The West today is facing a dangerous future. If Europe does not figure out a way to get Russia to turn the gas back on, the European economy will likely collapse this winter. If this happens, expect serious political instability. Yet at this very moment, our leaders are engaged in absurd power fantasies where they dictate terms to Russia about the sale of energy.
Consider the price cap on Russian oil. The idea is simple enough: buyers of Russian oil join a big club which makes a commitment not to buy any Russian oil that is priced above a certain level. Clubbing together has long been a feature of global oil markets. OPEC – and now OPEC+ – is a club of sellers. They effectively set the price of oil by meeting and agreeing on production targets for oil. So why haven’t buyers of oil clubbed together until now? Probably because the idea is ridiculous and, until very recently, Western leaders were not willing to look so unserious on the world stage.
It is not hard to explain why the idea makes no sense. Let us say the countries currently signed on to the madcap scheme – the United States, Canada, Japan, Germany, France, Italy, and Britain – turn to Russia on December 5th (the planned date of the action) and say they will not buy a single barrel of oil priced over, say, $90. The likely answer from the Russians will be: “Sorry, the market price of oil is higher than that. If you do not want our oil at the market price you are free to look elsewhere.”
What happens next? Assuming these countries place a ban on buying Russian oil over $90 a barrel, consumers and distributors will have to start bidding for oil in countries other than Russia. This will greatly increase the price they pay in these countries. This, in turn, will drive up the global price of oil – certainly for all the countries signed up to the policy.
What about Russia? They may lose out on some oil revenue, or they may not. It depends on two things. First, on how much the rise in the price of oil cancels out the loss in quantity being sold. Second, on how much of their oil can be shipped to alternative markets. Considering all this, who is more adversely affected by the oil price cap? Obviously, the countries trying to impose the cap. And those countries are not just slightly more adversely affected, they are far more adversely affected.
This is why no countries have tried a price cap before. It is an absurd policy. It is deeply unserious. It does not even pass the smell test of being an idea worth considering. If such ‘magic beans’ tactics worked, they would have been used by oil consumers against OPEC long ago.
It is sad to say, but the credibility of our elites is crumbling. They are becoming very difficult to take seriously. One can only imagine how their statements and actions are viewed across the world. Without putting too fine a point on it, the Chinese, Russians and Indians must be having a good laugh. And when that laughter dies down, it will have very real effects. Global partners will take us less seriously. We will not be accorded the respect we have been hitherto.
Meanwhile, inflation surges at home. Living standards fall, and there is reason to think the decline may not be reversed. This does not feel like a normal inflation. Normal inflation occurs when the economy is running too hot and is reversed when the economy enters a recession – typically after central banks raise interest rates. But our current inflation feels more like an impairment in living standards caused by supply chain disruptions and a shake up in global trade relations, sparked by geopolitical realignment.
Let us run some simple models to get a sense of how bad this could get. In one scenario, let us imagine that inflation in Britain continues at the current rate and we do not get a recession (or at least, the recession is not that bad) – so nominal wage growth continues at its present rate. This is the ‘No Recession’ scenario. In the second scenario, let us imagine that inflation continues at its present rate, but we get a recession in the last three months of 2022 and nominal wage growth goes to zero. This is the ‘Recession’ scenario.
Here is what those two scenarios looked like and compared to real wage growth in the 2001-07 period and the 2010-2021 period.
As we can see, in those halcyon days before the financial crisis, Britain saw its real wages rise around 2.4% a year. In the wake of the financial crisis, British living standards have been basically flat. That has been pretty unpleasant, but it has been tolerable – sort of. Now look at the two models. They show that we should probably expect real wages to fall by anything from 1.9% to 3.5% this year.
Now let us imagine that we are in for a decade of this. Let us say that due to shifting trade patterns, geopolitical chaos, continued supply disruptions (from lockdowns, net zero policies and various other interventions) and the decline of Western reserve currencies, we continue to see high inflation and low nominal wage growth. Here we will just label our ‘No Recession’ and ‘Recession’ scenarios ‘Bad’ and ‘Very bad’.
The erosion of purchasing power builds on itself. By the end of the decade, living standards – what you can purchase with your paycheck – have fallen by somewhere between 18% and 30%.
Of course, I do not have a crystal ball. Maybe after a few more months of turbulence, the economy will right itself and inflation will subside. My point is that you can make a credible case that this will not happen. In other words, I can argue with some justification that living standards in Britain will fall 18–30% in the next decade. Prior to the lockdowns, if you had tried to make that case to me, I would have dismissed you as crazy. But the world has changed drastically.
As these new realities assert themselves, our leaders engage in fantasy and playacting. And the rest of us risk, as Peter Cook once quipped, are sinking giggling into the sea.
Philip Pilkington is a macroeconomist and investment professional. You can subscribe to his Substack newsletter here.
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And of course “proper disposal” means paying to ship it half way round the world for Elbonians to dump in a river while lying to our faces about it.
Please leave Elba out of this
Don’t know our Asia from our Elba?
I don’t think a website called ‘Daily Sceptic’ is the right place for your advert…
Report it as spam.
I thought for a minute they earnt that by picking up all the facemarks littering the streets.
But surely, if it saves just one life…!
That will account for the rise in sea levels then
I think people are missing the point here, you see all those tons of cotton will absorb masses of sea water and prevent the rise in sea levels caused by all you profligate wasters that insist on turning your heating on during the winter – for shame!
That should keep Greta and her acolytes busy, picking it up off the beaches and dragging it out of the various oceanic gyres.
Yeah no. They actually don’t give a fuck about the environment, just the need to consolidate corporate ownership of the Earth and its resources, under the banner of a made up emergency.
More people need to understand this.
It is well to remember that this figure results from a model, so the truth is likely to be significantly different.
I guess it excludes all the containers of masks scattered around Felixstowe.
Does this mean that the oceans are now toxic with Covid viri.
To exactly the same extent as the air around us is.
All joking aside isn’t this one of the most disgusting aspects of this whole charade? As well as poisoning minds and bodies, they have poisoned the environment as well with these pathetic plastic talismans worn by the credulous to appease their oppressors. Fucking diabolical.
Every nap wearer STILL sanctimoniously strutting around with their hideous slave symbols on, are lost. They’re gone. Too lazy or too stupid to see how utterly ridiculous they look, and absolutely clueless as to where their compliance is going to take them..and us. I know this sounds harsh but I’m sick of their beady little stares, and drama passes. I’m through with them.
For the first time in the whole plandemic I had to stop myself losing it with a smug, sanctimonious parent at my daughter’s primary school yesterday who was wearing one to collect his child even though he didn’t have to. Fucking outside. I was going to ask him, why he was wearing that thing on his face, and was he aware that he might be scaring the children with his mock surgical mask, and didn’t he think we should be showing the children normality at this stage. And did he realise how fucking ridiculous he looked with his virtue-signalling stupid rag on his chin, and did he think he was better or more virtuous or safer than anyone else, and did he actually think that a loose fitting bit of disposable plastic tat could stop a virus either leaving or entering him, and if he did would he like me to draw him a diagram of the relative sizes of virons and the pores in breathable fabric, and had he ever seen how they do infection control in hospitals or laboratories.
Thankfully the bell rang and they all came out. Embarrassing scenario averted.
I think we can all relate your comment.
Pity.
Absolutely.
The fucking things turn up everywhere – in streets, in parks, I’ve even seen them thrown in hedges well out in the countryside. It should be frowned on in the same way as not clearing up dog shit now is!
Add it to the list of hypocrisies of the holier than thou, I will tell you how to live your life class.
It’s a long, long list.
Don’t dump them in the sea. Gather your used disposable masks and post them to 10 Downing Street, SW1A 2AA
I’d pick up all the filthy things littering my town right now and post them off, but they literally make me feel sick!
Yep. Me too. Disgusting on so many levels.
At least they are not disposal diapers/nappies.
I remember reading, a while ago, about some very smart kid who invented genuinely brilliant way to clean the oceans. It was based on the fact that a lot of ocean waste gathers in certain places, due to currents, winds, etc. and stays there basically whirling forever-so the boy invented some sort of whirling nets, to collect the garbage (in the article it sounded really simple although smart, my description is a bit dumb, sorry about that). Guess what: no agency or government were interested in the invention…
This has been floating around on Social media fora while.
Pun intended.
I am surprised it this low. Taking all the figures with several large pinches of salt – this being the Mail On-line, it appears that in the 18 months since the epidemic began 8.4 mllion tons of plastic waste has been generated but only 25,000 tonnes (why the change of unit?) ended up in the oceans i.e 0.3%. I guess this was because most it is medical waste which tends to be disposed of properly.
It is estimated that between 8 and 14 million tonnes of plastic waste enters the oceans each year i.e.12 and 21 million tonnes over 18 months. So the Covid contribution is between 0.12% and 0.21% of the plastic waste entering the ocean during that period. It is definitely a bad thing – but we should hardly notice it amongst the other plastic waste in the ocean.
Yeah the difference is, all the other plastic waste had a purpose.
Tragic but at the same time vicariously good. It will remind the sheep when in the future they pretend they never believed or went along with any of this (assuming it ever ends or they survive jab XX).
Meanwhile at cock26, the giant migrant monster puppet is in attendance at a session that discusses “gender equality”. Of course our government have found an extra crazy sum of money on the magic tree to throw at women “impacted by climate change”.
It stuns me that the general public don’t see this bullshit for what it is.
I think they largely do, but their own sense of powerlessness prevents them from doing anything about it. If we want to take on this heist, we need to get organised. They are acting globally, so must we. Opposition is far too fragmented; there needs to be a worldwide movement calling out this fraud for what it is.
If these masks were really intended for protection from a deadly disease, you’d think there would be special disposal bins all over the place.
An awful situation. Human hubris abounds.
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God help us all. Not another fecking computer model! We all know there are billions of these useless pieces of filthy clothcrap things clogging up just about fuxxing everything everywhere. No one seems to give a shite. I saw a bird tangled up in one near the M42 the other day on my way home. That bird almost certainly died a slow and agonizing death and there will be plenty more of those. Where are your plastic baggy tree huggers on this? Most of them are double-masked lying down in front of traffic on motorways I fear.