Deflating the Great Inflation Scare

January 20th, 2010 by The Parallax Brief

John Redwood MP (Con, Wokingham) joined the Great Inflation Scare yesterday, posting a blog, ominously titled “Inflation Soars”:

“December’s inflation figure was as bad as I feared – and that’s before the force of higher VAT kicks in in January.

The Consumer Price Index, the government’s preferred measure, rose by 2.9%, just a whisker below the level where the Bank of England has to write a letter of apology and explanation to the Chancellor. The Retail Price Index (including mortgages) rose to 2.4%, whilst the RPI excluding housing hit an alarming 3.8%.

The Monetary Policy Committee has a lot of explaining to do.

[...]

Their defence will be twofold. They say inflation will come down again after a further rise in the first quarter of this year. That is likely to be true unless there is another devaluation and a further difficult surge in the price of commodities and fuel.”

This encapsulates the Parallax Brief’s objections to the inflation hawks. Mr. Redwood fumes about inflation, but it is actually near post-war lows; he then admits later in the very same article that inflationary pressures will probably ease after the first quarter. But still he pens a blog entry front loaded with language like, “inflation soars”, “[the figures were] as bad as I feared,” and “[the MPC] has a lot of explaining to do”. Amazing!

And Iain Martin, the deputy editor of the Wall Street Journal Europe, did exactly the same yesterday on his blog, admitting that the Bank of England — which, the Parallax Brief would like to remind his readers, is an independent institution — was probably right to say the figures were nothing to worry about, but then going on the claim that inflation as it stands could lead to a resurgence of militant trade unionism. Astonishing!

Inflation is only 2.9%, a figure that almost every single government between the war and 1993 would have killed for. Second, these hawks actually admit themselves that inflationary pressures are likely to ease in the second quarter.

Yet here they are whipping up support for the idea that we should be panicked about a non-existent threat that, even if it did exist, might not even be a threat, as opposed to, say, concentrating on real problems that actually exist now.

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Categories [ Economics and Finance, UK Politics ]

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Is Depriving Afghanistan to Terrorists a Sensible Reason to Wage War?

November 9th, 2009 by The Parallax Brief

John Redwood on his excellent blog on Saturday posed a very interesting question: “Does the war in Afghanistan make us safe in the UK?” The Parallax Brief thought he didn’t flesh out his argument enough, or take it to its logical conclusion, and later gets into analysis of COIN warfare that he probably isn’t qualified to offer, but Mr. Redwood did make some interesting points.

“They go on to say that we need to fight in Afghanistan because some terrorists are trained there, and because the terrorist plotters in the UK often have links there. They link Afghanistan to Pakistan by calling the area the border badlands. Under questioning, they admit that most of the training and links are to the Pakistan side of the border, rather than the Afghanistan side. They seek to imply that the position in Pakistan would get worse if we removed troops from Afghanistan.

This argument will not wash.”

Let’s push aside for a moment the truth that British boots on the ground in Iraq and Afghanistan act as a recruitment clarion for extremist and terrorist organizations, as well as putting Britain firmly near the top of the list of hated enemies for every lunatic Muslim terrorist.

More to the point would be to ask where terrorist attacks are planned, where are they undertaken, from where to the terrorists hail, and where are they indoctrinated? It strikes the Parallax Brief that the answer to all these questions is very unlikely to be Afghanistan or the mountainous west of Pakistan. It is actually far more likely to be Bradford, London, Paris or Hamburg.

This is borne out by fact: 9/11 was mostly planned in Hamburg (and while the Parallax Brief is sure downtown Hamburg rocks on a Saturday night, it probably isn’t quite yet in need of NATO troops to maintain order). Meantime, the 7/7 London Bombings were carried out by British citizens. And the 9/11 attackers took flying lessons in America.

Terrorists don’t need Afghanistan or the lawless tribal Af-Pak border region.

That’s because it doesn’t take a the space afforded by a sympathetic country in the Hindu Kush to radicalize a young man and then teach him how to let go of a dead man’s switch. Besides which, Al-Qaeda is a highly decentralized organization in which the various cells rarely contact eachother and where individuals in the same cell might not even be aware of one another.

If our heroes are fighting and dying in Afghanistan to deny the country to terrorists, then it is indeed a deeply flawed logic that has sent them to fight on foreign fields, and shows an asinine lack of thought on behalf of their leaders.

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Categories [ Defence, International Affairs ]

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Downbeat GDP Figures Shock Economists

October 23rd, 2009 by The Parallax Brief

According to Bloomberg.com, Britain’s GDP dropped 0.4% for the third quarter, shocking economists. A Bloomberg survey of 33 economists had predicted a 0.2% increase. Lingering slumps in services, manufacturing and construction were primarily responsible for the gloomy results. Britain is now in its longest recession on record.

Bloomberg reports that, “The data, the first for the third quarter from a Group of Seven nation, suggests Britain may turn out to be the last of them to exit the recession sparked by the worst financial crisis since the Great Depression.”

Given that unemployment is what is known by economists as a “lagging indicator”, that is, its movements lag behind GDP movements by 6-8 months, unemployment will continue to rise well after any recovery, making it increasingly likely, in the Parallax Brief’s view, that the Labour Party will hit the polls on election day with unemployment either continuing to rise or near the high watermark — even if the Prime Minister delays until the last possible date

Clearly, these results will deal not just a short term blow to Labour by associating the government with yet more negativity for a 24-hour cycle or so, but will also have grave effects in the long term.

The Parallax Brief would also like to point out that the figures make fools of the monetary and fiscal hawks, such as John Redwoood MP and the Adam Smith Institute, who are already antagonising for a savage cuts in public spending and the tightening of monetary policy.

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Categories [ Economics and Finance, UK Politics ]

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