The UK is drowning in debt and dysfunction as massive debts run up by the Johnson government overturn the deranged Brexit dung cart. The astonishingly untalented, unfocused years of mismanagement have now hit the fan, hard.
The word being used by markets is “panic” and it’s not misplaced. Britain’s maimed economy is in very bad shape. The debts are literally crippling and soaking up revenue.
In this environment, the Truss government very unwisely proposed cutting taxes, thereby reducing the revenue available to manage the debts. The world, particularly the IMF and the UK’s armies of creditors, didn’t like it, and the pound was instantly devalued. That makes paying interest on UK loans a lot more expensive. It also increases the external debt, relative to the value of the pound.
In a very rare display of economic sanity, the Bank of England has had to step in to undo at least some of the damage and “restore order”, as the bank much too politely puts it. The bank is putting it mildly. The Bank of England will be buying UK government bonds to shore up the sinking ship over the next couple of weeks.
Bonds are long-term debts owed by governments to bondholders. How far this process can go is unclear. Foreign debt is the major issue. The bank’s buying will generate cash to service the increasing costs of that debt. How long the bank can do this and how much cash can be generated is debatable.
It’s also unclear whether the Bank of England can actually reduce or control debt levels. The bond-buying exercise will plug some holes, but this is a huge level of debt.
The UK is now in a far worse economic and fiscal situation than ever. Credit makes the world go round, and the cost of borrowing for the UK is spiking as debts reach an unsustainable level. The mountainous debt accrued since Brexit is literally out of control.
Thatcher’s verminous brats
Before Donald Trump and Vladimir Putin, there were Margaret Thatcher and Ronald Reagan. These were two ultra-clueless conservative dogmatists. She invented the current smug, insular UK Tories and he invented the equally diseased “trickle down economics” based on fiddling with taxes.
These are the hollow hallmarks of modern conservatism’s very few actual policies – Everything can be solved by waving flags, privatizing everything and reducing taxes for the rich. There are no other ideas in conservatism.
Thatcher’s famous statement “….For our children and our children’s children” has finally come home to rot in an economically destroyed UK. This is the culture created by all that drivel.
It’s almost impossible to say how bad this mess really is. The current known situation is:
- Brexit effectively annihilated UK trade, leaving the single market and making trade with the EU incredibly costly and inefficient.
- Various legal disputes could well make the EU trade situation even worse.
- Brexit ended high-value EU subsidies to UK sectors like agriculture, science, medicine, etc., etc.
- The UK may actually break up if Scotland secedes.
- Any number of expensive blunders based on Brexit have shredded UK revenue and effectively prostituted UK spending.
- UK revenue has also been smashed by reduced trade.
- UK businesses have left for the EU in hordes, reducing tax receipts.
- No less than 440 UK financial institutions have left the UK.
- Many of Brexit’s noisiest supporters positioned themselves and their families in the EU years ago.
- The UK’s appalling debt situation probably blocks any possibility of re-entering the EU until it stabilizes.
- The cost of living is now effectively destroying wages for UK citizens. They might as well be working for nothing.
- Beautiful Kent is now an unsanitary, insanely expensive, lorry park for the UK’s ever-diminishing trade with the EU.
It’s very much as if all of these utterly incompetent moves were deliberately designed to put the UK in the worst, weakest economic position possible. …Because that’s exactly what they’ve done.
No conspiracy theories are required. The fiscal position couldn’t be more immediately dangerous. All of this was done in plain sight, against massive criticism from experts, most of whom were fired.
The UK could at least in theory go bankrupt with these levels of debt and no control at all over rising interest rates.
A culture of smug, corrupt, incompetent ignorance
You hear a lot about “culture wars” in the media. This war is much older than recent history. The British class system is historically a euphemism for financial and national corruption. Making money is all this system knows or has ever known. It’s a culture of Uriah Heeps, not a nation. Certainly not an “upper class” or anything like one. Just trashy little bastards profiting from destroying their country.
It’s also a very smug insider culture based entirely on nepotism, collusion, and positioning. The smugness goes back a long way. To translate this into a working idea for destroying a nation, simply replace the word “privilege” with “corruption”.
During the Napoleonic Wars, the same culture made big money out of the contracts which produced rotting hulks unfit to sail in bathtubs to “blockade” Napoleon’s Europe. The so-called ships couldn’t outsail a sinking rock. Thousands of sailors drowned. The blockade, therefore, didn’t work either, and the UK did a roaring trade in black market goods.
That unholy atrocity defines the culture quite well. The people responsible were called “placemen”, meaning people in positions to rort money from anything and everything. They’ve been running Britain into the ground ever since.
The two world wars didn’t help Britain but did nicely for those able to benefit from them. After World War One, Britain was genuinely broke and an entire generation was maimed, still paying for it decades later. The second war ended the unaffordable British Empire, also destroying one of the world’s biggest economic trading entities. It kept Britain on rationing for over a decade.
Since then, it’s been a race to the bottom propelled by vested interests and the descendants of the placemen. The Tories presided over this drunkard’s funeral. Privatization destroyed the UK’s industry. The National Health Service has been underfunded and crippled by obsolescence. UK homelessness is an ongoing eyesore.
This culture has produced a few other abominations. The imbecile theory of a “service-based economy”, i.e. a nation of waiters, was one of its revolting offspring. In the 21st century, this is just a grotesque absurdity, completely non-viable, and being obliterated by technology. As a career path for unemployability, it’s pristine in its stupidity. Generations have grown up with this mindless myth.
It’s only relatively recently that the corruption has become so blatant, and so stupid. Brexit has done as much damage as the wars in ruining the UK’s trade. No number of U-boats could have sunk as much UK business. The current parlous state of the UK property market would have been far beyond the scope of the Luftwaffe. (Although Johnson’s redecoration of 10 Downing Street could have been done by the Blitz, if it was trying hard enough.)
The Tories have a culture which is much like birds. You get born in a fortunate position. You go to Eton, then Oxford or Cambridge. Then you marry some other ruminating trash, breed more selfish unreliable idiots, settle down, and destroy the country. Every so often you migrate to a tax haven.
The Bank of England may be able to put on the brakes. It might stabilize the huge cashflow deficit. …But with current policies, they’re basically putting more sandcastles up against an incoming tide of woes.
For more information on the UK’s horror stories, see Mr. Jonathan Pie, one of the few critical voices able to make itself heard in Britain.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
