Harbinger

Seriously.

Fuel prices rocketing, China's massive use of petrol pushing up the prices, gas and heating oil expected to rise, electricity to rise by 40% and with it probably food prices.

Public sector pay restraint which will undoubtedly lead to strikes, prisons, dustmen, fire NHS etc.

How long before we are a third world country?

Roland

If we don't change our ways not long. There are many predictions that the world may be in for something that comes close to the great depression. I'm seriously hoping this does not happen.

The price of fuel is an obvious part of this and it's not one that can just be solved. How ever it is the only part of the problem that is being addressed.

What the government can do to help the situation is firstly reduce public spending.

Throwing money into the system devalues a currency. This would mean losing non essential public sector workers such as smoking inspectors, litter inspectors. In other words people who do not work to make a profit. It would also help by removing non essential services such as buses that no one ever gets on. A currency in many ways is a share of the service you can provide into goods that you need. If this cycle is broken then the value of the currency falls making the price of goods appear to go up.

The other part of the problem that is not being addressed is the rule and legislation imposed on companies under Labour and the EU there have been thousands. For business to work it must make a profit. For business to compete against competition it needs to offer it's goods cheaper than the next man and therefore the price should come down to the lowest point it can while making a profit. For every regulation pushed onto a business there is a financial cost involved these costs will reflect in the price that we pay for the goods we buy.

The other part is to not have to buy oil in the dollar but if we even thought about how we could do this we'd be the next country accused of harboring terrorists and weapons of mass destruction. The dollar is on the verge of collapse. With out the world trading in it for oil it will become worthless it will be monopoly money and that is why America are so desperate to invade Iran.

douglas denny

I thought we already were.

DED.
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Earthling

Well I don't know if everything has reached third-world level yet, but the quality of care in the NHS is on the way and our road surfaces are certainly third world.

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Earthling's Blog

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Westcountryman

If you think our road surfaces are bad I would suggest not driving on the continent, especially in Belgium.

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Manus haec inimica tyrannis ense petit placidam sub libertate quietam - "This hand of mine, which is hostile to tyrants, seeks by the sword quiet peace under liberty."

Wowbanger TIP

The effects of the recession/depression currently building up steam depends largely on how fast as well as how hard it bites.

What has happened over the last decade is that incomes have been supplemented by debt. This has allowed low inflation to be combined with rising living standards. Most of this debt has been piled into home mortgages which as the capital sums have increased have taken an ever larger percentage of incomes thus reducing disposable incomes and increasing the reliance on debt as income. Not a problem so long as house prices kept rising, which is where the problem lies.

Simultaneously private manufacturing industry has been replaced by public social engineering projects as the main source of wealth in the economy, one fifth of the employed workforce currently work directly for the state, the overwhelming majority of the rest are employed servicing themselves and the public sector. Therefore there is very little real economic activity within the British economy. Making it extremely vulnerable to any sort of competition for resources with the new industrial nations.

The main reason why this has been possible is the revenues the British government has derived from North Sea oil which at its hight in 1999 supplied 5% of global production. Between 2005/6 that dropped by 25% and now Britain is a net importer of oil, at a cost measured in the tens of billions per year.

The secondary source of revenue for Britain is financial services. Obviously in very bad trouble itself at present.

We are in a position now where debt engine which was powering the economy has stalled, instantaneously removing a huge chunk of the collective income of the nation, hitting the luxury and service industries particularly hard. Simultaneously revenues to support the Byzantine bureaucracy of the British State are being punished as oil revenues and earning from financial services are going into steep decline. And all this against a background of rampant global inflation.

Therefore every area of the economy is being gouged; private and public service and productive and that gouging is reinforcing and multiplying the effects on each sector. This manifests itself as declining business in all sectors which will inevitably lead shortly to massive and spiraling unemployment.

This is not some strange conjunction of disparate factors. It is motivated by what is effectively a "correction" whereby the economy of the world is coming to terms with the massive demands of six billion people and in the process revaluing the West. Just as house prices in the UK are being revalued to what they are actually worth in a de industrialized society so the value of the West will be reassessed in a global context.

My guess is that the productive capacity of the UK is about the same as the Ukraine, assuming that it can get to that level without suffering a societal collapse reducing it to something like Somalia but without the nice weather. This was after all where we were in 79' just before the North Sea bailed us out.

The question is how will people deal with a total change in their lifestyles? How will they deal with not having cars, not having infinite credit to exchange for whatever they like in Argos, how will they deal with their entire income being used for food and domestic power? What will be the effect of huge numbers of unemployed people, not merely the usual victims from the productive sections of society but vast numbers of former state employees, the nice middle class people who have been running the state and supporting its agenda?

If they take a mature attitude and understand the economic forces which are driving the change and it happens slowly enough for them to adjust then we should be able to survive with an intact society, all-be-it a radically different one than we have now. If the change is resisted until it breaks through then it could rip chunks out of the system and cause a disaster which could rapidly turn into a catastrophe. For example if arrangements are not made to -reimburse the fuel costs of owner-drivers and small companies who carry a significant proportion of the container traffic then the supply chain it represents could simply cease to function. This would strip the High Street of all of its consumer goods and a considerable proportion of its food products. Thus opening the door to panic and chaos. Similarly if the State decides to tie itself to the mast of another stricken bank that bank could well simply take the state down with it, resulting in the bankruptcy of the state and anarchy within days. The opportunities for one part of the machine to break down and take the whole thing out are everywhere in the kind of economic environment we live and with an economy as distorted as ours.

There are two ways in which this might be averted. Either "demand destruction" halts the inflationary spiral. This is a nice way of saying we price our competitors out of the global market and they starve instead of us. However there is a serious question about who are the poor? Indian peasants have cotton, tea and corn to trade, we have management consultancies. Moreover in a globalized world the collapse of any markets/economies might start all the dominoes toppling anyway. Alternatively the West could halt the inflationary spiral by offering to buy at a fixed price or take what is required at gun point. Which is why the cynical believe the West is in Iraq. But quite frankly I seriously doubt that we have the balls, and so does everybody else.

So to answer the question "Arrrggg; how bad can it get?" the optimistic answer is very bad indeed the pessimistic? That the four horsemen of the Apocalypse could ride like lightning over the White Cliffs in the very near future, take one look at the nightmare of fear and loathing Britain has become and ride out again considerably whiter and faster than they arrived.

Roland

While your clearly well informed I do not believe I'm being cynical.

America do though. All they had to do is convince the world that they're lives, liberties, families and future were in the gravest and most immediate danger.

The plans to go into the middle east have been there for years. Thats not some bit of nut job conspiracy even many American politicians will admit to that.

Wowbanger TIP

I have actually had the pleasure of examining the situation in Iraq on the ground as I spent a period working there a few years back.

I am sympathetic to the view that at least a substantial part of America's motivation for the invasion of Iraq was the attraction of having a client state with a large American military presence slap bang in the middle of the Middle East and its oil reserves. This along with the chance to administer a punishment beating was an attractive proposition to American Geo-politicians. I also find the idea that the Iraqi attempt to trade oil in Euros rather than dollars was a serious spur to American actions very persuasive. However it also seems to me that these were eminantely sensible reasons to blast Iraq. It is a dim refection on the West that our elites can not make the case with any confidence of getting support of the people on this basis rather than with pathetic lies.

Having said that I also believe the "democratic evangelism" also played a significant part. And that if Iraq had become a successful oil state democracy then that would have been a major victory for the West and its values. However clearly this is not going to be the case.

As for the American willingness to go to war again. I think that Iraq was a massive risk in that it stood a chance of reawakening American isolationism and pacifism which was barely dozing after Vietnam. I believe that the American people would find it difficult to support another war, particularly in Iran. Given the low opinion most of the American populace hold of their government and their justified suspicion of its motives I think that it would be all but impossible to mobalize them even in the event of another 9/11 or worse.

Moreover I think that American intolerance of even very light casualties is such that they will be driven out of the Middle East in the next few years. Once that happens then the Pax Americana is over. That is assuming that America is in any position to continue the occupation of Iraq economically as this crisis deepens.

I have a strong suspicion that Iran and other share my analysis, otherwise they would hardly be provoking the Americans quite so enthusiastically in Iraq.

Another point which deserves serious consideration is that the populations of the West are so squeamish about war that they are effectively incapable of fighting in a sufficiently violent manor to achieve results. This has allowed the development of "4th generation" warfare in which the conventional military power of the West is all but useless, if not actually a liability. As long as the West remains in the mindset that wars can be won by being nice then the chances of victory in any conflict are remote.

Here a link to a clip which sums up the world's Geo-political situation much better than I could. Rob Newman on Iraq.

The Bear

How bad are things going to get?

Very bad.

Things on the other side of the Atlantic are going to get a whole lot worse though since the people who are going to be hit by the energy shock and all the spin off’s that will come with it are going to be gobsmacked by what happens to them.

Like spoiled brats everywhere, when they get upset everybody hears about it.

On top of that the situation in Britain is potentially explosive since when the economy goes to where I sincerely believe it will it’ll create a situation very similar to that in the Weimarer Republik and look at what that spawned.


I don’t fancy how things look, I can see the real possibility of a gloves off big time war in the not too distant future.

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Ea of Dune

Yes, this is why I run my business from the US these days. The dollar is so weak against the pound I can charge a decent day rate in pounds and it works out as a good amount in $.

We need a massive curtailing of the nanny state laws regulating small business and the stupid tax situation, it is strangling small businesses in the UK.

Maybe in the cities but not so much out in the countryside.
If the hypothetical meltdown hit we could survive at our place here OK. We have plenty of fuel saved up, our water comes out of a natural spring and it does not take much electricity to run the pump. If we had too we could do without the pump. We also have a wood burning stove, and since we are out in the woods here I can walk into the back yard and chop a tree down for fuel if needed.

I agree though the urbanised areas where the poor live would be hit worst much like what happened in Katrina.

Ea of dune