policies have created a housing price and rent crisis. This has combined with destruction wrought by an irresponsible jingoistic foreign policy, under that loose cannon, Liz Truss.
This policy supports the USA's objective of bringing Europe to a collapse. As a result, there is likely to be social unrest and increasing political instability in the United Kingdom.
There will, of course, be attempts by this fading government to crack down on any dissent by branding such a natural reaction of constituents as requiring an oppressive clamp down in the name of "law and order". While Liz Truss continues to exacerbate the state of affairs, Priti Patel, another loose cannon, will "manage" the "home front".
In the meantime Rishi Sunak has not, and will not, come up with solutions because of the ongoing destruction wrought by government loose cannon decision making.
The energy costs crisis is the result of a thoughtless foreign policy backfiring on British constituents. While Liz Truss advises the public that this is an essential cost, it is not. It is an arbitrary imposition on an increasing proportion of voters. The first step to ending this cost of living crisis is for the government to stop supporting those sanctioning Russian energy products and to advocate that Ukraine stops fighting and agrees to a peaceful settlement. But since the government is hopelessly uncoordinated and appears to not understand the implications of its decisions, Sunak is having to subsidize a high cost energy market which, at its root, benefits the Russian balance of payments and the strength of the ruble while our own balance of payment continues to fall deeper into negative territory.
Unfortunately, that other loose cannon, Boris Johnson, revels in all of this since it provides an opportunity for him to state he is far too busy eagerly promoting warfare oblivious of the fact that he is pushing increasing numbers of voters over the edge. As long as Boris Johnson's hold his current position so will the Ukrainian crisis be prolonged as a result of the UK supplying arms. As a result, the longer will the energy crisis last and the cost of living crisis will get worse. Johnson is not good for this country but in spite of the practical evidence, his dillusional and self-important attitude leads him to think that his ongoing activities are too important to seriously consider resigning. This is in spite of his excessively long litany of lies and poor decisions that have exacerbated our economic state of affairs.21/05/2022:
Following the debacle of shoulder-launched missiles having a limited impact on the Ukraine campaign the USA has switched to a ridiculous second world war mind set "solution". They have promised 90 M777 Howitzers the lightweight artillery pieces and Australia and Canada have promised 10 more between them. These constitute very heavy suicide vests for the operators. They are manned by between 8 to 12 trained artillery personnel depending upon the loading and firing procedures applied. The pieces take about 5-6 minutes to set up and 5-6 minutes to move, if need be. Apparently the M777s supplied are not computer assisted so there will be issues with accuracy. However, it is well established that the Ukrainians are intent on maximizing damage to residential areas and killing civilians in the Donbass, so this detail is of less relevance to them.
This form of engagement is completely out-of-date against modern systems. The Russians have very precise computer assisted triangulation radars to project shell trajectories (angles/elevations etc) backwards to pinpoint the location of each M777. The result is produced instantly.
The Russians then have the choice of responding with a full spectrum range of armaments within 5-6 minutes. Within 15 minutes it is not possible for Ukrainians to move the piece from the accurately identified synoptic surveillance zone coordinates, by moving to cover of some sort; camouflage has no utility. As a result locating and destroying M777s and their crews is a piece of cake. It is worth mentioning that the Russian self-propelled 2S5 Giatsint-S (2S55) artillery guns (see right) have been used to elimitate M777s. The Russia 2S55 are more flexible and resilient because they can move at some speed from the coordinates of any launched salvo so even if the Ukrainian side could locate the lauch coordinates any response by them is unlikely to find and damage an S2S55 or its crew. The other factor is that the S2S55's have roughly half the number of operational personnel of M777s. However, with each strike there is a loss of around 9 trained Ukrainian personnel. So the 100 M777s donated are likely to result in the loss of around 900-1000 dead or seriously injured Ukrainian personnel. During the last week, Russia has been applying these standard techniques to eliminate a large number of M777s and their crews, with ease.
This completely out-of-date thinking by those who are "supporting" Ukraine is simply helping Russia liquidate Ukrainian personnel. To help Ukraine, governments should stop supplying useless weapons and encourage the country to stop fighting and negotiate. The options are fighting to the last Ukrainian or accepting conditions laid out by Russia which in detail are not onerous The USA, Europe and the UK need to reflect on the follow up to this affair by seriously considering Russia's 2007 proposal for a mutual strategic security arrangement
including all countries as a basis for lasting peace. As it is, the follow up will demonstrate just how useless NATO has been.
The world has moved on and so should NATO. NATO does not have adequate defensive capabilities as a result of astronomically over-priced out-of-date weaponry and large numbers of European-based US personnel. These people are supported by out-of-date equipment and constitute a costly civil service that is unlikely to ever be called into any meaningful action. In any case, no US president would ever press the nuclear button for the sake of Europe to invite retaliation and certain liquidation of the USA. The NATO defensive "umbrella" is a charade constituting no more than "sales talk" designed for exercise a mind control to instill feelings of insecurity on the weak and ignorant to entice them into wasting public funds on over-priced weapons. In strategic terms, NATO's high profile showpiece advice has been demonstrably out-of-date and, in reality, has only contributed to increasing the deaths of Ukrainian personnel and levels of general chaos and insecurity. The fact that the Ukrainian government sees its role as demanding that Ukrainians fight to the last Ukrainian is a sign of poor advice and fanaticism which should not be encouraged in any way.
For lack of independent leadership, Europe has capitulated to US "cash diplomacy" and allowed NATO, the proxy of USA foreign policy, to dominate European foreign policy objectives. As a result of this corruption, NATO's strategic incompetence and ignorance of the economic dimensions of its decisions, has resulted in this affair drifting into a major economic crisis for all NATO members and the world. Therefore the global status of NATO has all but imploded. The majority of Arab and Islamic societies do not support NATO's and the USA's appeals to impose sanctions on Russia. They join the other countries that represent 75% of the world's population. Following the USA's lead, Europe has isolated itself from the rest of the world.
In the meantime, the leadership of BREXIT Britain vainly attempts to demonstrate its ability to outdo the USA in strategic over reach. It pursues an irrational completely out of date "colonial gunboat mentality", reflecting serious issues with the basic education of ministers and their true understanding of the lessons of history.
It is troublesome that for such people there is a perverse pride in past military disasters and cruelty inflicted by past campaigns to keep alive that irrational "jingoism" founded on base ignorance and lack of concern for the lives of "foreigners". Such people confuse capitulation with failure but are prepared to help destroy a nation they claim to be assisting. Too many decision makers are "military reservists" so they maintain this out of date perspective on the role of the military.
There does not appear to be a strategist amongst them who has the objectivity of a realpolitik approach. If there had been such individuals with any influence, this affair would have been prevented or terminated within a week through undertakings and negotiations. There is a juvenile attitude to such events that comes from a desire to "win" or "get back" at the perceived aggressor. Usually the intelligent move is to avoid aggression and impose peace; this is always what constituents prefer. As in the case of NATO, the British government has demonstrated a very poorly thought out delinquent and irresponsible behaviour which has exposed the people of Britain to a major cost of living crisis which no one voted for. Ibn Nr, the strategist, has referred to the much vaunted very expensive British submarine-based nuclear deterrent. He compares the system to a group of suicide tubs. The locations of the subs can be tracked by Russian marine reconnaissance drones. As a result sub crews activating launches would be the first to perish.
All of this can be summarised as a proof that there is a need to heed the Russian appeals for a mutual strategic security agreement which they sent to the USA and NATO in December 2021. These were vitally important documents deserving a balanced response. Of course, to form, the US State Department ignored these proposals and nervous directionless NATO proxies did the same while Ukraine-an neo-Nazi brigades continued their slaughter of Russian-speaking civilians in the Donbass. Hysterical politicians and a heavily censored media duping our national constituency aside, there remains an urgent need for such proposals to be put on the table as the pincipal and only focus. There is a need to put an end to this infantile and irresponsible stance of placing "all other options are on the table
" which normally constitutes a threat of possible military action. This never was a way to negotiate and come to an enduring agreement. There is an urgent need for an agreement containing operable checks and balances, covering at least the USA, Europe, UK, Australia, New Zealand, Russia and China. There is an urgent need for the world to jointly reverse the global economic calamity and tackle climate change in a mutually collaborative, effective and peaceful fashion.
In spite of fanatics like Anthony Blinken and Victoria Nuland at the State Department, there are far more responsible and balanced proposals appearing in the USA media, such as the recent article by Diana Ohlbaum in "The Hill"- click The Hill image to access.21/05/2022:
This weekend APE correspondents will attend a SDAC workshop on investment in the context of the cost of living crisis. There will be a demonstration of a cloud-based set of analytical tools that help investors ensure that all factors that can affect an investment's performance are taken into account. Something like 35% of investments fail and in the agricultural sector the failure rate is around %(data from OQSI and World Bank). With the emerging requirements for enhancing sustainability (SDG 12), lowering temperatures (SDG 13) and reversing the rise in income disparity and poverty (SDG 10) this approach is becoming critical to all new investments. The 2019 UN SDG Report states these SDGs are all going backwards. An important aspect of these tools is the determination of the likely extent of risk and likelihood of occurrence of identified hazards, such as price variations, weather or drought. The likelihood of "solutions" in reducing risk is also measured. This ends up with a determination of the resilience of any particular investment to identified hazards. This new approach replaces the so-called highly subjective Theory of Change (TOC) approaches. Although many would refer to these capabilities as artificial intelligenc (AI) SDAC refer to this as simply digital logic. Currently the percentage of investment projects subject to estimates of economic rates of return (CBA) is around 20%. Many SME investments simply install new equipment without determining the learning curve profile to calculate the time it will take to gain the full productivity potential. This can lead to serious cash flow problems and a need to raise further finance to survive and, in some cases, failure. A large proportion of so-called super-deductions are not used to increase productivity.
The case of the cost of living crisis will look at the integration of economic policy with due diligence requirements to gain policy traction. Policy traction is measured by comparing the quantitative stated objectives and time lines of productivity gains with actual achievement. Investment resilience has an important role in ensuring policy traction. In the case of the cost of living crisis cash assistance for lower income constituents does not solve the core issue of inflation and therefore has no traction in lowering unit prices. With the appropriate policy frameworks and instruments it is possible to gain traction and resilience through a combination of due diligence procedural design supported by supply side incentives. Contrary to general assumptions, this can provide a more efficient means of reducing inflation in the short term, rather than the common assumption of inflation being a medium to long term issue. We will post a summary of the workshop highlights.20/05/2022:
In last Thursday's Question Time, the issue of rising prices - inflation - was raised as well as the fact that a good percentage of the in-work population in Britain have wages that are insufficient to cover bare essentials. One of the key questions that came up was put to each panellist by Fiona Bruce the programme anchor. Bruce has become effective at not being shoved off her line of questioning in quite an effective and diplomatic manner. The question she asked each pannellist was, "What would you do to solve the inflation crisis
". None of the panellists who included, Lucy Frazer MP (Conservative), Lucy Powell MP (Labour), Alyn Smith MP (SNP), Mo Hussein ex-Press Officer for PM and Emily Carver of the Institute of Economic Affairs, was able to provide a coherent answer. Some avoided answering by stating this was a Bank of England brief. This is in spite of the fact that working from their own bases it would have been assumed that this question would be foremost in people's minds and will have been analysed in some depth. This state of affairs is truly lamentable and reflects the fact that both the economic theory and ability of economic policy to manage inflation is poorly understood by decision makers.
Lucy Frazer, the Conservative MP, valiantly repeated what the government priorities are by covering the key headline actions. In reality, what she mentioned does include the main issues but the actual mechanisms of how these meld together into a coherent workable policy to reduce inflation was lacking. This has proven not to be a challenge limited to Lucy Frazer, it is a major problem facing the whole government narrative. In particular, this also applies to the Chancellor, Treasury and, by extension, the Bank of England.
All of the Parliamentary Committee appearances of the Chancellor and Bank of England representatives have transmitted the same message. There is a lack of a practical understanding of what causes inflation and therefore no workable propositions that impact the mechanism of transmission appear.
The 2022 Edition of the British Strategic Review
sets out in some detail why monetary theory is flawed. Under the current precarious state of the economy, the conventional derived policy propositions from this same theory will not be able to reduce inflation without throwing the economy into a depression. Squeezing inflation out of the economy by generating additional poverty by increasing unemployment is hardly a solution.
We will soon post a coverage of the deliberations of a workshop held last weekend by APE Correspondents' Pool which explained in some detail the practical mechanisms causing inflation and a family of solutions that can actually bring prices down in the short term.
GrayZone has posted details of a corrupt tiny group of people who are alleged to have organized an anti-democratic manipulation of events including spying on civil servants and movements opposed to BREXIT so as to manipulate events to deliver to the USA a Britain free from European oversight and law, as the lead pliant supporter of USA foreign policy. The implications are serious and the evidence, including copies of emails between members of this group, seem to constitute a manipulation of events to mount a coup against Theresa May in favour of Boris Johnson. They also recognized the danger, for them, of Jeremy Corbyn's Labour position of a second referendum on the final BREXIT deal so they worked with media to undermine this by attempting to label this Labour position as ridiculous. However, in terms of the likely economic impacts of a hard BREXIT Corbyn's position represented the only logical way to safeguard the right of the people of this country to finally express their preference in the light of better information; this was the only open democratic option left to the voters in this country. The cabal's favoured position was the more extreme "hard" BREXIT forced through by a core of cabinet fanatics within a small inner group around Boris Johnson. The result of this corruption has been a worsening of the economic wellbeing of the British population and now, with the US and NATO pressure created the Ukraine situation which has resulted in the world, and this country, facing the worst economic crisis since the 1970s.
There are indications in these allegations that members of the same cabal provide the Home Secretary Priti Patel with support and are attempting to influence her decision concerning the extradition of Julian Assange to the USA. The alleged members of this cabal include the following: Evelyn Farr, Richard Dearlove, Gwythian Prins and Robert Tombs
The implications of these revelations are far reaching in terms of the removal democratic accountability and national independence of political decision-making by limiting options to the strict interests of the USA as opposed to the interests of the population of this country. The more serious issues that arises from these revelations are the possible involvement of several in government collaborating with what appears to fall under various categories of criminality and sedition. This exercise of hidden unaccountable power led to arbitrary decisions affecting the wellbeing of the whole British population in what constitutes a tyranny.
It is well worth reading the GrayZone report on this sordid affair because it is well presented and written and contains copious evidence of wrongdoing by elements with past association with British intel - to access click on the image above left. The notable factor is the ease with which these people are reported to have been prepared to deceive and lie to manipulate individual and public opinion through pliant media or by "digging up dirt" on anyone they do not like. It is suspected that these revelations and copies of emails came from someone in British intel who realized the potential damage that all of this could do to the service. On the other hand, it is alleged that this cabal, or someone currently in intel, wish to get rid of Johnson as prime minister because he is completely over-stepping the mark with a banal confidence which has caused the country to lose independence in decision-making. Johnson's bullish position in attempting to lead the sanctions against Russia and outdo the USA in promoting the military armament of Ukraine, has already led to an exacerbation of the impacts of Covid spiralling into the serious current economic state of affairs affecting the whole world and, in particular, the British economy.
The consequences for the tiny Conservative party, with a membership of less than 0.4% of the British electorate, in reality a pipsqueak faction, comes into question. The fact that such a tiny faction controls Parliament as a result of an election of dubious validity and that a few thousand misled members elected Johnson as leader, calls into question the British factional party-based electoral system which is crying out for needed reform.
Intel people are not good at economics or even strategy but they can be effective, if permitted to operate in secret, in manging the grubby business of effecting and manipulating visceral procedures to secure influence through lies and mind control. As a result, the outcome of this chaotic democratically unaccountable corruption can be appreciated by the reality of our spiralling cost of living crisis. Inflation is likely to surpass 12% by late summer 2022 and this would represent a decline in real incomes of 48% if this is not brought under control within 5 years. The fact that this will cause suffering and social instability is all part of the game exercised by such individuals who are, or border on, psychopathic personalities.
So far, there has not been any reaction, that we are aware of, from the European Commission relating to this report and the said mechanisms and covert behaviour applied to secure BREXIT. It is true that the last President of the Commission, Jean-Claude Junker, did comment that many lies had been stated in the BREXIT campaign in Britain and it will be recalled that the leader of the BREXIT pack was, indeed, Johnson who has form on the subject of misrepresentation and lies since the time he was a journalist based in Brussels. However, in spite of the fact that most of European foreign policy has now ended up being orientated by military questions, very much under the control of NATO and the USA, these revelations are likely to result in strong reactions from the European Union. The current dispute related to the Irish Protocol where the government intends to change their agreement with the EU is likely to see the EU, Good Friday Agreement, or not, pushing events towards Irish reunification by applying sanctions on the UK. The purposeful marginalization of Ireland and Northern Ireland and all populations under devolved assemblies, by Johnson, again reflects the bizarre bullish and somewhat dismissive arrogant overreach of this individual. This incompetence has already led to a rise in the support for parties that favour Irish unification.
Meanwhile, while our economic affairs, and that of the European Union, wallow in a disastrous state of incompetent management arising from a too close an alignment with the USA/NATO objectives, the economic progress and status of Russia and China continue to advance in a significant fashion - see previous article - below. 17/05/2022:
The balance of payments of several countries will undergo major changes in the next year. The degree of change depends upon the extent that the USA, Europe and some other zones attempt to apply sanctions on Russia and in particular to curtail their consumption of Russian gas and or petroleum.
This subject came up at an internal editorial meeting on SEEL's Strategic Review a new quarterly which will be associated with the British Strategic Review, an annual launched in early 2022.
Some very early back of envelope calculations suggest that sanctions against Russia serve no useful purpose for those imposing them and they prejudice the constituents in the United Kingdom and most countries in the world. Indications of likely changes see Russia and China both increasing their balance of payments to take up pole positions in the global balance of payments table. Germany will lose its position and face severe difficulties as will most countries imposing sanctions.
The USA and UK will remain as the worst performers linked to the dissemination of their manufacturing sectors as a result of applying inappropriate monetary policies over the last 50 years.
Although the rapid rise in Russia's financial performance is directly related to the rise in gas and petroleum prices caused by sanctions, the notable factor is that product sanctions have resulted in Russia incentivising companies to import substitute through innovation and investment. This has resulted in an ability also increase the export of a range of products from agricultural commodities through high tech and advanced military equipment.
This proactive policy, in contrast to the previous Soviet system, which collapsed, is a reflection of the radical changes that have occurred in economic policy orientation in Russia.
One of the accelerating effects, resulting from the West's willingness to confiscate Russian financial as well as other assets without due process has served as a demonstration effect. As a result, there has been a movement away from dollar-based agreements and transactions management systems, such as SWIFT. This in turn has limited the ability of the West, and the USA in particular, to sanction Russia based on dollar-related business.
The Strategic Review editorial declared that currently it is still difficult to assess the overall impact of the de-dollarization of commodity trades and contracts but this is bound to impact organizations such as the World Trade Organization, the World Bank and the IMF because of a rapidly declining relevance of their decision making to global development. Chinese-based Yuan and petro-Ruble-based finance is likely to grow to significant levels in African and South American development and BRICS countries. The changing attitudes towards the "West" which are underlined by a general mistrust is likely to see an expansion of the BRICS block with some significant new members. The countries that have avoided collaborating in sanctions against Russia have around 60% of the global population where the most significant global economic growth in markets will take place.
It is not altogether clear why our media misinform the British public so much concerning the Ukrainian state of affairs. Although Western media made much of the resistance of Ukrainians preventing Russia from occupying Kiev, as we have explained, there never was any intent to occupy Kiev, the movement of a large troop movement in the direction of Kiev was a decoy used by the Russians to attract Ukrainian troops from the Donbass region and to monitor the location of troops and hardware in the rest of the country. On the 6th of this month we advised that Russia was doing the same with the city of Kharkiv, so on cue we now have the somewhat nonsensical reporting about the plucky resistance of the Ukrainians in "driving out" the Russians from Kharkiv when they never were in Kharkiv. The Russians are withdrawing now as a result of completing the same process as they applied in Kiev.
The losses of Ukrainian military hardware can be observed in the stats in the table on the left. Based on the hardware audit, Ukraine has lost most of its operational systems and this has increasingly exposed its elite fighting forces. Based on unverified and several sources, the losses of personnel could be around 35,000-40,000. We do not have access to hardware and personnel losses on the Russian side but these can be replenished more easily and conveniently by Russia.
The current "Western" strategy of extending "support" to Ukraine, the more the loss of Ukrainian personnel will accelerate. This will result from poorly equipped and untrained reservists and conscripts taking the place of the deceased professional personnel. They will not be able to use unfamiliar Western supplied equipment effectively without direct operational support in the field. They will also be unable to maintain this equipment. It is more rational to prevent these uneccessary deaths and further suffering by calling a cease fire and to consider Russia's demands concerning neutrality and no NATO membership. From a purely logical standpoint of securing future European security, these demands are not excessive.13/05/2022:
The failure of the government to present coherent plans for action to tackle the cost of living crisis or so-called levelling up agenda relates directly to a gap in knowledge amongst the assembled government economists concerning real incomes. All governments since 1975 have worked on the principle that economic growth is measured by the monetary turnover measured in nominal pounds. Within this environment transferring money from one section of society to another or from one economic sector to another is a zero-sum game. Politicians are therefore having to make decisions on which winners are worth supporting in terms of gaining votes. As a result, policy has created an accumulation of abandoned groups of losers, including the low paid in work and important service groups such as NHS nurses. The winners have been asset holders. The government can claim that employment levels have never been higher but they fail to admit that real incomes for the lower income segments are rapidly declining. This is why the turnover in food banks has increased so dramatically.
Under this scenario, government sees raising its own debt to support people through the pandemic has to result in higher taxation. Besides taxation, the government offers contributions towards paying essential costs on the basis of a repayment such as the £200 payment being paid back in tranches of £40 each year. It is here that the lack of understanding of the government becomes very evident when they insist that this is not a loan. Under inflationary conditions the value of money is declining across the board because of a general rise in prices. Under such circumstances, inflation is the equivalent to an interest rate because the nominal value of money is declining at the rate of inflation. Therefore having to pay back a fixed nominal sum results in the person repaying this sum and each time losing an increasing amount from their disposable income in terms of their real income or ability to purchase other essentials. This is because the prices of all other essentials will have increased in the intervening period between payments. Therefore the £200 payment is the equivalent to a loan with interest payment. It became very apparent in an embarrassing exchange in a Committee meeting that Rishi Sunak clearly does not understand real incomes concepts supposedly as a result of his experience as an accountant where results are based on a balance based on zero-sum calculations ( see: From earned income to pauperism and back
). This lack of understanding is a general condition amongst Treasury and Bank of England clerics ( see: "Why the Bank of England cannot solve the cost of living crisis
As was the intent during the 12 years period of quantitative easing (QE) (2008-2022) the "affordability" test was applied on the basis of the excuse to pay off debt. However the result was a purposeful reduction in real incomes of wage-earners, a stripping down public services and the exacerbation of a housing crisis and a failure to pay off debt. The current cost of living crisis is the result of QE and a wrong headed foreign policy of acting in a way to encourage a rise in the international prices of energy resources. The government is now reapplying the same "affordability" test to the public sector as and excuse to further reduce its role as a way to "solve" cost of living problems created by government policy in the first place.
To avoid such policy-induced prejudice the government needs to understand and apply policies that are geared towards the generation of growth in real incomes and not nominal incomes. This can only be achieved through a concentration of manufacturing physical or real productivity which can yield at the minimum 2% each year in cost reductions through minor adjustments across sectors and a movement towards state-of-the-art best practice technologies as well as improving the capabilities and real wages of the labour force as a result of learning. This requires a very different mindset in government in terms of economic theory and choice of policy instruments. However, it is unlikely that this government's ideological bent will be flexible enough to realize that zero-sum policies are undermining the state of the British economy. Their preference continues to be bringing benefits to that faction who support such actions, and, of course, support the "party" with a vote and a financial contribution.
This weekend an Agence Presse Européenne Correspondents' Pool workshop has been organized to review the real incomes policies available to the government which could move the country from a destructive dependency on policies that only see debt or taxation as the options that demarcate the territory within which they decide what can be afforded. We will report back on the main points covered in this workshop.11/05/2022:
The attacks on civilians in the Donbass by Ukrainian forces have become indiscriminate using increasingly heavy ordinance of missiles to destroy housing and commercial centres as well as people. It is very evident that the timing and targets used by the Ukrainian military in the Donbass are indend to maximize deaths amongst civilians and is a so-called war crime adding to the 14,000 already killed over the last 8 years as a result of Ukraine's actions against Russian-speakers.
There has been a very rapid rate of destruction of Ukrainian tanks and vehicles, each approaching 3,000 or almost 6,000 items in total (see updated stats on the left). Usually at this stage of campaigns this rate declines but in this campaign it has increased. The ability of the Russian military to down Turkish Bayraktar strike drones appears to have increased dramatically as has the ability of the Russian military to spot and bring down small drones.
During the last 2 days a very ill-advised attempt to retake the so-called Snake Island by Ukrainian forces resulted in a complete fiasco and serious losses. This was planned as a stunt to attract worldwide attention to an action meant to demonstrate Ukraine's ability to strike back a Russia on the occasion of the 9th May Victory Day. However, in this attempt Ukraine lost 30 drones, 14 aircraft and three ships and it is estimated between 50 and 75 personnel. Snake Island is a very small and flat area which simply cannot be defended, if occupied, against Russia's advanced weaponry. Therefore this attempt was completely illogical and costly. It is not clear who authorized and coordinated this attempt but it reflected desparation or advice which is based on an out of date appreciation of modern armament capabilities and therefore an underestimation of the effectievness of the Russian capabilities. Judging from the international messaging and analysis on this event and its purpose, British advisers appear to be most interested and involved.
As a result of strategic incompetence and poor advice, Ukraine appears to be investing and losing too much manpower to incoherent actions; they do not reflect the reality within the theatre. Providing heavy armaments which are easy targets is not a solution. The switch to heavy armaments is related to the fact that, in practice, the supplied shoulder-launched missiles ("use out-of-the-box") have, except for some limited successes, turned out to be generally useless due to system failures such as flat batteries as well as a change in Russian tactics. Some captured Ukrainians have mentioned the lack of utility of these weapons considering them to be no more than toys. The number of deaths of Ukrainians manning shoulder-launched devices has increased because tanks stay out of range but use very precise anti-personnel weapons with a close to sniper precision. This precision has been commented on by foreign mercenaries who have since left Ukraine because they considered involvement to be a suicide mission. The precision is a consequence of the sheer weight and stability of tanks and the support of sophisticated sights and sensors. The mass of the ordinance used also means environmental factors such a wind speed and direction have less effect on the bullets/shells in the common sub- to multi-kilometre ranges within which these operate. The target elevation calculations are also automated enabling vertical precision.
To save Ukrainian lives it is necessary to initiate serious negotiations for peace. Unfortunately, reports seem to suggest that Boris Johnson somehow convinced the Ukrainian president not to pursue the negotiation pathway during his recent visit to Kiev. This will of course lead to more deaths but does he really care?
However, Russia, since the beginning of this campaign has declared its intention to complete its actions to help Donbass republics regain their full administrative area which will take up to around 20 days - a SASI estimate - to complete. Beyond that, Russia might impose a buffer zone beyond the Donbass borders of around 50-60 kilometers as well as security posts, based on negotiation or advancing forces, as a means of reducing the future risks to the Donbass population. This is a result of the experience under the ineffective Minsk agreement cease fire arrangements during which the killing continued.
It is evident that the decision by the Ukrainian government not to implement the Minsk agreement but to increase their attacks on the people of the Donbass was a costly mistake because Russia had no alternative other than to join this war on the side of the people of the Donbass. It would seem that a considerable amount of the pressure to not implement the Minsk agreement came from the USA. Knowing that Russia was relying on Minsk to terminate the murder of people in the Donbass on the basis of a rational peace agreement, it has to be asked why the USA and NATO encouraged Ukraine to opt for war knowing that Russia would have to step in to defend the people of the Donbass. The results for all have been a disaster and the deaths unacceptable. The blame for this major strategic error on the part of the USA and NATO is being redirected by Western media towards Russia which has a duty to defend Russian-speakers and passport holders against aggression.
In spite of the serious consequences of rising gas prices in Europe, a decision has been taken by Ukraine to stop Russian gas flow through a North Eastern transfer point to Europe as from this morning. Ukraine has cited maintenance difficulties due to the conflict which are of little merit since Russian military would not interfere in the operation of these transfer points. However, this decision could precipitate a significant negative reaction in Europe against this decision because the Russian supply company wishes to continue with meeting their obligations under the existing supply contracts with European consumers. However, Ukraine has imposed conditions that interfere with existing agreements. This is likely to exacerbate the already increasingly difficult situation for constituents in specific European countries by limiting their access to gas and also causing a further rise in consumer prices.
Images and videos are not evidence in the sense of providing a cast iron confirmation of who carried out atrocities. Much visual evidence in today's conflicts is staged. Journalists are ill-qualified to fact check evidence under conditions of conflict. This is because observing outcomes of an incident usually does not provide any indication of who carried out an attack. Those linked to military will almost always blame whoever they are up against. On the other hand, the willful murder of one's own citizens by military contingents are known to occur and then the guilty party states that enemy forces were responsible. In some cases military don the uniforms of their enemy to carry out such tasks in order to generate a "locally witnessed" event so as to generate a collection of witnesses to state, as a resultof the deception, that a specific side carried out the attacks concerned.
The destruction of houses and apartments quite often cannot be linked directly to one side or the other. However, in the Donbass, after 8 years of conflict, there is ample confirmation that most of the destruction of houses and civilian deaths have been caused, and continue to be caused, by Ukrainian action. They continue to deploy a now well-established procedure of withdrawing from mapped cities and villages and then timing attacks from their new positions aimed at specific points in cities to coincide with known times of community agglomerations in markets, transport hubs and schools.
The accusations of the existence of "mass graves" have all been disproven where Russians have allowed access by journalists in those areas taken by Russians in the Donbass. On the other hand, accusations of mass graves related to areas where Russians are no longer present such as Bucha, and others in the North West of Ukraine remain as accusations by Ukrainian authorities but little forensic evidence other than statements and numerous body bags, has been provided. The problem is the issue of knowing who killed any of the people concerned.
In war, unfortunately, extreme actions, including killing civilians who are supposed to be protected, is used to stage false flag events to blame the other side. Such extremes are encouraged by the desire to produce media content to demonize the opposition. Unfortunately journalists and media hopeful for maintaining their circulation, accept images and words which have no context with respect to who is responsible for atrocities. As a result media contribute to a widespread dissemination of misrepresentations. This, in today's environment, is a macabre behaviour intentionally used to shape public opinion to gain political support for government decisions.08/05/2022:
The blitz of propaganda surrounding the Ukrainian crisis makes objective analysis difficult and the establishment of a peace-making process virtually impossible. One of the most significant problems is a top down demonization of either Russia, on the one hand, or Ukraine on the other, very much buoyed up by the media. As a result what is considered to be "evidence" of war crimes is more often than not a casting of actual or non-existent events as real events. Although we have a national media, such as the BBC, which is supposed to be impartial, this organization still repeats details of events as being attributable to Russian or Ukrainian actions when the mounting post-"event" information has demonstrated that these widely circulated "facts" are a total misrepresentations of the truth. As a result radio chat hosts in the UK arguing against contrary facts resort to accusing those doubting the government narrative on Ukraine or Russia as being sympathizers or supporters of Russian propaganda because the "evidence" proves them to be wrong. Radio hosts have even stated that views opposing the UK government narrative is treasonous and in the last war people raising such views would have been imprisoned. This, to a large extent, is the problem. The government is running a blunderbuss propaganda and censorship campaign even although we are officially not at war, and therefore, those who wish to exercise their freedom of analysis and expression can attempt to balance the public discussion. In the meantime, the government is, in fact, doing all it can to encourage Ukrainians to fight on at risk to their lives. This is a very easy way to provide an impression of resolute decision making and support when we are not directly at risk. Our politicians are content to wear blue and yellow ribbons and agree to assign budgets and military hardware all paid out of public resources, and to otherwise get on with their lives.
The most important current priority is to bring the killing to an end which means Ukraine needs to be brought to the negotiation table to compromise, yes compromise, by backing down from the position of "not surrendering". The notion of the valiant David standing up to Goliath palls at the levels of Ukrainian corruption and political extremism which is exposed by those presenting the alternative narratives while corporate media condemn this information as Russian propaganda. It is obvious that the USA and UK want this war to continue so as to tie Russia up in the long campaign but this only means more Ukrainians and Russians being added to death lists as a result of our government's actions.
A neutral demilitarized Ukraine is clearly a step in the direction in terms of a mutual strategic security framework as a rational compromise which would remove the threat of any future military actions. This would not be a "step down" but rather a step up to establishing a peaceful future for the whole of Europe and Russia.
Recently, interviews have taken place with Russian media and captured Ukrainian commanders who were in the Mariupol Azovstal plant and captured while trying to escape. It is evident that the Ukrainian government wanted them to fight on in a suicidal manner while promising reinforcements which were in fact not being sent. Although most interviews with such captives have been unprompted rambling sessions, a recent one was somewhat triumphalistic on the part of an interviewer and this was quite distasteful given the actual plight of the captured Ukrainian commander. However, this was a microcosm of the equally distasteful reactions of the USA and UK which gave rise to this current crisis. This was the negative reaction of the USA and UK to Russia's appeals in 2007 for a mutual strategic security framework to include all peoples of Europe. The assumed luxury of being able to dismiss other populations is a strategic weakness exposing a blind spot to the fact that this creates concern and is perceived to be a threat to the survival of a people and their culture. Arming and assisting
Ukraine to continue its targeting of Russian-speaking civilians in the Donbass and supporting Ukraine's cancellation of their undertakings in the only hope for a peaceful settlement, in the form of the Minsk agreement, was an indication that NATO and Ukraine represented a security threat to Russia. What followed was inevitable but very much driven by an animosity held by leaders in the USA and UK.
The United Kingdom, in particular, appears to have developed an endemic close to pathological paranoid and irrational political animosity towards Russia. Remarkably, this appears to have emerged from the days of expanding empire when Russia, under Tsar Peter 1st, Peter the Great, (1672-1725), adopted English ship building processes creating a large and powerful navy modelled on the Royal Navy by the time of his death. However, English leadership considered this to represent a potential economic and military threat to England's expanding colonial ambitions. Since then there were collaboration and adversity such as the Crimean War over what today would be considered to be somewhat irrelevant issues but confronting the primitive notions of power and spheres of influence.
Russia, as an ally during World War II, contributed significantly to the termination of Nazi dominance in Europe, at a significant cost to Russia. The post-war cold war was underlined by the economic devastation suffered by the Soviet Union. With the collapse of the Soviet Union a shameful triumphalism on the part of the West, glorified the failure of a political system but ignored, as usual, the needs of the people. Privatization of state assets throughout the previous Soviet satellite countries was supported by the EU PHARE programme, the UK Know How Fund and USAID, inadvertently created a small group of multi-millionaire oligarchs, largely through corrupt privatization deals enabling the acquisition of significant productive assets at bargain basement prices or even free of charge to so-called "young communists". These individuals became influential in the "new politics" as a result of the enormous differentials between their wealth and the economic states of new political parties in Central, Eastern Europe and the Baltic fringe countries, all of which were characterized by a "new democracy" with a wide range of levels of corruption. Vladimir Putin came on the scene and reacted to this state of affairs and set about reconstructing the Russian economy. He has succeeded, while at the same time creating a political opposition funded largely by those oligarchs who were subjected to legal processes alleging corrupt acquisition of state assets. Within a relatively short period of just 20 years, Putin has been able to guide the country back to a state of economic resilience largely because he had been willing to delegate responsibilities to capable administrators. The importance and evidence of the state of Russia's economic resilience has been well demonstrated by the success of Russia in resisting major negative impacts caused by the economic sanctions imposed by the USA, NATO countries and the UK. On the other hand the economies of countries imposing these sanctions have proven to be far less resilient and facing a serious recoil effect on their cost of living.
Many oligarchs who left Russia to avoid legal processes, fund British political parties. In the United Kingdom, many parliamentary exchanges, when it comes to Russia, are markedly coloured by the use of exceptionally negative adjectives concerning most things Russian. Indeed, the whole development of the "cancellation" of all things Russian, including Russian citizens who have no connection to Russian politics being isolated and insulted by demands that they denounce their own government come from this subliminal irrational psychosis of a manufactured hatred promoted by politicians. There does appear to be an issue of a biased educational orientation of those who enter politics in the UK and a particularly shallow appreciation of, and therefore dismissive attitude towards, the significant role of Russian history and culture in the shaping of modern Europe.
As a result, the United Kingdom suffers from a dilettante leadership that is not fit for purpose. Rather than indulge such pathological outlooks or advocacy to support such irrational positions, people need to enquire and seek collaboration with Russians to work together to bring about peace. The most effective foundation to establishing the necessary levels of communication is for people to understand that the people of Russia and, indeed, Ukraine, share the basic human desires and motivations of the population of Britain. For such understanding to lead to beneficial results for all, people need to reject the pathological desires of leadership, so-called, and to demand a rapid coordinated movement towards a practical mutual strategic security arrangement whose fundamental objective is collaboration between peoples through a communication of shared cultural values and expressions as the foundation for a productive and fulfilling peaceful existence.
The issues of Boris Johnson being an inveterate liar and being embroiled in party gate as well as supporting an MP on the make, with the Patterson affair, pall at the depths on immorality that surround his every decision to avoid being forced to step down. The latest decision on this irresponsible journey, Johnson has enthusiastically thrown his efforts in entirely the wrong direction. He is leading a campaign to support the Ukrainian government which has imprisoned leading opposition politicians, closed down independent media and is implicated in the assassination of journalists and opposition MPs. This government has also created national heroes out of those who collaborated with the Nazi murders of close to a million Roma, Jews, Poles and Russians during the Second World War. These completely undemocratic acts are the result of the ominous rise and hold that neo-Nazi battalions and their political representatives have over the Ukraine government and society.
Johnson has appeased these violent elements by assisting them consolidate their power through contributing to the spreading propaganda, including advice on the organization of false flag events based on the Syrian White helmets model, by training them and supplying arms all justified on the basis of the absurd notion that defending Ukraine is defending our freedom. No acknowledgement is made of the 8 years of warfare pursued these neo-Nazi battalions against innocent civilians in the South East of Ukraine in the Donbass where this killing still continues. In developing a high profile well-publicized diversionary tactic of supporting Ukraine, Johnson is helping the installation and consolidation of a Nazi-oriented government in Europe. This government came into existence in 2014 as the result of a bloody coup organized by the US State Department in the middle of Europe with the assistance of these neo-Nazi brigades. Johnson's decisions only helps strengthen the growth and spread of the negative consequences of Nazism in Europe in supporting this ongoing murderous brutality.
This is worse than Neville Chamberlain's appeasement of Hitler because Chamberlain was duped by a false promise. On the other hand, Johnson is aware of the continuation of the genocide is the result of a broken promise of the Ukrainian government not to pursue the peaceful option of the Minsk agreement to which it had agreed in 2014 and again in 2015. This decision indicated that the neo-Nazis had taken over the direction of government policy and wished to continue with the genocide. Johnson's irresponsible actions are a frantic effort to save his own skin and survival by any means within the parochial Westminster bubble by supporting wholesale murder and war crimes in Ukraine. He equates this horrendous killing to a defence of democratic principles when the track record of Ukraine is a demonstration that no such principles exist.
Johnson has destroyed the image of Britain being an international vanguard against Nazism established during the Second World War and has replaced this with an image of cowardice and decadence as a result of his singular enthusiastic championing of development and spread of Nazi brutality in Europe today. As we witness the results of this corruption, Johnson risks becoming remembered as an articulate war criminal with blood on his hands.
The horrific scene below is a Nazi murdering a woman and her child in Ukraine in 1942. Then we fought to eliminate Nazism. Today Ukrainian Nazi battalions are continuing to murder civilians in the Donbass region of Ukraine. The British government enthusiastically supports this genocide by Nazi battalions willingly providing arms and training to these factions in an open grossly insulting affront to the memory of Britons who died in the Second World War fighting Nazism.
A considerable number of regular Ukrainian army personnel and some nationalists have been captured in the South East of Ukraine. Unlike the prompted interviews of some Russians captured by Ukraine where they are prompted to criticize their own service and country, those captured by Russia do not appear to be prompted but are simply recounting their experience in their own words. Sometime rambling but containing important information. Although we have no means of verification some common and important issues have become apparent. Much of the hyped equipment supplied by the UK, USA and others has turned out to be relatively ineffective in practice. Anti-tank systems quite often do not work or they explode before reaching their targets. The overall operational effectiveness of NLAWS ans Javelin ATGMS appears to be around 20%-25%. Training on these devices seems to have been completely theoretical so when the systems do not work, few have any idea how to fix the issue. In many cases batteries supplied were flat and many items beyond their stated replacement dates. The promotional explanation of these devices being "out of the box ready
" has not proven to be the case. This has caused a widespread deception on the part of men concerned whose lives depended on these systems working. Some questioned the value of assistance provided by members of NATO and there is an apparent deeply cynical view of the practical utility, and therefore value, of the West's assistance. The reality that the Ukrainian efforts will continue until they run out of people. A recently arrived British Brimstone missile was deployed by Ukrainian troops near Zaporizhzhia but it did not reach its target and flopped to the ground. It was picked up in perfect undamaged condition by Russian scouts; it has been sent to the MOD RF for systems analysis.
In terms of Russian tactics, Russian tanks now remain beyond range but are now picking off infantry armed with anti-tank weapons with large calibre and explosive munitions. In several cases captives note that the Russian tank anti-personnel systems, in practice, turned out to be extremely accurate and lethal. The experience with the shoulder-launched anti-tank systems leading to direct lethal hits on those trying to use them was the cause of the foreign volunteers (mercendaries) returning to their countries. In spite of the propaganda concerning the efficiency of the nationalist battalions, foreign mercenaries who have since left Ukraine have stated that the corruption and disorganization is excessive, equipment deficient and in reality there is a lack of effective coordinastion and supply logistics. As a result, people are expected to fight with insufficient body armour, ammunition and quality of arms.
In some instances, civilians with white arm bands were rounded up by neo-Nazi nationalists who then ordered regular army personnel to shoot them.
In some scenarios nationalists were shooting "anything that moves". There is an obvious animosity between regular Ukrainian army personnel and neo-Nazi nationalists and there have been examples of one party shooting the other.
All of those who were wounded have stated that they received prompt medical treatment and the fact that Russians have not left wounded Ukrainians to die in the field but have rescued them. These men had been told the Russians would torture and kill them if captured. In separate reports it is apparent that there are cases of Ukrainians torturing and executing Russian captives.
The most effective tactic deployed by the Russians since the beginning of the campaign include holding tactics designed to dilute the ability of Ukrainian forces to concentrate effort. The most obvious example was the "invasion of Kiev" which Western strategists misinterpreted as a failed attempt to occupy Kiev. This misinterpretation is still broadcast in Western corporate media. The same tactic is being applied at the moment in Kharkiv, again with success. Having destroyed most Ukrainian hardware, the Russians have introduced an effective support to rapidly advancing infantry in the Donbass using KA 50 series gun ships which report on what is ahead as well as eliminating hardware and Ukrainian troop concentrations as they advance, leaving the infantry to do essentially a mopping up operation, leading to a rout. This is why the rate at which tanks and vehicles are being taken out has risen significantly during the last 2 weeks.
An odd observation confirmed by Russian medics is that nationalists quite often have narcotics in their kits designed to incite rage and dulling of any pain. One name mentioned as a drug used is Ephedrine. This explains that their "bravery" is more linked to fanaticism induced by drugs. This situation is very similar to the Fallujah onslaught in Iraq when NATO and US tank crews were on drugs and playing loud heavy metal music while attacking civilian zones leading to Fallujah suffering one of the
highest tolls of civilian casualties including the alleged use of white phosphorous.
This goes a long way to explain the situation in the Astoval plant where nationalists, in a completely hapless situation continue to resist surrendering and threaten the lives of those who might consider laying down their arms. These nationalists are making increasingly bizaar demands. The Ukrainian government insistence that they do not surrender is a cruel indictment of the inhumanity of those in control of these troops who knowing that they are on drugs they can therefore promote these people, in such an impossiblre situation, as being brave national patriots. Clearly the Russian command cannot negotiate with people in this state of derangement. It would appear that this is the reason that Vladimir Putin prevented a wholesale onslaught because of the risks to Russian personnel. An observation was made that once the Astoval plant nationalists run out of drugs they will then realize their predicament and lay down their arms.
It is worth noting that in an interview with Oliver Stone, which features in the documentary, "Ukraine on Fire"
, Vladimir Putin referred to the danger of neo-Nazi drug addicts; he seems to have been better-informed than most. To access this documentary click on the image on the right.06/05/2022:
The predictable outcome of the local elections points to a more fundamental issue. With all parties, including Conservative, Labour, Liberal Democrats and Greens not having distinct economic policies that represent alternatives to monetarism, which has failed this country, it is impossible for any to provide and inspirational leadership. Inspiration comes not from Johnsonian assertions or Starmer's questions about partygate, the sometimes nice sounding combinations of words from Davey or the often sound logic of Lucas. Inspiration comes from demonstrable practical propositions that are likely to improve the real incomes and wellbeing of constituents.
Monetarism the totem pole of all British parties since 1975 has delivered a disaster for the majority of constituents of this country in terms of rising levels of income disparity, a declining manufacturing sector and skilled employment, rising balance of payments deficit and a cost of living crisis. However, no one in these parties questions the failed logic of monetarism sustained by the clerics employed by the Bank of England, the monetarists' temple.
Just as in the religious reformation of the past, economics as a whole needs a reformation arising from what are errors, abuses, and discrepancies in monetary theory and derived policies. This process needs to be taken from economists, academics and politicians who remain committed to a false logic and whose prophesies have constantly failed to deliver constituent wellbeing. These issues have to be reviewed by non-economists and those who live with the consequences of economic poor policy outcomes. By opening up analyses amongst the constituents of this country in a participatory manner it will become possible to trace gaps and needs to constraints and thereby identify the determinants and mechanisms able to satisfy the needs by correcting distortions.
All of our political parties together have memberships that do not surpass 1.25% of the total electorate and this is why these parties lack the intellectual critial mass and exposure to the people of this country to come up with anything practical. By becoming more participatory, acknowledging that alternatives are required and permitting people to come up with practical suggestions, such a process in itself would be inspiring and would lead to existing policy alternatives being considered more seriously. The current bunch of political parties are clearly not fit for purpose largely because the current separation of economic theory and practice from the real economy where the increasingly impoverished constituents of this country dwell.
| .... No way out for the Bank ....|
In a short presentation to analyse the recent Monetary Policy Committee of the Bank of England decision to rise interest rates to 1% at a short SDAC-Strategic Decision Analysis Group workshop, provided a clearer picture of the current UK predicament.
The cost of living crisis in the United Kingdom is a function of the purchasing power of the pound and the real incomes of wage earners. Wages have a purchasing power to obtain real goods and services according to the prices of these items. Inflation, the rise in unit prices of goods and services results in less being able to be purchased for a given nominal income. Therefore, the purchasing power of the currency and of specific wage levels declines. For example a 10% inflation rate is equivalent to a loss in purchasing power of the currency and wages of 65% over a 10 year period. 5% inflation would involve a loss of around 40% and 2% a 18% loss in real incomes, in rounded percentages.
Currently the United Kingdom is heading for a 10% inflation linked to four issues:
- Rises in prices in international commodity markets for gas, petroleum, food, fibres, feedstocks and minerals largely linked to inappropriate strategic policies related to imposing sanctions on Russia;
- Rises in domestic prices and rents of land and real estate and financial assets as a result of inappropriate macroeconomic policies;
- Constraints imposed labour force remuneration as a result of inappropriate national corporate accounting norms;
- Constraints imposed on corporations as a result of an inappropriate national taxation regime.
These four effects result in an economy incapable of responding to rising costs in a swift and effective manner by raising productivity to lower unit costs, raise wages and set unit prices at a compensatory level.
Russia offers gas and petroleum on the basis of long term contracts and unit prices set currently at around 10%-15% of the so-called free market spot prices. The British government could lower the price of imports by accepting Russian gas but refuses to do so. Therefore the United Kingdom government has taken a conscious decision to rely on more expensive energy resources leading to a cost of living rise in these particular products and derivatives such a agricultural commodities requiring petroleum derived fertilizer.
Source: McNeill, H. W., "British economic prospects", Introduction to Real Incomes Policy, SDAC-SEEL, 8th January, 2022.
The other part of this story is a misunderstanding amongst many economists concerning the origins of inflation. To understand this misunderstanding let us consider the question raised initially concerning the value of the currency. If the productivity of suppliers of goods and services rise and they are therefore able to lower their unit prices, the purchasing power or real incomes of wages rises. In terms of gaining market penetration under competitive conditions companies have to trade off their unit price setting against productivity and the distribution of funds to profit and wages. The countries that are committed to this approach as a result of a developed productivity culture are Germany, Japan, China, Netherlands, Switzerland, Russia, Taiwan, Singapore and South Korea. This productivity culture is intimately linked to the process model of constant product and process productivity improvement as illustrated on the left. The process model which results in a flow of incremental innovations is also combined with a better understanding of the need to pay compensatory wages to maintain national demand levels to drive learning curves through higher throughput. All of these countries come at the top of the international balance of payments league table. Germany, for example has over 1,400 SMEs that are leading exporters staffed by people with several generations of dedication to the state of the advancing art. Britain, on the other hand, together with the USA is at the bottom of the international balance of payments league table. The UK, in particular, has allowed the question of the complementarity between physical technical productivity, labour force learning and acquisition of tacit knowledge or skill be lost as a result of undermining the contribution of labour to corporate productivity agreements to maintain a stable growth in demand through compensatory wage settlements. This is only possible if there has been sufficient targeted investment in productivity enhancing changes or innovation.
Any serious accounting for these essential relationships were abandoned in the UK in 1975 in the stagflation period created by the rises in international petroleum prices. In spite of stagflation being obviously caused by cost-push inflation and inadequate technologies to secure petroleum substitution and avoid a rapid decline in currency values and purchasing power, an academic economics approach called monetarism was heralded as the saviour of stagflation. Monetarists consider inflation to be a purely money volume matter by equating the volume of money in the economy to "demand". They consider "demand" to be manageable through the policy instruments of base interest rates and managing the volume of money injections to the economy. This of course ignores the essential role of compensatory wages and productivity as the main determinant of real demand with productivity-based price setting being the unit price moderator. As a result the raising of interest rates depressed the economy and prejudiced thousands of families who lost their homes because nothing was done to increase the wages of home owners and many more lost their employment. This misunderstanding of the origins of inflation has persisted now for some 45 years and has been accompanied by a fall of investment in supply side production productivity and as a result real wages have been depleted manufacturing competitivity has declined; thus the disastrous balance of payments.
Monetarism is counter-productive in the sense that exactly when business requires low interest rates to counter inflation through incremental productivity investments, monetarists raise interest rates, making access to finance more difficult. Corporate taxation and accountancy norms place labour in a costs category resulting in a tension between shareholder dividends, profits and wages. Since the principal decisions are made by management the corporate taxation and accountancy code provided a negative incentive to marginalize investment and wage payments. After 45 years of monetarism UK manufacturing has been hollowed out, productivity is low and largely uncompetitive and we import most goods and services.
Just as we need to invest in higher productivity initiatives, the Bank of England, on cue, will undermine this process by raising interest rates and probably cause a further depression in economic activity. This illogical action is typical of monetarism and is damaging. The industrial cultural productivity deficit in the British economy can, however, be compensated through a Real Incomes Policy which can accelerate the process of manufacturing catch-up to generate well-paid employment and thereby real economic growth in consumption, as opposed to money volumes which do nothing but enhance speculative asset purchases which benefit few but which exacerbate the costs structure of the whole economy.
In spite of increasing numbers of sanctions being leveled at the Russian economy the strength of the ruble against all major currencies has risen.
Year on year the ruble quotations show a 16% gain in value against the British pound whose quotation is falling. The British pound is failing along with the balance of payments as a result lack of investment and productivity. The current cost of living crisis caused by inflation is, in part, due to the backfiring of inappropriate anti-Russian sanctions. This economic decline in the UK is also due to serious structural issues in the British economy created by inappropriate macroeconomic policies implemented by Labour, Conservative and coalition governments over the last 50 years. The most prejudice was inflicted on the wage-earning segment by the Bank of England's policy of quantitative easing during the last 12 years which drove injected money into assets such as land and real estate, offshore investment, stocks and shares, objects of art and an explosive financial assets sector (derivatives) and drained money away from much needed investment and growth in the supply side manufacturing sectors. 05/05/2022:
[Source: Time; RT] Lula, Luiz Inacio Lula da Silva, Brazil's president from 2003 to 2010, has returned to Brazilian politics just over a year ago after the Latin American country's supreme court cleared him of corruption and money laundering charges, allowing him to run for president once again.
In an interview with Time he expressed the opinion that Ukrainian President Volodymyr Zelensky really did want a war with Russia, otherwise he would have negotiated long before the Kremlin's special military operation started.
Lula drew attention to Zelensky's constant broadcasts around the world, addressing almost any audience and regularly receiving standing ovations. Lula said, "..sometimes I sit and watch the president of Ukraine speaking on television, being applauded, getting a standing ovation by all the [European] parliamentarians. This guy is as responsible as Putin for the war. Because in the war, there’s not just one person guilty. This president of Ukraine could have said,
'Come on, let's stop talking about this NATO business, about joining the EU for a while. Let’s discuss a bit more first.
'" "It seems like he's part of the spectacle. He is on television morning, noon, and night. He is in the UK parliament, the German parliament, the French parliament, the Italian parliament, as if he were waging a political campaign. He should be at the negotiating table,
" Lula explained. "Nobody s trying to help create peace."
Lula also noted that people are inciting hatred towards Russian President Vladimir Putin, but "that won't solve things! We need to reach an agreement,
" he stated. "But people are encouraging [the war]. You are encouraging this guy [Zelensky], and then he thinks he is the cherry on your cake. We should be having a serious conversation: 'OK, you were a nice comedian. But let us not make war for you to show up on TV.'
And we should say to Putin: 'You have a lot of weapons, but you don't need to use them on Ukraine. Let’s talk!'"
Notably, speaking of US President Joe Biden, Lula admitted that he respected him for his economic policy proposals, although "it’s not enough to announce the program, you've got to execute it."
And Biden is reportedly having a "difficult moment" with that. Moreover, Lula believes the American president has not demonstrated leadership with respect to the Russia-Ukraine crisis. "The US has a lot of political clout,"
he explained. "And Biden could have avoided [the war], not incited it. He could have talked more, participated more. Biden could have taken a plane to Moscow to talk to Putin. This is the kind of attitude you expect from a leader. To intervene so that things don't go off the rails. I don't think he did that."
Moreover, Lula expressed the view that Biden would not have been required to make any "concessions" to Russia if he had made an effort to negotiate. In the same way that the Americans persuaded the Russians not to put missiles in Cuba in 1961, Biden could have said:
'We're going to speak a bit more. We don't want Ukraine in NATO, full stop
' That’s not a concession,"
the former president said. According to Lula, "we politicians reap what we sow."
"it’s not just Putin who is guilty. The US and the EU are also guilty. What was the reason for the Ukraine invasion? NATO? Then the US and Europe should have said: 'Ukraine won't join NATO." That would have solved the problem,"
Furthermore, he blasted European politicians for inciting the current volatile situation.
"The Europeans could have said: 'No, now is not the moment for Ukraine to join the EU, we'll wait.' They didn't have to encourage the confrontation,"
Lula's comments come as Brazil is gearing up for a showdown in the October 2022 presidential election between the Workers Party politician and current Brazilian President Jair Bolsonaro. In relation to the presdential election, recent polling gives Lula a 14-Point Poll Lead Over Bolsonaro.
Tomorrow the constituents of the United Kingdom are expected to cast their votes in local elections throughout the country. Most people are feeling the cost of energy and realizing that other prices such as housing and food continue to increase. Many suggest that the local elections are more about community charges than about national politics.
The disgraceful influence of this government has been the suppression of free expression of Russians as a result of a Fascist-like policy of blind cancellation. They are advocating only allowing individuals to carry out their normal activities and who have no connection with politics, who have signed a shoddy document that states that they do not agree with the actions of their government.
This Stazi-like small-minded and disgraceful finger pointing has created an intimidating inquisitional environment where no one can protest against this injustice for fear of becoming conspicuous by rebelling against it - this is how low our government has stooped to succeed in manipulating society. Vanquishing participation and ruling by dictat and intimidation is a denial of all things the people of this country uphold as essential for freedom expression and liberty.
Such feeble minded organizations as Wimbledom are examples of submissions to a tyranny in their cowardly banning of Russian tennis players.
This unforgivable participation in intimidation is a justification for boycotting Wimbledon by all who value freedom.
This is not a particularly logical position. The ease with which local authorities can manage budgets is directly related to the effectiveness of macroeconomic policies "managed" by central government and it is these that create a cost of living crisis. Local authorities might be able to economize but the main culprit is central government.
Since the last energy crisis in 1973, Labour, Conservative and coalition governments have deployed monetarism ever since. Rather than encouraging investment in British industry and manufacturing through petroleum substitution and sustainable processes, all major parties supported increasing financialization, globalization and, as a result, British manufacturing was undermined by lower cost imports. The ability of manufacturing to pay skilled workers compensatory wages declined as did investment in manufacturing. As a result, productivity declined and income disparity rose. The inevitable outcome of a lack of investment in the real economy and over indulgence in financialization, led to the 2008 financial crisis. Rather than steer policy towards real economy investment to raise productivity, the government opted for an intensification of financialization by applying quantitative easing. This resulted in most funds injected into the economy going into assets and not manufacturing investment. By the time Covid turned up we had achieved the status of being the country with the second worst negative balance of payments behind the USA which has the worst balance of payments. As a result, even before Covid, we continued on the downward spiral of falling productivity and falling real wages. By contrast, Germany, paying higher wages and in the same geographic European zone as the UK has the highest balance of payments in the world.
Over this same 50 year period the British parliament demonstrated its ability enter wholly useless and costly military campaigns to support NATO and the USA and all of which were lost. These poorly executed and failed military ventures helped to spread ISIS and its many variants throughout the Middle East, Africa and Asia. The cost has added up to over 1 million innocent people being slaughtered and the creation of the worst refugee crisis made up of people still fleeing the violence our governments helped create in these countries including Iraq, Afghanistan, Libya and Syria. However, the government avoiding the responsibility of having created the refugee crisis are openly proposing to send such people to Rwanda a country with one of the highest poverty indices in the world. The UK government has a good deal of responsibility for the creation of these refugees but openly avoids facing up to this responsibility in a shabby manner.
In 1973 the International Monetary Fund under a Moslem Managing Director did not attempt to prevent Arab countries from raising their prices but cynically made use of petrodollars to "finance" petroleum imports by low income countries using petrodollars supplied by the Arab nations concerned. Petroleum prices therefore rose seven-fold within a decade. Paradoxically, the "price of energy" vanished from the political agenda because political parties and selected politicians were benefiting from the generosity of petroleum supplier and industry lobbies. The corruption associated with over-priced arms deals started under the Conservative government of Margaret Thatcher and continued under Tony Blair. Blair closed down the Serious Fraud Office investigation into this affair. As a result of this generalised corruption the idea of green energy and petroleum substitution was placed on the back burner for 35 years.
Six years ago the European Referendum resulted in a decision for the United Kingdom to leave the European Union. The processes and procedures adopted by the government since have transformed British politics into a landscape characterized by intolerance and abandonment of values once held dear to a large proportion of the British population. The intolerance is associated with an import from last century Europe as a variants of Fascism made up of economic policies shaped by corporations and politicians who support such policies because of personal and party interest in financial support, on the one hand, and a close to fanatical intolerance of individuals who disagree with this way of managing policy, on the other.
Just as Mussolini regarded this arrangement as common sense the post-war period witnessed this intolerance of diverse opinions under the shameful period of McCarthyism in the USA. This process of attacking individuals for actual or perceived contrary views was made possible by cowardly informants and finger pointers. In central Europe such a system was managed secret police and the Stazi whose work involved surveillance, torture and assassination.
Weak governments and assorted politicians who resort to or collude with, the use of intimidation to promote their own causes, fear the truth. Goebbels explained this concisely. They therefore conspire to hide the truth or "cancel" those who would expose the truth. The most shameful and blatant example of this is the case of Julian Assange who has been tortured by a weak British government fearful of the intolerant USA authorities. This government demonstrates a subservience to those who carried out horrendous acts that were exposed in the documents, images and videos which came into the possession of Wikileaks and were published as information of public interest. In a process similar to the Nazi German "People's Courts" the judges have slanted and ignored evidence, passed judgement and pronounced the sentence by agreeing to extradition of Assange to the USA.
This is an open demonstration of the objective of this government to intensify the regime of fear in this country in order to dissuade others from exposing the truth of government excesses and corruption. At the same time the "opposition" says nothing in an act of denial of the importance of truth, no matter how inconvenient. This government and the main oppositions parties expect the people of this country to support those in the local council elections who are members of these same parties that make up this corrupted government and parliament.
The failed military ventures that have created the massive refugee crisis is the result of a too-eager notion by our parliamentarians of regarding militarism as the solution to problems. Following the poor orientation of the USA and NATO there has been an attempt to replace our lowest cost and most reliable source of gas in Europe, Russia, by USA Liquefied Petroleum Gas that is around 35% more expensive. Following a bloody coup against a democratically elected Ukrainian government coordinated by the US State Department, in the middle of Europe, our government did not question this overt destruction of democracy. The UK and NATO countries began arming Ukraine in supporting a civil war against two Ukrainian states (Donetsk and Luhansk) who had declared independence because of fears of the likely outcome of neo-Nazi elements gaining influence in the following Ukrainian puppet governments. The fear was the open declarations by neo-Nazi elements in the puppet government to eliminate Russian-speakers and dual passport holders. The Ukrainian government proceeded to imprison opposition politicians, banned the use of the Russian language, closed down independent TV and radio stations and lately has published a list of individuals who have written or spoken against this government. Several of the politicians and journalists on this list have since been assassinated. This government was and is in no way democratic and it has continued its creeping genocidal attacks on the civilian population of the areas of Ukraine that declared independence. All the way through this horror the UK government has continued to train Ukrainian military and supply arms.
The promise of a peaceful resolution to this conflict, under terms of the Minsk Agreement, was the main hope expressed by the President of Russia as the way to terminate the military intervention. However, the Minsk agreement was abandoned by the Ukrainian government under the direction of the US State Department in early February 2022 after 8 years of warfare. Clearly the intent of the government was to continue to kill Russian-speaking civilians and dual nationality (Ukrainian/Russian) individuals in the Ukraine’s East. The areas that were coming under an impending major invasion from the Ukrainian army, trained and armed by NATO, appealed to Russia for help to avoid a wholesale slaughter of civilians at the hands of the Ukrainian army and neo-Nazi battalions. Therefore, Russia joined this ongoing war, it did not start this war. The fact that the Ukraine openly declared its intention to become a member of NATO while at the same time murdering Russian-speakers and Russian passport holders in former Ukrainian states reflected badly on NATO's declaration of being a "defensive" alliance. Therefore, this affront and associated danger was justification enough for Russia read this as an intent on continued violence supported proactively by NATO. Russia was left with no choice oher than to push back militarily.
Russia, in the second world war did the bulk of the heavy-lifting in overcoming the European suffering from the German Nazi regime. Russia lost over 25 million citizens in this effort. Russians understand that the Nazi threat starts with small fanatical groups who were hardly noticed by West Europeans. Leon Trotsky saw this danger early on when Joseph Stalin also appeased Hitler in an agreement which, like the Minsk agreement, was abandoned by the Nazis. Neville Chamberlain's appeasement of Hitler is an example of the type of naive and costly mistake being made today by the British government and parliament in appeasing Ukraine through declarations and by training Ukrainian military, supplying arms and encouraging it to fight rather than negotiate for peace.
This irresponsible attitude and the additional promotion of, and participation in, sanctions against Russia has exacerbated the international prices, not only of energy but also food and other commodities. The "benefits" of this trail of government decisions and a complicit parliament, for the people of this country, in addition to the problems of rising Middle eastern and African refugees, is an unsustainable rise in the cost of living. This aspect of the cost of living has combined with the policy-induced rising prices and rents of housing and commercial premises resulting from asset speculation taking place as a direct consequene of Bank of England's quantitative easing.
And yet the bulk of MPs in parliament expect the constituents of this country to support the candidates of their parties in the local elections. The central government has removed any effective capabilities for local authorities to have any relevance under such a social and macroeconomic disaster they have created. If one observes with care the antics of the government in handling BREXIT it is clear that the power of decision making in Westminster, especially with this latest government relies heavily on a "Little Englander" mentality, particularly apparent in the prime minister and current set of cabinet members in their failure to have run the government and parliament in a truly participatory manner. They largely ignored the wishes of the people of Scotland, Wales and Ireland. To compensate for this inept bias, it would seem that it is best for constituents to vote for those representatives in the devolved regions who look to a politics that is more independent of the Westminster bubble. The people in England are left with a choice. Vote for those parties who have together created the social and macroeconomic mess we are witnessing, and all feel in our pockets, or vote for those who represent an alternative to these main parties. This should not be just as protest vote, but rather be the first steps in bringing about change to shun militaristic violence and campaigns that are always lost, and getting rid of those who implement poor macroeconomic policies. Britons need to take the initiative to begin to shape a future to bring us back to the sanity of a peaceful and sustainable participatory future as a worthy legacy for our children.
There is an excess of unjustified assumptions in most of the media reports on the performance of the Russian military units operating in Ukraine. This week's Economist Newspaper has a coverage which is a typical example of an inadequate and biased analysis.
The Russian President declared the objectives of the exercise precisely at the time it was launched and these included:
- Assisting the self-declared republics in the Donbass to defend themselves to put an end to 8 years of creeping genocide and the killing of civilians by the Ukrainian government forces - this involved ending the Ukrainian occupation of th formal administrative areas these republics;
- To demilitarize Ukraine;
- To de-Nazify Ukraine.
- To carry out this excerise while minimizing the harm to civilians and supportive infrastructures;
- There is no intent to occupy Ukrainian territory;
One of the most misleading common statements in strategic analyses of the Russian performance has been to assume that Russia had intended to take over or occupy Kiev. Looking at the objectives, that was never an intent. This move was to pull a proportion of the Ukrainian forces from their concentration along the Donbass border by advancing on and appearing to surround Kiev to attack the city. This tactic worked but it might have been costly in terms of some equipment and lives of personnel. The focus on Kiev permitted the Russian units to discover a good deal concerning the location of military assets and personnel helping initiate a rapid completion of the liquidation of most of Ukrainian military hardware assets. Once, these backup assets which could compromise Russian effectiveness in the Donbass were eliminated the Russians withdrew from Kiev. The withdrawal had nothing to do with brave Ukrainians standing up to Russian units.
The other commentary relates to the fact that observers are not taking into account Russia's undertaking not to harm civilians and supportive infrastructures. Although this relates as much to non-Donbass residents as it applies to Donbass residents, this means the tactics used are more exacting and involve more time to complete. There is an obvious need to avoid air and missile attacks on civilian areas and making use of these assets on mainly military targets. The fact that Ukrainian military and nationalist battalions place artillery and missile launchers in the middle of civilian areas is an issue but the Donbass forces are learning how to handle this. This contrasts greatly with the indiscriminate killing of civilians carried out NATO and the US forces who carpet bombed whole towns in Iraq and Syria where the main victims were something of the order to one million civilians. Similarly, in Afghanistan, Libya civilian casualties rose to unacceptably obscene levels.
The Russians have opened countless humanitarian corridors a technique developed in Syria. However, as in Syria, Ukrainian nationalists either prevented civilians using them or fired on people using them in the same way as ISIS did in Syria. By far the greatest civilian residential damage has been wrought by Ukrainian forces in the Donbass, especially in Mariupol, and there is no doubt that their principal targets remain civilians. Their tactic is to map out areas they occupy, then to withdraw and then shell the towns and villages they have left targeting areas where they know there
To learn about the Nazi cover up in Ukraine click on the video link above.
are normally concentrations of people during the day such as railway and bus stations and markets. It is now evident that the Mariupol theatre and maternity hospital attacks given so much publicity were Ukrainian nationalist stunts. A so-called mass grave of 9,000 people outside Mariupol has now been visited by independent journalists only to find that this area is a normal cemetery and there is no mass grave. Some graves are occupied by Ukrainian soldiers buried in separate lots and in coffins. The Bucha story has now lost most of its credibility.
Such propaganda and false flag events do not win wars although they do gain a social media coverage and headlines for corporate media they also titillate and pad out poor strategic analyses. The current state of Ukrainian demilitarization achieved by Russia can be assessed from the data in the table above left.
As the Ukrainian government has not engaged in serious negotiations and does not seem to be independent of US State Department instructions, the Russian government has stated that this will result in changes in the original objectives. It is not clear what these changes entail but they could be taking precautions to strengthen the long term future defence of Crimea region of Russia and the Donbass republics.02/05/2022:
At an Agence Presse Européenne workshop this weekend the issue of appropriate economic policies for the United Kingdom were reviewed. According to the economist Hector McNeill the country is already in recession with a high real incomes deflator associated with inflation heading for 10%. He stated that,
"At this level recession cannot be avoided. The default monetarist response to rising inflation is invariably to do the wrong thing such as raising interest rates.
McNeill explained that all of the policy eggs are in the same Aggregate Demand Model "basket" which cannot tackle cost-push inflation gracefully because they have no handle on productivity.
The culprits are monetarism, Keynesianism, supply side economics and modern monetary theory whose theories and works cover the relationship between real incomes and productivity in blank pages.
As a result there are no relevant policy instruments.
"Under similar circumstances, this is what the Thatcher government did only exacerbating the depression and forcing many people with sound mortgages to be forced into a sub-prime mortgage status and losing their homes. Attempting to impose any of the existing policy instruments will only exacerbate the state of affairs since there are no conventional policy instruments to tackle the issue of cost-push inflation."
McNeill carried out extensive research into the conditions giving rise to the last global stagflation crisis starting in 1973.
"Monetary theory, in reality, does not contain any explanation of the mechanisms creating inflation and therefore can offer no effective solutions. Prices are not set by interest rates or money volumes, they are set by business managers. The rising prices and rents of housing and prices of mineral, energy and food commodities are a result of a considerable amount of quantitative easing funds flowing into price speculative moves in land, real estate and commodities, managed by banks, their clients and hedge funds. This has created a cost of living crisis and the need for managers to increase output prices to remain viable. Thus the price rises were already built in to the system before the Ukrainian crisis. Collaborating in sanctions against Russia are only making things worse."
McNeill considers the current economic crisis to be a result of a too long a run of inappropriate monetary policies which have run down productivity and essential investment.
He said that the way to initiate a reversal of these trends it to introduce a Real Incomes Policy to encourage companies to reset prices and encourage stepwise investments in productivity enhancing initiatives to raise the productivity of companies to absorb cost-push inflation through effective incentives.
"Being outside the EU it is easier to create Real Income Policy incentives while not involving any subsidies from the state and thereby avoiding WTO litigation. By removing corporate taxation and changing the corporate tax code to remove labour from the costs category, it is possible to revolutionize the rate of real growth in the values of profits and wages while moderating and even reducing output prices. This system can achieve a constant real growth in excess of 2% and most investment would come from reinvested margins rather than loans. This is completely counter-intuitive for monetarists and even Keynesians and this solution is more rational than what so-called supply side economics or modern monetary theory, have to offer."
The latter day pugnacious efforts at diplomacy by the current occupant of the post of Foreign Secretary reflects a corrupted intellect which is almost a carbon copy of that of the Secretary of State of the United States of America. No doubt this cloning of thought processes is to the satisfaction of the Conservative government and the Labour opposition on the vain assumption that ".. we are on the right side
". But this is not so. The United Kingdom obviously does not have an independent foreign policy and since the USA has no interest in the prospects of the population of this country, this is a serious state of affairs. Having relied on the NATO arms bazaar for "security" to give an impression of a strategic "defensive" alliance, the reality is that NATO members have a complement of arms that are a couple of generations behind that developed by Russia on 10% of the defence budget of the USA. Clearly a 2% GNP assignment for defence has not resulted in an effective strategic defensive framework, but rather, a wholly exposed membership. Since 1949 NATO members have been involved in bloody conflicts that were uncalled for and certainly not defensive. Since NATO did not honour the promise not to expand Eastwards beyond Germany and its willingness to initiate very high human cost warfare at the request of the USA, Russia was left to draw its own conclusions as to the significance of the USA's manipulation events to expand NATO Eastwards towards the Russian border. The President of Russia did attempt in 2007 to lay out Russia's concerns proposing a mutual strategic security framework which would include Russia. The USA and, of course, the UK, ignored these measured and balanced proposals. There have been 8 years of a war initiated by the Ukrainian government against Ukrainian citizens who did not want to be governed by a government set up as a result of a US State Department coordinated bloody coup in 2014. This puppet regime introduced a series of constitutional acts to marginalize Russian speakers and then in February, the current Ukrainian president declared that Ukraine would not implement the only negotiated and peaceful settlement agreement to this warfare, the Minks agreement. Russia had relied upon this agreement to solve the Donbass violence. This failure was the direct result of the USA State Department officials dissuading all involved from implementing the Minsk agreement. As a result of appeals from the people of the Donbass for protection, Russia initiated the current campaign.
The United Kingdom, rather than encourage the Ukrainian government to resuscitate the Minsk agreement and a more rapid route to peace, has done quite the reverse, following the lead of the USA to ply Ukraine with armaments and encourage the Ukrainians to fight to the last Ukrainian. This reaction only confirms that Russia had good reason to initiate its campaign because the USA and UK have not responded in any way that corresponds to a defensive but in fact have transgressed the very first Article of the NATO Treaty which requires efforts to seek peaceful resolutions. No, the USA and the UK have simply continued the slightly fanatical process of using the population of Ukraine and the armed forces to attempt to weaken Russia.
Why is it that the United Kingdom is working to sustain a puppet Ukrainian government established through violence by the USA in the heart of Europe, by continued violence? From the standpoint of Britain, this is a foolish bravado which is bound to prolong this crisis, raise the number killed and destablilize yet further international prices of energy, food and other essential resources, thereby causing immense suffering in the rest of the world and exacerbating our own cost of living crisis. This government has been keen to prevent relief for British constituents facing financial difficulties on the basis of the excuse of "affordability". This same government thinks it can afford to participate in a wholesale waste of public money on a corrupt regime and augmentation in unjustified violence and death in a wholly irresponsblle act.
The recent set of statements uttered by the Foreign Secretary at a Mansion House dinner, simply confirm to the world the true nature of NATO members and a wish to expand this failed system to South East Asia. Saying China needs the West because it is 50% of the world market is slightly absurd when, in real terms, this economy is shrinking and the rest of the word's economy is expanding rapidly. All of the main growth in demand for energy resources, capital goods and development finance are in those countries who have refused to participate in sanctioning Russia. Most have recognized the link between NATO's willingness to attack countries who wish to follow an independent pathway or for the USA attempt to sanction countries based on dollar dependency for transactions. The reaction of Russia to refuse to refusal to submit to this form of intimidation and its demonstration on how to neutralize sanctions, has been an amazing demonstration of resilience and independence that most countries seek. As a result, the rate of transition towards barter credits and own-currency-paired trading is beginning to marginalize, dollars, pounds and Euros. This is already resulting in a decline in the purchasing power of these currencies while the Chinese currency and the rouble rise in value as preferred currencies. This is occurring just as the refusal of several NATO members to use Russian energy resources in the future is resulting in rises in the international prices of gas and petroleum.
It is easy to appreciate why the corrupted intellect referred to above is defective because it does not understand the connection between a country's belligerence and the decline in acceptance of that country by those who have no respect for this type of irresponsibility. They look on and observe the rising costs of living in NATO countries created in good measure by the aggression of NATO inviting a forceful reaction. The so-called defensive alliance has created a strategic instability arising from social and economic stress. The government seeks to blame Russia who still offer gas at 8% of current market prices to anyone who is willing to sign longer term contracts. Russia will not supply gas that has not been paid for. Russia so far, has maintained an established tradition of being the most reliable long term gas and petroleum supplier in the world. Of course, the government refers to all the inflation in our economy as Putin's inflation when in reality if is a result of a failed so-called "alliance" called NATO. The government needs to revaluate what is in the interests of the nation. It is not to alienate the majority of the world's population where the main global markets are evolving or to become a promotional agency for a defunct NATO as an example to follow.
Nicholas Kaldor's inaugural lecture as Professor of Economics at Cambridge University in 1966 set out the reasons why the United Kingdom's apriori emphasis of economic policies needed to be geared to the maintenance of strong industrial and manufacturing sectors. His reasoning was sound. However, with the stagflation crisis starting in 1973 a Labour Chancellor, Denis Healey, abandoned Keynesian policies and a wages policy and did not introduce an industrial policy in 1975. He in fact introduced a monetarist approach which was intensified by stringent conditions of an IMF loan to the country in 1977. Nicholas Kaldor, who has been an adviser to the Labour government, withdrew his services in 1976 as a result of Healey's decisions.
The following Conservative government led by Margaret Thatcher adopted monetarism with enthusiasm but this government represented a significant change in Conservate governance by moving away from what had been a more pragmatic conservativism with a small 'c'.
Nicholas Kaldor became one of the leading critics of the policies introduced by Thatcher, especially in relation to the decline in the UK's manufacturing sectors, declining manufacturing exports and collapse in the balance of payments. He made use of his position as a member of the House of Lords to present coherent criticisms of the economic policies of the Thatcher government.
Some of Nicholas Kaldor's criticisms of the Thatcher government economic decisions between 1979 and 1982 were made into a collection entitled, "The economic consequences if Mrs. Thatcher
" and published by Gerald Duckworth & Company in 1983. This has a short introduction by Nick Butler. The cover is shown on the right, we have added the observation within the red bars. The book consists of 19 short but devastating speeches which in their detail demonstrate how, under Thatcher, the somewhat faulty logic of Healey's monetarism created a foundation for a combination of strands of a particular view of society.
Although some refer to this as an ideology it did not pass beyond being a particularly visceral view of human relations based on instinct and with the economic components being without a sound theoretical and therefore practical utility. Weighing up Kaldor's arguments one is left with an impression of a soulless macroeconomic policy environment reflecting well the sense that these people did not believe that there is something which others refer to as "society". Although Boris Johnson expelled most of those Conservative MPs which the people of this country could recognize and admire as "one nation Conservatives" it is very apparent that they had become an issue for Thatcher who referred to them as "wets". At the margins one does sense a whiff of fanaticism attached to some extremely negative views or fixations on social class-related motivations of society. This attitude is alive and well in the current administration and occasionally flickers to the surface in the pronouncemnts made by the current Chancellor. The notable point is that this decline has continued ever since under Labour, Coalition and Conservative governments all of whom deployed monetarism as the main policy drive. The point of particular interest is that while the current government continues this creed and we now face the very same predicament faced by the Thatcher government in the form of rising inflation caused by external resource prices and a cost of living crisis exacerbated by the very same errors made by the Thatcher government.
Lessons have very definitely not been learned as the economic trends initiated under Thatcher continue as a failure to resuscitate our almost nonexistant manufacturing sector to reverse the decline in the balance of payments and a government presiding over the continual decline in the real incomes of wage-earners and continuing to place higher tax burdens on the sections of the constituency least able to afford such payments as the cost of living rises. Unfortunately, this government does not appear to be aware of the magnitude of the current extent of the country's economic decadence in a performance that repeats the Thatcher years with policy justifications, as Kaldor explained, being assertions devoid of sound theoretical and practical coherence. Whereas the Bank of England and the government wheel out monetarists to explain their policies, they seem to remain unaware that the axioms and general theory of monetarism were shown to be groundless as a result of detailed analysis completed by the Strategic Decision Analysis Group at SEEL in 2021. This major advance in economic theory and explanation of its implications for the United Kingdom were set out in some detail in the 2022 edition of the British Strategic Review
Loose talk has serious implications and sometimes consequences, when the subject matter is a military action.
The inappropriate statements of Liz Truss caused Russia to move into a full strategic systems alert, and now, James Heappey, Under-Secretary of State for the Armed Forces is adding fuel to the fire. It is reported that he has expressed the opinion that the use of British supplied weapons for strikes on logistics sites in Russia would be fair game, or words to that effect. The problem with this, although semantic, is that this is seeing the UK becoming involved in decisions, or modes of thinking, in their support for Ukraine that shifts the perspective from "defence" to "attack". The school boy logic applied by Heappey is simply naive. It is quite normal for strategic military decisions to consist of constant reciprocations of locational states as campaigns progress. This signifies that Heappey's statements place at risk the whole of the British supply line to Ukraine including transport, warehouses and even the factories producing the weapons supplied on British soil. Since the country is not under a war regime and state of emergency our supply lines within the country are a more than easy target and any follow up in response to Heappey's ill-judged statements could result in the deaths of people in this country. Relying on NATO's article 5 is plain idiocy when the UK government is transgressing Article 1 of NATO which reads:
"Article 1: The Parties undertake, as set forth in the Charter of the United Nations, to settle any international dispute in which they may be involved by peaceful means in such a manner that international peace and security and justice are not endangered, and to refrain in their international relations from the threat or use of force in any manner inconsistent with the purposes of the United Nations."
Heappey recently responded in a TV interview during which he was asked why public funds were being spent on armaments for Ukraine when people were facing a serious cost of living crisis. Heappey's response was quite dishonest. He stated that Russia's use of energy as a political weapon and starting this war threatens our "freedoms" and that he hoped that the people of this country understand that. This is just a repetition of misleading USA State Department propaganda.
Russia has never used its supply of gas and petroleum as a political weapon and has always observed, since Soviet times, their contractual obligations which have involved the supply of gas at a very low price. The only time there was a contractual problem was when it was discovered that Ukraine was stealing gas from transit gas. Also, Russia did not start this war, it joined a war that has been running for 8 years since 2014 when the USA State Department promoted a bloody coup to overthrow a democratically elected government. Since that time national honours have been bestowed on past Ukrainian Nazi collaborators, the Zelensky government has closed down opposition TV stations and imprisoned opposition MPs as well as making no comment on the assassination of a leading opposition politician which occurred after Russian forces left Bucha. The threat to European freedom and the safety of the people of this country is the rise of neo-Nazi power in Ukraine. The UK government did not question the violent overthrow of the Ukrainian government in 2014 or question the antics of the Ukrainian governments ever since. This government is repeating the naive appeasement by Neville Chamberlain of Nazis in 1938. What is worse, however, is that while Chamberlain referred to "Peace in our time
" our own government, not only has ignored the 14,000 citizens murdered in the Donbass region at the hands of the Ukrainian government, but has now joined in to help this Ukrainian government. Russia entered this fray at the request of those under threat in the Donbass and who have suffered atrocities for over 8 years.
On balance, whereas Heappey satisfies himself of his own naive logic, the government's actions in supporting sanctions have created problems for the British population with some 20% now facing extreme difficulties with the cost of living and paying for essentials. Heappey, of course, has a salary which means all of this is of no particular concern to him but the people of this country have a justifiable concern as to why the government is spending money to support such a dreadful regime in the name of "freedom". On top of this, the government is raising taxes. In reality, there is no freedom to defend in the Ukraine while the cost of living crisis is constraining the freedom of the people of this country. With a government that refers to "affordability" in setting priorities, it would seem that helping the Ukrainian neo-Nazi battalions murder people in the Donbass is a priority while seeking to serve the interests of the people of this country, is not.
23/04/2022: A recent Economist Newspaper (see cover on right) ran a series of leaders and articles on inflation and a Special Report on Central Banks related to their taking on an array of concerns.
Unfortunately everything cited in these dissertations was statements by economists who consider inflation to be a purely monetary phenomenon. In 1976 it was well-established that money supply is just a part of the story. The main issue is the evolution of manufacturing productivity over which monetary and fiscal policies have no means of direct influence because the appropriate policy instruments have not been developed.
To explain this in a simple way we use a graph presented by the Economist in the article "Hawks take flight" on page 68 (see far right).
For now approaching 50 years, monetarism has distorted the direction of monetary growth by raising asset prices which created cost-push inflation caused by rising prices and rents of land, housing and commercial real estate. Under quantitative easing prices of commodities including energy resources and food have also risen. The Ukrainian situation has exacerbated this state if affairs. The failure to balance monetary growth with increases in physical productivity is a significant gap in macroeconomic theory and practice.
This separation of monetary concerns from economic physical productivity has reduced the adpatability and therefore the resilience of the supply side, slowing down productivity responses to policy-induced rises in prices of inputs.
Just when interest rates need to be lowered to faciitate productive investment to tackle inflation, central banks raise interest rates. Interest rates could be raised if effective productivity incentives were in place.
This is a version of the Phillips curve showing the relationship between unemployment levels and inflation.
We have added the dashed curve b-b.
Below is a diagram produced by the Real Incomes School showing the impact of productivity on the Phillips curve.
As can be seen the b-b curve is just one of three with low productivity resulting in higher inflation, a-a and higher productivity resulting in lower inflation c-c.
Because macroeconomic policy has ignored the application of incentives for productivity and have confused this with incentives for investment - not the same thing - we have witnessed monetarism hollow out manufacturing and general productivity because finance has been redirected into assets.
Jeremy Corbyn is on the record at warning the country about the influence of Russian oligarchs over British politics over several years and especially on the Conservative party. His warnings turned out to be correct.
Corbyn's view of NATO is also totally rational in the sense that, if we have understood the latest press reports, he has stated that, if there is no balance in security arrangements the resulting insecurity results in a massive non-ending arms race leading to more insecurity and the likelihood of warfare and deaths. On the other hand the government and Labour still hold on to completely out-dated concepts of nuclear deterrence. This has resulted in Russia developing systems which have completely removed the effectiveness of existing defence systems in the "West". Therefore the irresponsible expansionary strategy of NATO destroyed any concept of it being a defensive alliance. And so, the arms race continues creating a less secure world.
Corbyn has his feet on the ground and has turned out to be more rational in his approach than the hysterical militants and rather ridiculous reservist MPs in this country bent of pouring arms into Ukraine and in a completely cowardly manner encourage the Ukrainians to fight to the last Ukrainian. Working to give peace a chance, as Corbyn has always done, is a more courageous path, yet more complicated, given the size of the armaments lobby, but this is a far more sensible and inspiring being far more productive than the government's continual willingness to support military interventions and to contribute to alliances that are responsible for the murder of thousands of innocent men, women and children.
21/04/2022: The backward, stultifying parochial bigotry that pervades sections of society, including organizations and even parliament, who wish to prevent individuals or teams from participating in events because they happen to be from Russia is a negation of everything the people of this country are brought up to value. This includes the importance of freedom of expression, respect for others and the right to be deemed innocent and free from accusations when no evidence has been produced. This action of mass intimidation erodes the country's free exercise of the community conscience and ability to ensure fair play. This groveling, small-minded vicious finger pointing and participation in the blind "cancellation" of people who have done nothing wrong and the gross violation of privacy in demanding that Russian sports and artists and others, in a Stazi-like imposition, to sign prepared statements that they oppose their own government's actions, are unacceptable impositions. Such points of view are of no possible business of others. This reflects badly on the small-mindedness and visceral motivations of those who carry out all of this crude hatred in such a self-righteous manner. This has turned into a competition between grovellers in attempting to demonstrate who can lower themselves to become the most convincing champions of the brutal desires of neo-Nazis who control the Ukrainian government and their patrons in the US State Department. Why has Britain stooped so low so as to demonstrate to the whole world such a dreadful show of decadence and a mass hysterical and irrational hypocrisy?
Following the mass murder of, approaching, or perhaps, exceeding, millions of innocent people in the Middle East as a result of NATO actions did others ban American and British athletes and artists in this crude manner? Civilized societies simply do not act in such a vindictive manner.
This show of an ability to uphold a situation where there is no justice only follows the disgraceful treatment of Julian Assange as a broadcast of the United Kindom government's problems with facing up to the truth. The exposure of war crimes, for which there is ample evidence generated by the guilty party, the USA, is a state of affairs which should set Julian Assange free. Therefore, the whole world needs to observe and reflect on the this dreadful groveling of British justice and government, far from setting an example of upholding and demonstrating a freedom of action, have sought to satisfy the desires of the very people guilty of the war crimes exposed and to punish the person who has exposed this vital truth. The lesson for the world, witnessing this disgraceful behaviour, is that, if Assange is extradited to the USA, this government that has overseen this corrupt process and considers it to be acceptable, is tyrannical and cannot be trusted.