Evading the Causes of the Current Cost of Living Crisis

We need a more open debate about the causes of the current cost of living crisis. The elites would like us to blame a pathogen and an alleged autocrat but this is far too simple. It is certainly not caused solely by Vladimir Putin’s alleged weaponisation of Russia’s immense gas supplies. In fact, despite the furore over the Nordstream explosions and the closure of the Baltic pipelines, Europe continues to be supplied with gas at rates not dissimilar to those that applied before the war. Supply chain issues related to COVID recovery and many other fundamentals have certainly contributed to price rises not forgetting the pressure on commodity prices from the disruptions involved in the Green Agenda and problems with food supply accentuated by climate issues. But the disruption to trade caused both by the economic sanctions on Russia and threats of sanctions on China are a significant contributing factor and these policies are those of our leaders.

The invasion itself need never have been much of a factor in itself - it is just that Western leaders (without much consultation with their own peoples) decided that the costs of economic warfare against Russia were a 'price worth paying' and then got suprised by just how open-ended that price would turn out to be. It is not only the effects on trade and inflation but also the ridiculously high commitments of capital being made to prosecute an unwinnable war (shades here of Afghanistan) and eventually to the reconstruction of a nation that has been encouraged to fight that unwinnable war. The Ukraine War had emerged from a failure of diplomatic dialogue between the West and Russia over the previous two decades and the fault for that lies as much in London and Washington as in Moscow. The UK must take part (though certainly not all) of the blame for that and so for the immensely damaging rise in the British cost of living which is to a considerable extent attributable to the disruption caused by its foreign policy priorities and its extremely poor understanding of the consequences of its actions. 

Over a year on from the invasion, we have to draw some distinction between the energy component of inflation and 'core' inflation - the underlying inflation in food and services that has triggered high interest rates. Energy inflation if it does not go on for too long is something one works through. European governments could deal with it by adding to their fiscal burden with what amounted to massive dole outs - another price that might not be worth paying as national debt levels, already burdened by COVID social cohesion doles and green agenda doles (soon to be added to with increases in defence budget expectations) reach levels that require austerity and high taxes under conditions of low growth, that is, if the Western system is not to crumble under the weight of its own debt mountain. But energy inflation has triggered core inflation so that as energy prices fall, the lag in wage and commodity inflation continues to drive prices and forces up interest rates.

Nevertheless, funds to deal with energy inflation could be regarded (like the Green Agenda), at least in part, as a debatably necessary adjustment and an 'investment' in future energy security. After another year of recessionary misery (or soft landing from an optimistic point ov view) everything will be fine and recovery from 2024 and after will allow the debts to be paid off and prosperity to return. Except that the game is not over. The Europeans (which includes us) have just shifted their energy dependence from being one on Moscow to one based on the US and Gulf dominated spot markets. Renewables are not managing to fill the gap left by the decline in hudro and nuclear energy. Europe is still vulnerable not only to increases in the spot price of LNG and OPEC+s determination to maintain fairly high oil prices in at least the $80-$90 band (Brent Crude) but to the Russians deciding to turn off the spigot for gas or oil directed at Europe because they have (eventually) an adequate market in East Asia and have just had enough of European insults and support for Ukraine. The Chinese are busy committing to long term Gulf contractual terms while dilatory Europeans sit and hope for pries to come down regardless.

In other words, the 'headline' inflation problem has not gone away - it has just been pushed forward to next winter if the Europeans in particular do not manage to sign their own long term contracts for energy, Chinese recovery sucks in energy from elsewhere, there is a cold winter, the spot markets rise and the alternative energy structures that are supposed to displace Eurasian energy are not in place. If conditions deteriorate between Russia and the West to the extent that Eurasian gas is no longer available in Europe at all and the grey market in Russian crude going to refined products that serve Europe dies off in favour of East Asian needs, then European governments may face a fiscally destructive demand for yet more social cohesion payments to protect the most vulnerable households and businesses and this will be ... inflationary. 

So, we are in a position where markets are convinced that recessionary tendencies must mean that interest rates have peaked and are buoyant but a) the continuing rise in 'core' inflation means that, even if interest rates peak, central banks may be obliged to hold them at near peak levels for a considerable period of time while the mounting costs of all this to governments, households and businesses starts to unwind the viability of at least some of all three in a slow-burning creative destruction that weakens confidence and contains multiple political risks while b) the current relatively beneficial state of the energy market could simply be the eye of the hurricane, vulnerable at any time to a whole number of political grey swans and risking, if things go down hill, significant fiscal interventions for which there may no longer be united national political consent (or the cash) as the costs mount.

Looking at the world before February 2002 and after that date, we can see only one major trigger for a polycrisis that was probably waiting to happen on many other fundamentals - an ill-thought-out sanctions approach that was supposed to bring Russia 'to its senses' or even trigger regime change and Russia's economic collapse. It has clearly not done so nor is Russia isolated. At best, sanctions may achieve their ends only at immense cost to the poor and vulnerable at home and overseas, to working households and to those small businesses who may not survive beyond the doles they have been given to survive the next round of energy price hikes. A lot of the damage caused by COVID and sanctions is silent. About a year into COVID, I produced a list of local Kent and Sussex small breweries and put it to one side. This week I went back to it to see what had happened to them. Roughly a quarter seem to have crashed and burned as independent businesses. Walking around our mid-sized Kentish town, we see the gaps where shops used to be.

Inflation driven by huge fiscal inputs to deal with both crises and ideological convictions (such as Net Zero and the insanity of increased weapons expenditure) and by incompetently drawn up economic warfare policies, added to COVID-related supply chain problems, have meant interest rate rises. Short term subsidies to the population have meant high borrowings. High borrowing has meant weakened currencies against the dollar. Weakened currencies mean imported inflation which means yet more interest rate rises. Interest rate rises eventually mean recession. Recession means job losses and business failures. High borrowing eventually means high taxation yet recession means lower tax take. Increased taxation to deal with this and high interest rates mean a drag on growth. And so it goes ... a spiral of failure. All this is, at root, not down to Putin but to our collective paranoid and hysterical reaction to Putin led by a bunch of loopy ideological Tories and their fellow travellers in the Labour Party.

These have been many serious failures of policy derived from poor analysis and intelligence. We know this now whereas a year ago we only surmised that this might be so. Exactly how bad Western analytical intelligence has been perhaps only became clear with the release of the latest batch of Pentagon Papers. It is said that the professional foreign policy and intelligence community in Washington are distraught at the poor quality of their own political masters who are driven by simplistic ideological seat of the pants policy-making. Western democracies are, in any case, no longer fitted for the sort of long-range planning that seems to be the norm in Moscow and Beijing. A 'price worth paying', seen originally perhaps in terms of eighteenth century type war subsidies (wasteful but not critical to our own economy), has been transformed into a massive price for war and the reconstructive integration into the European and Western system of a basket case of a state riddled with corruption .

This is a price certainly not worth paying, incurred at the expense of national populations, long term economic prospects and future generations yet a reversal of policy is no longer acceptable to elites not for simple ostensible moral reasons but because back-tracking will shatter confidence in them. Like Macbeth, they are so steeped in metaphorical blood they may as well go forward as back but their doubling down constantly increases the risks that a serious situation could become a critical one. The financial technocrats remain extremely worried about more bank failures and so should we be, The system is under enormous strain and yet there is no way forward for Western leaders to do anything more than carry on being as stupid as they were in the far less critical situations of Iraq and Afghanistan. As in those two cases, the end game is now predictable - defeat or a victory earned at such cost as to be Pyrrhic.

Here, in the UK, the Government, the media and the political class are all in denial about these truths because are fully complicit in February's blunders and the even worse blunder of not using British influence to encourage peace talks back in April. We all know Boris was a chancer but his gambling sucked in everyone around him. Now our political addicts think that just one more throw of the dice (presumably this time it is the touted Ukrainian counter-offensive) will win back the shirt they are losing off their back. They now have no way out of the hole they have dug except to dig ever deeper and then cross their fingers, hoping that if they do so vigorously enough they will come out in Australia and all will be well. It is now no longer theoretically possible that Russia, clearly backed by a China throughly alienated by the incompetents in the State Department and in Brussels and Berlin, will collapse, be forced to withdraw from Ukraine or the Putin regime be replaced. Even if these events happened, none of them are likely to take place within the time frame required to avert serious damage to the Anglo-European economy and social cohesion. The cheap and hitherto reliable Eurasian energy resources in question are Russian and not ours so we cannot seize them any more than we can seize its massive mineral resources (much of it vital for Western industrial development) and grain output. They, not us, decide what is to be done with these assets of global importance.

It will take years for Europe to put in the infrastructure necessary to restore permanently lowered energy and commodity price structures in a global context. Europe will be competing with Asia for both sets of input and its competitive advantage in having cheap Eurasian energy to hand is now lost, almost certainly forever. Germany, apart clearly from the unstable coalition that rules it, has begun to fear de-industrialisation and has just, with immense stupidity, managed to undo all Macron's good work in China ten days or so ago. The German Foreign Minister alienated China under the massive illusion that its opinion on the Ukraine matter actually matters to Beijing. Macron to a great extent and Orban to a complete extent 'get' what is at stake for Europe and 'get' that it (and we in Britain) have been played by Washington. The embarrassment of watching Sunak kow-tow like all his predecessors to a President who touts a united Ireland tells us all we need to know about national decline. A nation has liberated itself from Brussels only to be a vassal to Washington.

The confrontation between Putin and Western liberal elites is likely to last years as Russia pivots to Asia while a Trump victory and growing European resentments and fragmentation could leave us Britons high and dry in any case. We could take the economic hit now only to see the rug pulled out from under us later. Whatever short term wheezes are being promoted by this Government to take the heat off itself and secure its position for an election, the huge damage to our economy of yet further tranches of borrowing (following the COVID experience) and to social cohesion from the inevitable austerity and increased taxation in the long term are certainly not 'prices worth paying' for the bulk of the population. It is as if (surely not) Government continues to undertake every wheeze to protect the asset rich middle classes in the rather stupid belief that they are the majority of voters and the rest of the electorate has no choice other than to vote for a variant of the liberal establishment that protects that class. This is true in a world made up of Red, Green, Orange and Blue 'Tories' but all four are skating on thin ice. That world may collapse under sufficient economic pressure.

These are all self-inflicted wounds on the British nation not so much by the Government alone but by an entire political class that continues its arrogant neglect of its own population in order to meet the needs of moral philosophy (as interpreted by Oxbridge, the media and the liberal intellectual class) and its own self-serving class interests. The media is wholly complicit. The butterfly minds of the elite have left an apparently powerless population to do what it can to get by - the Government has simply stopped inflation becoming intolerable for the middling sort but pushed those costs forward in time. Huge numbers of the Crown's loyal subjects will face a serious loss of living standards regardless. Perhaps the assumption of the liberal establishment that they are too stupid to see this and who is responsible will be its eventual downfall.

For a brief moment (maybe this coronation) we will now get to see what our nation can be at its most romantic but we note that the strong national engagement in respect for the late Queen Elizabeth has already diminished for her successor in opinion polls. We are seeing how national decision-makers are divorced from the condition of the people as much now as in the age of Victoria. The open debate we need may never happen - evasion of the conditions under which power is exercised may be what holds this nation together as it sinks slowly but steadily into penury. But never mind ... perhaps the upper middle classes think they can survive and since this is their Kingdom more than ours, then we must judge that all is good in the world. Why question such good order, they may ask. Why not, we should reply.

America - Learning Nothing and Forgetting Nothing

What is that cliche about the Bourbon restoration - learned nothing and forgotten nothing?  This certainly applies to American policy wonks who were trying to work out what was to be done after the Afghan fiasco. The result would appear to have been another fiasco in the making over in the Eastern bloodlands of Europe. The insistent political ambition of the American elite to engage in ideological intervention overseas at the expense of their own taxpayers remains dominant regardless of past errors (an ideological mind-set shared by many in our own British political elite and now infecting Europe at its highest levels). And yet dreadful domestic problems continue to rot the US just as the social democratic consensus in Europe collapses under the pressure of liberal economics. Poverty, lack of healthcare, poor education and collapsing infrastructure, guns out of control (which makes the FT's insistence that Russia is lawless look stupid to say the least). American foreign policy incompetence adds to domestic disenchantment and foreign doubt. It feeds populism by the back door.

Exactly what is America's game here? The cynical view is that its upper middle class political leaderships have abandoned their own people because growing empires require constant expansion and increasing asset values for its upper middle class clientele is all that matters in American politics. The fraying theory, of course, remains that the rich 'trickle down' wealth to the poor. The 'trickle down' of the alleged benefits at home was supposed to be sufficient to retain power in democracies fixed by party machines and big money. This, of course, looks a highly problematic strategy at the moment. Russia, far from isolated, has turned to a receptive China that has a ready ear for its own anti-imperialist narrative across Africa and Latin America. Multipolarity is becoming a fact this year rather than just the propaganda fantasy of the Kremlin. Constant market and asset expansion was to be enabled by building up equally neglectful and narcissistic upper middle class elites elsewhere in the world yet these elites have developed the same resistance to being patronised by the West as the working classes within the West. Markets are shrinking and not expanding. Perhaps those 'fixes' can continue for quite some time - but what happens when the money runs out?

 

With recession on the way we can already see a class war looming where the asset holders will want the system they think they own to ease up on interest rates and allow more inflation. Yet the intelligent part of the elite understands that their rule may collapse on sustained high inflation because it hurts the asset-poor (the majority of voters) far more than high interest rates hurt the asset-rich. The asset rich are relying on the asset poor to remain 'stupid' and disorganised which is why they so deeply resent the arrival of politicians like Trump who organise far from stupid people using only apparently stupid political tropes. A less economically cynical view, however, is that middle class politicians in the West simply have nothing to say to their own masses any more. Their culture is simply different. They only want to talk to people like them who they can nurture in foreign climes ... they had hoped that a nice liberal middle class would emerge in Moscow, Beijing, Tehran and Kabul, one that would construct the institutional forms that would require no concern for the 'damned of the earth' except as beneficiaries of aid, 'trickle down' and 'culture' from on high while the ownership of the assets around them remained theirs. When a Prime Minister of the United Kingdom (now removed) can effectively abandon his own constituency and become de facto Member for Kiev Central in Parliament, then you know this propensity for class internationalism has reached its most decadent phase.

As to the official American strategy in relation to Ukraine, it is simply a sign of weakness ... pouring funds into the Ukrainian money pit, evading the use of hard power, promoting an economic war that is undermining the West itself and dying to the last Ukrainian with weaponry whose use only enriches the major arms manufacturers. Apparently there are 40,000 committed Ukrainians in eight brigades (or whatever) armed to the teeth by the West just waiting to enter the meat grinder without perhaps realising that any victory will be Pyrrhic - their land and assets are already assigned to Western private capital as the only means of getting the finance for reconstruction. Blood and soil is not going to mean much when the blood of the most fit leaches out onto the soil and that soil belongs to some corporation listed on the NYSE or operating from a headquarters in Berlin or Tokyo.

But do Japan and South Korea (or Taipei) really believe that the US will do anything much more than they have done for Ukraine (prolong a devastating war at the expense of a people and a land) if China moves against Taiwan? I doubt it - it will be moral posturing once again, psy-ops directed at the homeland suckers and rhetorical gestures. Even the moralising American middle class know that they will be the losers if a strategy that largely hurts the poor, the young and the developing world ever became a real war. Those assets will eventually become cinders. Fortunately, the Chinese almost certainly have no intention of going into Taiwan with military force in the short to medium term - they are hoping the opposition Kuomintang will do that job for them. We should perhaps hope that they are right.

As for legislatures of 'hawks' getting involved in international relations, little makes me more scared - whether Congress, the Duma (which has to be restrained by the Kremlin as much as used), the UK Parliament or the greatest ineffectual moral posturing organisation in the world, the European Parliament. Congress is scariest of them all because Congress is at the heart of the most terrifying war machine the planet has ever seen and the most excitably irrational. The Taiwanese situation had been significantly worsened by Pelosi's blundering into it. Just as bad, here in the UK, Parliamentary hawks in the Tory Party, copied slavishly by one of the intellectually weakest Labour leaders in its history, have set the agenda for the nation. Their policies have resulted in 10% plus inflation, actual shortages and rising interest rates. It is not much better in Russia where nationalist expectations almost certainly limit the ability of the Kremlin to cut any reasonable deal with the comedian who runs Ukraine. Zelensky, in turn, is trapped by the nationalists on his own side and his need to keep on trucking to ensure he gets what he really needs - huge tranches of post-war reconstruction aid and support to rebuild his military as cat's paw for NATO in the East. Really, we 'ordinary folk' in all countries need to start standing up to the political class before they destroy us all. We need alternatives and we need them fast.

Position Reserved Explained

The subject matter of Position Reserved has always been various - philosophical, political, libertarian on occasions, commentaries on magickal thinking (by no means censorious) and sexuality. The political has ranged from international relations through British politics (including Brexit) to the politics of the Middle East, the Trump era in the US and beyond. I took a particular interest in such outre subjects as the ideology of the Far Right and national populism, sexual freedom and polyamory and the psychotherapeutic role of paganism and the occult. 

I tracked the COVID outbreak for some time as I tracked, with others, the idiocies surrounding the Russo-Western conflict as it developed up until Position Reserved suspended itself in 2018. I doubt if there will be much immediate comment from now on on world or national affairs because these are adequately covered by me on Twitter. Facebook and LinkedIn (see below). The general theme was a personal alienation from our species en masse, apparently a true ship of fools. This is my quasi-autistic side of which I have become increasingly proud. Like Cassandra, I had the unfortunate ability to see the darkness coming (it may already have come without us noticing because we shut the curtains early) yet be unable to persuade anyone else of its imminence.

The paradox struck me that while our species appeared to be a ship of fools, most of my fellow ship mates were in fact intelligent, thoughtful, humane, often quite simply kind, and as puzzled as I was by the way we were hurtling like the unfairly proverbialised lemmings towards any cliff present. The bulk of ordinary humanity seemed to have their heads screwed on properly - the idiots were the ones in power. With emotional insecurities blown into waves of hysteria by the media for which I have developed the deepest distaste (they are the dangerous winds blowing our ship of course), it appeared that we passengers on our many ships were at the mercy of demented captains, officers who obeyed every whim of the madmen and crews who had no choice lest they be keel-hauled for their temerity in suggesting that, perhaps, we might all be better off if we headed for port or at least took a route that did not have us riding those waves on to the rocks. 

Similes take us only so far. The correct and reasoned analysis is that liberal democracy is a fraud and has been for some time. Nobody dare say this any more than anyone could say that there was no God in 1660. Yes, we can elect our exploiters and the fools and, yes, we have the rule of law (often made by those same exploiters and fools) but we are, in truth, impotent, screaming into the wind.  Our noise only adds to the storm.  Of course, we have been persuaded that our world represents a less dangerous fraud than some more severe ideological frauds (which we insistently misrepresent as we go into denial about our own failures) but we should wonder whether that is good enough. It would be nice to think that a bit of activism might change all this fraudulent nonsense but, sadly, replacing one set of fools with another is only a fake progress. Facing our own impotence in the face of the uncaring universe and of the mis-organisation of our species into 'society' is probably the only way of maintaining one's own integrity even if it risks one's sanity.

But that does not mean one cannot have an opinion, only that one's opinion is likely to be futile if one is outside the tiny group of people who hold power in society - as much today as amongst the serfs of the Middle Ages or the industrial workers of Engels' Manchester. Would Spartacus have been anything more than another Emperor if his revolt had succeeded?  Our opinions remain valid nevertheless as acts of tiny defiance - chances, during our small insignificant (to Power) lives, to show that, at least intellectually, it really is better to die on your feet than live on your corporate, media-influenced and socialised knees.And, sometimes, in history, the taste of revolt, though doomed to change little of substance in the relations between men and masters, can be delicious. For brief moments, Milton's Satan becomes Lucifer the Light-Bringer and overturns the prevailing order simply because he can. And, then, dear reader, momentarily, we come to life after years in the dust and ashes of order, conformity and obeisance.

And so this Blog will have rare (when I can shake off my indolence) bursts of 'opinion' - analyses of our species, of the darkness and the light, proposals perhaps of the Swiftian kind and simple observations on how life might be lived better under the cosh of late liberal capitalism, only the latest of many interations of human ineptitude in organising itself for its own survival and happiness, a system of desperate scrabblings by desperate people that cannot house its young, trains rather than educates, provides health by box-ticking, cannot control its security apparats or its borders, leaves swathes of humanity in desperate loneliness and poverty and thinks posturing rhetoric is a replacement for decisive action. D__n them, I say, d__n the incompetent masters who rule by lies, manipulation and secrecy. 

There are also likely to be significant gaps between postings yet some may appear very soon after each other. The randomness is appropriate for someone who, quite honestly, writes only for himself, for a small circle of friends and that extremely rare person who might just 'get' what I am saying out there in the desert we call culture. And I may also write about strange and personal things ... dogs, how to live longer, life in a provincial backwater, whatever!  Intelligent comments are certainly welcome. Silence is assumed to be the default position of most readers.

For updated old book reviews and rare podcast reviews, see https://timpendryfictionreviews.blogspot.com and https://timpendrybookreviews.blogspot.com  For all book reviews (still being added to), see https://www.goodreads.com/review/list/1016626 - there are some 1,000+ at the time of writing with only revisions and more effective reorganisation of early ones appearing in the two new blogs. 

Film reviews were only of the best films seen in recent years and appeared on my Facebook Profile alongside quite rare Exhibition and Podcast Reviews. Cinema is, in fact, my first love but I only have time to write on books. I have Tarantino's attitude to the Art ... it is an Art and not Reality. No more reviews will appear from now on because I have decided that the mad sacrality of cinema requires silence and films will now only be discussed in person.

For examples of me wading into the seas of public trivia like a twenty-first century Flying Dutchman, see https://twitter.com/TimPendry  I tend to block people who stick silly little flags on their Profiles.

The Facebook Profile is at https://www.facebook.com/tim.pendry but I make it quite hard for people to get through and become one of the Elect. There is, however, plenty of material that is public domain. The huge number of Groups I used to run have now dwindled but I am happy to direct people to the remaining lively ones.

The LinkedIn Profile is at https://www.linkedin.com/in/timpendry but this will only be interesting to anyone who wants very short near-daily updates on the global economic and political situation. LinkedIn is otherwise an intellectual desert filled with desperate corporate platitudes.