Dories

[BillyStubbsTears]

Well, after months of people shouting "Go Nads" at her, she's finally, nearly, almost gone.

Just read her resignation letter. And think. She was in the Cabinet recently.

https://www.bbc.co.uk/news/uk-politics-66631019

What is it about the Tory party promoting genuinely mentally unwell women?

[ravenrover]

In her case infatuation with the piglet and drink, probably

[Filo]

That resignation letter was probably written by Johnson

[RobTheRover]

To be fair, if you take her fawning love of all things Boris out of it, it seems pretty much spot on. Especially Rishi's untruthful claims that the tories have brought inflation under control.

[BillyStubbsTears]

"A small group of individuals embedded deep at the centre of the party" apparently brought down the last 4 Tory PMs.

But Mr Lover-Lover had nowt to do with the first two?

The Tory party has been deranged by Johnson and Brexit. Dorries is the walking, talking embodiment of how badly deranged it has become.

[Branton Red]

Her conspiracy theory nonsense on Johnson (and Truss) being brought down is laughable.

But later in her rant the critique of Sunak's time as PM hits the nail squarely on the head. In fact probably the best opposition criticism of the current ineffective Government I've come across.

"the country is run by a zombie Parliament where nothing meaningful has happened.....and the government is adrift" Yep

"Levelling up has been discarded" Yep

"Social care [reform] abandoned" Yep

"The Online Safety Bill has been watered down" Yep

"The Mental Health Act, timed out" Yep

"Our commitment to net zero, animal welfare and the green issues...... squandered." Yep

"taking us to the level of the highest tax take since World War Two" Yep

"you have completely failed in reducing illegal immigration" Yep

"The bonfire of EU legislation, swerved". Yep

"Stormont is still not sitting" Yep

"you took credit for reducing inflation......this was disingenuous at the very least." Yep

[Filo]

Her conspiracy theory nonsense on Johnson (and Truss) being brought down is laughable.

But later in her rant the critique of Sunak's time as PM hits the nail squarely on the head. In fact probably the best opposition criticism of the current ineffective Government I've come across.

"the country is run by a zombie Parliament where nothing meaningful has happened.....and the government is adrift" Yep

"Levelling up has been discarded" Yep

"Social care [reform] abandoned" Yep

"The Online Safety Bill has been watered down" Yep

"The Mental Health Act, timed out" Yep

"Our commitment to net zero, animal welfare and the green issues...... squandered." Yep

"taking us to the level of the highest tax take since World War Two" Yep

"you have completely failed in reducing illegal immigration" Yep

"The bonfire of EU legislation, swerved". Yep

"Stormont is still not sitting" Yep

"you took credit for reducing inflation......this was disingenuous at the very least." Yep

Yes she has done a great job producing Labours General Election material lol!

[Bentley Bullet]

Her conspiracy theory nonsense on Johnson (and Truss) being brought down is laughable.

But later in her rant the critique of Sunak's time as PM hits the nail squarely on the head. In fact probably the best opposition criticism of the current ineffective Government I've come across.

"the country is run by a zombie Parliament where nothing meaningful has happened.....and the government is adrift" Yep

"Levelling up has been discarded" Yep

"Social care [reform] abandoned" Yep

"The Online Safety Bill has been watered down" Yep

"The Mental Health Act, timed out" Yep

"Our commitment to net zero, animal welfare and the green issues...... squandered." Yep

"taking us to the level of the highest tax take since World War Two" Yep

"you have completely failed in reducing illegal immigration" Yep

"The bonfire of EU legislation, swerved". Yep

"Stormont is still not sitting" Yep

"you took credit for reducing inflation......this was disingenuous at the very least." Yep

Yes she has done a great job producing Labours General Election material lol!

Someone has to!

[BillyStubbsTears]

I've no axe to grind for Sunak. I think he's shallow and all image. And I do agree that he's leading a totally ineffectual Government.

But to be fair to his administration, the party is punch drunk.

They've had a vicious internal war for a decade, with the two fronts of the rabid anti-Europeans and Johnson's narcissistic man-child insistence on getting to the top.

That has gutted the party of intellect and talent. It was thin on the ground to start with, but most sensible, moderate conservatives have been driven out, to the point where an intellectual Black hole like Tobias Ellwood now sounds like their equivalent of Socrates by comparison.

What has really f**ked the Tories for a generation has been
1) Putting her darling in No10, then
2) Replacing him with someone who was genuinely badly mentally ill, and THE most unsuitable person to ever take power.

Between them, they left us with an economy on the verge of absolute carnage. Dorries supported both to the hilt but doesn't seem to have any reflections on that.

We have the worst inflation problem in the G7, because of the effect of Brexit on the labour market and the absolute bedlam of Truss's madhouse 6 weeks. Those two reasons are bang on the rap sheet of the two PMs she supported.

Good riddance to the very worst example of modern MPs.

[Branton Red]

We have the worst inflation problem in the G7, because of the effect of Brexit on the labour market

Yeah just imagine how much better things would be for everybody if we had higher unemployment levels and lower wage rises 

[BillyStubbsTears]

Say you really don’t understand how economics works without saying you don't understand how economics works.

[tyke1962]

Thank God that Commie Corbyn didn't get in or we really would be in the shyte .

   

[Branton Red]

Saying you've been played by the media and are incapable of basic independent thought without saying you've been played by the media and are incapable of basic independent thought.

[BillyStubbsTears]

Saying you've been played by the media without saying you've been played by the media.

Oof!

[Branton Red]

Saying you've been played by the media without saying you've been played by the media.

Oof!

OK if you prefer.

You understand how Inflation works because it's the hot economic topic of the day and you've read about it in the news (well done!)

But you don't understand how Economics as a whole works which leads you to making rather silly statements. Such as: -

- a preference for a weaker Labour Market and therefore: -

- a preference for higher unemployment; and
- a preference for lower wage rates esp during a Cost of Living crisis caused by Cost Push Inflation due to rising global commodity prices.

Why? Because you've read such things are good for Inflation and that's all that matters because the News is telling you so.

Oh and of course Brexit is in part the cause of the UK's strengthened Labour Market and this fits your agenda.

Not because you've sensibly and independently considered their overall Economic impact especially on the poorest in our society.

[BillyStubbsTears]

Branton.

I understand how economics works because I've had an interest in it all my adult life and I've read the subject widely.

What aspect of how economics works do you want to discuss?

What about how the Phillips Curve has operated in the USA over the past 2 years, what the consequences are for their economic recovery, and whether that sane rationale applies to our economy?

Fancy it?

[Branton Red]

Billy

I understand how economics works because I have a First Class Degree in an Economics based subject from an eminent University. As part of my job I interpret Economic data to instruct business decisions.

It's always good to meet someone with similar interests - even if they are an amateur.

No I don't particularly want to discuss detailed economic theory in my leisure time. Thanks all the same. Busman's holiday and all that.

The Phillips curve, though broadly correct though only in the short term, is rather simplistic economic theory.

It is not particularly useful in determining an approach to short term shock cost push inflation. Neither is it particularly instructive in understanding the US's economic recovery - have a quick look at what has happened to US unemployment rates over the last 2 years.

Please can you explain to me the reasoning behind your objection to the UK having a strong Labour Market? Esp seeing as you come from the Left politically (and therefore I assume also economically?).

[BillyStubbsTears]

BR

I respect your background. It was arrogant of me to say what I said, even if i profoundly disagree with your take. I would respect your approach if you didn't assume I pick up snippets from the media.

Yes the Phillips Curve is a concept that works across the short term. It's the short term that we are talking about.

The Phillips Curve NOT working in the US wad precisely the point I was suggesting. Precisely because their response has contained the problem as a supply shock one so there's been no need to greatly depress growth to get on top of inflation - just ride out the shock. That has been excellent economic management, and they have an economy and real wages that are growing strongly (precisely what they need to do to attract voters of course - yet 95% of Republicans in a poll last week said that Biden has run the economy badly - go figure...)

In the UK, we appear to have a growing problem of the supply shock morphing into a wage push effect on core inflation which is the highest in the G7 and coming down slowly if at all. That is partly due to the very tight labour market, partly due to the consequences of giving the keys to the house and the matches to Truss for a month. Both those issues are, to a great extent, consequences of Brexit.

Question. If wage push inflation does get built in, how do you get inflation down without suppressing wages/increasing unemployment?

[BillyStubbsTears]

As for us having a strong Labour market, with respect whoever is the professional and amateur here, that comment suggests to me a fundamental misunderstanding of what an exogenous supply shock means, and what the consequences of it are. Apologies if I'm doing granny and eggs stuff here, but it seems there's a basic difference of opinion here.

It basically means that we are poorer as a nation than we thought we were. The stuff that we were used to buying on the world market for £x now costs more than £x, but we don't have any extra resources to make up the difference.

Doesn't matter whether you're left, right or centre, that's a fact. The nation as a whole has to adapt to its income buying less stuff. The usual effect is that prices of stuff go up.

If you have a very strong labour market, that means that workers have a lot of leverage to get higher wages. But that's nit cost-free to the country as a whole. It's mainly shifting the pain from workers to employers. If that was it, I'd agree with you that a strong labour market is an unquestioned positive.

But that's not the end. In doing that, you increase the costs of production. If you're in an internationally open market (like the EU) you make your companies less competitive and they lose market share. If your in a less internationally exposed market (like we are after Brexit) your companies may respond to higher wages by increasing prices and the wage-price spiral starts.

That's nowt to do with left-right differences. To me that's just basic principles of economics.  Which is why a tight labour market in a time of exogenous supply shock inflation can be a major problem. Whether you agree with that or not, it's a fact that we have the highest core inflation in the G7 and it's not coming down quickly,  which should be ringing alarm bells.

[Branton Red]

Billy

Firstly thanks for the apology. My response was clearly a bit of tit for tat. Apologies.

Clearly from your responses you have more than a passing interest and knowledge of economics.

I do think you are influenced a little by the media, certainly in your latest post, which IMO is too negative. Who wants to read newspaper articles or views from economists which say 'don't worry all will be alright soon enough' eh?

I could respond in huge depth, but a) I don't want to and b) I don't think you or anyone else will be interested enough. I'll try to be as succinct as I can.

[Branton Red]

On your first detailed post. You're simply making a false comparative looking at US v UK inflation.

Compare and contrast US ycharts.com/indicators/us_inflation_rate and UK www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/june2023

Remember Russia invaded Ukraine February 2022.

May 21: US 5%; UK 2.1% (not 5% in UK until Nov 21)
Feb 22: US 8%; UK 6%
Inflation peaked in US in June 2022 at 9%. Peaked in UK in Oct 2022 at 11%.

The current US administration has managed the economy well. The previous one didn't. They allowed the economy to overcook. Hence relatively high US inflation in May 2021 (coinciding with some Covid supply side issues).

This shows that UK (and Europe) inflation owes a lot more to the energy crisis than US inflation. Whilst European inflation is difficult to dampen with higher interest rates (which don't effect wholesale gas prices greatly) that wasn't so much the case in the US (and the US Federal Reserve were very aggressive in increasing interest rates).

The US market for gas is not the European one Putin had so much influence over. Also in response to rising energy prices the US had much more ability to increase supply internally so reducing the inflationary impact.

Also post-invasion look what happens to the US exchange rate www.exchangerates.org.uk/USD-GBP-exchange-rate-history.html. It strengthened massively - which often happens in times of crisis.

This helped quell US inflation but also worsened UK/European inflation largely because many commodities (esp oil) are sold in US$.

Comparing UK inflation to European inflation rates is much more instructive.

Will respond to your latest post later.

[Branton Red]

The most important thing to understand about an exogenous supply shock is the same as for any shock. That the impact/the damage it causes is worst in it's immediate aftermath.

Yes prices may (or may not) remain higher than they would have been medium term but it is in the short term when prices suddenly rocket that people suffer most as their incomes struggle to keep pace. i.e. 2022/1st half 2023.

We've had higher inflation than most European countries partly due to a high reliance on gas; partly Trussonomics; partly due to a tight labour market meaning higher wage rises than the rest of Western Europe (except Belgium).

But those wage rises haven't resulted in a commensurate increase in prices. Nowhere near.

At the moment of shock. At the moment of maximum suffering. People in the UK suffered less than many of our European counterparts because our wages kept up better against prices.

We're a consumer driven society. This therefore meant the UK economy was more resilient than some of our near neighbours as consumer spending didn't fall as much. The Eurozone entered recession. The UK did not.

And yes there was a shift in the damage away from workers and toward employers - without to date any major impact on employment levels. Like you say a good thing.

We're already almost certainly (awaiting Jul/Aug wage data) at a point where wages are rising faster than prices.

Wage demands are partly instructed by the inflation rate and will fall as it falls. Yes I agree the Government needs to take some supply side action - keep immigration high; encourage people back into the labour market post Covid etc.

There are no mainstream economic forecasts suggesting wage rises will cause permanent long term price inflation as you suggest. Inflation will start 2024 at c. 5% and end it at around 3%.

Average inflation in 2024 of c.4% but falling and wage inflation higher but falling also. Seems the general consensus.

Where's the problem with that? An economy can function (and grow) perfectly well in such a situation.

The doom and gloom I read in the papers and is mirrored in your posts is way OTT.

My concern is that in this OTT reaction we become fixated with the Inflation monster after it's become a major problem and go too far - I already think the BoE has done so in increasing interest rates. We get fixated with the nice target of 2% inflation target over what's best for the economy as a whole. There's a danger of giving the UK economy too much inflation medicine and driving us into a wholly unnecessary recession.

[Branton Red]

Oh and a postscript.

The main problem that besets the UK economy is not Brexit or Covid or short term Inflation - it's our anaemic long term productivity growth which pre-dates all those things.

There is not a better solution to this long term problem than having a strong labour market.

[River Don]

Just a small point Branton. Putin started limiting the supply of Russian hydrocarbons six months before the invasion of Ukraine. Inflation started exploding in Sept 21. You may recall Kwarteng had to bailout the entire UK fertiliser and CO2 industry. Very high gas prices had closed down the entire overnight. Consumers began feeling the effect of high gas prices in Oct 21.

It looks to me like the BoE were a bit slow reacting to the inflation which was staring them in the face. I doubt it would've made a great deal of difference though. And as you say, it looks very much like they will overcook the interest rate rises now.

This is commonly what happens though, isn't it?

[Branton Red]

Just a small point Branton. Putin started limiting the supply of Russian hydrocarbons six months before the invasion of Ukraine. Inflation started exploding in Sept 21. You may recall Kwarteng had to bailout the entire UK fertiliser and CO2 industry. Very high gas prices had closed down the entire overnight. Consumers began feeling the effect of high gas prices in Oct 21.

Thanks RD.

This ties in with my argument. As I stated earlier inflation was already 5% in the US in May 2021 (as you point out ahead of Putin taking such action) but didn't hit 5% in the UK till Nov 2021.

Therefore the root cause of a high proportion of US inflation was different to the root cause of inflation in Europe. Hence comparing the two and how they have moved over time/reacted to policy is simply a false narrative.

[River Don]

It's instructive to look at Switzerland. Their inflation has been way below the European average. But in Switzerland they use virtually no gas in their energy mix. They rely much more on hydroelectric power.

I believe much of the current inflation is due to our heavy reliance on the European energy markets. Also the UK is very reliant on imported food. The Ukraine war has disrupted the supply of food too. And then we've had the extreme summer weather in the Med over the last couple of summers which has affected crops. I'd say that's going to be an ongoing problem though.

Edit: oh and the high cost of fertiliser, which is derived from gas is pushing up food prices as well.

[BillyStubbsTears]

Lot to work on there BR. I do agree with a lot of what you say. I've been hammering on about productivity for years (and at the risk of tweaking your nose again, us becoming a more insular economy post Brexit - and we have because we've made it harder to trade with our biggest trading partner - is not a good move when that's your problem). And I also agree that a higher target inflation rate is not out of the question - primarily because it gives monetary policy more room to head off demand slumps and avoid the Zero Lower Bound problem that we had for a decade and a half.

I have a major difference of opinion with you on the danger of us getting into a wage-price spiral. The worrying stuff is in the very ONS link that you posted. Fig 5 shows core inflation and services wage increases both still rising and at nearly 8%. Which suggests that the inflation initially driven by the exogenous oil/gas and food price rises may be locking in. If that happens, even a left winger like me knows there's no obvious way to break out but to firmly reduce demand and weaken the labour market by increasing unemployment. And as someone who came of age in the era of the times when we did that in the 80s and 90s, I know it's really not pleasant. Its not a risk you want to take, even at the cost of some up front pain. Again, not left/right stuff, just basic economics.

I will point out again that I don't get any steer on my opinions from print or broadcast media. They have been generally woeful on macroeconomics since before the GFC.

I read a lot of the output from leading British, American and European macroeconomics - ideally ones who have regularly been right in the past. There's no-one who deserves that credit in Britain more than Prof Simon Wren-Lewis at Oxford, who has called every major macroeconomics decision right for 25 years. This is his take on the current situation.

https://mainlymacro.blogspot.com/2023/08/wage-inflation-unemployment-and-what.html?m=1

[River Don]

We could imported a load more workers from abroad... That would put downward pressure on wages. It's not like they aren't clamouring to come in.

Somehow I don't think the government will want to engineer a recession in the midst of an election.

Interesting.

[SydneyRover]

Good economic debate guys (Branton, bst, RD) and an excellent quote from Bertrand Russell in the link from bst.

''“When you are studying any matter … ask yourself only what are the facts, and what is the truth that the facts bear out. Never let yourself be diverted either by what you wish to believe, or by what you think would have beneficent social effects if it were believed.”

[BillyStubbsTears]

Hand up from me. I made a big mistake in an earlier post. Branton quite rightly says that the US economy hasn't been badly affected by the major supply shock that affected us and Europe. I was wrong to suggest it had.

America's inflation was driven earlier than ours, because Biden immediately pumped over $1trn into the economy in the America Recovery Act. The vast majority of that was aimed at low and middle income Americans to fire up the economy.

I referred to it multiple times at the time but given how tumultuous recent events have been, I'd clean forgotten it.

https://www.drfc-vsc.co.uk/index.php?topic=280646.msg1043894#msg1043894

American inflation took off as that money started flowing. As you'd expect it to do. But a demand-led inflation surge is relatively easy to deal with, by upping interest rates sensibly to apply a bit of a brake. That's why they've got inflation back down to manageable levels, while also getting the economy in a place to grow strongly now that things are back to normal.