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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

The UK Smoke And Mirrors Economic Miracle

Politics / UK Economy Dec 05, 2014 - 01:11 PM GMT

By: Andrew_McKillop


Abenomics Comes (Back) to Britain
We can easily argue that the UK has outdone Japan in financializing and destroying its economy using “pure Keynesian logic”. Its degutted empty-shell economy is fated to grow debt faster than the UK's real economy, and then implode - well suited to its pseudo multicultural, pseudo meritocratic society. Keynes, who was English, bisexual and a paid-in member of its degenerate elite said that central bank QE and debt growth are a lovely idea, but expecting the real economy to react and respond only to money printing and a debt binge is like a man who wants to become fat thinking the best way is to buy a large sized belt for his trousers!  Fatuous hope is all.

Growing national debt by growing government deficits was explained by Keynes as also able to stimulate the economy. While that isn't certain at all it certainly stimulates more debt, but paying back the debt, he said, was a matter for the “long term when we are all dead”, like him.

In his Autumn Statement to parliament, December 3 (for the UK Met Office this was the official first day of Winter) Chancellor George Osborne reminded MPs of how things looked in 2010. He said that in 2010 there were many voices asking if Britain could remain among the world's leading economies.  Declinists said that falling economic growth and runaway budget deficits, by 2015, would spell the end of the UK's leading role in “the concert of nations” – through economic decline, not referendum votes in its breakaway nations or the return of its Youth Jihadis from their Saudi-financed Arab terror war in Syria!

Charles Darwin isn't remembered for what he always said was a key part of his evolution theory. He said  that decline and extinction has been the fate of around 98% of all species that have ever existed on this planet. Why should this not apply to nations, preceded by an Abenomic and Keynesian crash of the economy?

George Osborne and prime minister Cameron have claimed in euphoric press and media interventions, for weeks, that the UK is now the fastest-growing economy in the sluggish G7 group, although this can be easily contested by the US. Cherrypicking various quarters like Q1 or Q3 2014, melding in before and after inflation data and forecasted inflation, changing the bases used such as Q2 2014 to Q3 2014, and other statistical tricks Iike backcasting  currency exchange rates to tweak up GDP numbers at the end of a period, but slimming them for the start of that period can give all kinds of lovely results.  In any case the permanent trade deficit of the UK's deindustrialized economy and its greedy consumer society is cast in stone.

The claimed number for real GDP growth to Dec 31 as given by Chancellor Osborne in his Autumn Statement was 3.0%. In September he had forecasted 2.7%. This was an 11% increase. For the period from late September to Dec 1st his own Treasury dept cranked up its forecast for the financial year 2014 budget deficit from around 78 billion pounds, to a present forecast of 91.3 billion, a 15% increase. Other forecasts of the deficit outturn place it nearer 96 billion pounds, but the undenied and clear reasons for this debt balloon feature the much lower than expected growth of tax revenues. This was a paltry 1% for the YTD (year to date).

The UK's “job creation miracle” – creating more new jobs than any other Keynesianized EU28 country and more than the combined total in the other Big 4 economies (Germany, France and Italy) – almost exclusively concerns low wage jobs, not high enough to tax. This is the UK economic miracle in a nutshell!

To be sure, so close to the May 2015 general election, hiking taxes of any kind is taboo – that will come after the election in an already-promised (or threatened) “unprecedented reduction of government spending”. Osborne however lightly tapped marauding American corporations evading tax every way that a high priced tax lawyer can imagine, with his symbolic “25-percent Google tax” to cream off about 450 million pounds a year or one-quarter of the ongoing tax evasion of this tax cheat whose actual wealth creation is almost zero. As a result of Osborne's choices, the UK budget deficit and its growth will remain the biggest of any of the Big 4 EU28 economies, relative to GDP.

The bottom line is simple. The UK has the fastest G7 deficit growth, and the fastest GDP growth. What this means is simple – even the ultra Keynesian IMF publishes a few studies, from time to time which show this “strategy” is no magic trick for “sustained growth”. For an example of these studies see. Debt growth is not sustainable as Mr Shinzo Abe is finding out, very fast!

Prey on Desperate Jobseekers
To be sure, Osborne and Cameron regularly crow that UK economic growth is twice the rate of Germany and 6 times the rate of France but they shy from explaining why tax receipts are growing so slowly in the UK – around fifteen times slower than the budget deficit in Q2-Q3 2014, at 1% a year. The UK job growth miracle can be ascribed to preying on desperate jobseekers from other EU countries, paying them a pittance to force down the wages of native-British workers, and then moaning about the immigration scourge! This is the Tory line for UKIP-tempted wavering voters = try a Cameron speech on EU immigration.

David Cameron's inability to do anything about the immigrant flood, said by Tory spokespersons to be heavily influenced by  Angela Merkel's hard line on European treaty compliance by Britain – the free movement of jobless Europeans is an “inalienable right”, she says – is a handy cop out for Cameron. He theatrically regrets his inability to stem the flood, but the flood is certainly not regretted by the UK's business leaders' federation, the CBI, or by the Twitter-friendly pale pink media, like the BBC, Guardian and Independent newspapers. Britain's multicultural low wage future is attractive – to them – due to their editorialists not living in one of the UK's growing city ghettos.

In addition of course, the immigrant flood helps jack up house prices as well as push down wages, and higher house prices are always welcome to the English middle classes and those who feed off them!

Confusing the immigration “debate” is now total. The French port city of Calais and its 2500 “desperate migrants”, who France is helping to pass over the Channel and economize its own spending on illegal migrants is nothing to do with often highly qualified EU-origin migrants who are simply unable to find a job in their own countries. Their complaint is with their own do-nothing governments, but their job starved plight is a handy lever for pushing down wages in the UK – and George Osborne has the proof in his near-zero-growth tax receipts!

Cheap labour from the EU can be paid the lowest possible wage in the UK, which for them is a better deal than getting paid nothing at home. Conversely the non-EU migrants are a mix and mingle of economic and political refugees who, in the second case and in European legal theory, should be housed and fed in the first safe country they arrive in. Like France when it concerns the horde holed up in Calais. Even under European law, there is a good case for the UK to deport them back to France when or if they manage to hop on a UK-bound truck at the risk of their lives.

All The Way Down – or Up?
The ruling coalition in the Westminster parliament is almost exclusively England-dominated but has been forced to make a de facto acceptance of “increased devolution”. In Scotland's case the unstoppable rise of the SNP is now given resigned acceptance at Westminster that full Scottish independence is coming – rather soon. For declinists this is manna from Heaven, but taking a real historical perspective we find that Union with England for Wales since the 1536-42 period, and for Scotland since 1707, is in no way historically impossible to unravel. Arguably a lot more challenging to the Westminster England-dominated political cabal in their anti-extinction struggle, no minimum wage in Britain is their lemming-need, and method to fend off decline - sucking in the immigrant horde. The transfer of widened financial, fiscal and economic powers from Westminster to the SNP-ruled Holyrood parliament of Scotland, concerning about 29% to 36% of all taxes gathered in Scotland (according to the SNP), as provided by the Smith Commission report and approved by the Tory-Lib Dem coalition in Westminster in November 2014, expressly excludes giving the SNP government the right to set a minimum wage. Keep them down – and keep the jobseekers flocking in from their own ruined economies!

With no minimum wage and a flood of desperate jobseeker migrants, the UK economic miracle can possibly stagger along a short while longer, swelling the debt balloon while England's “multicultural” ghettos expand and its Youth Jihadis troop off for their Arab colonial war, before being drowned and smothered in a tidal wave of debt. At that time, even the Englishman's castle, or semi-detached cinder block and plasterboard home with a muddy 75 square foot “garden” to park the car in will fall in price. For the English middle classes, that really is decline!

Since the fall of the Soviet Union in 1989-91, national extinctions are in fact somewhat commonplace. One example was the extinction of Czechoslovakia to become the two states of Slovakia and the Czech Republic on Jan 1st, 1993,.with the Czech Republic presided by the former Czechoslovakian president, Vaclav Havel. Interviewed by the UK House of Commons committee on foreign affairs in November, broadcast on the BBC Parliamentary TV channel, Havel said that at first he was totally hostile to the break-up, but aided by the real world of what the two peoples wanted, and by his wife, a Slovak, he then managed the totally peaceful break-up of Czechoslovakia. Asked his opinion on how this might apply to Crimea and the Ukraine, as well as Scotland, the Basque country, Catalonia, Brittany and other nationalist stirrings in Europe, he said that listening to the people is the key to peaceful dissolution of obsolete national entities.

Taking the example of Europe, Commission planners and dreamers want a Federal Europe made up of semi-independent states, meaning that in theory the Eurocrats would welcome the breakdown of former “oversized” nations, but the “market friendly liberal” economic ideology they also peddle can only stay in place with Westminster-type governments of Me Too “neolib” political parties dedicated to wage poverty and the crony capitalist casino economy. However, as the SNP case shows, referendum defeat in Sept 2014 produced a quadrupling of SNP party membership since the referendum! The will for independence and the breakdown of obsolete nation states is nothing to do with the decline mantra but the mainstream media don't want us to know that!

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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