Tuesday, 26 November 2024

FRANCE AND UK TO COMBINE FORCES IN AN EXPEDITION TO WIPEOUT RUSSIANS IN UKRAINE

26 November 2024


Introduction

Here is a rather tongue-in-cheek view on the proposition that France and the UK combine forces in an expedition to wipeout Russian soldiers in Ukraine. 

There then follows a more serious review and rebuttal of this proposition.

Proposition

The idea is for France to combine with Britain to send a small expeditionary force to wipe out the Russians in Ukraine.

This does seem like a good idea, given the experience from the first and second world wars and given the economic crises both countries and Germany, and the EU indeed, face at the present time. 

Is it not the best time to get involved in a foreign policy initiative, in order to distract people at home from the silly idea that life is changing? After all, success in such a mission would restore global confidence in the West and prove that we are indeed the hegemons of old.

Conclusion

My personal opinion is that this is a foolish, reckless and irresponsible idea. An idea that should be stopped immediately if not by politicians, then, by strong advice from the various ministries of defense, British,French and German.

I also think that there is no justification for such an action. None whatsoever. Furthermore, if it were ever implemented, it would lead to further failures in the long line of American foreign policy failures,from Vietnam through Iraq and Afghanistan.

Rebuttal of A Reckless Gamble: Why Sending Troops to Ukraine Is a Dangerous Folly

In recent discussions, a proposition, caricatured above, has surfaced suggesting that Britain and France should dispatch a small expeditionary force to Ukraine to "wipe out the Russians" and restore global confidence in the West. 

At first glance, some might see this as a bold move to assert Western dominance and distract from domestic woes. However, this idea is really extremely foolish and dangerously irresponsible. It is imperative that we rebuff this proposition before it leads us down a path of irrevocable consequences.

Playing with Fire on the Global Stage

The notion of sending troops into Ukraine ignores the complex geopolitical realities of the modern world. Unlike the early 20th century, today's international relations are governed by intricate alliances, nuclear deterrence and conventions on human rights. Russia is not a peripheral power; it is a major player with significant military capabilities, acknowledged, as the world's fourth's largest economy after the US, China and India, and includes one of the largest, if not the largest, nuclear arsenals in the world. Furthermore, Russia has just successfully tested a new hypersonic glide missile with multiple warheads that can carry modern explosives, as well as nuclear, that is unstoppable. 

Any direct military confrontation risks escalating into a broader conflict that could have catastrophic implications far beyond Europe's borders. It is likely that any expeditionary force sent into ukraine would be quickly identified and eliminated, further humiliating the West.

When things go wrong, do France and Britain seriously imagine that America will intervene on their behalf, never mind any NATO commitments? Of course America won't, and certainly Trump will not be best pleased - Trump has his own plan. Havenly, Republicans just swept the White House and Congress and isn't the will of the American people to stop this war? Perhaps the Europeans are thinking they can take more land, as in Koursk, to strengthen the West's hand in negotiations, but as we've discussed, the time for negotiations is long past: Russia will impose terms at the time of Ukraine's surrender.

For once, Europe is exercising some initiative, but on a subject where it needs to defer to Washington and Washington's think-tanks.

The Illusion of a Quick Victory

Proponents of this idea might argue that a small, swift intervention could achieve decisive results. History tells us otherwise. The history of this particular conflict, the Second Crimeian war, also tells us otherwise. 

Conflicts are rarely resolved quickly or cleanly. The experiences of Vietnam, Afghanistan and Iraq should serve as stark reminders of how military engagements can become protracted quagmires with distrous outcomes. Underestimating the opponent and overestimating one's own capabilities is a recipe for disaster. Why can the West not see this? Where is the justification for such hubris?

Ignoring Diplomatic Channels

Diplomacy exists for a reason. There are established international protocols and organisations designed to handle conflicts, including the United Nations and NATO. Where is the UN justification under international law, where is UN approval for such an invasion? Unilateral military action undermines these institutions and international law and sets a dangerous precedent. It sends a message that "might makes right", eroding the foundations of international law and order that have been painstakingly built over decades. We know perfectly well that America puts its own strategies forward, irrespective of intl law.

Where is Congress approval for this act of war? Putin has said that he considers the attacks on Russian home. Territory to be an act of war by america.Since the missiles can only be fired with active american involvement. Yet Congress has not been consulted.

Domestic Distractions at What Cost?

Using foreign policy as a means to distract from domestic issues, which appears to be the case here, is not only cynical but also detrimental to the nation’s well-being. The economic crises facing Britain, France, Germany and other EU countries, require focused attention and resources. Diverting funds, weapons and political capital to escalate a losing position in an unnecessary war would strain national budgets already under pressure from public debt, probable new rise in inflation and in consequence interest rates.

The Human Toll of War

War is not an abstract concept; it involves real people and real lives. Sending troops into combat puts soldiers in harm's way and risks civilian casualties. Ukraine has already lost 600,000 soldiers, dead and wounded; and probably 10 million Ukrainians have left the country. The humanitarian impact on Ukraine would only bring furrher devastation. None of this can be justified under the guise of restoring confidence or asserting hegemony.

Undermining Global Confidence, Not Restoring It

Far from restoring global confidence, such an aggressive move would likely isolate Britain and France on the world stage. Allies may balk at unprovoked military action, and condemnation by the Global Majority could lead to sanctions or retaliatory measures. 

The global community values stability and the rule of law; further acting as aggressors will further damage reputations and diminish America's influence in international affairs.

Lessons from History Ignored

The reference to the First and Second World Wars as justification is misguided. Those conflicts resulted in unimaginable loss of life and were born out of a failure of diplomacy and the rise of unchecked nationalism. Russia won both these conflicts. The Bolsheviks prevailed over the Whites, who were supported by France and Britain. The first Crimeian war was lost by the Russians, won by the Western powers, but this was arguably, not pay military victory and exposed the basic political and military aim focused on taking the Black Sea. 

Repeating the mistakes of the past under the illusion of reliving former glories is naïve and dangerously irresponsible.

The Risk of Escalation

Engaging Russian forces directly could trigger a chain reaction. Russia may respond with more force not only in Ukraine but potentially against other interests or allies of Britain and France. The conflict could spill over into other regions, drawing in additional countries and potentially igniting a larger, uncontrollable war. Although this may may sound extraordinary today, American cities are also put at risk.

Alternatives to Aggression

There are more effective ways to address international conflicts and assert leadership on the world stage. Diplomatic efforts, possibly economic sanctions, and support for peace initiatives can pressure aggressors without resorting to war. Investing in international development, promoting human rights, and collaborating on global challenges like Security, Climate Change, Debt, are constructive ways to build confidence and demonstrate leadership in a multi-polar world.

Perhaps the first step is for the west to recognise of that. The international situation is now multi-polar, ie power is shared by multiple sovereign states.

Conclusion: A Call for Reason

The idea of sending an expeditionary force to Ukraine is a perilous gambit that risks lives, destabilises the region, and undermines international norms. It is a rash solution to complex problems that cannot be solved with force alone. Politicians and defense ministries must dismiss this proposition outright and focus on strategies that recognise the new multi-polar reality and promote peace, stability, and prosperity throughcooperative strategies, both for our peoples at home and globally.

The challenges facing Britain, France, and the wider European community are significant but not insurmountable. Turning to military aggression as a means of distraction is not only unethical but ultimately self-defeating. It is time for cooler heads to prevail and for exceptional and determined leaders to steer us towards a future built on cooperation, not conflict.

Wednesday, 20 November 2024

THE RETURN OF UK INFLATION

20 November 2024
With update 21 November 2024

Return of Inflation in the UK


1. Introduction

The recent UK Budget has introduced policies likely to rekindle inflationary pressures, threatening the current downward trajectory of consumer price inflation (CPI).

Bank of England Governor Andrew Bailey warns that Budget measures could delay further rate cuts and stoke inflation.

2. Key Inflationary Drivers

a. Corporate Cost Pressures

Businesses, particularly in labour-intensive sectors, face higher costs due to:

National living wage increases.

Employer National Insurance Contribution (NIC) rate hikes.

Impact:

Companies like BT, Sainsbury’s, and JD Wetherspoon are expected to raise prices to offset increased payroll costs.

Suppliers may pass on cost increases, amplifying inflationary pressures.

b. Wage Growth

Wage growth remains strong at 4.8% in the private sector, well above the target of 2–3%.

Public sector pay increases further push average earnings upward, influencing private sector pay negotiations.

c. Public Spending

Increased government spending on hospitals, schools, and public services is deemed inflationary:

The Office for Budget Responsibility (OBR) predicts a 0.5% rise in CPI due to Budget policies.

3. Changes to Rate Cut Expectations

Pre-Budget forecasts of a 4% base rate by mid-2024 have been revised upward, with rates now expected to fall more gradually:

Analysts at Pantheon Macroeconomics foresee rate cuts occurring quarterly instead of at every meeting.

Berenberg estimates the terminal rate to be 4.25% by Q2 2024.

Capital Economics increased its 2026 CPI forecast from 2% to 2.2%.

4. Additional Pressures

External risks, such as US election outcomes and potential trade wars, could exacerbate inflationary pressures.

A weaker sterling may contribute to imported inflation, further complicating the Bank of England’s policy decisions.

5. Conclusion

The Budget’s fiscal policies, while aimed at boosting public spending and wages, risk reversing recent progress in controlling inflation.

Analysts and market observers caution that the Bank of England may slow down or halt rate cuts, prioritising inflation control over economic stimulus.

Update 21 November 2024

Yes, it's difficult to get a handle on what's going on. But basically, before the budget, the data said that inflation was on the way down, then along came the budget,

- up go employers' national insurance contributions and the minimum wage, and this will translate through into higher prices

- then wages are still on the rise and for a few very interesting reasons. Main one being the hangover from covid

- and the government is going to spend more on infrastructure, so it says.

And the consequences are to push inflation up. But over the next year or so, the Bank of England should get it back down, so that by 2026, it will be near 4.5%.

But take a careful look at that graph. The forecasts made in March and then there's the new forecast made after the budget.

What do you read for 2026?

Of course, economists are always wrong and no one is worse than the Bank of England...

Tuesday, 19 November 2024

EXPECT 4.5% MORTGAGE RATES

19 November 2024

If you are thinking of buying a property, or having to re-mortgage after your 2 or 5 yr fixed rate expires, expect higher mortgage repayments.

From all I can work out, it looks like the BoE bank rate could be settling down from 4.75% today to a terminal rate of 4.25% in the second quarter of next year.

So there are hopes of Bank of England base interest rate cuts.... But this isn't the same as your mortgage rate., oh nooooo !

You'll be on a fixed-rate deal (2 or 5 yrs), and fixed rates move with swap rates, not the BoE base rate.

How are swap rates worked out?

"Fixed-for-floating swaps" is a deal where party A receives a variable interest rate linked to the BoE base rate over a period, by paying party B a fixed rate. 
Then party B adds on its costs and profit margin and that's what you, party C rhe mortgagor, will pay.

So the fixed rate reflects where market participants A and B expect BoE interest rates to average over the course of their agreement. 

As a result, swap rates tend to change when interest rate expectations change - expectations rather than actual interest rates.

The five-year swap rate has climbed from 3.75 to 4% since the Budget – despite the recent 0.25% interest rate cut to 4.75% BoE base rate.

Remarkably, more than a third of mortgagors are still paying rates of less than 3 per cent, thanks to cheap deals secured before rate hikes began. These are almost all due to expire over the next two years. 

This means that for the country as a whole, average mortgage rates are going to increase next year – even as the base rate falls further.

As the chart above shows, the Office for Budget Responsibility OBR forecasts that average rates will keep rising to 4.5 per cent by 2027, and stay elevated all the way to 2030. According to the BoE, the average household rolling off a cheap deal and having to remortgage, will see repayments increase by a quarter, or £180 a month. For an unlucky 400,000 mortgagors, payments are set to increase by 50 per cent or more.

So we need to put that in our budget spreadsheets. Locate your expected purchase or remortgage date on the graph above and then put that number in your spreadsheet, less any first-time buyer discount if applicable.

Sunday, 17 November 2024

TOWARDS A NEW WORLD ORDER - REBALANCING FOR PEACE

17 November 2024

Towards a New World Order: 
Rebalancing for Peace

In the aftermath of the last World War, global institutions were established with the vision of fostering cooperation and preventing conflict. As the world faces a shifting geopolitical landscape, it is worth revisiting the fundamental principles needed to achieve lasting peace. These principles rest on three foundational pillars:

1. Trade as a tool for peace, transcending the motivations for war.


2. The safeguarding of global sea and land lanes to ensure free and fair movement.


3. The respect and enforcement of international law as a universal standard.


Achieving these ideals, however, demands a radical rethinking of global governance structures. Here are the key propositions for a more balanced and peaceful world:

Reimagining Global Governance

1. Acceptance of a Multipolar World

The unipolar dominance of a single power or bloc is increasingly untenable. A multipolar world would acknowledge the rise of new powers and distribute influence more equitably.



2. Reaffirming the Role of the United Nations

For the UN to serve as an effective arbitrator, its decisions must be universally respected and immune to unilateral challenges. This would require a renewed commitment to its authority.



3. Rebalancing the Security Council

The current structure of the UN Security Council, heavily weighted in favour of the G7 nations, must shift to reflect the interests and voices of the global majority, including nations from the Global South.



4. Reforming International Institutions

Beyond the Security Council, all major global institutions need to be rebalanced to reflect contemporary realities. If reform proves impossible, there may be no choice but to rebuild these institutions from the ground up.



5. Abandoning Alliances

Alliances often create hierarchies, with dominant powers exerting centralised control. Alliances meanblock politics. Such structures perpetuate division and conflict. 

Instead, a decentralised approach that respects the sovereignty of each nation could promote collaboration without coercion.




A Diplomatic Path Forward

The goal should not be military solutions but diplomatic ones, where rational negotiations respect national sovereignty. Centralised, top-down power structures must give way to decentralised systems that operate through delegated authority with mutual consent.

Challenges and Realities

While these ideas present a blueprint for peace, their implementation is admittedly far-fetched. The reality is that the world seems more likely to split into blocs—the West versus the rest—if no consensus emerges. China, despite its rising influence, shows no signs of pursuing the role of a global hegemon. Similarly, BRICS, a grouping of emerging economies, is unlikely to assume such a role without risking catastrophic global conflict.

The Fly in the Ointment: Israel

The most intractable obstacle to global peace remains the Israel-Palestine conflict. This singular issue continues to defy resolution and often complicates broader international relations. Without addressing this "bluebottle in the ointment," any vision of a harmonious global order will remain incomplete.

Conclusion

The dream of a balanced, multipolar world governed by diplomacy rather than alliances may seem fantastical. Yet, it remains a vision worth striving for. Whether through incremental reforms or bold reimagining, the international community must confront the structural flaws in the current system. Otherwise, the planet risks further division—or worse, devastating conflict.