Friday, 25 May 2018

Friday Night Disco - The Joker On A Trip Thru The Jungle - Watts 103rd Street Rhythm Band

Trump's Triple Nobel Prize Win

Donald Trump could be the first person to ever win a triple Nobel Prize.  Trump's doppelganger, Boris Johnson, already noted that Trump was in line for a Nobel Peace Prize if instead of withdrawing from the Iran nuclear deal, he was able to enhance it, and secure a wider peace in the Middle East.  In a similar vein, Manuel Macron, proclaimed that Trump could get the Nobel prize if he brought about the denuclearisation of the Korean peninsula.  Never one to miss when someone is heaping praise and adulation upon him, Trump himself proclaimed that "people are saying I should win the Nobel Prize".

Of course, he even the Trumpish dolt Bojo was not being serious in saying that Trump should win the Nobel Peace Prize.  Politicians have realised that Trump has the mentality of a toddler, and that if you want to influence him, the way to do it is to offer him sweeties, and tell him how good he is.  Bojo realised that Britain has no influence in the world, and will have much less still after it leaves the EU, and so rather than wasting time with an actual meeting with Trump, he went over to the US to appear on Trump's favourite TV shows to heap praise on him, and offer him goodies if he were to be a good little Donald, and not pull out of the Iran deal.

The comments from Macron and others were of the same nature, with Macron even taking the piss out of Trump, by then actually shredding the whole Trumpist world view, such as it is, in his actual public comments, even as Trump was standing next to him, but doing so in language that he undoubtedly thought the ignorant Trump would not understand, or even bother to listen to having Macron's previous words of adulation still ringing in his ears. 

Of course, on Iran, the invitations of Bojo, Macron and others to remain in the deal were not enough to persuade Trump, given that he was already so committed by his previous statements, and the need to retain what remains of his base, ahead of the US mid-term elections.  Besides, Trump is also tied into a series of other commitments, with other Bonapartist leaders and regimes that require him to build, and continue the drumbeat of war against Iran.  Trump is reliant on his alliance with the Bonapartist regime of Netanyahu in Israel, and the house of Saud in Saudi Arabia.

But, Trump still had the prospect of his Nobel Peace prize for getting North Korea to get rid of its nukes.  However, as I wrote a couple of weeks ago, there was never any prospect of that happening.  Trump's empty ultimatism over the last year has simply allowed North Korea to get on with its programme of building the nukes it required, and the missiles it required to deliver them.  There was never any chance that the US was going to launch a pre-emptive strike against North Korea, other than by accident, and Kim as a far more astute politician than Trump, knew that to be the case.  Kim and the South Korean leaders both effectively played Trump with the same tools used by Bojo and Macron.  They know that Trump is a child like narcissist of extremely low intelligence, who doesn't realise when people are actually taking the piss out of him, with their ridiculous adulation, that simply reflects back on him his own infantile use of superlatives for each and every occasion.

South Korea, which was actually the driving force for a rapprochement with the North, not Trump, has good reason for trying to achieve some kind of deal.  Kim, as I pointed out, was never going to get rid of their nukes, especially having seen what happened in Iraq, Libya, and how the US had just reneged on the Iran deal.  Kim saw a meeting with Trump as the opportunity to get Us troops off the Korean peninsula perhaps in return for halting any further nuclear or missile tests (which it had completed anyway), and perhaps for reducing the size of its conventional army, which now having the protection of nukes, against US attack, it could afford to do, and would have good economic reasons for doing.

When Vice-President Pence simply reinforced that by agreeing with John Bolton that what the US actually wanted was some kind of Libyan solution in North Korea, it was fairly obvious what the North Korean reaction would be!  The whole Trump apparatus gives the appearance of a Barnum and Bailey circus, but without the actual organisation that goes behind such an operation.  It stumbles from one fiasco to another.  Trump could still be the first ever winner of a triple Nobel Prize.  If they introduce prizes for Idiocy, Incompetence and Bigotry, then Trump is a shoe-in, for all three.

It makes you wonder why the US ruling class, and more specifically its Executive Committee in the permanent state apparatus has continued to tolerate the situation.  In part, it comes down to the Bonapartist tendencies inherent in the US Presidential system.  The President has semi-dictatorial powers, especially where their political opponents are divided, and so weak.  In the US, the President heads up the Executive, and appoints the rest of the Executive, whose functionaries operate as an equivalent of a mixture of what in Britain would be a Minister, and their top Civil Servant.  That means that where these political appointees are reflective of the President themselves, any opposition to the policies they adopt, from the permanent state, has to come from its subordinate layers.

So, having idiotic Presidents, in the US, is nothing new.  Reagan was a dolt, and his economic policies were described by George Bush I, as Voodoo Economics, which led the US from being the world's largest credit nation into being the world's largest debtor nation, having terbled the US budget deficit, massively inflated its trade deficit, and which led to the 1987 Stock Market Crash.   But, Reagan was able to push forward with these idiotic economic policies, because he was able to appoint others to positions in his economic team who promoted such idiocy.  Trump has appointed some of the same people like Larry Kudlow to his own team of economic necromancers.  

George Bush II, engaged in the Iraq War, with almost an equal level of ignorance about geography, let alone global politics, as Trump.  He saw the Iraq War as a personal vanity project, and it was opposed by the US permanent state, who recognised that such a war was against long-term US interests.  And, they were right.  The greatest beneficiaries of the Iraq War, have been Iran, on the one hand, which was able to extend its strategic reach into Iraq, in support of its Shia allies, and thence into Syria, and on the other hand, the Sunni jihadists of Al Qaeda, and its offshoots, including ISIS.  The gains of the latter from the Iraq War, together with the support given to them from the Saudis, who have used them as mercenaries to fight proxy wars against its regional opponents in Iran, Syria, Yemen etc. was also the basis for Iran to intervene in this assorted conflicts, and thereby to extend its own reach.

But Trump seems to be a qualitatively different level of moron.  He seems to have been able to continue, however, because behind him stand more intelligent, better organised right-wing forces driving the US further down the road of Bonapartism.  In that they mirror the path trod in Turkey and elsewhere, all of whose regimes are tied together by a similar right-wing, nationalist and populist ideology of National Bolshevism.  It operates via a series of personal alliances that are visible on the surface such as the ties between Trump and Netanyahu, and the Saudi Royals, the connections to people like Farage, who is the face of that wing of right-wing nationalism operating in the Tory Party, along with people like Le Pen, Wilders, Orban and so on, and of course, Putin. 

All of them operate via a series of empty vessels, like the conmen who operate the shell game, reliant on continually distracting attention from one thing to another, as the impotence of their snake oil is exposed in one instance after another.  They rely on focussing attention on some external threat, in order to distract attention from the fact that the real source of the problem is with the actual political-economy they themselves espouse.

For example, Netanyahu is reliant on focussing attention on a supposed danger from surrounding Arab states, and from an impotent resistance from Palestinians with rocks, whilst the fact is that it is a heavily armed, and nuclear armed Israel that has occupied Arab lands, continues to occupy and extend settlements in the West Bank, imposes a humanitarian crisis on Gaza, via its blockade, and so on.   It thereby justifies the Bonapartist regime in Israel, which depends upon keeping the state in a militarised condition, undermines normal class politics, because its foundation is that same authoritarian nationalism that was promoted by the Zionists from the beginning.  It means that any real opposition to that Zionist agenda is squashed in Israel itself, and where it is opposed outside Israel, including as we have seen recently in Britain, by Jews themselves, it is labelled anti-Semitism!

In Britain, the problems of poor jobs, a failing NHS and social care system, and so on is similarly blamed on immigrants, foreigners and the EU, whereas the real reason that the NHS needs £350 million a week extra, is not that that money is going to the EU, but that Tory governments going back to Thatcher, have repeatedly underfunded it, have focussed spending on large vanity projects rather than primary care, so that vast amounts is siphoned off to large construction companies, pharmaceutical companies, and a bloated bureaucracy.  Similarly, the problems in social care, housing and so on, are not the fault of immigrants or the EU, but of the austerity measures introduced by conservative governments again going back to Thatcher.    

The relations between all of these different right-wing, nationalist groups operates like a series of corrupt business people whose real tax affairs, and financial manipulation is hidden from view by operating via a succession of interlinked, and secretive shell companies, one hidden inside another like a Russian doll.  The various companies that comprised the operations of Cambridge Analytica, which itself was a progeny of these same forces, is merely emblematic of the way they operate at a global level.

Trump himself is emblematic of that too.  He tells us that he is a brilliant businessman, and master of the Art of the Deal, a claim that is as ridiculous as his belief that people really thought he deserved a Nobel peace prize.  The fact is that like nearly every rich person alive today, he inherited his money.  His businesses then went bankrupt four times!  Questions still surround where the money came from for his current businesses, and as with the financing and support for various right-wing nationalist forces across the globe, attention has focussed on the role of Russia.  The Mueller investigation may throw some light on that, and in the process some right wing nationalist UK politicians might start to feel a little hot around the collar too.  Its perhaps why Trump and his right-wing supporters have been so keen to try to shit down that investigation.

Theories of Surplus Value, Part II, Chapter 16 - Part 2

On average, capitals of equal size produce equal profits, irrespective of the organic composition, and irrespective of whether the constant capital comprises a large amount of fixed capital and small amount of circulating capital, or vice vice versa. Ricardo correctly observed this fact, but was unable to explain why this average rate of profit was 20%, rather than 200%, because he had no basis for objectively determining the amount of surplus value. He is left, thereby, explaining this profit only on the basis of an addition to costs, whose limit is determined purely by competition. 

And, Ricardo's followers were thereby also led into all sorts of errors, because they were unable to connect this average rate of profit, via all of the intermediate stages, back to the surplus value, which is its objective basis. 

“Ricardo realises that the rate of profit is not modified by those variations of the value of commodities which affect all parts of capital equally as, for example, variations in the value of money.” (p 427) 

In this respect, Ricardo is superior to those modern Marxist economists, and the Austrian School, who attribute crises to the adoption of credit money, in place of gold. But, having made this observation, he should have concluded that the rate of profit is affected by variations in the value of commodities that do not affect all parts of capital equally, “that therefore variations in the rate of profit may occur while the value of labour remains unchanged, and that even the rate of profit may move in the opposite direction to variations in the value of labour. Above all, however, he should have kept in mind that here the surplus-product, or what is for him the same thing, surplus-value, or again the same thing, surplus-labour, when he is considering it sub specie profit, is not calculated in proportion to the variable capital alone, but in proportion to the total capital advanced.” (p 427) 

Marx quotes from Ricardo's “Principles”, where he describes three different situations. In the first, Ricardo describes a situation where the value of money falls in half. The result is that the commodities produced by a capital double in price. But, by the same token, Ricardo says, the money price of the capital has also doubled. If the money price of the capital rises from £1,000 to £2,000, and the exchange-value of the output rises from £1200 to £2400, the money profit in the first case is £200 or 20%, whereas in the second case the money profit is £400, but this still represents only 20%. The fall in the value of money has made no difference. 

In the second case, described by Ricardo, he says that if a given capital, as a result of some rise in productivity, is able to produce double the quantity of output, so that the value of this output remains unchanged, then this would also produce the same rate of profit. However, that does not necessarily follow, It could be that labour is replaced by a machine, which thereby raises the productivity of the remaining labour. As a result, the proportion of capital comprising constant capital may rise, and that representing variable capital fall. The mass of surplus value then falls, whilst the value of output may remain constant. But, with the same value of advanced capital, and a smaller mass of surplus value, the rate of profit would fall. 

The third example, given by Ricardo, continues the previous two, so that a capital of a given value doubles its output, but the value of the output remains constant. At the same time, the value of money is halved, so that the money price of the output doubles, whilst the money value of the advanced capital also doubles, thereby leaving the rate of profit unchanged. Ricardo's formulation is not precise enough, Marx says, because, where Ricardo refers to the output as “produce” of the capital, he should say “surplus produce”, or surplus value. 

“For the rate of profit is equal to the surplus produce (value) divided by the capital employed. Thus if the surplus produce is 10 and the capital 100, the rate of profit is 10/100, which equals 1/10, which equals 10 per cent. If however he means the total product, then the way he puts it is not accurate. In that case by proportion of the value of the produce to the value of capital, he evidently means nothing but the excess of the value of the commodity over the value of the capital advanced.” (p 428) 

Thursday, 24 May 2018

Theories of Surplus Value, Part II, Chapter 16 - Part 1


[1. Individual Instances in Which Ricardo Distinguishes Between Surplus-Value and Profit]

“It has already been shown in some detail, that the laws of surplus-value—or rather of the rate of surplus-value—(assuming the working-day as given) do not so directly and simply coincide with, nor are they applicable to, the laws of profit, as Ricardo supposes. It has been shown that he wrongly identifies surplus-value with profit and that these are only identical in so far as the total capital consists of variable capital or is laid out directly in wages; and that therefore what Ricardo deals with under the name of “profit” is in fact surplus-value. Only in this case can the total product simply be resolved into wages and surplus-value. Ricardo evidently shares Smith’s view, that the total value of the annual product resolves itself into revenues. Hence also his confusion of value with cost-price.” (p 426) 

As said previously, by “cost-price”, Marx means here price of production

Marx sets out a number of ways in which the rate of profit differs from the rate of surplus value. The rate of profit can rise or fall as a result of a rise or fall in rent. Marx doesn't mean a change in the rate of profit of enterprise here, i.e. the profit left over after the payment of rent and interest. He means the effect of changes in rent arising from variations in the organic composition of capital in agriculture as opposed to industry, which affects absolute rent

The total amount of profit is equal to the total of surplus value. However, the total amount of surplus value depends not only on the rate of surplus value, but on the quantity of labour exploited. The same mass of surplus value can be produced by a smaller number of workers with a high rate of surplus value as by a larger number of workers with a lower rate of surplus value. 

“The same amount of profit is therefore possible, with a falling rate of surplus-value and a rising number of workers and vice versa, etc.” (p 426) 

If the rate of surplus value is given, the rate of profit depends on the organic composition of capital. It is to be noted that this applies to the rate of profit rather than the annual rate of profit, for reasons that Marx comes to momentarily. 

With a given mass of surplus value, and composition of capital, the rate of profit will be affected by changes in the value of different components of the capital. This is the point that Marx makes in Chapter 6 of Capital III, dealing with variations in the prices of raw materials etc. And, to return to the point referred to previously, in relation to the rate of profit as opposed to the annual rate of profit, it will vary according to changes in the rate of turnover of the capital

As a result of his own analysis, Ricardo should have been led to distinguish between surplus value and profit, and between the rate of surplus value and rate of profit. But he doesn't, and this leads to his failure to understand the difference between exchange value and price of production. With no objective basis to determine the quantity of surplus value, and thereby of profit, “he appears in some passages to descend to the vulgar view—as has already been indicated in the analysis of Chapter I “On Value”—the view that profit is a mere addition over and above the value of the commodity; for instance when he speaks of the determination of profit on capital in which the fixed capital predominates, etc.” (p 427)

Wednesday, 23 May 2018

Theories of Surplus Value, Part II, Chapter 15 - Part 56

Finally, in this chapter Marx summarises some of the arguments by de Quincey, contrasting Ricardo's position to other economists. 

““When it was asked” [by the economists before Ricardo] “what determined the value of all commodities: it was answered that this value was chiefly determined by wages. When again it was asked—what determined wages ?—it was recollected that wages must […] be adjusted to the value of the commodities upon which they were spent; and the answer was in effect that wages were determined by the value of commodities.” ([Thomas de Quincey], Dialogues of Three Templars on Political Economy, Chiefly in Relation to the Principles of Mr. Ricardo in The London Magazine, Vol. IX, 1824, p. 560.)” (p 424) 

And, in the same journal, the question of the determination of value by the quantity of labour, as opposed to the value of labour, is taken up. 

““So far are the two formulae from presenting merely two different expressions of the same law, that the very best way of expressing negatively Mr. Ricardo’s law (viz. A is to B in value as the quantities of the producing labour) would be to say—A is not to B in value as the values of the producing labour” [l.c., p. 348].” (p 424) 

Marx adds that if the organic composition of the capital in A and B were the same, then it could be said that the relation of A to B was proportional to the value of the labour in A and B. But, that does not mean that the value of A or B is equal to the value, i.e. the wages of labour in A and B. The exchange value of A and B would be proportional to the wages in each for the same reason as it would be proportional to the constant capital in each. 

“Assume the composition to be 80 c+20 v and the rate of surplus-value equal to 50 per cent. If one capital were equal to £500 and the other to £300, then the product in the first case would be £550 and in the second £330. The products would then be as 5×20=100 (wages) to 3×20=60; that is as 100:60, as 10:6, as 5:3. [And] 550:330=55:33 or as 55/11:33/11(5×11=55 and 3×11=33); i.e., as 5:3. But even then one would only know their relation to one another and not their true values, since many different values correspond to the ratio 5:3.” (p 425) 

de Quincey writes, 

““If the price is ten shillings, then […] wages and profits, taken as a whole, cannot exceed ten shillings. […] But do not the wages and profits as a whole, themselves, on the contrary, predetermine the price? No; that is the old superannuated doctrine.” (Thomas de Quincey, The Logic of Political Economy, Edinburgh and London, 1844, p. 204.) 

“The new economy has shown that all price is governed by proportional quantity of the producing labour, and by that only. Being itself once settled, then, ipso facto, price settles the fund out of which both wages and profits must draw their separate dividends” (l.c., p. 204). “Any change that can disturb the existing relations between wages and profits, must originate in wages” (l.c., p. 205).” (p 425) 

And Marx summarises de Quincey's conclusion in his own words. 

“Ricardo’s doctrine is new in so far as he poses the question whether in fact it sets aside the law of actual value (l.c., p. 158).” (p 425)

Tuesday, 22 May 2018

Global Yields Set to Gap Higher

Global bond yields are set to gap higher, i.e. sovereign and corporate bonds are set to sell off.  The further ramification will be a corresponding sell off in shares, and property markets.  The US 10 Year Treasury Yield, has already moved decisively above 3%, and within a short space rose to over 3.1%, though it has sunk back to around 3.08%.  Goldman Sachs were predicting a week or  so ago that it could hit 3.60% per cent by next year, but it looks like it could hit that level or at least 3.50% within a matter of a few weeks, at most.

In my predictions for 2018, I suggested that Trump would send the US economy into a rerun of the 1987 Twin deficits crisis that led to the 1987 Stock Market Crash, which until that time was the worst in history.  I pointed out that Trump was applying the same Voodoo Economics that were applied by Reagan, based on the cranky ideas of Art Laffer that if you cut taxes (particularly for the rich) you somehow magically increase the amount of taxes collected.  Those policies under Reagan showed that idea is bonkers.  It trebled the US budget deficit, and turned the US from being the world's biggest creditor country into the world's biggest debtor country.  Since I wrote that, Trump has appointed Reagan's old advisor Larry Kudlow as his economic spokesman.

I pointed out at the start of the year that the consequence of Trump's tax cuts as happened with Reagan's tax cuts, would be to reduce government revenues, fail to increase US economic growth, and would suck in imports, resulting in the trade deficit ballooning.  The US Congressional Budget Office has now confirmed that.  What there is no sign of yet, which would increase US productivity and growth is the $4 trillion infrastructure spending plans, required as a minimum to restore the crumbling US roads, rails, bridges, telecoms and so on, to the standards required of an efficient 21st Century economy.  The US is not alone in that requirement.  The implementation of conservative policies over the last 30 years and more, that concentrated on the illusion of financial wealth, meant that those conservative governments literally failed to mend the roof of their economy's infrastructure when the sun was shining, so as to minimise government borrowing, and thereby keep down interest rates, so as to keep the prices of financial assets and property inflated.  Now they have huge backlogs of expenditure to have to undertake, just like a landlord who fails to maintain their property, and then finds their lack of routine spending has undermined the fabric of the building.

The pundits on the speculation news channels have worried over the fact that yields on shorter dated bonds have been rising much faster than on longer dated bonds - yield flattening.  Traditionally, when the yield curve becomes inverted, so that longer dated yields fall below those of shorter dated bonds, it is an indication of an impending recession.  The logic being that speculators think that a recession in the near future will cause the demand for money to fall back so that interest rates fall.  In part, the current approach is based upon wishful thinking.  The financial speculators do not mind a bit of recession, if it reduces interest rates again, because those lower rates push up asset prices again.  In part, its based upon the application of a mantra rather than looking at the current reality.  The reason there is curve flattening is that shorter dated bonds are selling off as central banks have been forced to withdraw from QE - the only ones still involved are the BOJ and ECB, and they are likely to stop in the next few months - and the central banks, already way behind the curve in terms of actual market rates of interest, i.e. the rates that small businesses must pay if they can get loans, and the rates consumers have to pay for consumer credit, have started to raise their official interest rates.  That means speculators first sell these short dated securities, which are the first to get hit by the current central bank tightening.  The longer dated securities' prices simply reflect that large quantities of them are in the hands of the central banks themselves.  The fact that their prices have not fallen so much yet, is not an indication of a recession on the horizon, but simply of the fact that the central banks are not selling them!

As I also pointed out a few months ago, the reason that global interest rates are rising, is not because of inflation, but because the demand for money-capital is rising relative to the supply.  The demand for money-capital is a function of how much industrial capital needs money-capital to finance capital accumulation.  The supply is a function of how much realised profits increase, so that they are available either for direct accumulation by companies, or else are thrown by companies into money markets available for others to borrow.  It also depends upon how much of the existing stock of savings are mobilised as money capital rather than simply as money for spending purposes - including spending for the purpose of financial speculation and other forms of gambling.  If global growth rises, and companies seek to accumulate additional capital, the demand for money-capital rises.  If realised profits rise by a smaller proportion, the supply falls relative to demand, and interest rates rise.

In the last few months, we have seen the confirmation of the other point made in my predictions for 2018, which is that although global growth is continuing on a pretty synchronised basis, the usual three year cycle, would result in a relative slow down from the third quarter of 2017 to third quarter 2018.  That relative slowdown has been seen, and has slowed the rise in global interest rates.  But global growth continues at a faster pace than seen for about a decade, and it is set to rise again in the next few months.  At the same time as capital itself is expanding, and the demand for money-capital is rising, whilst tighter and tighter labour markets are starting to push up wages, and thereby, although still only tentatively, begin to squeeze profits, governments are having to increase spending on infrastructure etc. so that more government bonds are being issued, increasing their supply, and pushing down their prices, so causing yields to rise. 

As I've pointed out before, and Marx noted this process 150 years ago, as global growth is rising, and as more labour-power is employed, also at higher wages, this creates an inevitable increase in demand for wage goods.  The producers of wage goods, as a result of competition, for fear of losing market share to their rivals, then have to increase capital investment.  Interest rates are pushed higher again, and as they rise the capitalised value of financial assets begins to crash, the money flowing increasingly into real productive investment in search of profits rather than paper capital gains.

The UK, as I again pointed out at the start of the year is an anomaly.  Its economy has, and will continue to be dragged along on the coattails of this growing global economy.  But, already it can be seen that it is acting as an increasingly long tail, dragging along behind.  The UK economy, already an economy in long-term relative decline, from its 19th century heyday, was placed in even worse condition to deal with the global economy, as a result of the conservative economic policies introduced in the 1980's, and continued thereafter, to the present day.  It is itself now a bit like a 19th century aristocrat, living off its assets, and borrowing against them to fund its continued consumption.  That is another reason that conservative governments - in which I include the governments of Blair and Brown - have attempted to keep asset prices for things like shares, bonds and property massively inflated.  But, Brexit has blown that model apart far more quickly than would otherwise have been the case.  The UK has rapidly gone to the back of the pack in terms of growth, and its productivity level continues to deteriorate.  The UK economy is likely to continue to stagnate as a result of Brexit, whilst it will not be able to escape the global rise in interest rates, which will quickly burst all of those various asset price bubbles, in stocks, bonds and property.  In 1990, when interest rates rose by a much smaller percentage (as opposed to percentage points) than it is rising now, it caused house prices to fall by 40%, in a matter of a couple of months.  Conditions are more conducive to an even bigger crash today.

On top of all that is the effect of these movements on currencies, and particularly in relation to the Dollar as against emerging market economies.  I also pointed out at the start of the year that a number of inflexion points were approaching.  We have started to see the Dollar strengthening as US official rates rise, a reversal of what has been the case over the last couple years.  The US 10 Year Treasury is now the providing a positive real yield, whereas the bonds of most other G20 countries are still lower than their inflation rates.  As US rates continue to rise, the Dollar will strengthen, and EM currencies will fall, leading to them needing to raise their own official rates.  That is being seen already with Turkey.  But, the UK is also falling more and more into the category of these emerging markets, and that will increase the more it is separated from the EU.

The fall in the Pound following the Brexit vote pushed up UK inflation quickly, at the same time that it increased the slow down in the economy, creating the foundations of stagflation.  It has not been the strength of the Pound in the last six months that led to it rising against the Dollar, by around 10%, but the fall in the Dollar.  Now, as rising US official interest rates, start to exert upward pressure on the Dollar, and the impact of Brexit on the Pound, causes it to fall, that process of a weaker Pound causing higher imported inflation is likely to resume.  UK inflation is already way above the BoE's 2% target, and is likely to then start to rise again, increasing the tendency towards stagflation.  Moreover, recent reports have shown that another impact of Brexit is that the flow of migrant labour into Britain has slowed considerably, the racist hostile environment policy is also likely to have impacted that.   Its effect on labour shortages in the NHS and in social care has been well documented.  But, other recent reports show that the real problem for an industry like fishing is now the inability to recruit the required migrant labour, rather than the EU's Common Fisheries Policy.

Globally real market rates of interest have been rising for some time.  The real global economy is continuing to grow, as part of the long wave boom, and that growth looks set to pick up faster in the next few months.  Money-capital is becoming in increasing demand to finance the expansion, and the prices of financial assets have only been kept inflated as a result of a tremendous effort by central banks to keep them floating in the stratosphere.  For years, there has been no basis to own those assets as sources of revenue, because even where they were not offering nominal negative yields (which many of them continue to do), they were providing negative yields in inflation adjusted terms.  The only basis for holding them was in the expectation of large capital gains, as further speculation backed by central banks pushed their prices even further into outer space.

When speculators see the prospects of prolonged capital losses rather than gains on shares, bonds and property they will rush for the exits.  Yields on global bonds are set to gap higher, and that will be the start of the end of the current period of irrational exuberance.  For many who think that it can continue, or that current paper prices have any substance to them, it will end in tears.  But, as always happens in such crashes, for others it will be a bonanza.  Cash is King, and ironically, all those who currently had to rent, because they could not afford to buy, will find themselves in a privileged position.