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Tommy Strollers Politics Blog

Tommy Strollers Politics Blog

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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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PoliticsPosted by Graham Thompson Tue, December 01, 2015 22:01:29

The African Exodus, which the British Guardian newspaper recently reported had already amounted to 150,000 refugees in 2014, cannot be allowed to go on increasing. The reason is not that Europe can no longer tolerate such an influx (after all Europe has been accommodating such influxes since the Indo-Germanic invasions of the mid second century BC.) but rather that we can no longer turn a blind eye from the prospect of more and more of them dying at sea, and nor can we afford to spend large resources on rescuing them from the Med. Their settlement in Europe in larger and larger numbers also makes no sense as we are depriving the African countries of their future lifeblood - their own younger generations. Refugees from the middle east have greatly added to the total in 2015, but this must surely be a more temporary phenomena, depending on the setting up of more stable governments in the region. But the exodus from Africa is potentially a more lasting problem whose causes must be carefully analyzed if we are to find a permanent solution. The cynical exploitation by organized criminals and north African pirates to transport the refugees can also no more be tolerated. But what to do about it all? As usual, our response as Europeans has been based on a curious mixture of patronizing human sentimentality (rescue them from their own foolishness) and racial prejudice (fortress Europe – send them back). It has been Italy that has most reacted to and saved the lives of these precarious immigrants. Just imagine if it were UK and not Italy which was closest to the point of embarkation – how would the British react? Probably by a tripling of support for UKIP followed by an immediate closing down of coastal borders, and all attempts at crossing over to the UK being diverted to the Channel Isles, where refugees would be held in camps, similar to the Australian policy. We need to examine the reasons for this exodus if we are going to help these people in the right way and prevent the present trickle of refugees (the population of poor Africans wanting to come must be in the region of millions per year, not hundred thousands) from turning into a deluge.

Africans, firstly, are often fleeing local wars of their own or repressive regimes, such as in Eritrea, where all young people are forced to join the armed services. Secondly they are fleeing drought and starvation in some areas (especially the Sahel). From this and other causes they suffer from severe economic poverty and local elites mismanaging their countries' finances. Years of underdevelopment and exploitation by the west has also not helped improve the economic lot of most countries. There is a stubborn dependence on natural resources, rather than developed agriculture and local business opportunities in most countries, often forced on them by richer countries (Europeans included) whose companies pay low wages, import western experts, and control global market prices for exported raw materials. Most African countries are forced to import large amounts of food today where once they were largely self supporting. This is partly the result of decline in local agriculture, and the increase of exported cash crops, on land often owned by big food multi-nationals. But it is also the result of the population explosion and the huge migration to the cities from the countryside. This has added to the number of starving, or at least hungry mouths to feed, largely on western hand-outs or imported food. Tribal social structures have largely broken down, with nothing to replace them, so mutual support and reciprocity in economic matters have given way to fierce individualism, especially amongst young urban males. There is therefore less and less to hold them back from setting out to find the "golden pavements" of Europe. But in some areas where family structures are still intact, the family itself will put together the money to help a young man reach Europe, hoping that eventually their poverty will be relieved by the son's employment in high wage countries. But how many sons come eventually to send money back or ever go back? Often the new pressures and poverty they encounter for themselves in our world makes that impossible.

The attractiveness of our world in the west has also been made greater by changes in media and education over the past 50 years. Educational methods and subjects are based firmly on western models, western books and a western conception of the world. This has not only helped break down local tribal structures by helping to change values (eg a new disrespect for the older generations and a greater belief in the individual and the possibilities of the educated man) it has led to the influx to the cities with less and less valuation of work on the land, and promoted greater ambition in terms of seeing the educated west as a possible future. There are many qualified youngsters now in Africa with more than 10 years of education, but they are fit for western style jobs that are just not available in their own countries. Unemployment is incredibly high in the cities and most jobs that are available are unskilled and require minimal qualifications. This breeds enormous resentment amongst young people, and now on top of that their appetites for the "good life" have been stimulated by western style media in the modern global communication systems. What is not available to them in their own streets and shops is plainly visible on their TV screens and computers - but in Europe and America. This resentment rarely leads to local political rebellion, but results either in attempted emigration to richer countries, or in some youngsters, a radicalization to fundamentalist beliefs, particularly in countries where Islam is a prominent religion. Local mullahs with extreme views can easily recruit such disillusioned and educated youth for terrorist causes. This happens even more so in African countries where the local elites are Christian and access to power and jobs comes through Christian connections. Such is the case in parts of West Africa and also Tanzania, where there are great inequalities in power related to religion, something the catholics of Northern Ireland also suffered from, with disastrous consequences.

The real key to this is, then, the alleviation of poverty, a different style of education more fitting to local cultures and needs, together with a reversal of climatic trends and a re-greening of the land. Local agricultural production has to be prioritized and made more attractive, and multi-national dominance reduced. Responsible governments should be rewarded and strengthened, not as is now often the case, the dictators that protect western investments. But how can these enormous tasks be achieved so as to reverse the great exodus? More coming in the next blog!

Please leave your comments below.

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Why post-hippy left field?

PoliticsPosted by Graham Thompson Fri, November 28, 2014 14:33:30
The hippy ideas and communist political values dominant in the 1960s and 70s when I grew up are "old hat" and dead as far as most people today are concerned. The worst excesses of hippiedom - leading to the Mansen killings in California, which were heralded as the main message of hippy culture by an eager right wing press, led to its early death except in a few way out collectives and communes in the 70s and 80s. The swing to the right in the 80s and early 90s emphasised the completely opposite values of utilitarianism and individualist greed.

The left politicians of the 90s capitulated abjectly, partly because they matured in these new selfish values, but also because their own far left was destroyed when the Berlin wall came down and communism collapsed. There was a belief that there was now only one ballgame in the park - free market capitalism, embraced by all sides. The collapse of communism was indeed due, as it had become a bloated, corrupt and mirror system to the west, where top party members enjoyed the same lifestyle as the top capitalists, equally removed from the lives of the "workers" living in the tenements of Moscow, just as the western multi-national magnates were so distant from those of Brooklyn or Manchester.

What is never acknowledged today is that both hippy values and communism were founded on a revolt against the tyranny of capitalist and materialist views of mankind, that perhaps in their genesis there might be some truths which we need to relocate and promote today for the generation maturing in the 21st century. A generation that is becoming tired of the facile solutions of consumerism, and of being constantly branded and cookied by multi-national companies, their press and political servants. There is a gradual realisation that these communication controllers are abusing our bodies, our computers and our minds in their attempt to make us believe in them, buy their products and vote for their politicians.

The threads of a different way of thinking about being human, and a more social being, rather than homo ludens or homo competerens, were there in a genuine way, back 50 and more years ago. But they were abused and rehashed by every company from Levis to Virgin for the pure purpose of profit, disguised in a vacuous theatre of the "adsurd". Being social is now always mediated through the product and is absent of real human communication and content. There was a real "break" with this historical past of hippiedom and left wing humanist values, where humans believed in a better future for all, and had some kind of road map to get there. We are now only left with comic reflections of such a naive attempt, and the cynicism and satires of a "worldly wise" capitalist intelligentsia. This is the black and constant diet of 21st century culture.

But we need to find these original inspirations again if we are to find a better society, not one attuned to the possible human follies of brotherhood and free love, but one that exploits the full capabilities of humans and their complex minds, and not a society believing in only one banal truth - that consuming goods leads to happiness.

So that is why I call my blog "post-hippy and left-sided." The "left" implies not old-fashioned ideas of the perfectibility of man in a state-controlled utopia, but "left field" innovations that can soften, maybe even blunt the deleterious effects of modern capitalism, bring back people together in real contact and trust. It is already happening in the incredible number of self-help groups and local activists springing up against statist solutions/dissolutions and loss of social services, but it has no theory or political message within it to challenge the "big message" of capitalist governments and trans-nationals. And perhaps there is a dearth of understanding of how we became trapped in this one way street to consumer paradise. The dangers of purely capitalist thinking, urging more products, more growth, and more poorly paid service jobs feeding the rich, have never been more obvious, especially when it stands unopposed in today's world. This blog will suppose and suggest other routes out of the slavery to capitalism, and reflect on what we can truly learn from the failures, and successes (and yes there were some), of hippiedom and communism.

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