Image Source: Pixabay

U-turn… no, you turn. We’ll all turn.

Yesterday morning, Liz Truss called off Britain’s proposed tax cut. Someone must have reminded her that the cut would inevitably lead to higher deficits… which would inevitably lead to more inflation… which would inevitably lead to un-happiness in merry ol’ England. The Guardian:

The humiliating U-turn forced on the government will have economic as well as political consequences. A week of turmoil in the financial markets showed just how badly his mini-budget had gone down with international investors. The pound fell, the cost of government borrowing rose, mortgage products were pulled.

Meanwhile, the Australians turned the wheel too… raising rates less than expected.And as the US economy weakens, investors bet heavily on a U-turn by the Fed. Bloomberg:

Bulls Storm Into Stocks, Bonds Amid Peak-Rate Bets: Markets Wrap

A bullish start to the fourth quarter deepened in global markets, lifting US index futures and Treasuries, as investors wagered the end of monetary tightening is mere months away. The dollar slid for a second day.

Investors see weaker-than-estimated US manufacturing data supporting a dovish tilt at the Federal Reserve after 3 percentage points of hikes began to tell on the economy. Money markets now see the Fed Funds Rate peaking below 4.5% by March. Speculation is growing that the global wave of disruptive monetary tightening is nearing its end…

Return to Reckless?

“Disruptive monetary policy?” That’s what the Bloomberg team calls the Fed’s attempt to get back to normal. The elite were having such a good time pumping fake money and credit into the system. And then… someone comes along to ‘disrupt’ the party. They don’t like it.

But this party is coming to an end, whether they like it or not. And not just because central banks are raising rates. The whole post-war era is petering out. Things are falling apart. Throughout the West, the elite are failing, flailing, and falling down.

In Italy, voters (26% of them) chose a woman who talks like a conservative, of sorts. She is for motherhood. For Christianity. She wants men to be men… and women to be women. And she doesn’t like immigrants.  

“Fascist!” Western opinion mongers were fast to tag her. But, like Trump, Meloni seems little threat to the elite’s important programs; she will stick with them all– NATO sanctions against Russia, welfare… deficits… the euro. The parts of the EU system that stick in her craw the most are those that would keep her from doing even more damage – that is, the restrictions on spending and debt.  

In England itself, no one is quite sure where Ms. Truss came from. As near as we can tell, she was chosen because she was such a nonentity that no one hated her.  

In Germany and France, the elite are facing another crisis of their own making. The falling leaves may soon be followed by a ‘winter of discontent’ – made cold and dangerous by their own hostility to their number one provider of energy, Russia. And now terrorists – presumably from the US – took out the pipeline that could have brought them some relief.  

Tip o’ the Hand

Anthony Blinken, US Secretary of State, revealed the gambit when he declared that the sabotage was a ‘tremendous opportunity’ for Europe to wean itself off cheap Russian fuel… by turning to expensive American fuel.

Why would Europe want to do such a thing to itself? The average German has no interest in punishing Russia for whatever crime he believes it has committed… but, for now, he goes meekly along with the elite program, however foggy its goals and dubious its means.

As the price of gas goes up… and the weather turns cold… people will cut back and make do, as best they can. Wood-burning stoves and firewood are said to be in short supply. Thermostats are being turned down. Street lights are turned off. Even the Eiffel Tower has gone dark.

Big factories do not cut back little by little. They throw the switch. Already, some of Germany’s fertilizer and chemical output capacity is either closing down… or making plans to do so. This will have a huge effect on next year’s agricultural output.

The Netherlands already has the distinction of being one of the world’s smallest by landmass, but greatest by export, vegetable producers. It does so by growing its legumes in vast greenhouses which you see when you fly into Amsterdam.

These farmers face staggering energy bills. Some 40% of them are said to be in ‘financial distress.’ How many will go out of business? How many will close up?We don’t know, but the price of kale and cabbage may soon shoot up too.

The shutdowns of the Covid Panic caused huge losses. So will the shutdowns from a lack of gas. Here’s Thomas Fazi at “Unherd:”

In the UK, 45 million people are forecast to face fuel poverty by January 2023; as a result, “millions of children’s development will be blighted” with lung damage, toxic stress and deepening educational inequalities, as children struggle to keep up with school work in freezing homes. Lives will be lost, experts warn. Meanwhile, in Germany’s Rheingau-Taunus district, the authorities have carried out a simulation of what such a blackout would mean for them, and the results are shocking: more than 400 people would die in the first 96 hours. And this in a district of just 190,000 inhabitants.

Like the Fed… the Bank of England… and the Truss government… ‘the People’ have their limits. They may be long-suffering… and, like all beasts of burden, slow to anger. But their patience is not unlimited. How far can the elite go? How much incompetence and corruption will the deplorables tolerate? How much can the economy stand? We may soon find out.

More By This Author: