Tuesday, October 11, 2022

Putin's Irish useful idiots vote down European Parliament resolution on Russia

Russia and Ukraine were the biggest states in the Soviet Union after its collapse in 1991 (December 26, 1991). Ukraine held an independence referendum in early December 1991 with the blessing of Russia. Voter turnout was at 84% and a stunning 90.3% voted for independence. Two-thirds of the estimated 1-1.5mn Soviet military personnel stationed on Ukrainian territory backed independence. Hundreds of foreign observers and correspondents were in Kyiv.

The new independent republic held about 5,000 nuclear missiles. Only Russia and the United States had more weapons. In 1994 the Ukrainian government decided to give up its nuclear arms in exchange for security guarantees from the US, the UK and Russia. The agreement is known as the Budapest Memorandum.

Putin, the Russian dictator, dismissed the Budapest Memorandum and since the invasion of Ukraine in February 2022, he has threatened to use nuclear weapons in the country.

The Crimean peninsula was annexed in 2014 after a pro-Kremlin government in Ukraine was ousted. The president fled to Russia in February after protests in which more than 100 people died. Russian troops began an invasion of Crimea later in the month.

In a televised address before the invasion in February 2022, Putin explicitly denied that Ukraine had ever had “real statehood,” and he claimed that the country was an integral part of Russia’s “own history, culture, spiritual space.”

Putin also said Russia would "seek to demilitarise and denazify Ukraine,” stating, “your fathers, grandfathers and great-grandfathers did not fight the Nazi occupiers and did not defend our common Motherland to allow today’s neo-Nazis to seize power in Ukraine.”

The Soviet Union long denied collaboration with Nazi Germany under the secret 1939 Molotov-Ribbentrop pact, only acknowledging and denouncing it in 1989 under Mikhail Gorbachev. In September 1939 the Nazis invaded Poland from the west and Soviet Communists invaded from the east.  

Kievan Rus’ – a medieval state that came into existence in the 9th century had Kyiv as its capital and was founded hundreds of years earlier than Moscow while Ukraine has its own distinct language and customs.

Putin could not tolerate an emerging democracy on his borders with the prospect of Ukraine joining the European Union. However, joining NATO was not on the agenda of the organisation. 

Sunday, October 02, 2022

Brexit returns UK to status of a sick man of Europe

Bloomberg commented "Nothing illustrates it better than the slide in the pound. It’s fallen from a high of more than $2 in 2007, just before the financial crisis, to $1.50 at the time of the Brexit referendum, and is now on the brink of parity with the dollar." In 1945, about half the world’s trade was still transacted in sterling. IMF data show that sterling accounts for 5% of global foreign reserves, which is above the currencies of Switzerland, Australia and Canada. It's also ahead of the Chinese renminbi which is close to 3%. The current value of the UK is 3% of global GDP. The Euro Area's equivalent numbers are 15% and almost 21%.

The economic dunces that sit in numbers 10 and 11 Downing Street, London, thought that giving big tax breaks to the mainly wealthy would turbocharge the British economy. Meanwhile, mortgage rates will rise for many people following expected high interest rate changes from the Bank of England.

The first decision of Kwasi Kwarteng, the chancellor, was to sack the civil service head of the Treasury. He rejected involving the public body, the Office for Budget Responsibility (OBR), in forecasting economic growth and with the support of Liz Truss, the prime minister, he plucked the annual growth target of 2.5% from the air.

The Office for National Statistics said in August 2022 that it had revised down annual volume GDP growth in 2020 by 1.7 percentage points, meaning that it fell by 11%, the largest in more than 300 years and the worst recorded among G7 countries ((US; Japan; Germany; France; UK; Italy and Canada). 2021 growth was 7.44%; 1.67% in 2019 (pre-pandemic) and 1.65% in 2018.

A recent analysis by Oxford Economics for the Tony Blair Institute concluded that aggregate UK output might be cumulatively 0.4% higher five years hence.

Truss talks of economic growth while deriding an “anti-growth coalition.” But of course, she ignores the biggest drag on growth: Brexit.

In Kwarteng's mini-Budget on September 23rd, he proposed the biggest tax cuts since 1972. The unfunded £45bn cost would be added to the deficit and 5% of households would get almost 50% of the benefit, according to the Resolution Foundation, a think tank. In addition, £60bn+ would be spent on energy subsidies.

Update: The British government on Monday, October 3rd, U-turned on plans to scrap the top 45p rate of income tax, the chancellor confirmed at the Conservative Party Conference. This would have benefited people earning more than £150,000 at a cost of just£3bn of the£45bn mini-Budget. The Resolution Foundation said that despite Monday’s U-turn, the richest households would still gain almost 40 times as much as poorer families from policies announced in the mini-Budget.

More U-turns are expected as the new government searches for savings if any on public services while at the same time seeking the support of the majority of Tory MPs that did not support Liz Truss for prime minister (the final ballot of MPs had 137 votes for Sunak, 113 for Truss.)

In October 1980 Margaret Thatcher, then prime minister, in her speech to the Conservative Party Conference, said "To those waiting with bated breath for that favourite media catchphrase the 'U-turn,' I have only one thing to say: You turn if you want to: The Lady’s not for turning."