Steve Schifferes Part 2: where the next crash might come from-and the chilling consequences

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Our earnest recommendation of the second part of Steve Schirreres’ excellent diptych of articles for The Conversation

As Britain declined after world war one, no other power replaced it with the necessary financial, military and cultural power necessary to avert the political and financial instability that followed. The result was revolution, boom, crash and depression, leading rapidly to the Second World War. “Ah!” we hear you say, “Ah! That could never happen again. Look for example how well the world did to wriggle out of the consequences of the financial crash of 2007-2008!” But that, gentle readers, is to beg the question. For back in those days the world had two shots in its locker which are now fully fired. First, a spirit of co-operation among the great powers which let them co-ordinate rescue plans quickly: and the trust to make them stick. (Schifferes is rather good on this, having had a ringside seat) Now Mr Trump has declared that he will only ever consult American national interest. He may have valid domestic reasons for taking this line; but it will make any recovery from a future recession very much harder indeed.

Secondly, the America of those days still had deep and unrivalled capital markets, which enabled its Federal Reserve to act as a lender of last resort to the whole world. And this is where Schifferes gets really interesting. Firstly he details deep worries about the long term stability the US Bond market and the dollar. Remember- a hegemon needs both bonds and a currency to ensure global stability. Combine this with the threats to the US Stock market( a concern to many commentators at the time of writing) and you have not only the elements for a perfect storm, but no obvious lifeboat to climb into when it strikes.

If you want to know how the world really works, and get some glimpse of where it might be heading, then these articles are a must read. And remember- next time you get cross because the train is late, or service slow in your local restaurant: these troubles may be slight compared to what is coming down the line.

[1]https://theconversation.com/the-rise-and-fall-of-globalisation-why-the-worlds-next-financial-meltdown-could-be-much-worse-with-the-us-on-the-sidelines-267920?utm_medium=email&utm_campaig

#economics #history #US Bonds #dollar #trade #globalisation

Is Globalisation over? Steve Schifferes worries what comes next

Recently the residents of the Canadian State of Ontario irritated US President Donald Trump by running a series of TV ads showing former President Ronald Reagan disparaging trade tariffs,. Why would such hero of the global Right have taken such a heterodox view? The answer is that Reagan thought that free trade was the best way to distribute prosperity as widely as possible. Under the hegemonic power of the United States of America of course. And he had good evidence for this belief, as Steve Schifferes makes clear in this article for the Conversation.

Schifferes is such a good writer. His sentences are always short and to the point, He keeps away from jargon. Which clarity allows him to range over the last 400 years or so of history tracking the rise and fall of the various powers-China, France, The Netherlands, Britain the USA all of whom aspired to the hegemonic position in world affairs. In the first of two such called The Rise and Fall of Globalisation: the battle to be top dog he comes to one overarching conclusion. Things go better, and the world grows when there is one such dog. The period of British dominance , roughly 1815-1914 was marked by ever closer union of world markets and ever greater flows of capital and people. The American hegemon, roughly lasting from 1944 to 2016 was a second such example. The great problem for the world was that, as Britain stepped down in 1918, the USA did not step up to the plate. Leading to two decades of deep economic and international stability that culminated in the most destructive war in History. This one we shall urge you to read, gentle readers. It not only describes, it explains.

And now? Populists everywhere not only proclaim that globalisation is dead, they actively seek to undermine it wherever possible. Tariffs, restrictions on free movement of goods and people, hostility to learning and science-all indicate the flow of history is one way. Yet populist nationalists can point to one overarching weakness in the globalists argument. The whole system when it worked, depended on the successful nationalism of one nation,the hegemonic power. Their nationalism was a good thing. From which many concluded “if nationalism is a good thing, we want some of it too.” So as the hegemon declines, as America now does precipitously, they will assert their own nationalisms more and more. World war Three anyone?

[1]https://theconversation.com/the-rise-and-fall-of-globalisation-the-battle-to-be-top-dog-267910

#steve sciffereres #history #economics #trade #USA #war #globalisation

Pity Rachel Reeves-but Britain’s problems are as dreadful as everyone else’s

Pity poor Rachel Reeves, Britain’s beleaguered Chancellor of the Exchequer (that’s what we call our finance minister). According to Larry Elliott of the Guardian, [1] she faces some agonising choices as she tries to prepare November’s Budget. Being a British Chancellor has never been all beer and skittles. And Larry’s dissection of the fiscal and financial constraints she faces , to say nothing of organisations like The Office for Budget Responsibility (OBR) or the Bank of England breathing down her neck is as succinct and percipient analysis as you will get of the economic landscape of Britain today.

Or any where else. All the advanced nations seem to be in dreadful trouble at the moment. The USA, France, Italy: even the once vaunted Germany and Japan seem be in the same mire of rising debt, financial constraint and absolute inability to deliver the rising standards of living, education and health which their citizens had come to expect. Why do finance ministers suddenly seem so powerless?

They can still control some things of course: fiscal policy , debt issuance, regulatory frameworks and co-ordinating policy with Central Banks. What lie outside their control are immense things like global capital flows, stock market volatility, commodity prices and private investment decisions. At the time of writing over 80% of the world’s investment capital is in the hand of things like Hedge Funds, Sovereign Wealth Funds and Family Offices, as well as less shady entities such as pensions and mutual funds. And this has had very real consequences. For us Elliott’s key paragraph was this rather neat summary of the history of the world in the last twenty five years:

……..the big moves in inflation in recent decades have been globally rather than domestically driven. There was a long period in the 1990s and early 2000s when globalisation led to much cheaper imports, especially from China. More recently, the main reason inflation shot up above 10% was the sharp increase in gas and food prices caused by the war in Ukraine. Trying to hit a specific inflation target using the blunt instrument of bank rate is a mug’s game.

Which raises the question: is the Nation state still the best vehicle to deliver the thing its citizens really need? It’s a big question and the answer may not come down to a simple yes/no. But if it is to succeed, the nation must be immensely strengthened and reformed. Who will do it?

[1] Rachel Reeves is the face of this budget. But the really big decisions are not in Labour’s hands | Larry Elliott | The Guardian

#economics #history #inflation #rachel reeves #UK #Germany #France #finance #money #capital

If all the wealth in the world were shared out, what would happen?

Many decades ago, we often used to hear the argument “if all the money in the country were shared out, everyone would only get 20p” A tiny sum, which could not make any difference to daily life. This was the UK in 1973, Perhaps it was true then, there. Is it true of the world as a whole today?

The statement itself is a cognitive howler: because it equates wealth with money, carefully avoiding the inclusion of all the goods, capital infrastructure(IT systems, railways, etc.) and productive resources such as factories that make up the wealth of the world, which is best expressed as GDP. When we set out to find what that was, the best estimate was from the World Bank,[1] who put it at $105 trillion in 2023. Now, the population of the world is around 8 billion (8×10⁹) people. What would happen if we found a way to share that GDP among all of them? The answer is: everyone ends up with an an income of $13 125 a year. Which surprised us greatly. Instead of being insignificant, its actually quite a lot. Let us explain why.

That same world bank defines four categories of national income by GDP. Low: $1 135 or less. Lower Middle: $1 136-$4 465. Upper Middle: $4 466- $13 845. High: $13 846 and anything above. There is enough wealth in the world to raise everyone almost to the level of high income countries, certainly to the very top of the middle range.

Now there may be very good reasons why this cannot be done. Some are practical. Some are moral. But if it were done, what difference might it make to such issues as mass migration, educational attainment, and the overall level of demand in the world economy? Let alone health, security and basic nutrition. Just a thought.

[1]https://ourworldindata.org/grapher/gdp-worldbank

#wealth #GDP per capita #economics #inequality #migration #health #geography #economics

The Slippery Slope fallacy: the one we’ve never got on with

“Don’t throw that rubbish there! Put it in the bin like you’re supposed to!” Many years ago we lived on a pleasant private estate in West London with trimmed lawns, walkways, security, a residents association, all those sorts of things. The only problem was some of the residents, who were either too lazy or felt culturally compelled to throw their domestic rubbish down by the rubbish chutes instead of putting in properly, as we, the decent majority did. This bad practice spread, being quickly copied across the estate and soon we all had a widespread problem with flies, rodents and an ugly disfigurement of our pristine areas. It’s called the slippery slope. Another example is when the office agrees to step out for a single drink and, three hours later, the entire company ends up blind drunk ,broke and embracing each other with varying declarations of love. Everyone copies bad behaviour, because they feel entitled, or are missing out. And so crime, disorder, drugs and violence spread quickly through communities, reducing everyone to common beggary.

And that raises a bigger problem for us here at LSS. For years we have proudly touted our Enlightenment, Whig, rational, call them what you will credentials like a badge of honour. Central to our purpose, hardened readers will recall, is the practice of reason and logic. Avidly do we follow websites like your logical fallacy which are stuffed with every classic example you could wish for: post hoc propter hoc, texas sharpshooter, all shining beacons of clear thought each one of them.. Standing out like a dead rat in a melon souffle is the slippery slope, of which the authors state

Allowing to happen will cause Z to happen: therefore we should ban A now!

Yes, we see the error. The slippery slope is a fallacy for it allows one to jump to conclusions without checking each intervening link from A to Z for both logic and empirical fact. Its the classic howler of someone like a Daily Mail columnist, carried away on tides of hysteria and dread. The trouble is: it’s how humans really behave. It’s the way most of them are.

So our problem with the slippery slope mirrors a more general problem. Reason, learning, and all the the qualities which we prize are not always good guides to how society works. (Try a Friday night out in Croydon if you don’t believe us) Yet the values we espouse are the only ones which will ensure not only the good life but also human survival in the long term. The problem we now have is how do we form a critical mass to allow those values to prevail?

[1]https://yourlogicalfallacyis.com/

#logic #fallacy #reason #slippery slope #enlightenment

1st September 2025: the day world history changed forever(you did notice, didn’t you?)

Today, or yesterday (it’s all a bit muddled what with time zones, deadlines and so on) world history changed forever. Because the two biggest powers on the planet have started to come together. Making Asia potentially one huge zone of economic co operation. the true centre of economic and political power in the world. Yes, Mr Xi and Mr Modhi have started to talk about the joint efforts of 1.416 billion Chinese and 1.464 billion Indians. all increasingly prosperous and tech hungry. All of which trumps the 347 million Americans who so recently seemed to have the world game so utterly in their hands(anyone remember George W Bush?)

Ah, critics might say- but look at the GDP figures. America at $30.51 trillion is still comfortably ahead of both its enemies combined($23.4 trillion) But a Briton in 1900 could have pointed to similar figures which showed how rich they still were, ignoring the growth potential of rivals like the USA and Germany. And ominously, the current USA is in a bad position here, with 1.9% against China’s 4.0 % and India’s 6.9% The conclusion is obvious; the USA is fast on the way to becoming a regional, local power. It’s days of strutting the world like a colossus are over, or very nearly so.

And how has this come about? There have been long term trends of course. Growing inequality. political polarisation and corruption of its legal system have been in evidence since 2000 at least. The Iraq war of 2003 was an epic blunder and the crash of 2008 fatally undermined the rationale of the American order. But until recently America still represented an open democratic country Rational independent institutions. inalienable Rights , Something worth fighting for, both for its own people and for its allies. But now those allies are humiliated . [2] Others, not allies but still potential partners, alienated by irrational and erratically applied tariffs, rush to form their own blocs and trading systems. It was easy to believe that Mr Trump and his policies made sense at least from the point of view of their own country. Now the damage is not only deep, it is permanent. Welcome to a new world order.

[1]https://www.bbc.co.uk/news/articles/cp37e8kw3lwo

[2]https://www.independent.co.uk/news/world/americas/us-politics/trump-tariff-ass-kissing-nrcc-hannibal-b2729968.html

#china #india #usa #donald trump #narendra modi #Xi Jinping #geopolitics

Is all the money in the world running out?

Is the United States of America about to go bust, the way that previous empires like Spain and Britain did? Critics point to astronomical levels of government debt ( it’s now a whopping 123% of GDP) and ballooning trade deficits. Exactly the opposite to the US position just over one hundred years ago when it elbowed aside Great Britain to make Uncle Sam the dominant world player. “Ah”, counter the critics” if you have the world’s reserve currency you can issue as much debt as you like. And the fact that America has independent institutions makes its bonds the safest bet in the world for foreign investors”. So-no problem then? Perhaps. The trouble with debt is that it’s OK until it isn’t. As interest rates start to rise (as they have been doing for some time) the rising costs crowd out all sorts of fiscal flexibility. Especially on crucial issues like defence, health and education. As for the United States much vaunted institutions- recent events have put their independence in very great doubt indeed. [1]

But before we heap all the opprobrium on poor old America, don’t forget everyone else is doing it too, Japan is running debt at an eye watering 250% of GDP: while in France things are so bad , there are even rumours that they are flirting with an IMF bailout[2] If stalwarts such as they are in such deep trouble, what hope for less prosperous nations? The answer, chillingly, is not much. According to a report by Schroders [3] the levels of sovereign debt around the world are so high that they represent a real risk to future investment, growth and healthy trade. In effect the repayments will come to stifle most normal economic activity. Though the authors are careful not to go quite this far, what worries us is that if this activity slows, then there may be a real risk that many nation states may become structurally unable to ever repay their debt. If sovereign bond markets cease to function there is no real stable credit, In effect. all the money in the world has run out. The political, social and military consequences of that would be interesting indeed.

[1]https://edition.cnn.com/2025/08/29/economy/trump-fed-turkey-argentina

[2]https://www.theguardian.com/world/2025/aug/27/france-on-the-brink-political-crisis-economic-francois-bayrou

[3]https://www.schroders.com/en-gb/uk/institutional/insights/sovereign-debt-dynamics-the-alarming-backdrop-to-rising-geopolitical-risk/

#sovereign debt #USA #japan #france #economics #finance

Is Donald Trump A socialist? It’s really about tariffs

A few months ago we published a little blog(LSS 7 4 25) in which we wryly suggested that the policies of Donald Trump. especially on trade tariffs, more resembled those of socialists like Tony Benn than those of classic right wingers like Ronald Reagan. Our aim was less with ideology and more with practical matters: will the tariffs work? We even pointed out that, with advances in automated techniques like AI, it was pretty unlikely that huge numbers of jobs would be created in manufacturing, even if the tariffs really did change the pattern of trade in the way Mr Trump desires.

It’s view shared by professional economists of some standing, as this article by Steven Greenhouse for the Guardian points out. For example Ann Harrison of UC Berkeley, not only shares our thoughts on the automation thing. She also points out that to be successful, tariffs need steady application over decades. Trump’s wildly erratic “they’re on. they’re off” approach seriously impedes investment planning. And how long has he got anyway? Would a successor-perhaps JD Vance or a younger member of the Trump dynasty-have the same approach? While Michael Strain of the impeccably right wing American Enterprise Institute worries that all these tariffs will simply raise costs for most US manufacturers – a serious own goal if ever there was one. The various experts raise other questions too. Will the so called pledges of investment from other nations really materialise? Will the tariffs create an archaic automobile industry based on petrol, hopelessly unable to sell a single unit to a world which has long since moved on to electric? Frankly, are tariffs high enough to achieve their stated purpose(yes, that surprised us too) But all of these are laid out in Steven’s excellent article.

Tariffs are like many things. Sometimes they’re good and sometimes they’re not. If they were all good, then every nation would set them at 100%. If they were all bad, they would have been abolished long ago. The real mistake is to implement a good idea with insufficient care and attention. Now that really does resemble many socialist regimes of the past.

[1] https://www.theguardian.com/us-news/2025/aug/18/trumps-tariffs-manufacturing-resurgence-jobs

#donald trump #socialism #capita;ism #tariifs #trade #economics #american enterprise institute

Co-LAB-oration, or why its good news UK is back in Horizon

Science is good for economic growth. It’s theme we’ve touched on before in this blog(LSS 4 10 23; 1 3 24) So any initiative that builds on this incontrovertible fact will meet with our approval. if only because we want a higher standard of living next year. Which is why we showcase this article by Lisa O’Carroll of the Guardian [1] which reviews progress of the UK’s revived membership of the EU administered Horizon Programme, which tries to bring together the efforts of scientists technologists and scholars from across many countries.

It may soothe the objections of our more rabid eurosceptic readers, to learn that almost half the members (20:27) are not in the European Union, but are located as far afield as Canada and New Zealand (“is that Bri’ish Empoire enuff fer yer, Guv?”) But because science is a collaborative process it helps if you can recruit your teams from close neighbours, if only because it saves on things like travel costs on the day of the interview. We need not discourse long on close financial and technological links as Lisa covers them well in her article. It’s a cultural link of a different stripe which makes us think that rejoining was the right decision.

For what the UK and its fellow members have in common is that they are open societies, where information and people flow freely. The other possible partner, the USA, is showing strong signs of both damaging the free flow of information as well as launching major attacks on both the funding and the very work of scientists, as our readers well know. The Horizon programme and the countries that contribute, are the genuine heirs of both the Renaissance and Enlightenment. Societies that abandon the practice of truth and reason soon fall into cultural and economic stagnation. Just as being in UEFA is a sound bet for British Football Clubs, so is Horizon for British Universities. A good news day forr once

[1]https://www.theguardian.com/science/2025/aug/12/uk-recovers-position-horizon-europe-science-research-eu-brexit

[2]https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/horizon-europe_en

#science #technology #economics #EU #UK #renaissance #enlightenment #donald trump

Here is the weather forecast: there will be a World government, soon

We at LSS might not want a world government: we might be quite happy with the State we’re in. But you can’t avoid the inevitable. And the hard data, the ineluctable facts from the weather forecasters, suggest that this inevitable may come sooner rather than later, But before we draw our conclusions: what are these facts?

If we break 1.5⁰C global warming (and all the evidence suggests we shall) the effects will be dramatic. There will be alternating cycles of fires and floods in many countries, and for the first time the trend of ever rising food production will go into reverse. The loss of land, and the beginning of floods in coastal cities will lead to rapidly increasing migration pressures. Many would say that is already happening. But it’s as nothing compared to smashing the 2⁰C limit. At that point, sea levels will rise by 40cm by the end of this century, displacing hundreds of millions and wrecking the pattern of the world economy. The surviving lands, wracked by floods and droughts, will start to lose their capacity to produce food at all . The resulting migration pressures will make todays numbers look negligible. As for 3⁰C? It’s too scary to give the full details. But its got something to do with complete collapse of the seasons, fires in the tundras, and social unrest brought about by massive flows of refugees.

In such circumstances a World Government would form very quickly. Because it would be the only body capable of addressing the multiple threats at a global level; Which is the only level at which they can be tackled. History shows that sudden changes in ecology (usually plagues or climate changes) produce truly massive, paradigmatic changes in politics and society . The ending of the Roman Climatic Optimum meant the end of the Ancient world. All its customs, norms and beliefs were washed away in a new Medieval Europe. Similarly it was the Black Death that nailed the coffin of Feudalism, and an utterly new capitalist world was born. The nation state has served us well for hundreds of years. But then-so did cathode ray TVs, plastic musical records and steam trains. So-do we cling to what we’ve got? Or replace it it in anticipation, saving everybody time in the long run?