Thursday 30 June 2022

Greta & the childrens crusade: it's over

We all saw Greta in action back in 2019-20 and - promoted by whatever adult agency was lurking in the background - how she captured attention and captivated gullible politicians; and how the 'Greta phenomenon' briefly led children out of the classroom, to stamp their feet a bit in public and demand that the grown-ups do, errrr, something.  Now, it seems, that's all over; and leftie-greens are, as so often, left to puzzle over how the Revolution didn't quite happen - again.  Here's a convoluted piece from the Grauniad, Where have all the young climate activists gone? which offers the thesis that they have gone quiet because they want to avoid being coopted for ‘youth-washing’ by nasty politicians and corporations.  (That's 'youth-washing' as in greenwashing, not as in ... and get yer bloody hair cut!, much as though some of them need a bath.)  Oh, and they realised they were distracting the world from the plight of the Global South, and other piteous gems: 

... climate politics was awash with ideas around children, the future, and intergenerational justice ... For a time, it seemed that a climate movement was emerging in which children acted simultaneously as the spark, inspiration and energy. This wave seemed unstoppable. But that moment has passed. [Now] media focus and activists themselves are placing less emphasis on age; it is often incidental, and less central to activists’ strategy ... a critical repositioning in parts of the UK climate movement, recognising climate breakdown is not a future issue, but a devastating present reality ... world leaders and corporations were “youth-washing” by co-opting child climate activists  -  inviting them on to platforms and into private meetings to burnish their own images; but their demands - from urging for financing for loss and damage, an end to the racist Home Office or an end to capitalism itself  -  were not heard ...

(An end to capitalism itself?  Surely not!)  Finally, avoiding the obvious possibility that it was all a fad, the piece concludes by clutching at straws: 

It’s a good thing that young activists are now viewed less as angelic saviours, and more as political actors in their own right.

So that's alright.  It also cites an earlier piece of detailed navel-gazing by the earnest folk at Novara media - who naturally offer a convoluted leftie analysis; but at least they also have the intelligence and self-awareness to recognise that the sheer nastiness of 'progressive' politics had a role to play in causing the whole thing to fizzle out.

*  *  *  *  *  *

Longtime C@W readers will know my 30,000-ft view on this.  In the real world, Peak Greta might be thought to have happened in mid 2019 when for example the desperate Theresa May strikingly committed the UK to 'Net Zero by 2050', way ahead of the pack, causing some people to credit Greta with this result.  But actually, the tectonic plates really shifted at the end of 2018 (when Greta hadn't yet got much further than her truant picket line in Sweden), when a key UN committee backed 'adaptation' and 'resilience' to climate change as being officially Green.   At this point, every traditional steel-n-concrete industry on the planet realised that instead of non-stop opprobrium and decline, there could be plentiful government-underwritten contracts in this for them, too!  The banks weren't slow to draw the same conclusion and Bingo!  Net zero carbon quickly became the only game in town.  Nothing to do with Greta, except that the timing looked like she might have had something to do with it.  But correlation doesn't mean causation, eh?

And now Putin has de-railed much of this, at least for the time being.  Hell, lignite-burning is coming back into fashion!   And the armaments industries. 

None of it looks like a youth movement now.  Where will all that enthusiasm and energy find an outlet?   I guess we will have to wait and find out.  Can't see them all joining the Young Conservatives though, Boris.


Tuesday 28 June 2022

'Ask C@W': your energy questions

Nope, we're not setting up in competition with Martin Lewis: but a couple of BTLers have raised some specific energy questions of late, so here we go with another issue of the 'ask C@W' energy helpline. 

Won’t the lack of LNG landing terminals in Europe mean that the UK will be alright? If the gas can’t be physically landed in mainland Europe and the UK - Europe link only has so much capacity then won’t that mean lower gas prices through winter in the UK?  (Al)

Basically, yes, that's correct, although with absolute prices being sky-high whatever the physical sufficiency and price relativities, the definition of "will be alright" could be queried.  UK (also Spain) is well served with LNG regas capacity and both countries are enjoying lower wholesale gas prices than the continentals, exactly as market logic would predict.  Correspondingly & likewise, the UK is exporting as much gas as the pipelines to the continent can manage, based on that clear price differential.  There's every reason to assume this will continue through winter; including the exports unless things get so bad that HMG introduces rationing &/or export restrictions. 

This sufficiency of LNG capacity is a great free-market success story that we've written about before, contrasting with the dismal failure of central planners, particularly in Germany and, to some extent in France.  Italy ought to be better off, too, but local planning laws there are skewed 99% towards NIMBY considerations and generally fatal for building regas.

We're exporting a bucket load of power through interconnects to Europe. Wonder who is doing the checking and paperwork forms on the receiving side to make sure it is up to scratch?  (Sparky)

Same things as gas, with the added frisson for France that half their nukes are closed for safety reasons, pending regulatory review of their endemic corrosion problems (and of course cooling-water from shallow rivers being too warm in summer, as usual.)  Oh, and nobody gets hung up about import-export paperwork.  Ireland, utterly dependent on UK for energy trade, would grind to a halt in a day or two if anyone were to get sticky about that.  (I know what you're thinking ... Time to play hardball ..?)

What’s happening with Rough storage - are there any plans to commission it before winter?  (Al again)

Not a chance: it would take years.  I'll post a longer 'history of Rough' another time - it's a fascinating case study.  For now, we can say that Centrica, once big free-market advocates but latterly joining the ranks of the shameless subsidy-seekers, have been touting for government money and/or RAB approval for something, anything, to allow them to avoid writing off Rough and taking the big decommissioning hit - very expensive indeed.  Before Ukraine they were peddling an implausible scheme for using Rough to store hydrogen on a seasonal basis; and CO2 before that.  Needless to say, Putin's War being the latest headline grabber, it's now Centrica's latest roll of the dice.  Failing that, it'll be a proposal to convert it into an offshore Nightingale Hospital; or asylum-seeker detention centre, or something.  Anything.

They were such a laudable enterprise once.  


Addendum:  anon asks BTL below - 

has Gazprom contracted to deliver any gas for this coming winter? If so, with whom? If they have contracted to do so, to what extent does it mitigate the risk of Russia’s deciding to turn off the taps?

Yes they have, in large quantities, to most of their traditional wholesale customers.  Some of the latter have courageously refused to play Putin's "pay in rubles" game (a meaningless trick in economic terms, designed only to humiliate) and been unilaterally cut off.  I am guessing Gazprom has made some utterly ludicrous legal claim they were 'in breach of that new (unilaterally imposed) payment term' - there are plenty of whore lawyers in Europe who'll frame the case for them - and will claim the contracts have thereby been terminated.  But the craven realistic ones in Germany, Italy et al who've knuckled under still have their contracts in place.  I've yet to learn how either side is treating Russia's big cut in Nord Stream 1 volumes: it's possible (being summer) that these haven't impacted on contractual volumes per se, but only the amounts coming forward for the spot market: in which case no contractual issues would arise.

The biggest importer, Germany's Uniper (heir to Ruhrgas), has brazenly and loudly stated that it fully intends to carry on importing for the many years its Gazprom contracts have still to run.  What it really means is, "until you pass a law to stop us - and compensate us, kindly don't forget the compensation".

Will Gazprom consider itself 'contractually bound' to deliver?  No!  They'll do exactly as they are told.  As a matter of history, Gazprom has actually been a very reliable supplier over the decades; was initially (i.e. when the invasion first started) very keen not to burn any contractual boats - not least because they wanted to keep their powder dry for a legal challenge to Germany's prompt kiboshing of Nord Stream 2; and is always punctilious in terms of talking the language of 'inviolable contracts blah blah'.  Pft.  Meaningless in today's circumstances.    

Addendum 2:  further Q&A has developed BTL.  And our learned friend Mr Wendland has pitched in, too. 

Thursday 23 June 2022

Mr Putin's Gas is Heating Things Up

We've several times mused over Putin's gas weapon:  how he's carefully kept Germany supplied and, in turn, how careful Ukraine has been with the transit pipelines; how 'green' ignorance on the critical and frankly irreplaceable role of gas in European economies contributed to the remarkable willingness of European countries to approve swingeing sanctions; how Putin couldn't believe this degree of ignorance really existed; how on earth Germany might do without their continual fix of Russian gas.

Well now he's done it: not content with shutting off supplies to non-ruble-compliant buyers in half a dozen 'lesser' countries, Putin has now cut back Nord Stream 1, Germany's only direct import route from Russia, to 40% of capacity, at exactly the time new German laws require that much-depleted gas storage be steadily filled, in order to be full at the start of winter.  The Germans are running around like headless chickens, busily bringing old lignite burners, FFS, back into the powergen fleet.  There isn't a country in Europe with any coal capacity that isn't actively trying to maximise it, Greta or no Greta.

The MSM in this country hasn't really cottoned on yet: hey, it's a record June heatwave!  Barring some astonishing (and right now, quite unexpected) climbdown by somebody, this makes next winter a perilous time for us all: outright gas shortages in mainland Europe, and unheard-of prices everywhere.  Oil won't be far behind gas and electricity.

What is the UK government doing?  Tinkering with a couple of coal plants.  What it's NOT doing is preparing the populace for what's to come.  Ordinarily, this would be a rather obvious thing to do: at least there's a very genuine externality to blame, however you define it.  But I guess an 'optimist' like Johnson has absolutely no interest in looking forward further than, well, the next shag.  I can't even guess how this is going to play out, socially or politically.


Tuesday 21 June 2022

Amusing Week in the Culture War

'Nuff said
Some smiles to be had from this week's Culture War exchanges.  Firstly, and hearteningly, the world swimming body FINA has banned participation by 'trans women' in women's competitive swimming.  This is judged by some as likely to be a domino moment as the equivocal figure of Seb Coe of World Athletics is limbering up to consider enacting the same principles for track and field.   Cue the inevitable outbreak of counter-lobbying, including muttering from the cycling body that maybe fairness in competition isn't important after all, compared to the great 'inclusivity' imperative. 

Mercifully, in rugby and the fighting disciplines it's a stark and simple matter of safety all the way, and the disingenuous bleating of Stonewall cuts no ice whatever.  Sport will always provide nice, clean examples of the fundamental contradictions and illogicalities of the more extreme trans positions (if I may use that phrase) - one of several reasons why SJW lefties et al hate sport (see also "I always knew it would start with sport").

Secondly and outright hilarious is Amy Callaghan, an SNP MP, who has been recorded saying something she now greatly regrets.  (Well, regrets having been caught, anyhow.)  Guido has the full gen here, and her grovelling apology which is a gem, nay, a veritable collectors item of the woke art.

... a wholehearted apology to anyone who have been hurt or triggered ... I have been searingly reflective and honest with myself. Whilst I can’t forgive myself for how inappropriate it was for me to frame my input in this way, I owe everyone, not least survivors and my constituents, an explanation: I am both sorry and, ultimately, take full responsibility for my words, as insensitive, poorly worded and misplaced as they were. I’m taking full accountability for the hurt and disappointment I’ve caused ... This isn’t good enough...  Zero tolerance can’t be a slogan, it has to be real...  I got it wrong... I can see now how hollow and inappropriate ... I cannot condone the way this was presented on my part. This was wrong, insensitive and I am deeply sorry. I am hugely saddened that I have let myself down in this way... this isn’t reflective of who I am as a person. There is a complainant who has been let down this week by my words and by my party. There is no moral high ground or false equivalence when it comes to misconduct. We must do better, myself included.

I am guessing there's a woke handbook that contains all these phrases, and you just cut-and-paste them into your statement of contrition when you feel the need to abase yourself.  This one must surely be an 8 or a 9 on some scale?  But curiously she doesn't offer to resign or get herself to a nunnery or anything meaningful; so we can't be plumbing the full depths of this turgid stuff.



Sunday 19 June 2022

Shorting Germany?

Anon, BTL previous post - "any investment suggestions?" ... 

Well we can't and don't do financial advice or recommendations on this blog, so DYODD etc.

But here's something from Capx which is a clear enough recommendation from somebody else: buy dollars and Italy, sell Germany! 

Blast from the past: 2010
The rationale is basically that the Germans are about to cop the bill for the Mediterranean economies.  Hmmm - that's a bit like nuclear fusion, people have been predicting it for a long time.  But maybe now's the hour.  You can also chuck into the pot Germany at long last being called out / caught out as being the mainstay of the Russian economy (both as importer of stuff and exporter of tech), which may not be allowed to last much longer.  What other game do they have to play that could be equally lucrative?  Well, China, of course as regards the tech exports - but the USA won't let 'em have a free run at that, even if they've (the Germans) been surreptitiously sleeving, not to say laundering for Russia these 8 years.

Personally I went 'buy USD' when the whole current thing kicked off which I date to Feb 2021 (when I first reported far-east gas prices going through the roof here) - a general rule of mine over the decades.  He who underestimates the latent strength of the USA is often doomed to a big disappointment.  Saved me in the late '00's when I shorted GBP @ 2.10 in '07 (hat-tip CU, I might add: I can even tell you which pub we were in).  We tracked its glidepath down on the blog, all through the financial crisis.

Gold hasn't been quite as effective this time around.

How much further down can £ go?  Well 1.05 (1982) is the all-time low (That's what it says when I looked it up just now.  From memory, it actually went a bit lower that year).  The psychological floor represented by 1.00 is apparently quite sturdy.  That's not a prediction, by the way.


Thursday 16 June 2022

Tepid Bank of England hamstrung by past leadership and groupthink

Does anyone remember Mark Carney. back in the days when we thought only hiring foreign experts would do, we had this Canadian lead the Bank of England.

In his whole tenure he promised much but did less. There were few changes in interest rates and post the 2008 recession we actually dropped rates throughout the recovery by 0.25%.

And we poured in yet more Quantitative Easing to create the easy money. This has come back to bite us quite nastily now. 

And yet today's Bank of England has chosen to raise interest rates by 0.25%. Whereas the Federal Reserve went for 0.75% - inflation is worse in the UK too. 

Whilst the £ has recovered a little today on the back of the rise, it is at a very low $1.23, exacerbating our energy crisis through the exchange rate fiasco. 

Moreover, the Bank is frit from cancelling QE  and reducing money supply. thereby baking in a long road to reduce inflation. in the 1980's we would be talking about Interest rates at 12% -15% by now. 

But so sleepy is the Bank and so slothful in its actions that we will be lucky to have 2% interest rates in 2022 whilst experiencing 10%+ inflation. 

Frankly, it is unbelievable. Mind-numbing. A wilful destruction of the Pound and people's real net worth and assets to bail-out the Government of its debt and to the hope that something will turn up. 

All the Bank of England Monetary Policy members should be sacked forthwith due to showing an insufficient understanding of their remit which is to manage economic stability! Not promote instability. 

Wednesday 15 June 2022

Only Psychopaths Need Apply ...

Here's a really telling piece of pop psycho-philosophy for our times. 

Who could she possibly mean?
It's Veronika Stepanova, a Russian online "psychologist" with a big youtube following, declaring that only a psychopath/sociopath (- ideally, a high-functioning one with a good IQ, natch -) is fitted to be a President.  Unfortunately I haven't got the direct link but you can view the relevant extract in this tweet.

In summary:  to be a good President, it takes someone with a pathological drive for power who can follow the necessary path of listening only to himself, and not the law, without conscience or guilt.  It's hardly a novel thesis: indeed, it's Nietzsche 1.01, The Will To Power, albeit expressed more artistically there.  Only such a man can become a Beethoven, a Caesar, a Napoleon who were certainly all complete shits.  Nietzsche included Goethe but I'm not sure that's as clear an example.  You can add your own favourites to the rollcall: many people put both Gordon Brown and Boris Johnson on the list, which (if that's right) goes to show it's a necessary characteristic but not a sufficient one.

(Ironically, it was of course Stepanova's compatriot Dostoevsky who gave us a compelling of the "maybe necessary, but not sufficient" aspect, in Crime and Punishment.)

It's also a view commonly held by many of our BTLers, who often include the sentiment that it's why they despise all politicians.  OK: but that still leaves a couple of key points to consider:

  • It ain't just politicians, is it?  It's great artists (per Nietzsche: consider Monet for example, another self-focused shit); business innovators (libel is libel and I'm sure we all have our nominees); scientists ... and so it goes on.
  • So - despise them or not: do we, actually, need them nonetheless?  Nietzsche, of course, didn't care about what "we" need, it was all art-for-art's-sake with him.  But George Bernard Shaw certainly thought we needed them: the hungry man had best follow the fat man, because fattie knows where the food is.
We are stuck with them!  Lamentably, there are those who merely think they are Napoleons - Raskolnikov, Johnson - and we are stuck with them, too.


Monday 13 June 2022

Recession incoming?

 It is amazing really how long the Government and the media take to cotton on to real world events. 

As readers here will know, as soon as the Ukraine war broke out and sanctions were applied to Russia, an economic disaster was set in train. 

There was no hope of controlling the oil price, a weak pound and strong dollar has accelerated the damage. Then we have China with a frankly insane covid-zero policy that has hugely derailed their economy and will continue to do so. 

The effects of the above are galloping inflation, a huge excess of supply over demand across the West and energy input costs up nearly 300%.

With all of this a recession is to be expected, indeed the Government must want the demand destruction of a recession to help reduce inflation. 

The idea that a -0.3% read, hugely impacted by the reduction of spend on test and trace, is only a passing feature is for the birds. 

More likely this summer is petrol and diesel at well over £2 per litre and a further big drop in the stock markets. Until the global supply chain is sorted out, there will be no let up to the economic stress. 

As for our Government, they continue to profiteer from energy prices via VAT. They are not alone, much of the inflation now is profiteering with suppliers sensing they can push up prices if they want too. 

The inflation genie will be very difficult to control now. However, time also to keep an eye on sovereign bond yields across the EU. As we know from the 2011 Euro crisis, Italy and other economies cannot withstand inflation pressures in the Eurozone when devaluation is not an option. Germany may find itself bailing out the Euro as well as Russia. 

Saturday 11 June 2022

WTF goes on in storage units??

Last year I had cause, for the first time ever, to rent a small lockup in a large, purpose built storage emporium, one of a well-known chain.  It's very slick, they really do have it down to a fine art (as behoves the providers of any commoditised service like that).  I was moderately interested in the list of prohibited items - seemed reasonable enough to debar explosives etc - and I did notice the sign that said the Police and HMRC have the right to force entry ...

That ain't just spare garden furniture going up ... (story below)

Another thing that became obvious was that some folks used their units for the most bizarre things.  (Although the place is mostly deserted, you do catch the odd glimpse.)  E.g. a significant hoard of one-armed bandits, wrapped up in that clingfilm that people wrap their suitcases in at airports.  Also that on a Monday morning, a truly enormous lockup is prone to dispense vast quantities of palletised cans of soft drinks onto a juggernaut using a fork-lift.  Clearly, I'd not realised the industrial aspect of these places.  Oh, and on Saturdays some lockups attract whole families, coming to poke around (and block up the lifts with trolleys - what sport).

Next thing I noticed was that, of a week day, there were two quite large lockups, either side of a corridor, double-doors wide open, music playing, in which two ladies were - or rather, are - running an interesting and rather fragant business, packing up all manner of brightly coloured little stuff (trinkets, food parcels) into very neat little containers.  There's a lot of sumptuous Asian fabric involved, and the smells (which hang permanently in the corridors) are very pleasant.  This operation requires workbenches, a lot of orderly rackspace, big inventories, and not a little electricity for the lighting and various other pieces of equipment they have.  An Alladin's cave of goodies!  Making up gifts for guests at Asian weddings, maybe?  It isn't the done thing to poke into other people's business(es) in these places ... 

Anyhow, this week the storage firm issued updated T's & C's in order to prohibit, inter alia, the following newly banned items and activities: 

  • power invertors and power generators
  • cremation ashes
  • use of any charging equipment (including power banks, portable chargers or similar) when you are not with such equipment or when the Store reception is closed
  • use any power inverters or power generators (generators ? what, diesel???)
  • use more than one (1) computer server at any time
  • carry out crypto mining
Wow.  I am obviously a very pedestrian client.  

I did then recall an incident a few years ago at another such storage place nearby, which burned to the ground in a fire so fierce, the whole rather basic steel-and-concrete-cube edifice essentially melted - 120 firefighters involved, the whole works (photo above).  Now hang on:  what on earth is being stored that causes a blaze like that, where steel-and-concrete doesn't survive?

Wow again.  You may be sure I've acquainted myself carefully with the fire exits (which do indeed seem pretty good, with vast ports for pumping in foam).  No wonder they worry about some of the items on their list.  (Cremation ashes!)  The world of anonymous, frequently deserted** places is indeed a very strange place.  Anybody got any entertaining stories from this whacky realm?



** except Saturdays and Monday mornings, obviously

Thursday 9 June 2022

After Boris: Runners, Riders & the Momentum Thing

Who he?
I am a long-time amateur student of how the big parties change their leaderships.  If there's one iron rule, it's that the long-term heir apparent rarely gets the prize - and when they do, everyone quickly knows it's a big mistake (Eden, Brown).  Generally speaking, heirs apparent come and go: think of Thatcher's time:  Cecil Parkinson;  Norman Tebbit;  John 'golden boy' Moore;  Michael Portillo ... come 1990, nope, none of them.  John Major!  Wouldn't have been on any serious list of predictions 18 months before it happened.  Ditto Thatcher herself, of course, in 1973.  Or May in 2015.  Or Corbyn in 2014.  Or Blair in 1992.

And so it goes on:  parallel instances are legion.

Michael Crick, an old chum of mine and very professional student of these things (no man more so since the late, lamented Vincent Hanna), developed some advanced theorising about what he called "limited electorate" elections (like when MPs choose the leader), honing his observations on frequent, bitterly fought contests in student politics.  In his theory, when everybody involved essentially knows everybody else, and when there's a lot of serious ambition in play, i.e. the post is much sought after**, there is no merit whatever in being an heir apparent.  Quite the reverse: the key is to be accelerating like crazy up the rankings in a shortish period before the election, maybe even coming from nowhere.  That's "nowhere in people's reckoning", not "who the hell is this?" - because, ex hypothesi, everyone knows everyone.  Or, to translate into American political vernacular, it's the candidate with the Big Mo at the exact time of the poll.  Fresh, novelty value.  We've all made a discovery.  "Hey, you know what?  Maybe ... Fred !"

These days, of course, the leadership elections are technically thrown open to t'membership - but only on some shortlist basis.  In other words, the informed, limited selectorship (where everyone knows everyone) gets to pre-qualify what t'membership will find on the ballot.  A bit of a hybrid, but it doesn't significantly invalidate the theory, I suggest.

Anyhow.  By way of calibration, here's the complete list of runners and riders as listed A-Z by Conservative Home back last December, another time when Boris was on the rocks.  (It's not new.)

Badenoch;       Baker;      Brady;      Gove;      Harper;      Hunt;                             Javid;     Mordaunt;      Patel;        Raab;        Rees-Mogg;                                     Sunak;      Trevelyan;           Truss;      Tugendhat

Who is Harper?, I hear you mutter.  And Badenoch .. and Trevelyan ..?  But that's not the point.  Now: here's this week's YouGov opinion poll list:

Gove;          Hunt;          Mordaunt;  Patel;      Sunak;      Truss;                                     Tugendhat;          Wallace;          Zahawi

Read these lists and weep.  But note how things change: and while Gove has apparently now ruled himself out, Wallace - nowhere in December - came top of the poll!

Yes, folks - Timing is everything in these matters, with Events running a close second.  If Boris staggers on into the New Year (a very big If), it'll be someone nobody is even considering right now.



** Obviously this isn't meant to be relevant in elections where generally there is a dire paucity of candidates, e.g. for the chair of the local WI.  Though sometimes it might.

Monday 6 June 2022

Boris on the Rocks: Predict That Vote!

 ... and not before time.

I suppose everybody already knows what they think about the shameless oaf.  If not, have a read of this.

Open thread, with particular glory going to any BTL-er who calls the vote correctly during the course of the day.


UPDATE  - This bloke wins the compo, hands down

Now, if he'd like to email us & claim his free subscription to our own wonderous political sooth-saying ...  

Friday 3 June 2022

What Putin Didn't Do next

Ten days ago, one of our BTL anons asked: why aren't the Russians interdicting Western military supplies en route to Ukrainian forces?   We suggested that wasn't the only dog not barking, and that we'd take a look at the whole subject.  What hasn't Putin done, that he might have?  And what might that mean?  Here's a random handful - one could list many more.

  1. Cut off gas supplies to GermanyIndeed, nobody has done this - and nothing could be simpler, for Russia, Ukraine, or a rogue actor with a big long gas position and access to mercenaries with a kilo or two of semtex.  We know exactly why: literally nobody wants to piss off Germany in such an obvious fashion.
  2. Use gas in Azovstal.   We know Putin isn't squeamish in matters of chemical warfare.  And he had to sit and watch  for a truly remarkable number of weeks while the defenders of Azovstal incommoded him seriously, riveting observers worldwide, and buying Ukraine a lot of time.  Obviously a Red Line there.
  3. Interdict inbound western military supplies - the one that puzzled Anon.  Actually, I think we do hear occasional reports that Ukrainian logistical bases close to Poland have indeed been hit.  But maybe not as much as one might expect, given that one presumes Putin's intelligence forces have at least some fifth-column sleepers and sympathisers on the ground with mobile phones.  He seems, though, to be husbanding his aircraft and stocks of cruise missiles, which may be more to the point.
  4. Mount serious cyber warfare against the west.  It could even be conducted on a disavowed basis, if Putin so chose; there are enough rogue players out there in cyberspace.  Another important straw in the wind.  Readers will recall I warned against this before 24th Feb: it seemed to be an obvious one.   Clearly, I was being overly pessimistic. 
  5. Deploy readily-available Red Army operational doctrine - which was purpose-written for invading places swiftly, based squarely on a realistic assessment of what Russian resources could muster.  See below.   
  6. Pick on 'loudmouth UK' for unpleasant unconventional retribution - as some of our own BTL commenters have suggested (!), a propos of some of the bellicose nonsense spouted by Truss, and our egregious military assistance.  After all, the UK is no longer owed any "compulsory solidarity" by the EU: why not make an example of us ?     
  7. Reduce Odesa to a smoking ruin.
  8. Have a submarine accidentally trawl up one of the massive transatlantic comms cables.
Nota bene, all these "surprises" are passive / negative: surprises of omission, the kind we can identify when we know what dogs we're expecting to hear in the night.  Equally, we haven't seen any "positive surprises" from Putin, the creative kind that any military commander worth his salt should sprinkle liberally around his campaign to keep everyone guessing.  Readers will know this is one of the most damning criticisms I have to offer of any politician or military leader.  What creative strokes has he pulled?  The nearest we've seen from Putin is the hint that something nasty might come out of Transnistria, which is pretty feeble; and the flamboyant testing of a new strategic missile off-stage.  OK, Putin thought he could pull off the whole thing inside a week, Crimea-style: and an outright coup de main doesn't need an accompanying smokescreen of several other little surprises.   But he knew that it wasn't working almost straight away.  By contrast, the pocket dictator Saddam Hussein was well up for unexpected eye-openers, when he in turn realised his own sudden (and successful) lightning invasion wasn't going to be the end of the story.  Hat-tip to the man: pulled several strokes, he did.    
*  *  *  *  *
As regards 5: we've discussed this one before, mostly concluding (as have many others) that the Russian Army of 2022 doesn't have the leadership or training to execute on what would be involved.  One aspect I haven't mentioned: if we take at face value Ukrainian claims of Russian aircraft shot down - well over 200 - it suggests Putin is potentially unable to deliver the necessary aerial bombardment, at least from within the resources he's willing to hazard.  More recently, I've seen it suggested that Russian 'grinding' techniques in Donbas are perfectly appropriate, and will ultimately be successful; and, hey, it's only been 100 days!  

Here, we've never doubted some limited territorial gains can be delivered that way: but the cost and the time involved can't possibly have been in the original budget.  Sure, Russians will put up with a great deal - a lot more than soft westerners will, as many pundits suggest - and ultimately (if they can manage conscription plus mass mobilisation plus training) they can "win" against objectives that are narrowly-enough defined.  

But do they have time?  Are they certain to win the slow-bicycle race between their own grinding methods, and German / French / Italian unwillingness to keep the sanctions applied ... with winter coming ... and starvation looming for Africa etc ..?  Maybe that calculation is all he has left now by way of grand strategy.
*  *  *  *  *
So what do we conclude?  We might ponder these potential inferences, some or all of which might be in play:

A.  He's persuaded himself everything is going just fine: he's Stalin in 1943.  Hell, some of our BTL-ers have said as much!  Personally, I'd say that's a delusion, but there we are.

B.  He's holding all the above possibilities - and more - in reserve, just letting us stew on them.  Burn as few boats as possible.  Hope to get back to normality by Xmas in the time-honoured fashion.  On Odesa, for example, for the long term he'd rather capture it intact.

C.  Xi has had a little word with him.

D.  He's imposed some rigid Red Lines of his own devising (as any political leader should, c.f. George Bush Snr), on the assumption that 'Vietnam Rules' apply: i.e. he can do more-or-less whatever he wants in-theatre, and the Americans can do whatever they want outside the theatre, provided everyone makes sure direct clashes don't occur, in-theatre or anywhere else.  In particular, he guesses use of chemical and cyber weapons might trigger a western response that would really hurt him - in other words, he does have something in mind that really makes him lose sleep.

Maybe we should try to guess exactly what it is.   Here's a suggestion, which relates (e.g.) to 6 above: he knows there's a lot more we (the UK financial authorities in concert with GCHQ) could do to beggar him personally, and all his friends.  

Any other suggestions as to why he's staying his hand?


Wednesday 1 June 2022

Where now for Quantitative Easing and the Bank of England?

Many moons ago, I wrote an article, amongst the first in the UK in 2008/9 about the thought of the UK trying to loosen monetary policy via quantitative easing. It was something new to these islands and soon enough the Bank of England took it up. 

By expanding the balance sheet of the Bank, and therefore the Government for who m it is an independent subsidiary, lots of cash could be freed to replace the capital destroyed by the losses of the Financial Crash. This prevented deflation in the main and allowed the economy to recover. 

A known side effect, was to create the concept of "free money" for politicians to spend. When QE was put in place, the Micawberish George Osbourne was Chancellor. For all his faults, he was not going to go for this spending surge. 

Why is it free money? Well, the bank issues bonds, but also buys them back from the banks, allowing the banks to make a profit. It also then pays itself interest on its own bonds, sometimes also there is a capital profit if bonds rise in value. The money paid to the banks gets lent into the economy and so increases money supply - M4 as it is known technically. 

Now, in 2022, we have a big mess. After Covid hit, lots of money was used to pay furlough and the cost of the vaccines and general failures of the time. This money was borrowed via bonds and other instruments. This pushed huge amounts of cash into the economy, to stop it from collapsing under the burden of lockdowns. 

After the lockdowns we are now left with a situation of far too much money in the economy (which did not collapse, hooray), with little to spend it on as production is so hit by the pandemic dislocations and now the commodity price spike (which was coming whether war with Ukraine or not, as Mr Drew has repeatedly explained). 

The net effect of this is huge inflation, massive by modern day standards. The Government has responded by deciding to tax more (which does nothing to reduce inflation, the money is all spent again by the Government and more borrowed anyway) and spend more. The Bank of England is raising interest rates to try and cool demand - but demand is way up after the pandemic and external costs of energy and food are not controlled Bank of England interest rate rises.

So for now, too little is being done and although money supply has dropped back to the historic level, there is nothing to compensate for the 2020 splurge to 6x the normal rate. Inflation will be with us a while. 

In the meantime, direct Bank of England interest rate rises clobber borrowers and debtors - long used to ultra low rates. a 2% increase becomes a 200% increase in repayments when your base rate was 1%. Let alone moving rates up to say 5%. It will bugger the economy if they try it, they know this, so won't do it and will let inflation rip as a result, impoverishing us all. 

Which is why I am so perplexed at the refusal to just sell some bonds that they own, it will likely raise money for the Government, reduce the balance sheet and start to withdraw excess capital from the market that is no longer needed. It will have the same impact as raising interest rates, but hit the financial sector harder and consumer sector less. 

It would also unwind the position we are in now, where lots of MP's, stupider than ever as they are these days, see QE as a way to fund all their future spending fantasies that they need to win votes. After all, QE has not bankrupted the County in 12 years of operation and has allowed about an extra half a year of GDP spending during that time. 

Of course this is wrong, but not unwinding QE in 2015 onwards, as the economy returned to normal, we left far too much monetary stimulus in the economy so that when Covid hit it has proved a key cause of the rapid rise in inflation. QE, useful during a monetary crisis of 2008, is really bad during a fiscal crisis like 2022 because it is so inflationary just as Government needs to have an expansionary fiscal policy. 

None of this is rocket science r very difficult to understand, so I am at a loss as to why the Bank of England and the Treasury won't start fixing such obvious problems.