'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.  

ND

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. 

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.

ND

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.

ND

  

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.

ND

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. 

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.

ND

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. 

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?

ND

_______________

** except Saturdays and Monday mornings, obviously

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.

ND

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** 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.

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.

ND

UPDATE  - This bloke wins the compo, hands down

https://www.theguardian.com/politics/2022/jun/07/professor-dubbed-mystic-meg-of-politics-says-boris-johnson-will-be-out-by-autumn

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

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 Germany.  Indeed, 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?

ND

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. 

Mandelson's 'Starmer' strategy looks like a winner

The bulk of the Left of the Labour Party, having thoroughly swallowed the mendacious soft-focus "I'm really a Corbynite" leadership pitch of Kier Starmer, rapidly became disillusioned (and in some cases, defenestrated) when he started purging the Peoples Party in a singularly calculating manner. 

And we know whose are the calculations: it's Mandelson, the preeminent British political strategist of the age. 

I feel we may now summarise his 2019 thinking, and estimate his chances of success.

1.  Corbyn has done a Thatcher**, potentially sterilising the Labour vote for years to come

2. The only chance of reversing that lies in someone who looks the part (besuited, established), grabs all the levers of power within the party  AND ...

3. ... methodically, gratuitously, ruthlessly and flamboyantly takes every opportunity to do Corbyn and his acolytes down (in ways that Hague, IDS and Howard could never do to Thatcher).  You don't want an excrescence of people who remind the electorate of Corbyn and, crucially, you don't need them; neither for their pitiful subscriptions NOR as election-time infantry  -  because elections are lost by sitting governments, and won by clever media strategies funded by big donations, not knocking on doors

And now we come to the reason why this all might come to fruition in less than a single political generation.

4. Johnson is always going to self-destruct: possibly sooner rather than later: the key is to be in position for when it happens

With any luck (thinks Peter) it'll be Johnson who, in turn, sterilises the Tory Party as did Thatcher, for another decade of Mandelsonian influence.

Looks like it's going to work.  Still: at least Mandelson is intensely relaxed about people getting filthy rich, eh?

ND

_____________

** there's many a Thatcherite that has been in 30-year denial on this.  They have forgotten, or may never have tried, getting support for the Party during the leaderships of the aforesaid Hague, IDS and Howard.  Some things are never forgotten or forgiven by the electorate: Corbyn committed that kind of sin, and so IMHO has Johnson.  

Sunak's Package: Lots Bad - Anything Good? Updated

We may not have received full details yet, but here are a couple of immediate thoughts - to the negative.

• Crass bad politics in the presentation of it:  why spend a week saying, oooh, all our instincts are against a windfall tax, that's no way to behave, that's a nasty leftie idea - and then say, oh, alright then, if you insist; how about £5 billion?   But we don't enjoy doing it, mind.  When you give something away, do it with good grace and get the full credit.
• Oil & gas production isn't the only energy windfall sector:  but I haven't read anything about hitting the other really big windfall-winners, namely nukes, and windfarms / solar / biomass etc that are subsidised via ROCs rather than CfDs - which is the majority.  These guys - with costs that don't go up but sales prices that really do, and subsidy payments that carry on regardless (apart form the nukes) - have been making out like gangsters.  And why did they need subsidies in the first place?  Why, to make investing in renewables 'low risk'.  OK, so no windfall rewards, then ... surely?  Nobody, ever, should be getting windfalls on the back of public subsidy.

Anyone spot anything to get enthusiastic about?

Incidentally, it's still not clear to me Johnson is remotely seized with the horror that is to come next winter.  This was an opportunity for making some serious preparations.  If you're going to give large cash sums by way of rebates, now is the exact time to start priming the populace for what may be coming next.  Johnson's sole strategy is Micawber, but there ain't anything good gonna turn up before the next GE that I can see.  So he's destined to be permanently on the back foot: one of the worst things I can say about a politician, particularly one who's in power.

Open thread - go for it!  

ND 

UPDATE:  Channel 4 reckons he's coming back again shortly for another £3bn from "electricity companies".  I trust this gets to the second point above.  Presumably it all points to the plan being rushed out to cover for the Gray report.  What a bloody shambles.

Russian Cyber Attack Incoming?

The capitalists are rather busy right now.  Yes, I'm on BTL notice to post on what Putin isn't doing, and why: but that must wait.  

By way of a pot-boiler, however, and very much on theme: before the Ukraine war started I solemnly advised folks around here (and elsewhere) to back up onto hard drives etc, any precious data they held in the Cloud - because the very first thing would be a massive Russian cyber attack.  Well, of course, that's one of many things that didn't happen. (yet ...)   

Or maybe that's wrong.  This, from Germany's Tagesspiegel:

Repeated cyberattacks cause concern about German wind industry’s IT security ...  A string of apparently targeted cyberattacks on German wind farms has led to worries that the country’s main future power source is not sufficiently protected. Turbine manufacturers Nordex and maintenance provider Deutsche Windtechnik both grappled with attacks on their IT infrastructure earlier this year, with the latter attack quickly being linked to possible Russian perpetrators, a cause the company so far neither has ruled out nor confirmed. Wind power industry association BWE said its member companies are experiencing “a new quality of cyber threats” since Russia launched its invasion of Ukraine. An earlier incident this year, shortly after the invasion began on 24 February, led to roughly 5,800 turbines by manufacturer Enercon being cut off remotely. While the Enercon case might have been “collateral damage” of an attack on a US satellite provider, this could not be said of the two later incidents.

Not a definitive sighting, clearly.  But a very strong message about vulnerability.

ND

Has Simon Jenkins completely lost it?

I always wonder about Simon Jenkins.  He writes crisply, with an air of massive authority, and the Graun gives him absolutely free rein.  Sometimes I like his stuff; other times he goes pompous soft-left and it's annoying.

Anyhow, today he's gone 100% populist pig-ignorant. 

Forget a gimmicky windfall tax. Energy companies should be forced to slash bills instead ... The answer must be to slash the price cap and demand the companies spend their profits directly on cutting bills. The wimps of Ofgem, the industry regulator, must become tigers. They know that these companies – and their executives – are now wealthy. They know investment is not at issue: they are distributing massive profits and buying back shares. Unless the west goes collectively mad, energy supplies, and profits with them, will return to normal. For now, the priority is simply to bring the price of energy down, and at the government’s command. Yes, all consumers, rich and poor, would benefit; but it would not cost the exchequer a penny, and it would instantly relieve the cost of living at source.

Well, that's embarrassing.  It would seem he thinks it's energy suppliers who are making the windfalls: seeing that it is only they who are subject to the cap and regulated by Ofgem.  Has he somehow not noticed that suppliers have been dropping like flies?

Making his excuses for him; perhaps he has primary producers in mind?  Nothing to do with Ofgem or the retail cap, mind; but OK, well invent a new cap on their prices and for one thing you can say goodbye to all our imports, at the very least.  That's 60% + of our gas.    

I do look forward to his scheme for capping the astonishing profits of renewable generators still on the ROCs subsidy, though ...  Seriously: if people like Jenkins understand as little as he does, both on the principles and the details, some very strange populist cries are likely to be gaining traction, with the scope for some particularly crass political decisions being made.

What a plonker.

ND 

 

Ukraine / Biden / Taiwan: where does this lead?

Here's a headline to wake up to on a dull Monday morning: 

US would defend Taiwan if attacked by China, says Biden.   President says US’s responsibility to protect island is ‘even stronger’ after Russia’s invasion of Ukraine

Blimey.  If he isn't immediately made to "walk this back" by his own people (which is what generally happens when Biden's been talking in his sleep again), this is an absolute blockbuster, and will shake the Chinese rigid.

The only offset is the technicality that he paid lip-service to the 'One China' policy - followed, however, by "but".

What a turnaround.  Back in February, Xi must have been expecting that Putin's Ukraine gambit (a) would turn out to be a quick win of some sort; and (b) could be parlayed to give China more options - and maybe opportunity - vis-à-vis their own designs upon Taiwan.  Make it clear that the USA is a paper tiger, etc.  That sanctions don't work.  That the RoW doesn't fall in line with the west.  That India is with him.

But that would have been based on the notion that China had already secured a satisfactory baseline of non-commitment from the USA.  Xi would never have given Putin the thumbs-up otherwise: not in a million years.  

If Ukraine's success in dragging Putin into the mire has actually emboldened Biden in this regard (plus giving a fine public demonstration of the efficacy of good defensive weaponry + intelligence + tactics), Xi must wonder if Taiwan is now out of reach in his lifetime.  

Actually, of course, that might make things even more dangerous.  We're having quite enough of Old (& sick) Men In A Hurry just now.

ND

Mr Putin, What Are You Like? - revisited

After one week of the war in Ukraine,  we posted this: 

Putin is guilty of Adolf-style micro-managing the military (the ever-tempting sin I've frequently lauded George Bush Snr for avoiding)

Well, even then some BTLers were objecting to an earlier citing of the Sudetenland as a parallel (I could never see why), and many still don't consider these WW2 analogies appropriate.  

OK.  The whole point about analogies / parallels / similes is not that they are in some sense exact: no discursive account in any sphere except the mathematical is ever 100% exact.  The relevant question is:  do we find it useful? **  

It seems to me, and indeed to Mr BQ from time to time, that WW2 often provides extremely useful case studies - as you know, I cited Finland 1939-40 before this all kicked off, and nobody was being compared to Adolf in that one: it's Uncle Joe all the way.  And yes, of course, it breaks down as a parallel with current events because no other nations came to Finland's aid in anything like the way countries have done for Ukraine.  But the point was, I expected - giving reasons - the Ukrainians to fight, against several people who said they'd fold; that Finland and Ukraine are both big countries with plenty of space into which a defender can fall back; and that the Winter War was an example that seemed pretty apposite.  No?

So: back to the headline.  Yep, in that one I made the dreaded comparison with Adolf.  Not just him, of course: Lyndon Johnson was another inveterate military meddler.  And was it right?  As far as the parallel goes, well, from just this week ... 

Russian failures fuelled by Vladimir Putin’s meddling 

Why Vladimir Putin’s Meddling May Be The Reason Behind The Russian Army’s Poor Show In Ukraine 

Prof Sir Lawrence Freedman from King’s College London, said he judged the military statement about Putin’s level of involvement to be plausible

... others now seem to think so, too.  None of us knows for certain.  Maybe it's just a confection of western psyops, designed to make ordinary Russians turn on their man, or annoy Putin to distraction.  Maybe somebody has a full explanation as to why the Russian forces, heirs to the mighty Red Army, have thus far been screwing things up quite as comprehensively as they have, but which doesn't involve inept decision-making by Putin.  Do let us know. 

But amateurish micro-managing in Moscow surely does seem to be a useful thing to consider.

ND

__________

**Obviously, if suggesting a particular parallel fundamentally pisses off ones interlocutor, it ain't gonna move the discussion forward.  If I've misjudged the readership, well, there you go - have a refund, Russian warship ...

An exceptionally significant Defence appointment

The name won't mean anything to you, but the new Commander of UK Strategic Command is Lt Gen Sir James Hockenhull.  It's a significant straw in the wind.  

Hockenhull was previously Chief of Defence Intelligence, and is now risen to greater seniority than any member of the Intelligence Corps before.  (There had previously been only one 2-star general, the norm being a one-star in that Corps.)

His latest step up, I can tell you, comes as a result of the stellar performance of Defence Intelligence over the past 6 months in particular.  Quite encouraging, I find this.  

Needs a haircut, though.

ND

Axing those 91,000 Civil Servants

We learn that Johnson has packed off all his ministers to come up with bright ideas for saving a bob or two, thereby to forestall the the current and fast-growing economic crisis.  I'm sure we've all suffered fatuous "initiatives" like this at work, and had cause to marvel at the inanity of it all.  If your Chancellor doesn't have advisers of the calibre of a Keynes to come up with the broad macro-strokes that will be required, there's just no point.   We gather this particular "idea" is attributable to the execrable Rees-Mogg.  If BJ imagines saving a couple of billions by axing 91,000 civil servants will contribute anything meaningful, he's as stupid as anyone ever imagined.

(a) None of us want a bloated civil service, nor a bunch of workshy WFHers on the payroll; but unless by some miracle he can identify exactly those 91,000 people who are collectively & personally responsible (haha) for the global crisis we now face it will have purely disruptive consequences - and broad-spectrum ones at that - at exactly the time he's enough on his plate;

(b) I'm no expert on how public finance accounting works, but I don't see how it will save money for a good few years; 

(c) If he wants a diversionary tactic against voters noticing his own crass behaviour and manifest unfitness for office, there are many better ones, at infinitely less cost, to be had.  The only diverting that will happen will be of governmental time and energies.

As we know from covid, when the shit really hits the fan, the government cheerfully moves the whole nation onto the public payroll anyway.  The shit that's almost certainly going to happen between now and the next election makes this an entirely spurious 'policy'.

Discuss!

ND

Where now for Putin? (part 2) - Mission Somewhat-Less-Impossible

 After one week of Putin's war, we wrote this: 

... it was widely suggested that Putin has available to him a fruitful strategy of "bloody a few noses, seize 50km, freeze the new border, wait for the waters to close over, rinse and repeat, from Tbilisi to Tallinn". In other words, that's not to be characterised ... as a less-than-ideal outcome: it's maybe what he wanted all along... He certainly has his 50km ... (But) the whole of NATO has been royally stirred up; and Tallinn might be feeling a bit more secure than it did three months ago.  The "50km" strategy starts to look a bit, well, glacial ... how long has he got?   

Ten weeks later, a different way of asking the question might be:  what else has he got?  

Map (extract): Institute for the Study of War - to whom maximum kudos

As any student of warfare knows, you overlook logistics at your utter peril.  Putin now has to confront the obvious fact that he simply doesn't have the wherewithal to execute an offensive war, Red-Army style, which requires vast usage of ammunition (each salvo from a single BM-21 requires a full truck-load of rockets).  Russian logistics are essentially dependent upon rail networks (maybe subject of a later post) - they don't even have many trucks, still less the resources and logistical genius of (e.g.) Gen Schwartzkopf in 1991, or Wellington in 1813.  And while he can't advance to Kyiv on a train, there are several rail links from Russia direct into his newly-acquired strip (pink in the map above).

So what's Putin got left?  Let's credit him with retaining a degree of agency in the matter (though he does look awfully ill...) - so what orders does he give?  He has, de facto and possibly by accident, the components of a workable "fait accompli" strategy and probably the military means to sustain it, territorially if not politically.

Faits Accomplis / Coups de Main

A standard geo-politico-military strategy is to grab something more-or-less out of the blue[1] in the hope that the other side will be taken aback and, before they can respond effectively, you've consolidated to the point where it's too late: think Putin / Crimea 2014, Nasser / Suez 1956, and several of Hitler's early moves.  Less encouragingly, there's Argentina / Falklands 1982, and Saddam / Kuwait 1990.[2]

Putin certainly has his 50 km - more like 100 km, in fact - the arc roughly between Kherson and Kharkiv.  Note two things.   On the negative side, he faces very stiff & well-organised resistance in the centre of the Donbass front: indeed he's being rolled up from the west at Kharkiv.  On the positive side: apparently he has enough of the Kherson oblast to guarantee the water supply to Crimea - a genuine strategic goal; and all of his 50km has a border and rail links with Russia.

Provided he sticks to a defensive posture, his logistics there are (relatively) secure.  That alone isn't remotely sufficient - both Argentina and Iraq had broadly favourable, and certainly superior (in relative terms) logistical positions to the foe they faced.  But it is 100% necessary: and proximity to the border will do this for him.

So: much as he evidently wanted to achieve more[3], Putin's orders must surely now be:  

Define a defensible subset of what we now occupy - categorically including whatever it takes to water Crimea.   Dig in; set up the resupply lines; and hold that territory to the last mercenary.  Lay waste and abandon the rest.  

This is militarily realistic.  And he seems to be laying the geo-political groundwork, by declaring Kherson to be part of Russia, which he can then announce will be defended by whatever means, as NATO would defend its own borders.

It is not guaranteed to succeed, of course: see Falklands 1982 and Kuwait 1991.  That pinkish chunk in the map running north and east of Luhansk up to fiercely-contested Kharkiv looks to me like turf to be abandoned on the theory outlined here.  And note the little blue patch east of Kherson: that represents Ukrainian claims of partisan operations: WW2 teaches us it's the right kind of territory for that stuff, after all.

And the politics for him (at home and abroad) and indeed for everyone else, will be complex - to say the least - and not concluded any time soon.  Maybe, indeed, he'll regret the whole thing profoundly; and Xi will never talk to him again.  But in purely military terms it is at least coherent in light of the resources he can put in the field, and his ability to sustain them.   

BUT ... rinse and repeat?  No way.  Even if "successful", he'll never live to see a re-run of this - anywhere west of Donbass, at least[4].  

ND

___________

[1] Even though "there's no such thing as strategic surprise"; ... but "there can always be tactical surprise"

[2] Faits Accomplis are all rather important right now because Xi obviously hopes to pull off a big one with Taiwan - hence his acute interest in the fate of Putin / Ukraine 2022 - and is trying a slow-motion one with the South China Sea "new islands" trick

[3] As the one-time 1990s Russian PM, grizzled old Victor Chernomyrdin said sadly upon leaving office: "we hoped for better things - but it turned out as normal"  (A deeply Russian sentiment, that)

[4] Sorry, Georgia (subject of my triumphant New Year prediction here in Jan 2008) but I think you're on your own 

That Putin non-Speech: What Now? (part 1)

Sadly there are no competition awards to be made after Putin's Speech - none of us really reckoned on nothing much to say, did we?  Mostly, people everywhere figured either ...

(a) escalation (declaration of war / mass mobilisation / small nuke somewhere / big distraction-stunt); or

(b) declaration of victory (got what we want / now - what we have, we hold)

Nobody really expected "I am a tired old man / weather's a bit cold & overcast for the time of year, pity about the flypast / WW2 was great / all rather difficult now / oh well, soldier on, I suppose / safe journey home, mind the tanks round the corner, they have a habit of breaking down / let me have that blanket".

I need this blanket more than you, Grandma

So: what does it betoken?  

• he doesn't fancy escalation.  You could see why: maybe the west has more sanctions up its sleeve; he doesn't have the military resources for anything much on the battlefield in the near term; mobilisation (& declaration of war) would be a very two-edged sword - potentially deeply unpopular where it matters, for not much return in the short run beyond the legal freedom to send conscripts into the battle.  Also, putting aside the morale-boosting double-down effect of any spectacular escalation, in military terms he might not need it - see part 2. 
• he doesn't have a victory worthy of the name.  Russians are patriotic, and fairly-much whipped into line right now to swallow (or at least pretend) quite a lot; but they ain't stupid.  And calling a 'victorious halt' right now would come with all manner of practical problems, not least that they are positively retreating on the Kharkiv front and may find holding the Donbas line really difficult - maybe even Kherson, which is really important for them (water supply to Crimea).  So: no point, even, in that rehearsed 'Z' flypast: no triumphalism whatsoever**.  
• status quo is priced in for his audiences.  The home audience is more-or-less conditioned for the long haul - at least in their current frame of mind, before sanctions really hit (which they will: Russian industry is grinding rapidly to a humiliating halt).  The RoW can hardly think any worse of him; and China specifically was utterly disgusted at a very early stage - only a lightning victory at low (material) cost would have been good enough to impress them and give them encouragement for their own heartfelt designs on Taiwan.
• there is at least the possibility something helpful turns up.  Top of his list must be the EU splitting badly as Germany refuses (i) to stop buying the gas; (ii) to pay for the pain Poland et al are suffering; and the populace as a whole tires of massive stagflation - we were happy enough to send weapons, but we never figured on 20% inflation ...  Yes, folks, there's every possibility the Russian public has more tolerance for hardship than we do.  (I'm being flippant here, of course; they absolutely do, by the bucketload.)
• he's run out of ideas - if not his own, then anyone else's.  Somebody could have come up with something, by way of an imaginative, low-cost surprise / fillip / morale-booster.  I am always banging on about how the point of being in power is that you always have vast scope to take the initiative, limited only by the shortcomings of your own imagination.  Even Saddam Hussein could be credited with understanding that: he pulled several surprises on us in 1991, not to mention the big one in 1990.  There's never been any indication Putin has any imagination himself; but in a land of avid chess players, there must be someone around him who does.  Mustn't there?  No, apparently not. 

I conclude he's now adopted a strategy of doggedly bringing about a situation conducive to a mission his massively disappointing army can actually be expected to execute.  We should add, 'as best possible', because performance to date doesn't provide much encouragement.

What's that mission?  More at the weekend in part 2. 

ND

___________

** For my money, the scrapping of the flypast is an impressively logical & decisive reinforcement of his 'nope, comrades - no victory yet' posture.  Somebody is still thinking coherently in there (if not imaginatively), and Putin is listening - to them, at least.

PS: à propos of our speech-drafting compo, at least poor little troll-anon's worst fears were not realised ...   ["My fear is a NATO-sponsored terrorist attack, either on the parade or its spectators. A 9/11 style spectacle. It's unlikely the US can let this pass without doing something."]  Or was it a Kev-spoof ..?

... and it isn't just inflation!

This link is to a thread containing some eye-opening charts portraying how the world (UK in particular) is changing under our feet.  Some of the changes being captured have been gaining momentum over many years, and are fairly familiar (see this chart, for example; and the growth in financial inequality).

Others are less so, e.g.

• % young adults living with their parents  
• % women aged 30 that are childless
• out-of-pocket payments for healthcare in the UK - now the same as in the USA!
• rise in crowdfunding to pay for medical costs

These sorts of socio-economic shifts require a D.Cummings to wrestle with them politico-strategically.  The long term implications will be significant.  Can't see B.Johnson having the slightest interest in that anymore, though.

ND

The cost of living crisis to come

 to come you say?

YES.

You see what we have today is just the foothills unfortunately, baked into the pipeline are some rather big nasties.

A - Diesel  is now $600 a ton, up from $200. Diesel fuels everything, tractors, ships, trucks. All the real stuff, even a decent percentage of cars. It is 3x more expensive that it was a few months ago. Russian crude was very good for making diesel and so their refineries were experts and pumped it out by the millions tons a day. Now we are not playing with them, they are not doing that. Worse, the Western refiners that made diesel used Russian crude. Now that is not available to them either, though they are giant things, oil refineries are calibrated carefully to the right API for fuel and other key factors - typically they are supplied from the same wells for years and years and forever in Saudi! With Diesel at this price the costs of globalisation, farming and much else are not coming back to earth anytime soon. 

B - China, has gone nearly as mental as Russia, only this time on its internal population. Life has stopped in many major cities, the factories are closed and the ports are full. This is a huge dislocation in the global economy and it was exactly this kind of thing that started the inflation super-cycle in 2020 when the pandemic hit. 

C - Market crashes - as the markets catch-up with the factors in the real economy, investment will drop. In the medium-term this is a good thing as it stops money supply growing so fast (investment is matched with bank created fiat money everywhere), but it also leads to lower productivity and output. Right when the economy is short of supply rather than demand. 

I remember writing how fearful I was of stagflation in 2011/12 after the great recession. Inflation did peak but the commodity prices crashed and China was much less effected so continued to supply the goods which kept supply and demand matched. 

This time there is no counter-balance that I can see. The only one will be a huge reduction in demand - job losses, high taxes, much higher poverty etc, the creation of scarcity. 

The Tories won't survive this it needs to be said, no Government would, in the same way Labour could not escape 2008. People will need someone to blame for the misfortune of an unstable world and perhaps more rightly for some poor policy choices that may have helped around the edges. However, what will a new Government do faced with the same situation. Only printing money will arise as a solution with inflation at 10%+....

Croydon Goes Bankrupt: The Sequel

The story so far:  in a series of stunning scandals and maladministration, a curiously non-ideological one-man Labour dictatorship in Croydon reduced the largest London borough to bankruptcy.  Considerable opprobrium lighted upon this individual, his crazy schemes and disgraceful neglect of residents; but Croydon looks demographically fairly safe for Labour, not least because Tory voters are fairly widely spread across the vast borough, whereas Labour votes are nicely concentrated geographically, sufficient to hold the council and 2 of the 3 parliamentary constituencies.

Meanwhile in Croydon South, the only constituency held by the Tories, the hyperactive and "creative" MP Chris Philp came up with a wizard wheeze to solve his perennial local problem.  The Labour council was forever approving planning applications his core voters hate.  So, reckoning that a borough-wide elected-mayoral system would be a lot less wasteful of Tory votes, and might conceivably come up with a Tory majority, he organised a campaign + referendum to switch to the executive mayoral system (the same system just cancelled by Bristol voters: these enthusiasms come and go).   Philp's Croydon referendum campaign, bitterly opposed by Labour - despite official Labour policy being in favour of elected mayors -  succeeded by a huge majority.  Hardly surprising: the Borough was by then bankrupt and the scandals had achieved unusually wide currency, local and national.

However.

The Tories then selected their current leader - i.e. leader of the Minority on the council - as Mayoral candidate, simply on Buggin's Turn.  He's a nice enough chap (always the most damning thing you can say about a person) but has the charisma of a potato, and no more than the usual local profile enjoyed by a councillor, i.e. virtually zero outside his own patch.

Labour, having recovered their wits after the crushing referendum result, suddenly discovered they were, after all, in favour of elected mayors, and pulled a serious stroke by selecting a genuinely well-known and genuinely local candidate: career politician Valerie Shawcross.  She'd been Leader of the Council many years ago; a Deputy Mayor in the GLA for many subsequent years; has a superb grasp of London politics; is fairly moderate and well liked, as these things go; and has completely clean hands as regards the recent Croydon Labour scandals.  Her campaign (notable for a complete absence of the colour red!) was excellent and of course Boris is a gigantic ball-and-chain just now.  What made her prospects even better was that Mr Potato and the Tories ran a very poor campaign, with truly lame leaflets etc.

But she lost!  In an election-night count that went on for 36 hours(!), with recounts, the Tory won by less than 2%.  As they say around here, inability to count is what got Croydon in this mess in the first place ...

Philp's gamble, which must have seemed like a slam-dunk only a year ago, will have cost him some sleep over the past three weeks.  But it's come off.  Couldn't happen to a nicer chancer.

(Sorry, that's, errrr, chap )

ND 

Competition: Write That 9th May Putin Victory Speech!

OK, C@W crew:  what "victory" is Putin gonna claim next Monday?

Give us at least your main bullets, if not the whole 6 hours script ...

When Does Inflation Hit? Bank Holiday Post

Returning from a Bank Hol run on the supermarket, I cannot but notice that the much-heralded inflation (as anticipated by myself, amongst many others) has not yet hit food prices - at least, not the stuff Mrs D and I buy, across a wide range of foodstuffs and drinks.  Not even the stuff coated in sunflower oil.

We are given to believe supply chains are heavily oriented towards just-in-time, which speaks against there being many months of last year's produce stashed in Mr Tesco's warehouse, being steadily run down.  The warehouses of his suppliers?  Some of what's in our trolley is fresh produce.

And everything requires transportation: do supply-chain players buy their fuel many months forward?  I'd believe they fixed their electricity and gas prices around this time last year, which was when every energy professional knew the price crisis was coming, Ukraine or no Ukraine.  But diesel?  Ships' bunkers?  Maybe.

Or is everyone determined to take the hit in their P&L?  Is it even a "passive price war"?

All in all, I'm surprised.  When does the absence of wheat (& sunflower) exports from Ukraine - and Russia - make itself felt?  When do supply-chain players run out of forward-purchased energy?  

When does food inflation hit?

ND

PS:  Food aside, I'm not sure I've encountered the full out-working of >6% CPI generally, either ...

PPS:  Food price inflation has gone through the roof in, errrr, Russia ...  One of our new trolls can now assert this is CIA propaganda if they like, but, hey-ho, it's true.