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The World on Economic Fire

PoliticsPosted by G. Thompson Tue, July 10, 2018 00:32:06
The crisis in global economics I predicted back in March is already gathering pace. It is intertwined with a political crisis of now global proportions. It started with the false high valuation of the dollar created by Trump's tax breaks to his buddies, his policy of America first and the resultant fake boom in the American economy. Of course, the American economy is and was before Trump, in deep trouble, the cracks papered over with "quantitative easing" - a euphemism and false description for printing money on the basis of gold it does not have, and a huge national debt and imbalance of trade. The boom cannot last and economic reality will burst upon the American political scene within 6 months at the longest. But the high dollar has already had a devastating effect on Sth American and other BRIC economies. Interest rates are shooting up in BRIC countries (Argentina already 40%!) to protect their own currencies and economies from the high dollar. Their crises have been made deeper by relatively low oil prices, as BRIC countries such as Brazil, Russia, Venezuela etc are heavily dependent on oil and gas exports. Even the Chinese currency is wilting under the onslaught of Trump's policies. This has been made worse by his latest "Twitter Trade War". In a couple of strokes of his pen (no, keyboard) he is bringing the world to its economic knees, in other words the trade war he has begun, nominally to put America "first", has brought about crazy repercussions from his major trading partners - the EU & China - they too have put up their trade barriers to American exports. There is now following: a flight of AMERICAN companies (cf Harley Davidson et. al) to other countries, where they can produce for local markets and avoid the tariffs. Leading to unemployment and eventual crisis in the American economy. It will eventually be followed by a flight of investment by Germans, Chinese and Japanese out from the US economy. This economic crisis in the USA will also hit the Europeans and Chinese too, as America is their largest export market. But both areas are a little insulated from immediate crisis by two factors: the European economy, especially the central economies and Scandinavians, have positive trade balances, and savings, not debts, and secondly are not so dependent on oil to fuel their economies. Both have increased massively their investment in alternative energy in the last 20 years. And China has reserves of oil bigger than America - in its oil storage tanks. I know this because the company I worked for in Denmark, Mærsk, has been delivering enormous quantities of oil to China since 2004, more than what they need. (see my blog on the low oil prices 2014 - 2018).

Trump also shot himself in the foot by going into a diplomatic war with Iran. This may have been on purpose, just to shift up the oil price (it is now almost double what it was before his declaration against the Iran accord) and therefore make it economical to begin again mining the oil shales in USA and Canada. But it again is a Phyrric victory. OPEC is already releasing more oil, and China and Western Europe are partially insulated from higher prices by either alternative energy or massive oil reserves. I think the Chinese saw clearer than others the coming of the present crisis. The result will be a ceiling of the oil price around 90 dollars, with the likelihood of it coming down again in the near future. Even if it stays high and more shale oil is released, the globally oil-based economies are on the wrong side of history, alternative fuels and energies will come more and more on line. In other words Trump cannot stop this global trend with his out of date reliance on oil and coal. Likewise in the metal producing industries, most of the world will just turn to other cheaper resources, in China, Eastern Europe, Australia, and Sth. America. US of A will decline as a producer of primary products.

In the European sector we also have cause for concern. Italy wants to leave the Euro, Spain is falling apart and also has major economic and political crises. Eastern Europe will be starved of funds from the European Commission, unless it reforms its populist-statist policies which has lead to dictatorships and chronyism. Then there is the glorious Brexit designed by a hapless Conservative government. This government is falling apart, Brexiteers are at war with May, the Prime Minister, and her more gentle Brexit softliners. But her policy cuts no ice with Barnier and the western European governments. Brexit has to be Brexit, and the sinful Brits have to be outcast from the European family, as no special treatment can be allowed. The four pillars of the market cannot be compromised - no movement of labour must be matched by a return to pre-membership trade tariffs. This will hit all Europeans, but not half as much as it will hit the UK.

How can the UK turn to the USA for special trade deals when they are already in a trade war with them?! Will China and India come to the rescue? The old commonwealth (India & Pakistan)? I very much doubt it. China may help a little, but agreements to lower tariiffs between the Europeans and China are already stalled, why should the Chinese favour the Brits? After all, they will no longer be a bridge to the rest of Europe. The Asian sub-continent itself is going through its own crisis with rising interest rates. So no joy there, too, Mr. Johnson et al!

No, Brexit means hard Brexit, and a major crisis in the British economy. I can forsee either a new government within 3 months (the Conservative party looks like it will fall in two -at last!!) or another hung parliament. The latter will mean a crisis in as any negotiations with Europe or any other foreign country will be very difficult. A new Labour government will mean the same, with dithering Jeremy Corbyn at the helm. Result: run on the pound, 20% interest rates, massive unemployment and many people losing their homes, especially if they have interest only mortgages or massive amounts of capital to pay back. House prices in London are already falling, and this has always signalled, in the past, a crash in house prices over the whole country. Only the banks and mortgage lenders will be the winners, just like in 1992-4.

Most people under 50 can hardly remember 1992, and are imbued with the false idea that mortgage interest rates can remain eternally low. In Europe many more people rent, or they pay back real mortgages, so the crisis again in western Europe and Scandinavia will not be so severe. But a global crisis caused by the American economy's collapse will affect us all. So take out your share market investments now, and sell all those houses (not) paid for with whacky interest only loans. There is not much time.

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World Economic Crisis - short update

PoliticsPosted by G. Thompson Thu, May 31, 2018 09:19:07

Many countries are entering political and economic crises - Spain, Italy, Turkey, Iran, Argentina, Mexico, Brazil, Indonesia, all with a currency and interest rate crises, but the far east is getting healed (cf Korea). This is definitely the beginning of a downturn in the global economy, which the Chinese saw coming a long time ago and stocked up on oil (see my article from 2016 -."We should be happy no? - comments on low oil prices). Add to this the Trump trade war with the Europeans and China and we can guess where it is heading. Trade Wars always lead to economic recessions, since the Brits tried to stop cheap cotton and wheat being imported from the States back in the mid-19th century...

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The Economic Crisis of 2018-19 has already begun!

PoliticsPosted by Graham Thompson Wed, May 09, 2018 02:01:21
As I reported in my last blog, a major economic crisis is approaching. My estimate is that it will hit the US by the end of the year, the shortly thereafter the UK, especially if we have a "NO DEAL" Brexit, which is looking ever more likely. That should be pretty clear by New Year 2019. Bust and booms always go in regular cycles - and it is exactly ten years since we had the last collapse because of greedy banks. But this time the only ones to benefit will be the banks - it will be more like 1992, but even worse because the level of debt in the US and UK (but not in Germany or China, which both have surpluses) is much higher than 1992. Thousands, perhaps millions will lose their homes because of accelerating interest rates, particularly if they have interest only mortgages. Thousands will lose heir jobs. After 2019 the crisis will spread to the rest of Europe and then China, because China depends on us in the west as its major export market.'

The first sign of the coming crisis is in Argentina. This is what the Financial Times says today:

"In discussions with Christine Lagarde, the IMF managing director, Mr Macri discussed a precautionary credit line that Buenos Aires could access to shore up its currency and stabilise debt markets. Bloomberg News reported he was seeking a $30bn credit line. The talks occurred as the peso plunged more than 5 per cent to a record low of 23.10 peso to the dollar, taking its decline in the past eight trading days to 12 per cent in spite of the central bank’s spending $5bn in reserves and raising interest rates to 40 per cent on Friday. Mr Macri’s announcement gave the currency a brief reprieve, allowing it to recover to 22.30 peso. “This will allow us to strengthen our programme of growth and development, giving us greater support to face this new global scenario,” Mr Macri said. Ms Lagarde put out a statement calling Argentina "a valued member of the IMF”. She said: “Discussions have been initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order.” 12% Peso’s decline in the past eight trading days despite the central bank spending $5bn in reserves and raising rates to 40 per cent Simon Quijano-Evans, EM strategist at Legal & General Asset Management, said the IMF programme was likely lead to a further fiscal tightening in a country that has already been working through Mr Macri’s more gradual austerity programme."

But the crisis is expected to spread. Again today BORSEN, the Danish financial paper reports:

“Market fears open run on (developing Countries) currencies”

"The nervousness for a global downturn similar to 2013 with an active run on shares and currencies in a series or new economies is spreading in financial markets…...The recent stimulus for such forecasts was the fear that interest rate rises will begin in the USA (after being at historic lows for many years) because of an over-stimulated economy, and rising inflation. The boom in America has also led to the increased value in the dollar against these currencies, which will be reinforced by future interest rate rises. The fall in currencies such as the Argentinian pesos may also have local origins, but the fear is the disease of falling currency values and subsequent raising of interest rates to defend the pesos will spread to other countries whose economies are stalling. Countries such as Russia, Brazil, Mexico, India, the Philippines, Turkey and South Africa. And if there are problems in one land, it is more likely to spread to others.” In fact all of these countries’ currencies have fallen by between 7% (Brazil) to 10% (Russia) and 12% (Argentina) since 1st April - that is just 38 days!

Why should we be concerned? Well first these countries form a major part of the European and British export market. If their economies fail, they will stop buying our goods. Then our economies will also be dragged down. Secondly, the boom in the States, which is partially causing these new economies' currencies to decline because of the strong dollar, is a fake boom, created by a fake President: USA is suffering the biggest debt crisis of its history - it has an unsustainable level of debt that will take generations to pay back. But the President is making it worse by giving away millions in tax breaks, mostly to the rich. This stimulates the economy, but only for a short time. The dollar is predicted to fall by about 7% by the end of the year against other major currencies - except the pound (Borsen/Nordea Bank expert Anders Svendsen). It may fall much more quickly if Trump is thrown out of office because of Putingate. Political uncertainty will lead to economic uncertainty, and an already jittery market will crash, with raised interest rates in the States to defend its own failing currency. This could happen before the end of this year. Add to this the uncertainties of Brexit, particularly on an already weakened British economy, and we have the perfect scenario for the pound to fall in value too against the euro, the yen and the Chinese nimbi, all MAJOR trading partners (plus the US) - which will lead to a sudden increase of interest rates, perhaps by April next year, to as much as 15%. A no deal Brexit (which is looking ever more likely) will make this an even greater certainty. Thus 1992 all over again, and thousands maybe millions losing their homes in the UK.

Can we avoid this? The answer is no, precisely because the major financial papers are already predicting it. This becomes a self-fulfilling prophecy. People taking notice will sell shares, buy safer currencies and gold, and sell houses. Many European & International companies and personnel will move out of the UK altogethe, reducing house and commercial property prices in London but boosting the French and especially the German economies. Frankfurt will replace London as the financial centre of Europe. So the euro will rise in value against the pound, enforcing ever higher interest rates to defend it.

It is called the domino effect!

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Consequences of Brexit

PoliticsPosted by Graham Thompson Thu, May 03, 2018 04:32:22
If you have big property and large mortgages, it is time to sell your houses etc now. There are all the signs of a crash in the market, probably around Easter next year, the time of Brexit, with a gradual fall before then. House prices in Central London are going down the fastest, and the rest of the country tends to follow that. Prices in outer London are stagnant or dipping, as they are in most of the rest of the country. Most experts see it as a temporary dip, but I see it otherwise with Brexit looming. You may have even read some fake news that London prices are increasing because of the sudden interest of NON EUROPEANS in the London market BECAUSE of Brexit. This is rubbish - there are thousands of expensive commercial and domestic properties lying empty in the central and eastern parts of London, firms are leaving the City and so are employees. Brexit will trigger a sudden decline, and as always the rest of the country will follow. I predict a crash as big if not bigger than 1992 EMF debacle. After Brexit there might be a double whammy - house prices will crash, and because imports will become massively more expensive, interest rates will rise to double figures. Wages will follow. Young Brits have never known interest rates of 15% like I and my father did when John Major was prime minister and he had 'those bastards" ie Brexiteers from the Tory Party on his back.

History tends to repeat itself and at that time house prices fell by more than 40% from 1990 to September 1992!

The following quote is from:

"The UK joined the ERM in October 1990. at a rate of DM 2.95 to the Pound.

However, the problem was that the economic situation was declining quickly. The UK was sliding into recession due to falling house prices and an end to the past economic boom.

High inflation and deteriorating economic activity was making the Pound less attractive. Therefore, the Pound kept falling to its lower limit in the ERM. Therefore, the government was bound to protect this value of the Pound by:
  • Increasing interest rates - this attracts hot money flows - it is more attractive to save in UK with high interest rates.
  • Buying pounds with foreign exchange reserves.
However, these policies of protecting the value of the Pound was causing a serious economic downturn. High interest rates particularly hit the housing market. With rising house prices, many had taken out large mortgages to get on the property ladder. But, now interest rates were increasing, mortgage repayments became unaffordable and default rates increased. Combined with rising unemployment from the recession, the housing market saw a dramatic fall in prices that was to last 4 years.

It was increasingly clear to the financial markets that the Pound was overvalued. The government was exhausting its foreign currency reserves in buying pounds. But, more problematically, the high interest rates was causing a serious recession and misery for homeowner.

Financial speculators like George Soros predicted the Pound was doomed, so they were keen to sell their pounds to the British government. (It is said George Soros made £1 billion out of the UK government during ERM crisis)

It became a question of pride for Ministers, with Norman Lamont and John Major pledging to keep the UK in the ERM, seemingly at all costs.

For a long time, the British government fought a losing battle. But, the foreign currency reserves of the British government were no match for the trillions of Pound Sterling traded on the foreign currency and the pound kept sliding. It is estimated that the Treasury used £27 billion of foreign currency reserves trying to prop up the Pound. The Treasury estimated the final cost to the taxpayer was estimated at £3.4 billion.

On one desperate day - Wednesday 16th September, the UK government increased interest rates to 15%. In theory, these high interest rates should attract hot money flows. But, the market saw it for what it was - a measure of desperation. The market knew these interest rates were unsustainable and couldn't be maintained; the sell off continued and eventually, the government caved into the inevitable and left the ERM. The Pound fell 15%, interest rates were cut, and the economy was able to recover.

It is a classic example, of failed government policy. If the UK had joined the ERM at the start of the economic boom in the mid 1980s, the anti inflationary impact would have helped moderate the boom, kept inflation low and prevented a painful readjustment. But, they joined at the wrong rate at the wrong time. Trying to keep the Pound artificially high caused a recession, deeper than any of our competitors. The ERM was dubbed 'The eternal recession mechanism'. The artificially high exchange rate just attracted financial speculators who saw the British government as a source of easy profit.

On leaving the ERM, the UK economy soon recovered. This was partly due to devaluation, but also perhaps more importantly - interest rates were able to fall significantly."

My Blog Again:
My father lost his house then because he went into negative equity. He had an interest only mortgage, and owed more than he could possibly pay from his pension. He lost about £80,000 on a house he bought for £135,000. In today's market for house prices, he would lose about £150,000! The only people that win in these situations are the banks, they get many cheap houses and sell them after a few years at massive profits when the market recovers. Interest rates may not go that high but any British govt. will have to prop up the £, just like in 92/93. Add to that the political uncertainty of a minority government, the fall of Theresa May and Boris in charge (the new bastard Brexiteers are in a majority in the cabinet) plus someone like Michael Gove as Chancellor - you can guess how seaworthy SS Great Britannia will become. "No deal is better than a bad deal" politics will reign which means the abandonment of 1 million Brits in Europe and mass emigration of the best minds of the UK. Do I need to say more?

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Still We Have Cheap Oil

PoliticsPosted by G. Thompson Tue, March 27, 2018 17:35:48
So my blog more than two years ago on cheap oil its causes and effects has proved to be largely correct. The price of oil remains really low because of the reasons I gave in that blog. And the consequences remain the same. Problem is cheap fuel for air travel means people in their masses are taking short holidays all over the globe. This helps the good effects of globalisation (cultural understanding and reduction of racism) but it does nothing for global warming - on the contrary it hastens it - and tourists in some hot spots are getting attacked and demonstrated against because of local pollution, rise in prices (incl. property), and general destruction of minority cultures.

Prices are finally rising, not because the oil situation has changed, but because of the political crisis around Trump's move to re-introduce sanctions against Iran. His is the only country wanting to do this, so this brings him in direct conflict not only with China and Russia, but also with the UK and Europe, all of whom wish to continue the agreement with Iran, as long as the UN can monitor their nuclear industry. Now the whole might of the US economy will be brought to bear on Iran, but also on us, too, here in Europe. Our companies will find it difficult to trade with Iran, as Trump is trying to blockade the country economically. China has the most interests in Iran, but Europe is not far behind them. This will lead to a trade war and a race to the bottom. The oil price rise is partly because of the loss of oil supply from Iran, but more importantly, the result of jitteriness about what will happen in the future. Higher oil prices has already led to a switch towards shale oil, esp. in the States, as it was not economical to mine it at previously very low prices. My guess is that the oil price will sink again in a couple of months from the now $70 a barrel to $50. But it could go the other way if the political crisis between all the major countries is not solved and the US economy collapses. The greatest danger for us in Europe is not higher transport costs and more inflation, but a real split with the US if Trump manages to stay in power. This will lead to the first major shift in the great global alliances since 1939 - nearly a hundred years ago!. This tectonic shift could easily lead to another World War if not handled properly by the world's politicians. But I doubt it, the more likely scenario is that Trump is forced out of power before then. Let us hope so.

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We Should be Happy - No???

PoliticsPosted by Graham Thompson Wed, January 27, 2016 16:14:23

We Should Be Happy - The Price Of Oil Is Falling To Its Lowest Level In 20 Years

But Maybe We Shouldn't - Thoughts On The Current "Crisis".

The oil price fall is spectacular in recent months but we have been here before. In 2004 it was down to $35 a barrel, while in 2007, before the crash it was up to $90 a barrel. Directly after the banking failures it fell to $33 again in 2009, but by 2011 it was over $120 a barrel. It fell gradually to around $60 at the middle of last year, then fell violently to under $30 in January this year. Sometimes the crash in value has been due to economic crises but this time it has not been heralded by economic troubles - in fact it may be adding to a crisis in confidence in the economy and where it is headed. The main factor in the sudden drop in price is oversupply and hoarding of oil by some major countries, especially China. But I want to look in detail at this fall and the reasons for it, then I will look at future consequences and prospects. If there were logic in the market alone then cheaper oil and fuel should give a boost to the global economy because of cheaper air, ship and truck freights – but no boost has come - in fact the opposite. This is a problem very difficult to understand but I think the popular media's account of the situation is lacking in depth, especially in its explanations and possible future consequences.

One of the explanations for the oil price fall is the global slowdown of the past 7 years - but as we have seen there is no correlation on a global level. In the past year the US economy has definitely picked up, and so too until very recently has the official UK economy. The French economy still seems in the doldrums but the German economy seems to be steaming ahead still. China is slowing, but its growth up to December 2015 is at a rate that most countries would envy (6.9% p.a.), and the next year's forecasts are only for a slight fall (to 6.5%), Despite turmoil in the Chinese stock markets late last year, these seem to have stabilized for the moment. So demand for oil should, according to this, still be high in the key developed and developing countries. But can it continue?

What the papers do not tell you is that there has been a fall in demand for oil compared to its production level, thus there is over-production leading to a glut of oil and hence the price fall. From 2009 until 2015 there has been a global increase in output from 72 million to 76 million barrels per day, an increase of approximately 6%. Before this same period, the increase in consumption of oil had been at 1.3% per year but since 2009 it was only an average 0.7% increase per year (all figures are from the website). This means that the total rise in consumption has been 4.9% from 2009 to 2015 and this is considerably less than production. Where has all this oil gone, and why have we come to produce too much oil???

What the papers also do not tell you is that there has been a significant decrease for the demand for oil, especially in the past three years compared to the production. Production has continued to increase despite slowing demand for 3 reasons. Firstly back before 2010 considerable money was invested in shale oil in Canada and Alaska by the US, in order to make them relatively independent of the uncertain situation in the middle east. Until Obama's decision last year to cancel the oil pipeline from the far north to the Gulf of Mexico for ecological reasons (but it was clear from the drop in price already experienced that economically too this pipeline made no sense, as it would lead to even more over-production and selling oil at a loss) there seemed to be no stopping shale oil coming onto the market. Secondly, this has resulted in a competition for customers between the States, and Saudi Arabia and the Gulf states. This too has driven prices down. Thirdly, where is OPEC in all this? Why haven't they been able to stabilize the oil price? Simply because there are too many players now in the game – many new developing countries in South America, Africa, and South East Asia have also become producers. This has not only added to the oil flows but also meant the OPEC system no longer works. If the major players tried to hold onto the price levels around $60 (the figure necessary for most companies to remain profitable for re-exploration and normal activities) the lesser players would undercut them. The fact that there has been no global agreements has led to a race for the bottom.

But there has been a final reason why over-production has occurred – and this is the success story of the new green industries, including the motor industry with their more economical cars and trucks, hybrids and oil-free electric vehicles. We can quite clearly see this in countries such as Germany and Japan, but even in France, the UK and, more recently, the mother of oil consuming countries, the US of A. But the oil consumption level has also gone down in recent years in other industries such as shipping (residual fuel oil used in most ocean going ships has dropped from 2001 = 13 million barrels per day, to 8.94 million in 2010 - and this has continued due to new eco-friendly fuels and improved engine efficiencies). Bio-diesel consumption by contrast has increased from 0.02 million in 2001 to 4 million in 2011.

Oil consumption in Germany began falling as early as 1999 from when it fell from 2.923 million barrels per day to 2.65 in 2004 (IndexMundi). This fall steadily continued through the 2008 crash (2.45) until 2011where it has levelled off at around 2.40 million, which is where it is today. This is a reduction of 22% - a big boost to the German economy because it used to import most of its oil and now it depends much more on its own home-grown green industries and their products. Oil consumption in both France and the UK has also fallen, from a peak in 2004 to a much lower figure in 2013 (in both countries an approximately 12% reduction in 10 years). Even the US has used less oil, despite the new streams of shale oil coming on the market. Their reduction is more recent: from a high of 20.8 billion barrels a day in 2005 down to 18.69 in 2009, and then 18.41 in 2012. In 2013 consumption went up again to 18.96 million – and this may be due to gradually falling prices and the American love affair with the car in such a huge country. These countries together are the major oil consuming countries in the world, but all have witnessed a reduction. It is only in the developing BRIC countries where consumption has continued to spiral upwards – the main example being China, which increased on average yearly by nearly 10% since 2003, and in 2013 stood at 10.12 million barrels per day – more than half of the US consumption. There are some indications that this consumption level will flatten out in the next few years, partly because of green technologies coming on-stream, but it is still number 2 to the USA in the world. China and the other BRIC countries are the main reason why world oil consumption continues to increase, but there is some hope that this will also level off as we move into the 2020s, especially if other economic and political conditions make further oil exploitation difficult.

We have seen that oil production continues upwards despite these trends – and the reason and consequence is that countries like China have been busy stockpiling oil whilst the prices are low, so that it can be used in the following years when the prices are thought to rise again. The tanker business has soared in 2015 with a 25% increase in oil deliveries over the previous year, bucking the downward trend in 2013 and 2014 (Fairplay Magazine January 2016). But then the problem comes when all oil storage facilities become full. The US and China are lead countries in this effort to hedge against the future price by trying to build in more and more storage. But this has also the affect of keeping prices low. And the reason for building more storage becomes self-defeating if the world's economy also starts to stall. Now the oil companies can no longer operate and invest, nor do they want to, in future exploration or even usage of existing discoveries. The Brazilian fields are a good example – plenty of unused potential but the oil-glut and local economic crises (and these are related) have led to a halt in investment.

The Consequences

The main consequence of having over-production and so much stored oil will be to keep the oil prices low over the next year at least. The demand for oil always dips in summer, so come late spring time we may see prices going below their present record levels. When asked to forecast the future price of oil, market experts gave a range from lows of $10 a barrel to a maximum forecast of $60-70 by the end of 2016 (BBC4 PM Show 25.1.16). The price will definitely not climb to the point where the Oil Companies will consider it worth pushing ahead with new exploration.

This has a number of effects on the stock markets and the real global economy. Let's look at the winners first of all. Clearly the motorist and the transport sector will be the first beneficiaries of cheap petrol and oil, and this includes the major shipping companies who can deliver their goods more cheaply world-wide; flights too are becoming cheaper, and therefore people will travel both short and long distances more - with negative consequences for global warming and pollution. But there are not many other winners, and in fact transport companies will NOT benefit in the long term because of the general downturn in global markets. As we have not escaped the consequences of the last crisis in 2008 and 2009, the transport sector is still depressed and freight rates are at their lowest for years. This has squeezed the sector almost dry, and the container business has imploded with over-capacity (in particular, with too many monster container ships having been built, and the scrapping of perfectly workable smaller but not very old ships, and resulting consolidation and takeovers of the smaller companies), and further years of cheap oil will not really help to balance the books if there is not enough to carry.

The crisis in the real world coming from low oil prices mostly first affects producing countries, particularly the slowly developing BRIC countries such as Brazil and Russia. But it also affects smaller countries such as Venezuela, Nigeria and Indonesia, all big oil producers whose economies and development rest primarily on oil sales. Continued lack of demand means that all these countries are going into major economic crises. But these countries are also the export target markets for the high value-added products, which are mostly produced by the most advanced countries - US, Europe, Japan and South Korea. Saudi Arabia, the Gulf states and the newly emerging Iran will also be hit hard by continuing low price, with a slowing of their incredible (up till now) pace of development. Most of the new cities in these countries have yet to be paid for, but a stalling of their economies will probably mean only the banks will become the major property owners as companies are driven into debt. So the knock-on effect will hit us all, even China, which though not a major oil producer, makes profits from the applied oil industry, and whose exports and investments also go to these countries. None of these countries have diversified their economies away from oil (and coal) dependency so as to be able to make more money in other industries and make up for the loss in profits on oil-based products. It will take some time for them to do so, though the rich middle eastern states and China can clearly see the problem and are trying very hard. This slowing of the global economy is part of the reason why politicians and financiers, investors and economic experts are cautious about the recovery continuing into 2016 & 2017, and why stock markets remain volatile. It is just not a good time to invest. Dry bulk prices for raw materials are also at an all time low after over-saturation of products such as iron-ore, coal and bauxite in the world markets. Many of these primary products are produced by developing countries and also Australia, and the slumpin prices has disastrous consequences for their economies, and then again, ours.

The reaction of the stock markets and their different sectors is very complex and confusing, simply because cheap oil in everyone's mind is normally associated with a booming market and business expansion. The oil companies' shares go up and down, but mainly down because of fears of future inactivity and loss of markets; they go up, because profits are still good, they are still selling oil to an overfed market, and they do not pass on the whole price-fall to consumers. Transport companies also are seen to benefit from cheap oil in the short term, but because of the instability and overcapacity, their shares also go down. They too try and maintain profits by not reducing transport pricing (especially where they have near monopolies), but competition in many markets mean that they are forced to lower freight rates and passenger fares. Energy companies too are reluctant to pass on the reduction in the oil price to customers, they need to rebuild old infrastructure and maintain profitability in the face of lessening demand (party because of global warming and competition from alternative energy sources). But their shares too are affected by the market volatility. The general fears in the market are directed to the future state of the Chinese economy, but this is not the real culprit, and as we have seen, it should still grow at a reasonable rate, partly on the back of cheaper fuel and energy, and also because of real attempts at diversification into secondary industries and the green sector. Having a one party state certainly helps the speed of this transformation, despite the illiberal consequences.

Cheap oil should boost the profits of all companies that transport their goods or supply energy and fuel, but as we have seen it is not that simple. The real block is in the loss of export markets in the developing world, and these markets are vital for the next stage of capitalism, both in the west and for the resulting creation of consumers and tax payers in the poorer countries. Governments everywhere are losing out because of the massive loss of revenues from oil and fuel. Therefore already unbalanced books become more unbalanced.

Another crazy result of cheap oil is that many countries (most significantly the UK) are going back on their previous promises to switch to alternative green energy sources, and reduce their emissions of greenhouse gases and toxic emissions. The short term gain of using cheap oil rather than longer term investment in the green industries (as in Germany and Scandinavian countries) will be extended by right wing politicians (who still gain tremendous party payments from oil companies) so long as the oil price remains cheap – and this could be at least two or three years longer. Job losses in green enterprises will continue to increase and many companies go bankrupt in these countries before the new green shoots are big or strong enough to compete with the oil giants and associated energy companies. But this is a terribly short-sighted policy with disastrous consequences for the planet. Obama's encouragement of local green companies and the cancelling of the Alaskan-Gulf of Mexico pipeline is a heroic counter to right wing interests - but will it still be the US policy after the next election, especially if oil prices remain low and the Republicans take power?

The last major geo-political consequence of cheap oil may be an increase of the present already high level of global conflicts. As the economic situation continues to get worse in South America, the Middle East, Africa and Indonesia, this will probably result an increase in extremism – both in terms of Islamic fundamentalist extremism in the last three countries, and right wing reaction in South America, and also European countries affected by continuing and new areas of civil strife. Refugees, economic impoverishment and war has often in the past led to more right wing power in both developed and under-developed states. If this also leads to a Donald Trump US president, God help us all. But somehow I think this turn to governmental and populist right wing extremism is very much a temporary phase that will lead to a strong reaction in the other direction, once its consequences are seen. These consequences – more global warming, and civil and international conflict, will surely lead the human race to join in the search for peaceful resolution to conflicts and a greener world. In this Germany is still a beacon of hope in a bleak global situation.

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The English Family my own included

The Family in Different TimesPosted by Graham Thompson Tue, January 12, 2016 14:35:05

The English have less and less contact with their genetic families. I wish to look at this development by first examining my mother's northern family from Durham, then comparing it with my father's family, which is more typical of my own life and family situation today. In later blogs in this category I will compare the English family in these examples with Belgian and Danish families, both which I know intimately and for long periods.

I recently got back in contact with a long lost cousin on my mother's side after more than 50 years. Ken Haywood is now the second oldest surviving member of my mother's family and is busy collecting information on the family tree. Our grandfather came, with his father and the rest of the family, to the mining village in Durham in the 1890s, in order to find more stable and well-paid work as a miner. My mother's grandfather, a Haworth by name, came for similar reasons from Bacup, Lancashire, about the same time to the same village, and his daughter married my grandfather in 1909. They settled down and almost all the male children, four brothers, also became miners, as well as most of their sons, my cousins. My mother and her children were the exception, along with her younger brother who made a career in the RAF.

The pit closed in 1965, prompting some of the brothers of my mother to either retire, or one younger one, to move to the North Notts coalfield at Worksop. This was the father of Ken, and his three younger brothers still live in the area. Many of the other cousins then moved into other occupations around Durham, if they could find them. In this family then, apart from my mother and her youngest brother, there was originally a large extended family of up to 18 adult males and their children all living within one village from 1890 until 1965, and up to the late 1970s there were 9 males remaining, who had not died or moved away. Today there are only 2 male cousins and 1 female from the family left alive in the village, 2 more have died and 2 have moved away since 1970. This, I would claim, is typical for what I would call a settled English family living in the 20th century and surviving two world wars. Only one of my cousins in Nottinghamshire still worked down the mine before the last pit recently closed, but mining, one could say, has always been at the centre of the Haywood family's lives. Here we have a pattern of settled job experience in maybe one or two locations with strong family links giving mutual support.

My cousin Ken now has little contact with his home mining village in the north, his last meeting with those left living was at the funeral of my mother's youngest brother, retired from the RAF, in Catterick two years ago. The family slowly lost contact with one another after my grandmother's death in 1971. I lost contact with the village after this too, though I did make one more trip there in 1991, at which time there was only one remaining uncle living there. However in the 1950s and 60s the family was an incredibly interactive unit, and I remember as a boy visiting at Christmas, New Year and in my summer holidays for two or three weeks, during which I witnessed at my grandmother's house a steady procession of her sons and grandchildren coming through the door. Everybody helped one another, and events like New Year and Christmas were celebrated together, sometimes with three sittings of 12 or more people each at my grandmother's table: grandparents and their children (my uncles), then my older cousins, and lastly myself and the younger cousins and "bairns" (great grandchildren).

On my father's side there was a very different pattern - one might call it the dispersed family pattern, quite the opposite from the Haywoods. From shortly after his marriage to my mother during the war, my father started a series of jobs for the army and air-force. I went to 10 different schools as a boy, but in his lifetime my father lived in over 50 houses in more than 30 towns. His parents were similarly nomadic, though of course my mother had lived in one village all her life until shortly before she married. It changed drastically thereafter, her life following the Thompson pattern rather than the Haywood. My Thompson grandfather came from Luton, his wife from Sheffield. There are traces of Italian blood in the Thompson side and sometime in the early 19th century this Italian strain moved to England and became workers, helping to build the railway line between Kings Cross London and Edinburgh. Their itinerant labours probably laid a curse on the whole family.

I have two living Thompson aunts (out of four) living in Vancouver, Canada and an uncle in London, Ontario. There are many more Thompson cousins living in Canada than England, most of whom I have never met and, of course, they have children and now grandchildren there. My parents were frequent visitors to them and my grandparents, who themselves immigrated there in the 1960s, after the first wave of emigration in the 50s. I have never visited Canada, even if one of my daughters has once done so, just to meet the "Canadian" cousins. I have one sister who lived in one town in the west country where her husband came from, for 33 years - an exception for the Thompsons. But in 1993 she "upped sticks" with her husband and went to live in Cyprus for 16 years. She is back in the west country now after her husband's death, living close to her two children.

My own children grew up and went to school in one neighbourhood in Swansea, Wales, where I went to college. But after my divorce I have lived and worked in four different countries - first Tanzania, on and off for about 4 years working as a researcher and development worker, then later as a teacher in Brussels, Belgium, 16 years, and now in Denmark, 7 years, where I intend to retire. I see my 3 children twice a year, as they all live in England, but none of them live close to one another. They see each other and their children maybe four or five times a year. So this is a typical dispersed family whose make-up has been thrown apart by migration, job mobility and general love of travel and the exotic. My parents visited more than 13 countries for their holidays, mostly outside Europe, including the States, Hawaii, Russia, and Tunisia (but never again Africa, said my mother afterwards). My sister and I have a longer list! The average English families probably lie in the middle of the extremes of the Haywoods and the Thompsons.

How these families contrast with Belgian and Danish families for patterns of migration and contact we shall see in the next blog in this series.

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What Should Be Done With The Old

SocietyPosted by Graham Thompson Tue, January 12, 2016 12:42:49

Although the concept of who is an old person has changed because of people living longer (is a 65 year old today regarded as an old person?), the stereotypes of old age (e.g. doddery, forgetful, incompetent and useless) have not really changed, and have maybe become stronger and more extreme than before. Why is this?

Firstly, there is the growing distance between youth or those under 50 and those who are 70 years plus - firstly in terms of number of years (when I was a boy the gap between myself and my 60 year old Grandad seemed enormous - but now with more and more children being born to parents in their 30s and 40s, this gap can be 60 or 70 years, not just 40 or 50). Secondly this gap has increased in terms of technical knowledge and the way different generations communicate. How many over 70s can use the internet to their advantage or mobile phones? There may be a growing number, but even the frequent users have problems with mastering the new technologies and often prefer face to face contact or the use of the old-fashioned fixed-line phones. This also results in a growing information gap and a giving up of communication from both sides because of the preference for different methods. The “info poor” older generations cannot speak on the same terms with their own children, let alone grandchildren or great grandchildren. Knowledge of the past, part of which belonged not only in books but inside the heads of the old, is also accessed in a different way today - instantly via Google, so why bother asking Grandad? In these circumstances it is easier to “depersonalise” and devalue the old, to lose contact with them and “put them away” in care homes. Furthermore, inability to use the modern methods of communication only confirm to the young that the old are stupid and on their way to being dimented.

The current political language about people not playing an active economic role in society is about them being “parked” outside the world of productive lives in homes and hospitals (“bed blockers”), where, supported by state benefits, they become merely a burden to the rest. The idea of parking people precisely displays modern attitudes to old age, but unlike for cars, there is only long stay or terminal parking. The old have to be “disposed of” in some way. They are unproductive and costly members of a sub-society.

If the state-economical view has fostered this ideology about the old, the young and those who are fixated with modern consumer values, sometimes take the language and attitudes much further. They see the old not only as burdens but as parasites who have robbed them of their own chances of a pension at 60 or 65. They also tend to see the old as part of the system that forces them to work harder and harder for less real returns. Many young comedians reflect and propagate these views of the old, stereotyping them as useless baggage, doddery diments or making them the target of malicious and outrageous jokes (e.g.drivers should try & see how many old people they can knock over in order, presumably, to reduce their numbers - this joke was recently told on BBC). This attitude is promoted by the media, which tend to avoid targeting gays and the disabled, but the old are fair game. If they are portrayed as being unjustly attacked, it is usually as victims of muggers, care-home workers or sex maniacs. They are in the news only as far as their being helpless victims of these attacks, what happens to them afterwards is not of interest unless they die. There are few good-news stories about active and capable old people recovering from attacks or disease, and making continued contributions to society.

In fact the media and the internet are changing our relation to history. Everything is now present and available, history as a narrative, a development of people and events is disappearing fast, except perhaps in films. Explanations, background and evolution over time has no place in the “instant news” and “click and go” pictorial world most younger people belong to. This also cuts them off from the narrative and development of real lives, and reduces the older generation, who are potential representations of these real lives, to objects. History instantly disappears as yesterday´s news, and the global scope of the news makes it impossible for “stories” to find place above constantly changing headlines. The internet reinforces this tendency on screen by presenting everything as equally available and interesting, and it decontextualiises both individuals and events. Internet surfing is completely the opposite of the linear development of a story, it always leads away, leaping from topic to topic, usually via attractive images or headlines, or stories that are rarely completed before something else catches our eye. This process reduces people´s full attention, empathy and concern - the news is so shocking that it better not be read in depth, much less understood within a historical context. This leads to another way of cutting off the old from the young: the former are history, dead and gone before they even die, as they have little connection with the ever changing screened images of the presented present we are all addicted to.

Furthermore, partly because of this disconnection with real lived history, the younger generations can more easily blame the old for the present catastrophes - global warming, the age time-bomb, even the flaws of capitalism, false idealism and the lack of political solutions - all can be laid at the door of the older generations.

Social and geographical mobility are other causes for young families to gradually lose contact with the older generations. The young have less and less common interests with their elders, and in many cases geographical distance and the pressures of modern family life, where both spouses are working, make visiting and maintaining contact more and more difficult. These types of dislocation lead to a feeling of alienation amongst the old and the inability to share real living emotions towards them by the young. Without regular face to face contact it becomes easier and more convenient to park the old away in care homes where contact is often lost forever.

In the atmosphere created by modern politicians, the media and the internet, and because of the oldest generations’ increasing isolation from the rest of society, personal violence towards old people has become more common, especially violence towards the old in institutions and hospitals. The violence is often perpetrated by low-paid, poorly trained workers who have themselves become victims of the economic crisis and see themselves as powerless to change their own lives. The only power they have is over those who are in their care, a power they abuse by resorting to ridicule and sometimes violence. Total power in those who in themselves feel betrayed and outcast, can lead to total abuse of those they should be caring for.

There are many things that are difficult if not impossible to reverse in this dysfunctional relationship between the old and the young, but there are things that can be done to improve communications and attitudes, some of which have already taken their place in shining examples of better relations. My next blog will try and answer the question - What should be done with the old?

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