Sunak's budgetary offering yesterday was an irrelevant sideshow. The amounts of money involved were tiny compared to the problems created by the government's self-inflicted economic harm resulting from its idiotic and ineffective lockdown. The real spending and borrowing comes not from these planned expenditures, but from the spending and borrowing that it will be forced into in coming weeks and months.
The government complains that people might not go back into pubs and restaurants, and is trying to bribe them with a £10 August meal deal. But, that problem is one of its own creation. In the Spring, as various social media outlets, followed by the mainstream media, never slow to jump on a bandwagon, stirred up a moral panic over COVID19, the government instead of confronting it with scientific facts, itself first appeased it, and then collapsed into it. If you have all of the media telling you that there is a global imminent existential threat, that any minute there are going to be mass burials and cremations, that hospitals are going to be overrun, requiring whole new hospitals to have to be created over night, that 45 million people globally are going to die, and half a million in Britain alone, is it any wonder that you put the shits up people???
But, none of those things were based on scientific evidence or facts. The closest they came to that was a report by Imperial College in London, which has record of putting out such scare stories in the past, none of which ever came anywhere near being true. They gave a similar figure of 45 million deaths globally, for Swine Flu, with a similar mortality rate of 0.9% that was way off, with the actual global mortality rate being just 0.03%! And, the same appears to be true with these predictions. As against its predictions of 45 million deaths, the actual number of deaths globally is just half a million, or 1% of its predicted figure. Using its predicted mortality rate of 0.9%, what that means is that the actual mortality rate is likely to turn out to be around 0.01%. The media, of course, put out the half million deaths figure, as a scary number, without any comparison. But, the actual comparison is that each and every year, on average, half a million people die from flu, without the world's media or government's batting an eyelid.
One or two hospitals did get overrun, but anyone who has spent 24 hours in A & E, knows that this is not an exceptional occurrence, but merely a symptom of a massively under resourced NHS. The Nightingale hospitals established as a massive publicity stunt, supposedly to deal with this overrunning of the NHS, were a complete waste of time, money and resources, and have been closed down. The 7,000 bed hospital created in the Excel Centre in London, never had more that around 20 patients gracing its beds at any one time, and in total treated only just over 50. The hysterical talk about requiring mass burials and cremations proved to be just that. In most of the country, rather than hospitals being overrun, occupancy has fallen to around 40%. And, no wonder, because the reality was that the greatest concentration of deaths was in care homes and hospitals, so anyone that could avoided such places like the plague.
This is a crisis created by the government itself. By appeasing all of the moral panic whipped up by the mass media, it simply gave credibility to the nonsense they were purveying and stimulated the hysteria further. Younger, better educated people were less likely to be taken in by it, and realised that unless they suffered some underlying medical condition that compromised their immune system, then they were part of the 80% of the population for which COVID19 posed no serious threat, and so they continued to go to the pub and so on, until the government forced pubs, restaurants and so on to close. Now as the economy faces the worst economic slowdown in 300 years, caused by the government's own idiotic lockdown in response to that moral panic, it is trying to bribe people to actually go to those places.
But, the truth is that there was no need to have closed them down in the first place, and the government could have simply confronted all of the media hysteria with scientific facts to show that there was no need for the vast majority to stop going about its business, provided it took simple sensible measures. Sweden showed that, and made liars of all the catastrophists who were claiming that imminent doom, and the End of Days were once more upon us. Sweden too suffered deaths from COVID19, but as in most places they were concentrated in its care homes and hospitals, because it did not put in place the required measures in those institutions fast enough. But, Sweden did not go into lockdown, causing it to be pilloried by all those other countries that were cratering their economies by doing so. All of those other countries and all of the catastrophists took great pleasure in predicting that it would pay the price by seeing a surge in its deaths. It didn't.
In fact, Sweden was able to flatten its curve of deaths fairly quickly, and its per capita mortality rate has always been only around half what it is in Britain. Its number of new deaths from COVID19 in the last few weeks has been in single figures, and on sum days, has been zero. Throughout all this period Swedes continued to go to work, and to go to the pubs and restaurants and so on. Its economy is suffering only because it is part of the global economy, and policies of lockdown have done considerable damage to that global economy.
Having created a climate of fear and moral panic over COVID19, its not surprising that some of the less educated members of society, who have been trained to act like sheep on following the memes put out by social media and mainstream media were more inclined to do so, when the government, and even more so when the opposition echoed those dire warnings of imminent threat. The comparison with wartime has been used many times, and its appropriate, because, as with WWI, when the opposition party joins with the government party in proclaiming such an imminent threat, and calls on everyone to rally to the colours, its not surprising that large numbers are taken in by it, and respond. Its a good dry run for the Bonapartists when they want to induce similar passivity and compliance in some future crisis.
But, the government is where it is, as with many other governments across the globe that introduced such economically damaging policies of lockdown. Now they have to deal with the consequences. The real spending and borrowing for the Tories will come from a rise in unemployment to around 4.5 - 5 million, and all of the costs of benefits and loss of tax revenues that implies. Many of those put on the dole as a result of the lockdown will be already precariously employed workers who will not find employment again quickly. With unemployment rising to those levels, as all of the borrowing pushes up interest rates, the £15,000 bribe in the cut in Stamp Duty is likely to be irrelevant, as homebuyers default ion their mortgages, and become forced sellers, causing house prices to crash, as happened in similar, but not so extreme conditions in 1990. Then house prices were in a massive bubble, but not as much of a bubble as they are today. Then interest rates were already many times what they are today, even before they rose. Even a small rise today will represent a huge proportional increase.
The borrowing is also going to be fuelled by households and businesses, many businesses are already borrowing on a large scale with credit lines being drawn down, and new bond offering being prepared. But, some of the worst affected businesses are those directly hammered by the government imposed lockdown, such as airports, airlines, and consequently aircraft producers. And alongside them comes car makers, who are already suffering their own specific problems in needing to retool to move to electric vehicles. All of those problems are multiplied in Britain because of Brexit.
Its inevitable that governments are going to have to bail out aircraft producers, carmakers, airlines and airports. Those bailouts are going to run into hundreds of billions of Dollars, Pounds, Euros etc. There is no reason that the EU is going to help bailout British companies as Britain heads for Brexit. The EU as a $14 trillion economy can easily mobilise the resources to bail-out its strategic industries, even running into tens or even hundreds of billions of Euros, though it will require large-scale borrowing, leading to a sharp rise in interest rates to do it. But, Britain with its puny $2 trillion economy will struggle to do so. But, unless the UK government does borrow and find the funds to bail-out these industries, they will go bust, and it will lead to a more rapid concentration of capital in the EU. The funds the government is going to have to find for these bail-outs are huge, dwarfing what Sunak has already spent, and promised yesterday.
When the UK government bailed out the banks and finance houses in 2008/9, the total cost came to £2 trillion. The financial sector accounts for a disproportionately large part of the UK economy. Even so, imagine the total cost then of bailing out the rest of the economy, or even just a large part of it. When the initial proposals for bailing out the banks were put forward, the original figures were only a fraction of what the actual number turned out to be. That was the case just in Britain, but, as Sraid Marx described it was done quite deliberately in getting approval for bailing out the Irish banks.
The cost of bailing out large parts of the UK economy which is facing going bust as a result of the lockdown, unless such bail-outs occur, will make the bail-outs of the banks seem like small beer. The total cost is more likely to be around £20 trillion. British workers are going to be paying the price of this insane policy of lockdown for decades to come in the form of higher unemployment, and all of the health problems that goes with it, as well as slower growth, resulting from the need to cover the interest payments on all of this debt.
After this self-inflicted economic disaster, the Tories should never win an election ever again, but then all those that encouraged them to go down the insane route of the lockdown can never be trusted by workers either.
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