Monday 9 October 2017

Labour Should Hope The Tories Do Not Give May Her P45

The Tories under Theresa May are now clearly dysfunctional.  May herself is useless.  She is kept in place only because a) there is no one any better amidst the Tory ranks, and b) if May goes the Tory infighting will break out into open civil war, with one side or the other winning, and the party splitting.  Its in Labour's interest that the Tories continue fighting like rats in a sack, and that the fighting be intensified.  That is best served in May remains in place holding the ring.



May remains in place only because the two warring factions would have to fight it out to a close if she went.  The Remainers feel in a bind, a bit like Labour, because they do not want to be seen to be openly coming out to oppose Brexit.  For now, it is the the Three Brexiteers who are taking the can for the Brexit negotiations necessarily and predictably going balls up, as all of the promises about straightforward negotiations, the EU having to give concessions to Britain and so on are shown to be as big a lie as the promise for £350 million a week fort he NHS.  By the end of this process, anyone tied to the idea of Brexit will find themselves tied to something as toxic as University Tuition Fees were for the Liberals after 2010.

Voters who were badly misled, and see the whole thing turn into disaster and farce will not look any more sympathetically on those politicians and parties who try to say "We we trying to respect the vote of the people", as their excuse, and quite rightly, because the job of a politician and a political party is to give the voters the benefit of their ideology, and of their class memory, as well as their more in depth knowledge and experience, not to be simply something that tags along behind the electorate.

That is why Labour's current position is doubly disturbing.  Not only should Labour know that Brexit is a reactionary nationalist dead-end that will lead to disaster for the working-class, but even knowing that it is refusing to give a lead on the basis of a subservience to a democratic primitivism, and failure to give any kind of clear and principled leadership on the most important issue facing workers for decades.

For the Tory Remainers, it is more difficult, because 66% of Tory voters voted Leave, as against 66% of Labour voters voting Remain.  For Tory Remain MP's the issue is more that they know that Brexit will be disastrous for the economy, and for those rentier capitalists whose interests they serve.  For Labour it should be a no brainer.  They have the opportunity to clearly distinguish themselves from the Tories, to distance themselves from the disaster of Brexit as it necessarily unfolds over coming months, including the potential for the Tory Right to try to push through a break-off of talks, and a sharp no-deal Brexit, which even May herself is now talking about.

If Labour came out to oppose Brexit, and to make clear that they would oppose any such no deal Brexit they could act as a pole of attraction for the Tory Remain MP's, who would be unlikely to go along with a no deal Brexit, even if that meant the government falling, and an election being called.  If Labour is to make its chances of winning the next election easier it will have to win in Scotland, which seems impossible unless it appeals to the 66.6% of Scots remain voters, who currently mostly back the SNP.

Already Brexit is undermining the Tories plans.  As I forecast last year, the UK economy is heading deeper into stagflation.  The economy is slowing sharply, whilst the fall in the Pound is causing inflation to rise.  The slowing economy has already swallowed up the leeway that Hammon thought he would have in the public finances, come his budget in a few weeks time.  Meanwhile, the EU economy is growing stronger by the week, and in the US the economy is strengthening, with employment continuing to rise, and now wages starting to rise sharply.  As a result across the globe interest rates are rising.  Global interest rises will cause UK interest rates to rise too, in addition to the lower UK credit rating, and its rising inflation.

It all spells a period of intensifying stagnation for the UK economy, whose productivity is now falling rather than even just rising slowly.  It comes at a time, when UK private household debt is again at dangerous levels.  The financial pundits talk about this high level of household debt in terms that suggest that the authorities will not be able to raise interest rates for fear of causing it to start defaulting.  But, interest rates are not in the gift of central planners any more than the price of anything else.  If interest rates rise because global interest rates are rising, and because inflation is rising, the fact that UK households might go bust will not be a reason for those rates NOT rising.  On the contrary, whenever credit starts to go bad, whenever people start to default on existing loans, or become desperate to borrow to repay their existing loans, to defer going bust immediately, that is precisely the time when interest rates spike much higher, because lenders start to worry about losing their money, and so charge higher rates or stop lending altogether!

When that causes property prices to collapse, so that people are left in negative equity, and start walking away from their houses and the debt that goes with it, as they did in the US, in 2008, the real state of the banks' balance sheets will also be exposed.  All of this is before Brexit has even happened!  Just as happened in 2000 and 2008, everyone after the event will ask "what happened there", and "why didn't anyone warn us this could happen", except it will be even more dramatic than in 2008.  No one will thank those politicians who failed to point out what was coming.

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