Covid-19 update

Guns

The Guardian

 

The pandemic is spreading around the world as outlined in my previous post.

Given that the majority of the world’s population is either in shutdown or in the process of getting locked down, what will be the likely social consequences?

Clearly the risk of social unrest and civil disorder in our major cities is high.

Three data points I have come across this week highlight how civil unrest could emerge in the coming weeks and months.

Reuters have reported, from France, that the price of cannabis has soared since President Macron ordered the closure of the borders. The writer notes that “some police sources have privately expressed concerns that a prolonged scarcity of cannabis could fan trouble in France’s restless city suburbs and prisons.” The article ends with a warning that France could be on the cusp of real problems.

This is not just an issue for France. It is going to be an issue across our developed world.

A bigger concern and a likely flash point for major social unrest, isn’t drugs but the huge numbers of people who are losing jobs. Mass unemployment looms as blue-collar workers sign up for the dole.

The head of the Red Cross has warned that“’We have a lot of people who are living very marginalised, in the so-called black hole of society… In the most difficult neighbourhoods of the biggest cities I am afraid that in a few weeks we will have social problems.” Reports are coming through of poor families struggling to get enough money to feed their kids in places like Liverpool and Manchester.

It is therefore likely that in the coming weeks, driven by the above factors, we could easily see significant civil unrest across the West.

If developed nations like Great Britain, France and America struggle to maintain social order with their welfare provisions, how will developing countries like India cope? This article notes the growing terror among India’s vast poor that their incomes are drying up now that the country has been locked down.

The social unrest in the rougher parts of Paris, London and Berlin would be nothing compared to the spectre of starvation which is now the reality for millions of impoverished Africans and Indians.

Social unrest as a consequence of the lockdown measures imposed by governments across the world to prevent the spread of covid-19 is the likely next step in this grim saga. This will likely be a major trigger for a further massive fall in stock markets, along with Depression era economic data coming through on jobless figures and economic activity in the month of April.

Stay safe folks.

Covid-19 update

The arc of the Long Descent

20d8e859-trucksfi2-1024x534

VT.com – Army trucks filled with bodies drive through Italian streets

 

“…the Coronavirus is more a window or a marker that separates what will be seen as the end of an era and the beginning of another.”

Econimica, “End of Growth: Does Covif-19 Herald An Era of Decline?”, Chris Hamilton

 

 “At some point, major pandemics will become inevitable, leading to huge disruption of global and regional supply chains, international tensions and the closure of borders to refugees.”

 Forecasting Intelligence, “How to prepare for a dying future”, 10 March 2019.

 

It now feels like a lifetime ago that I posted my predictions for 2020 within the wider picture of an industrial civilisation peaking.

The day after I posted that on the blog, I jetted off to Asia for a three-week holiday, just as the coronavirus was starting to spread beyond China. It was a great trip travelling across south-east Asia and at some point, I will write a post on it.

However, there is only thing to write about today and that is the developing global crisis of the coronavirus pandemic outbreak. Apologies for the delay in writing a post, it’s been hectic since I came back from holiday and to a certain extent, I’ve, like millions of others, has been trying to get my head around this developing situation.

The coronavirus marks the end of the long era of growth and the new era of deglobalisation, supply disruption, international balkanisation and state interventionism. We are now entering that era.

Last year, in my post “How to prepare for a dying future”, I wrote that “at some point, major pandemics will become inevitable, leading to huge disruption of global and regional supply chains, international tensions and the closure of borders to refugees.” I should have added everybody else as well!

The situation is developing fast, and as I write, the Financial Times is leading on the story that London will be shut down soon to prevent the spread of the virus. So, what do I see coming?

  • The confirmed (and unconfirmed) number of the infected will continue to exponentially rise throughout the developed world for the foreseeable future. The death rates will continue to soar, despite the shutdowns being imposed throughout most of the Continent.

 

  • Financial markets will continue to have a volatile journey with relief rallies being punctured by ever deepening slumps as the crisis worsens. My tentative forecast for the bottom in the markets is when the FTSE 100 hits the low 4000’s and the S&P 500 around 1750 which could happen within weeks.

 

  • Governments around the world are already stepping up monetary and fiscal measures to avoid a deflationary depression and a re-run of the 1930’s Great Depression. This will involve nationalising of essential bankrupt companies (airlines, railway companies etc), massive support to small-to-medium businesses via tax breaks, grants etc as well as helicopter money to citizens. All this will not be cheap. Government debts will soar and central banks will monetise on a scale never seen since the 2008/9 financial crash.

 

  • The medium-longer term consequences of a global bailout of the private sector negatively effected by the shutdown measures will be a permanent shift in power from the private to the state. The inflationary impact of People’s QE by the central banks will, in time, result in a wave of global inflation. I would recommend gold as a good hedge when this happens.

 

  • It is likely that the combination of stringent shutdown measures on a scale of China, the warmer weather from May onward and the fast-track work on reaching a vaccine will ensure that the worst of the pandemic crisis – at least for the cooler regions of the world, will be over by the beginning of June. I am also cautiously optimistic that a vaccine will be ready by the Autumn for mass production.

 

  • The economic impact, at least in the short term, will be severe and whilst there will be a recovery later on, it will be jagged one given the fact that millions of people will have lost their jobs and stared (or fallen into) the financial Abyss. After such an experience discretionary spending will remain weak and consumers will prioritise getting cash reserves and stable employment over spending on non-essential items.

 

  • The pandemic virus will trigger a wider reorganisation of life – a further shift to remote forms of working and a greater focus on reliance at a personal, family, corporate and national level.  Governments around the world will prioritise the re-localisation of the production of goods: China and the south-east Asian region will be the main casualty of this trend.

 

  • The virus will have negative consequences for the European Union (EU) as it has acted as a brutal reminder that when the chips are down you are only rely on the nation-state to act in the interests of the people. The failure of the rest of the EU member-states to provide medical provisions to the Italians in their darkest hour (China intervened) will not be forgotten by Rome for a long time.

 

  • Civil disorder is likely to occur in our major cities. Criminal gangs will exploit the partial withdrawal of the police to target the wealthy, food supply chains will be severely stretched given the increased demand for food and this, in itself, could trigger violent clashes in our major urban centres. Declarations of martial law, army on the streets, rationing, curfews and in the worst-case scenario, shoot-to-kill orders could occur.

Insurge Intelligence recently posted a good article on the potential ramifications of the outbreak. They argued that “the prospect of business closures due to the outbreak could perhaps be the biggest wildcard, leading to unpredictable societal disruptions in public services— food supply chains might become strained if companies are forced to close on a large scale, or operate on reduced staffing, for a prolonged period due to the virus becoming endemic.

However, much of the real risk here comes not from supply chains, but the self-fulfilling prophecy of panic-buying, leading to empty-shelves and disruptions in availability of key food items. At worst, managing that sort of disruption could see national security agencies step in to maintain public order and keep the show on the road until things settle down.”

So, to summarise, we are entering uncharted territory but this isn’t the end of the world but rather the end of an old world.

The globalisation dream has ended. Even if, as I’m sure we will, partially bring back the tourist industry, global travel in the years to come and relax border controls, it won’t be on the scale before.

The emergency measures being introduced, massive state interventionism, rationing of goods, border controls, nationalisation of industries and the suspension of the free market itself (mortgage relief, landlords banned from removing tenants etc) are a hallmark on what is coming longer term. The end of the money economy.

As I explored in an earlier FI post here, what will eventually happen in the decades to come is the partial or complete collapse of market based economic arrangements around the world.

Big picture, the macro trends, whether on escalating climate change disruption, resource scarcity, the shrinking of working-age workers in the developed world from 2020 onwards are here to stay and will accelerate.

Welcome to the new era folks.

The arc of the Long Descent

At the top of the peak

How-to-Prevent-Altitude-Sickness-on-Everest-Base-Camp-Trek-1920x595

Mosaic Adventure

 

 

“The fact that conventional non-OPEC oil production has rolled over is a huge problem that has received little attention by oil analysts. To put this in perspective, conventional non-OPEC oil production still represents 45% of global oil production and now appears to be in sustained decline.

Furthermore, if you include other sources of non-OPEC production, such as Canadian Oil Sands (which is not considered “conventional”), biofuels, refinery gains, and OPEC NGLs (which are not part of the OPEC quota systems), the US shales still represent an enormous 75% of the total non-OPEC liquids growth over the last decade. Now that the Bakken and Eagle Ford are facing exhaustion issues that are readily becoming apparent, nearly all of non-OPEC’s production growth will have to come from just one play in West Texas–the Permian.

Never before has the global oil industry been so dependent on one field in such a concentrated geographic area for all of its future growth.”

Goehring & Rozencwajg, “Shale Oil: A Startling Prediction Using The Latest Statistical Techniques”

 

“A spate of new scientific research released through 2019 has thrown light on nearer-term risks of a global food crisis in coming decades, such as a multi-breadbasket failure — due not just to climate change, but a combination of factors including population growth, industrial soil degradation, rising energy costs, groundwater depletion, among other trends.

Taken in context with a number of climate change models produced over the last decade, the heightened risk of droughts in the 2020s means that a global food crisis could be imminent.”

Insurge Intelligence, “West’s ‘dust bowl’ future now ‘locked in’, as world risks imminent food crisis”

 

 

If our global industrial civilisation was a mountain, we are likely to be at or very close to the peak.

If this is correct, our collective future will be a story of the decline and eventual collapse of our industrial civilisation.

A core purpose of this blog is to circulate to a wider audience my view that the limits to Growth business-as-usual (BAU) modelling is the most likely future fate of our industrial civilisation. And that modelling, which has proved broadly accurate over the past 40 years, suggests that we are hitting global per capita peaks in food and services as at now.

Limits to Growth 2020

Dirk Bruere Limits to Growth 

 

As you can see from the above chart, the 2020’s are, if the modelling continues to prove broadly accurate, a tipping point when industrial production slumps, global population peaks and death rates start to soar.

Interestingly, Bloomberg today noted that top market strategists are referring to the 2020’s as the “Peak Decade” for demographics, globalisation and oil demand. The reality of our global predicament is starting to permutate among the financial elites of the Western world.

The idea that, as we enter the 2020’s, global key metrics are peaking and will rollover may still be a shocking idea for many. We are likely to have to get used to this new paradigm soon. At the top I included a quote from the Insurge Intelligence website which is one of the few online sources that takes resource scarcity seriously. They argue, based on the latest scientific evidence, that various factors, which I have previously referred to as the Limits to Growth mega-trend, are colliding to make a global food crisis a rising probability in the coming years.

I’m not convinced that a global food crisis is imminent – far too much food is wasted across the developed world – however the prospects of future shortages, price hikes and climate triggered droughts is likely in the coming decades.

Peak oil concerns have faded since the surge in US shale production over the last decade. A recent report by Goehring & Rozencwajg suggests that the bulk of non-OPEC production growth this decade will come from “…one just play in West Texas- the Permian”.

Given that conventional oil fields are declining on an annual basis, global oil demand is still rising (for now) and the US shale miracle is slowing, the prospects of another oil supply shock this decade are high. That will likely prove to have major repercussions on a global economy still recovering from the 2008/2009 financial crisis.

So that’s the big picture on where we are and where we are heading as we enter this potentially momentous decade. Now it is time to review how my predictions for the year 2019 fared.

I predicted that Britain would leave the EU in 2019 and that there would be an 11th hour amendment to May’s deal, possibly relating to concessions on the Irish backstop. In fact, Britain is not leaving the EU until 31st January 2020 but Boris Johnson did manage to secure changes to the Irish backstop which enabled a revised deal to be agreed between the UK Government and the EU in October 2019. It wasn’t in the direction of a softer Brexit either as I thought at the beginning of last year.

Overall, I will probably give myself more of a fail than a pass on that prediction but I was not wholly wrong. The timing of our leaving the EU was technically wrong but de facto correct in the sense that the Tories victory in the December general election insured Brexit was happening as a political fact prior to the New Year. Similarly, the key to unlocking a revised Brexit deal was eventually done by concessions on both sides on the issue of the Irish border.

My second forecast, which I only placed a 30% probabilistic chance of happening, was an Arab style insurrection in France. This didn’t happen in the end and was my wildcard scenario for the year.

My final forecast was a bulls eye. I predicted that Trump, as part of a wider attempt to withdraw from the US empire business, would order the withdrawal of the majority of US troops from Syria. That occurred amid chaotic scenes in northern Syria, in November 2019.

So overall, a reasonably decent performance but not the best compared to my now vintage inaugural forecasting attempt back in 2016 when I successfully predicted both Trump and Brexit.

In terms of my predictions for 2020, here is what expect is likely to happen, with a probabilistic rating attached.

UK will agree to a shallow goods-based trade deal by 31st December 2020 (70% probability)

Britain, led by Prime Minister Boris Johnson, will achieve a shallow trade deal with the EU facilitating the free flow of goods by the end of 2020. Other areas will be concluded in 2021 and 2022 but the overall thrust of the final settlement with the EU will be a hard Brexit e.g. low alignment with EU standards which allows the UK to diverge on regulation and laws.

Despite much commentary in the European media I don’t think there will be an extension to the trade talks although it is possible that a very short-term technical extension to approve the new deal might occur in January or February 2021.

Sir Keir Starmer will win the Labour leadership contest (75% probability)

The crushing defeat of Jeremy Corbyn’s Labour party in the 13th December British general election triggered a new leadership race. There are currently 5 candidates still in the running although that is likely to be reduced given the need for trade union endorsements. The three candidates who are most likely to go to the wider membership are Sir Keir Starmer, Rebecca Long Bailey (RLB) and Lisa Nandy.

The Yougov polling of Labour members and the political betting markets suggest that Sir Keir Starmer is the overwhelming favourite to win the race. RLB is the preferred candidate of Corbyn’s circle but has lacked any spark so far. Anecdotally the membership, still shaken by the defeat, seem to be prioritising Starmer who is seen as the most prime ministerial of all the candidates.

Whilst I have placed a small wager on Lisa Nandy, who has impressed me so far and could surge now that the hustings have started (allowing me to exit with a profit), my forecast is that Sir Keir Starmer is the most likely candidate to win the Labour leadership contest.

The result will be announced on 4th April 2020.

Donald Trump will win the US presidential election (60% probability)

This has proved a difficult one to call. Whilst Trump’s rating vs v vs Joe Biden, who remains the most likely Democratic candidate to win the primaries, remains poor, he has significantly narrowed a once big lead.

Compared to Elizabeth Warren and Bernie Sanders, who are on the left of the Democratic spectrum, Trump is leading in key battlefield states. Should either Warren or Sanders win the Democratic primaries Trump is likely to win the US presidential election, possibly by a landslide.

Joe Biden, who appeals to soft Republicans and conservative Democrats worried about the tax-and-spend socialism of Sanders and Warrens, has a better chance of defeating Trump.

One figure to watch for is Mayor Pete Buttigieg, who would be my wildcard candidate to win the Democratic primaries. Conservative, ex-military veteran and homosexual; he reminds me of the relatively unknown Emmanuel Macron who ended up winning the French presidential elections in 2017. Buttigieg has horrendous ratings among the key African-American demographic who form Biden’s Southern firewall and therefore has a difficult, if not impossible, path to victory.

Should Biden become the Democratic Party candidate the prospects of a Democratic victory in November increases (at least compared to his rivals), however, on the balance of probabilities I would predict that President Trump is more likely than not to get re-elected for a second term in office.

The reason for my call is that Trump has managed to erase much of the once mighty Biden lead in battlefield states and we are still in the early days of this presidential campaign. The booming economy in the “flyover states” and the wider cultural weaknesses of the Democratic Party suggest that enough voters will hold their noses and vote for the Donald again.

Please note that prediction is predicated on the assumption that President Trump is not impeached in the Senate.

Well, that’s it for my set of forecasts for 2020. We will see how I perform at the beginning of 2021!

As always, I appreciate any feedback and comments you have to my blog posts.

If you wish to subscribe to my blog Forecasting Intelligence, just add your email to the box at the bottom of the website.

At the top of the peak

Revenge of the Gammons

Exit Poll 2019.png

Sky News Exit Poll

 

“Like Trump, Johnson realized that his nation’s leftward party had abandoned its working-class voters in order to pander to the comfortable classes. He went to the working class voters Labour had abandoned and spoke to them about the issues that concerned them—above all, an end to the open borders and free trade agreements that drove down working class wages in order to boost middle class salaries and investment class profits—and found them more than willing to listen.”

John Michael Greer, “To the shores of a surging ocean”

““I have absolutely no doubt that if you have a right-wing populism against a left-wing populism in this country, the right-wing will win.”

Former Prime Minister Tony Blair (April 2019), “Tony Blair says Corbyn would lose next general election if Boris Johnson becomes Tory leader”

 

The last Labour Prime Minister, Gordon Brown, was reported to have warned during the dying days of Labour government that if they let the Tories into power the Labour party would never get back in. Disappointed Labour supporters might feel that this prophecy is coming true after another shattering defeat on 13th December 2019.

The Tories made sweeping gains across the Red Wall, the old Labour Leave voting strongholds across Wales, Midlands and the North. The eventual vote tally surpassed my baseline prediction of a comfortable Tory majority and pushed it closer to a 1987 scenario which I warned could happen in my last post.

Overall, despite the poor performance of the Scottish Conservatives, I am reasonably happy with my forecast. It captured, unlike some commentators, the sizable Tory majority and I never ruled out the possibility that the Tories could be heading towards a larger majority along the lines of Thatcher’s 1987 victory.

The Scottish Conservatives fiasco is an interesting one. Up to a week or so before the election, all the signs, including from within the SNP camp, was that the Scottish Conservatives were making inroads into keeping the bulk of their seats. The SNP strategy to focus on independence over Brexit was proving a mistake among Unionist voters.

What I didn’t fully realise was that Nicola Sturgeon decision to pivot from indyref2 to prioritising stopping Brexit in the last week of the campaign probably did enough to ensure that left-wing Unionist Labour voters would swing to the SNP over the Tories. The lesson from that is not to under-estimate the SNP leader Nicola Sturgeon!

So, what was the main lesson from this election? I would argue that it was the electoral revenge of the so-called gammon voters. The term gammon has become popularised by a rather toxic set of upper-middle class social justice warriors to describe working to lower-middle class white middle-aged men with slightly reddish complexion.

These voters tend not to have a university education, have worked in manual jobs or are self-employed and have socially conservative views. They historically have voted Labour but have been drifting away since the early 2000s to the Tories, UKIP/Brexit Party or not voting at all. This key voting demographic, who tend to live in the Red Wall, was referred to by a Tory think-tank as Workington Man and provided Boris with his stunning majority.

There has been a ferocious post-election debate within the Labour party on what was to blame for Labour’s defeat. Some have argued that neither Corbyn or his policies were at fault but rather Labour’s Brexit position.

The problem with that argument is that Corbyn’s personal ratings had been consistently grim for months prior to the election. Popular perceptions of his fitness to run the country, manage the economy or keep Britain safe were abysmal. As I noted in my last post elections are inherently presidential affairs and the majority of the public had concluded Corbyn was not up to the job.

As for Labour’s super-radical manifesto, the reaction in focus groups was dismissive laughter when Labour’s policies were read out. People simple didn’t take it seriously. Labour would have been far better keeping to a more centre-left (albeit still radical) 2017 policy manifesto with a few key pledges that sounded vaguely feasible should they get into office.

Labour’s defeat had its roots in the aftermath of that June 2017 campaign. Despite the fact that the Tories clung onto office, the Tories underwent the political equivalent of a near-death experience. The recriminations were brutal and a forensic process started in Tory HQ on what went wrong. Yet, it must be stressed that Theresa May managed, despite the abysmal campaign, to get over 40% of the vote and gain marginal seats like Mansfield.

Oh Corbyn

The Times

 

Labour, on the other hand, had a very different reaction to another electoral defeat against the worst Tory leader in living memory. They went on a political equivalent of a 24 hour cultish party where Jeremy Corbyn became a secular Messiah to the chants of “Oh Jeremy Corbyn”. There were no tough questions on why Labour failed to get more votes and what they needed to do to give them a better chance of converting some of those Tory voters into Labour at the next general election.

In an alternative history, Corbyn might have moved to neutralise his historical “baggage” – e.g. the historic associations with IRA, Islamists and so on – through an apology or acknowledging that he had made mistakes in the past. Along with a tougher position on law-and order, national security and Brexit, that might have been enough to persuade some voters to give him a chance. It was those “gammon” voters who were most suspicious of Corbyn. The failure of Labour to deal with their weaknesses proved fatal in the winter of 2019.

There is no doubt that Labour’s flip-flopping over Brexit irritated both Remain and Leave Labour voters across the country. Still, I would argue that by shifting to an official second referendum position, Labour lost the support of Leave voters (those “gammon” voters) across their traditional heartlands which proved fatal in the December election. Brexit was only one, admittedly big issue, which encapsulated a deeper sense among Leave voters that Corbyn’s Labour party did not share their values, their patriotic love of the country or their economic interests.

Now, the Tories have the opportunity to convert this new cross-class electoral coalition of the small shires, suburbs and towns across England and Wales (outside the big urban cities) into a new era of Tory hegemony. Already, it is looking likely that the Tories will rule for the entirely of the 2020’s given the scale of the swing needed for Labour to get into power.

 This article brilliantly explains how the Tories have transformed their position and what a dire position Labour is now in. As the writer notes, “Brexit is a sign of the times, a glimpse of the future but the progressive mind can only see it as reactionary, nostalgic and backward looking. The decisive role of the working class in asserting national sovereignty through its democratic vote in order to renew the ancient institutions of Parliament and the common law is incomprehensible to the left.”

By embracing a hard Brexit, with the clear commitment to ending free movement, the Tories signalled to the working classes that they could be entrusted with their vote. As Greer notes, Brexit was driven by the bottom 80% of voters who had been economically hit by the impact of mass movement of EU workers into the UK which effectively capped their wages over the preceding 15 years. It’s not a coincidence that real wage growth for the working classes has only picked up since 2016 as the supply of foreign workers dropped after the referendum result.

I will be writing my 2020 forecasts soon but one thing is clear, the shock waves of Boris stunning political victory will have ramifications for America. Should the Democrats run on a left-wing “woke” policy platform they will struggle to win over Middle America in November 2020. However, much voters wince at President Trump’s tweets, his vulgar and at times unpresidential behaviour, they will be unlikely to turn over the White House to a far-left Democrat radical.

The Tories crushing victory in 2019 may prove, as Michael Bloomberg warned his fellow Democrats, a canary in the mine for the Democrats this year.

I will be posting my 2020 forecasts soon and look forward to any feedback you might have.

All the best and a Happy New Year to all my readers.

Revenge of the Gammons

UK general election final forecast

UK ge 1

Allianz Global Investors

 

“On the @YouGov MRP: it puts Tory seats midpoint at 339, vs 310 in 2017, when the result was 318; similar accuracy this time would mean 347 seats, majority of 44”

John Rentoul tweet (10 December 2019)

 

The British people are the brink of deciding the fate of this great country.

The polls indicate that the most likely outcome is a Conservative majority, although the scale of undecided voters out there suggests either a hung parliament or Tory landslide remain outlier outcomes. The YouGov MRP poll, which came closest to accurately forecasting the June 2017 election, released last night its updated forecast of a Tory seat tally of 339*. This is within the ballpark of other pollsters and election models.

*- a party requires 326 seats to have a majority in the House of Commons.

Should this election come down to a presidential-style choice between Boris Johnson and Jeremy Corbyn, there is only one winner. Boris Johnson.

Corbyn’s net satisfaction ratings are horrendous even factoring in that Boris is also relatively unpopular compared to previous leader’s comparisons. This guarantees that the Tories are the largest party but not necessarily that the Tories will win an outright majority.

UK ge 2

Financial Times

 

One of the myths of 2017 was that the pollsters never saw the hung parliament outcome coming. That is factually incorrect. Some of the pollsters did. At the time, I worked for a major private bank who predicted, based on the public polls available, a hung parliament outcome. Therefore, it is significant that the polling overwhelmingly indicates a tiny/small Tory majority to a landslide victory.

UK ge 3

Politico

 

My final election forecast is the following:

Cons                      344

Lab                         234

LD                           13

BxP                        0

SNP                        34

PC                           4

I have increased the tally of Scottish Tories seats from 9 (YouGov forecast) to 17, which in turn bumps up the overall Tory seat tally, taking into consideration a further tightening in the polls since the YouGov poll was published.

The YouGov forecast in 2017 did not anticipate the huge surge in Unionist tactical voting in marginal seats across Scotland, which meant that the Scottish Tories gained double the expected seat tally in the actual election. I suspect that something similar will happen this time around.

Ian Smart, who accurately forecast the 2017 general election result in Scotland, is predicting the following outcome in this general election.

UK ge 4

Ian Smart blog

 

Whilst this is my baseline prediction, I do think there is a risk of a late surge by undecided voters, which could destroy that Tory majority dream. The shift this week from Brexit to the NHS has helped solidify the Labour vote and the odd reaction of Boris Johnson to the picture of the boy in the hospital has damaged the Tories among Labour Leave and undecided voters.

Nadeem Walayat, a forecaster who accurately predicted Trump, Brexit and the 2015 general election, is forecasting a Tory seat tally of 326. That would be a Tory majority of one.

Alternatively, the message of “get Brexit done” could ensure the Tories do better than expected, pushing them towards landslide territory. Anecdotally there is talk of lots of “shy Tory” voters in the red wall so we could see bigger Tory swings across the Midlands and the North than the polls are picking up. Undecided Tory Remain voters are also apparently slowly shifting to the Tories. The tightening of the polls will likely scare more undecided Tory Remainers and soft Liberal/Tory voters to voting Tory to keep out Jeremy Corbyn.

My lack of a strong conviction, coupled by the poor betting odds, is why I have not recommended attempting to bet on the Tory seat tally in this election. You should only bet when you have a strong conviction in your call.

Therefore, I am sticking with my forecast of a good performance by the Scottish Tories but have ditched my earlier forecast of the Liberals sweeping across central London. Jo Swinson’s disastrous campaign and the late surge to Labour among Remain voters has put an end to that Liberal dream.

We will see whether this forecast turns out to be true tomorrow evening.

UK general election final forecast

UK General Election forecast – update

Boris vs Corbyn illustrative final-01

Yougov

 

“On Monday of this week, the man some people have begun referring to as “Dr. Doom” sits in a German restaurant in London, stares at his coffee and says, “I wish I hadn’t been right.”

Then he offers another prophecy: “I suspect we might have Boris Johnson for 10 years, maybe longer.”

De Spiegel interview with the former British ambassador Sir Ivan Rogers

 

We are nearly half way through this general election and it seems like a good time to provide an update on where we are heading.

In 2016, I wrote that “the Conservative Party is moving to bring on-board Labour voters, just as Donald Trump is doing with blue-collar Democratic voters, in the United States. You may hear a lot more in the coming years of the May Labourites and how they will bring an electoral landslide for the Tories at the next general election.” The Tories under the than Prime Minister May were embracing the rhetoric of a centre-left economic policy agenda and as a consequence enjoyed soaring polling ratings.

We know what happened next. That rhetoric failed to be converted into policy. The June 2017 snap general election was a disaster for the Tories and resulted in a hung parliament.

This time round, under their new leader Boris Johnson, it looks like the Tories have a better chance of capturing those ex-Labour blue-collar voters in the election on 12th December 2019. Current polling shows the Tories ahead with a 14% lead in the national polling

Poll on polls 24 Nov

Politico

 

Labour’s policy manifesto published earlier this week was a radical socialist programme which would overturn the 1979 political economy. The numbers involved are eye watering and it is questionable how credible much of the proposed policies are, whether in terms of their implementation or costings.

Focus group feedback indicate that this, far more radical manifesto, simply fails to pass “the smell test” with voters. The proposed four-day week idea, in particular, goes down badly with voters. Labour have missed the lesson of 2017 – yes to radical change of the status quo but it must be done in a way that is sellable on the doorstep and comes across as “credible” to the wider electorate.

The Tories, in contrast, have smartly learned the lessons of their electoral near-death experience in 2017. They have ditched the commitments to austerity and have promised significant investment across public services and infrastructure. The key retail propositions have been tested to destruction with focus groups and their overarching message of “get Brexit done” was literally copied from feedback from disgruntled voters. The Tory campaign has been disciplined, ruthless and much better focused on their key target seats.

One metric I am following closely is the net satisfaction in leaders’ ratings. This FT chart shows the huge gulf between the two leaders and the Tories need to maintain that healthy lead in the coming two weeks.

Net fav ratings

Financial Times

 

A recent poll suggests that gap is narrowing which, if replicated in other polls, could be a worrying sign for the Tories. However, it could also be an outlier. We will only know once we see further polling in the coming days and weeks. I suspect that the radical Labour manifesto could be having the impact of energising Labour’s core vote even if it hardens existing negative views of Corbyn among the wider electorate.

Net fav ratings 2

Political betting.com

 

As Eurointelligence noted recently, “the purpose of this manifesto is to fire up the Labour grassroots. We think it might succeed on that score. It is smart politics for Labour to vacate the centre ground and focus on turnout.” The risk of that strategy will be to turn soft Labour voters against the party even if it succeeds in raising the turnout figures for the core demographics of the Labour voting base. Until we see further polls in the coming weeks it will be difficult to precisely forecast whether Labour’s strategy is working or not.

So, to summarise, I’m sticking with my forecast that the Tories should get a solid comfortable majority on 12th December 2019 of 347 seats.

Scottish Conservatives seat tally update

For those readers who took up my advice and placed the bets of the Scottish Conservatives getting a vote tally of between 11 and 15 and 16 plus, things are looking good. The first Scottish poll in a month indicates that the Scottish Conservatives will lose one seat (Stirling) to the Scottish National Party (SNP). This is contrary to the widespread assumption that the Tories would get wiped out at the general election.

Note, though, that the seat projection is based on national polling and doesn’t factor in potential Unionist tactical voting in those marginal Tory-SNP seats. If that occurs, which is what is predicted by the Scottish Labour writer Ian Smart, then the Tories will increase their seat tally in Scotland.

The odds of the Scottish Tories getting over 16 seats is now crashing. A £25 bet would now return “only” £275 rather than over £400 when I recommended the trade a few weeks ago. I expect those odds to narrow further as we get closer to the election as it is clear that momentum is with the Scottish Conservatives.

Bet 5

Coral

 

It looks likely that the Tories will reach at least the seat tally of between 11 and 15 which will yield a nice profit for those who took the bet. And the prospects of a blow-up rise of their seat tally to 16 or more is increasingly promising.

As always, I look forward to receiving any feedback you might have on my analysis. Stay tuned!

FI

UK General Election forecast – update

UK General Election forecast

ADS-BritishGeneralElection

The New Yorker

 

This general election is likely to be the most consequential since 1979 when Margaret Thatcher swept to power. The fate of Brexit hangs on the outcome.

If the Tories win a majority Prime Minister Boris Johnson will be able to pass the withdrawal treaty and the United Kingdom will legally leave the European Union (EU). Should the result be a hung parliament, Brexit itself will be in doubt and the possibility of a Labour government looks very likely.

The election of Jeremy Corbyn into 10 Downing Street would be a transformational moment in British, and indeed, global politics. A man firmly on the radical left of politics would be in the driving seat of one of the major great powers.

So, what are my thoughts, with a huge caveat that there are 4 weeks to go, on the election so far.

Looking at the polls, which give a reasonable indication of where we are, the Tories have maintained a national lead of over 11% so far. This could change, given that the manifestos and debates haven’t occurred yet, but so far there seems to be a consistent pattern of the consolidation of both the Labour and Tory vote vis v vs the smaller parties (Brexit Party, Greens and the Lib Dems).

Poll on polls

Politico

 

The national polling hides distinct regional variations, and to a certain extent you should view this election as a series of regional contests.

One of the most reliable means of working out who the eventual winner is in terms of leader’s metrics.

The New Statesman recently noted that the only meaningful change since the campaign started was that Boris Johnson had become less unpopular whilst Corbyn’s dire personal ratings remained the same. That is good news for the Tories since it implies that their lead over Labour is more solid then many jittery commentators think.

The British political class are still shaken by the May 2017 general election when Labour surged in the polls once campaigning started. The risk is that commentators have the 2017 model in their head when they should be thinking of different scenarios.

The 2017 scenario is that Labour and Corbyn’s polling will surge during the coming weeks and ruin any prospect of a Tory majority. That remains a possibility although there is limited sign of it to date.

An alternative scenario is 2015, where the Tories were very nervous amid a consensus that Britain was heading towards a hung parliament. In the end the Tories won a slim majority to the shock of pollsters and commentators alike.

A few have posited a 1987 scenario, where, again, the national polling suggested that the Tories would win a large majority which, in the end, they did.

I have already posted why I think the Scottish Conservatives could do better than expected north of Hadrian’s Wall in this election. For those who wish to read about the asymmetrical betting opportunities click here.

Here are my mini-predictions on the shock results that are likely to happen on the 12th December:

There is also a risk that Boris Johnson might lose his seat on the night which would cause a political earthquake if it occurred.

In terms of the wider political landscape, I expect that the Tories will make patchy gains in Wales, Yorkshire and the north of England. However, a mix of Labour tribalism, the Brexit Party and the failure of Boris to fully “seal the deal” with the electorate will ensure that there won’t be a transformational realignment from Labour to the Tories.

The south may prove a bruising night for the Tories, in particular uber-Remain, middle class enclaves which, whilst traditionally Tory, will fall to the Liberal Democrats. In other seats, a combination of factors, including the Brexit Party withdrawing, the fear of a hard-left Labour government and local Tory support should save local Tory candidates from a swing to the Liberals.

So, overall, my tentative conclusion – which I may update as the campaign evolves – is that the Tories are on course to win approximately 347 seats. This will give them circa 20 seat majority in the House of Commons.

 

UK General Election forecast

Political betting alert: Scottish Conservative election gain opportunity

170606121333-scotland---travel-destination---shutterstock-512226913

CNN travel

 

As I’m sure many of my readers are aware, a general election is looming in the United Kingdom, on the 12th December 2019.

After the humbling experience of 2017, where I failed to forecast the hung parliament that resulted (although I wasn’t alone in that failure!), this will prove a difficult election to call. The polls indicate, so far, that the Tories are leading with approximately 11% of the vote compared to the Labour party but these are early days (literally) in the campaign.

One area where I do have a stronger conviction on what the likely eventual outcome will be is in Scotland.

The commentariat took the view that the SNP would sweep the board in the June 2017 campaign but this turned out to be wrong. The Tories, supported by industrial levels of tactical voting won numerous seats from the SNP.

One of the few Scottish commentators who successfully forecast this result was a Scottish Labour supporter called Ian Smart. Here is his snapshot of his forecast just prior to the June 2017 election:

Bet 4

Ian Smart blog

 

He has just completed his blog post on where he thinks this election will go and he is forecasting, contrary to nearly everybody else, that the Tories will gain seats in this election. You can read his blog post here.

Given his track record, and in my opinion his compelling argument that the Unionists will come out, again, to frustrate the SNP push for a 2nd referendum during this campaign, this is worthy of a small asymmetrical bet.

IS snap

Ian Smart blog

 

As a disclaimer, political betting is about probabilities and there is no guarantee that you will make profit from taking bets. You should only bet on what you can afford to lose.

 The Scottish Conservatives currently have 13 MP’s and they are widely considered, after the loss of their charismatic leader Ruth Davidson to be in for a drubbing. This is therefore a high-risk trade.

I would recommend that you place small deposits on two potential outcomes which look likely if Ian Smart forecast (as of now) comes true or anywhere near it. Smart is currently forecasting that the Scottish Conservatives will gain 4 seats, taking their overall tally of MP’s to 17. A major caveat is that this might change as the campaign evolves.

The UK political betting website Coral is the only firm, at least as far as I can find, that offers betting opportunities on the size of the Scottish Conservatives seats tally.

Bet 1

Bet 2

Bet 3

So, to conclude, the worst-case scenario is that the Scottish Tories fail to get 11 MP’s and you will lose £50. Should the Tories get between 11 to 15 seats, you will make a overall return (minus the £25 lost on the 16 plus bet) of £125.

Should the Scottish Tories do as well as Ian is saying in his blog, you will see a return of £400 (factoring in your loss of deposit of £25 on the 11-15 bet).

For me, this is a political betting opportunity worth taking but of course this is entirely up to you.

I also must remind readers that they need to check whether political betting is legal in their country of residence.

The Coral betting company is easy to register with. Note that there appears to be restrictions on how much you can bet on the 16 to 1 odds and I could only bet a maximum of £25.

I will be writing a full blog post this month of my thoughts on the likely outcome of this general election.

As always, I look forward to any feedback you can give on my writings.

Political betting alert: Scottish Conservative election gain opportunity

Book review: The Second Sleep by Robert Harris

Second Sleep pic

Penguin Books

 

“All civilisations consider themselves invulnerable; history warns us that none is.”

Robert Harris – The Second Sleep

“Greer sees the scientific profession sowing the seeds of its own undoing. These include the profiteering machinations of the medical industry, the demonstrable lies that scientific experts regularly tell the public, the verbal abuse that outspoken atheists within the scientific community hurl at people of faith and the toxic legacy that industrialism is leaving for future generations.

Even without these considerable downsides to modern-day science, scientific research would still have a tough go of it, since the resources on which it depends will be desperately needed for necessities like food production and defense against barbarians. In light of all this, predicts Greer, it will be a no-brainer for communities to decide to stop funding science altogether. Greer also sees laboratories and other scientific facilities being vandalized and burned down for the betrayal of public trust that they will have come to embody.”

A Review of Two Books by John Michael Greer: Dark Age America and The Retro Future by Frank Kaminski

 

Last month I wrote a post titled the Deep Future in which I charted the likely journey of our industrial civilisation over the course of the coming century or so as we descend into a future deindustrial Dark Ages.

Robert Harris, the brilliant British novelist, recently published a brillant novel, called The Second Sleep, which is posited in a future England after the collapse of our own civilisation in 2025. We never find out what triggered the collapse but the book hints that it was some type of global cyber-attack that brought down the internet.

Either way, the results were catastrophic for humanity. Our just-in-time (JIT) economic relationships collapsed amid the chaos, the ATM’s and supermarkets went empty and as a consequence society collapsed. A mass exodus of 8 million people fled London and the other great cities; fighting, rape, starvation and massacres stalked the land as the world descended into a 150 year long Dark Ages.

The fictional world where the reader explores is over 800 years after the Apocalypse as it is referred to. As the Guardian notes in their review, ‘into the void of the “Dark Age” steps a rejuvenated and dogmatic church, whose authoritarian rule and obsessive suppression of heretical “scientism” ensure that people live in brutal and backward conditions.’

I don’t intend to go into any further detail about the specific plot of the novel in case any of you wish to read the novel yourself (which I strongly recommend). What I do wish to do is explore some of the themes in the novel.

The scenario Robert Harris describes is what is known within the survivalist community as a “fast crash”. A sudden disaster causes chaos to our JIT systems, triggering shortages of food in our major urban centres which lead to mass panic and collapse. I used to fear that this was a likely scenario but over the years, after much reading and thinking, I’ve reached the conclusion that this is an unlikely fate. Whilst localised breakdown of food production and distribution are likely in the future, a global collapse is extremely unlikely given that there are many things governments can do, in an emergency, to ensure that food is requisitioned, rationed and distributed accordingly.

One should also remember that the majority of the world’s population are far less dependent upon the internet and global trading networks for their daily sustenance. Still, even if Harris fictional scenario remains unlikely, you should always prepare for short-term disruption to supplies, for example in the event of a global pandemic or in the case of major civil unrest.

One of the major themes in the book is the power of organised religion in this future Britain. A common pattern during the decline periods of previous civilizations is a resurgence of organised religion which has been termed the Second Religiosity by scholars. Note that it isn’t always the traditional religion that revives, after all, it was the Christians, not the legacy Pagan cult religions, that surged as the Roman Empire disintegrated.

In Harris book, it is the Church of England, with its network of thousands of churches, which act as a sanctuary after the collapse of our own civilization. Slowly, within a generation or two, the surviving descendants embrace a fundamentalist interpretation of Christianity which explains the collapse through the narrative of a sinful world destroyed by the Beast himself.

Science is distrusted and deemed heretical in this world. And who can blame them? After all, it was science and the civil religion of progress that created a high-tech civilisation that imploded with unimaginable horror, death and suffering.

In our future world a similar fate awaits science as referenced in the review of John Greer Dark Age America book at the top. Imagine the scene: its 2121, our civilisation is falling apart and enraged mobs destroy the remaining scientific establishments and hunt down scientists who are widely blamed for the nightmare unfolding. Science promised the masses eternal economic growth, flying cars, space travel and instead the world is descending into darkness.

The rise of religion also revisits another theme explored in the novel which is the reversion to medieval forms of geopolitical warfare in this far future Britain. Scotland is an independent fiefdom in a long-term war against the English.

In the north of England, the descendants of the Muslim populations who migrated to Britain in the 20th and 21st centuries formed a Northern Caliphate which is engaged in a permanent religious war against Christian England. All of the above are credible long-term possibilities should the United Kingdom disintegrate during the twilight era of our industrial civilisation.

Of course, this is a book of fiction, even if it is well researched, and it is unlikely that a far future Britain would correspond so closely with medieval England. I suspect that aspects of our late civilizational period would survive in a mutated form in a far future England. This would involve air travel (small planes for the elites), rudimentary renewable technologies, the use of ham radios and other low-tech technologies that don’t require extensive petroleum inputs to function.

My Americans readers are encouraged to read John Greer’s Dark Age America non-fictional book on what a deindustrial America might look like in the future. I would also recommend John Greer’s Stars Reach, a fictional novel in a post-collapse American world hundreds of years from now.

Overall, the book was a gripping read and a thought provoking take on the fragility of our current era and what might take its place in the centuries to come.

Book review: The Second Sleep by Robert Harris

Deep Future

Mayan

Loco Gringo

 

“Like modern industrial society, the Maya built their civilization on a nonrenewable resource base. In their case it was the fertility of fragile tropical soils, which couldn’t support intensive corn farming forever. On that shaky foundation they built an extraordinary civilization with fine art, architecture, astronomy, mathematics, and a calendar more accurate than the one we use today. None of that counted when the crops began to fail. Mayan civilization disintegrated, cities were abandoned to the jungle, and the population of the Mayan heartland dropped by 90%.”

John Michael Greer – “The Long road down: decline and the deindustrial future

 

Writing this month’s post has proven a challenge. I was planning to write an update on the latest twists in the on-going Brexit saga but the truth is that it is difficult to predict the eventual outcome of this drama.

So, I changed my mind.

I hope you readers clocked the recent news story of the successful drone attack on the Abqaiq oil fields in Saudi Arabia, the second largest in Saudi Arabia. Saudi oil supply has been halved as a consequence, oil prices are expected to spike to $100 per barrel and it could take weeks to get supply back to normal.

Imagine if, instead of a few drone attacks, a far bigger attack of Saudi oil facilities occurred and the bulk of Saudi oil supply went off-line for months on end, if not, forever? Could you imagine the economic and geopolitical chaos that would result! In such a scenario you would be wise to stockpile food and other core goods if you haven’t already got your secret supplies sorted.

This is a reminder of how fragile our industrial civilization is to major shocks.

I’ve just started reading a superb new novel, called The Second Sleep, by the brilliant British writer Robert Harris. On the surface, the novel is based in our medieval past among the ruins of the ancient Roman Empire but you realise, within a few chapters, that it is instead placed in our deep future where the Church is dominant, population is a fraction of today’s and we have returned to an era of lords and peasants.

The reason I’ve dedicated this month’s post on Forecasting Intelligence to our deep or far future is that it gives us a sense of perspective on the turmoil of our current era. I have focused on this blog on the likely challenges and trends within the next few decades given that this is what myself and you will be most concerned about since we will be living through them.

However, I probably have not covered in sufficient thought the longer-term fate of our industrial civilisation.

To start with, those readers who find this topic fascinating should read the following books, the Robert Harris one just mentioned, but also John Greer’s “The Long Descent” and “The Ecotechnic Future: Envisioning a Post-peak World”. They all provide an interesting fictional and non-fictional guide to the likely pattern of our own civilizational collapse and the potential future civilizations that could arise from the collapse.

Our human history has seen dozens of civilisations rise and fall and there are certain patterns that can be seen across the thread of history.

Our own industrial civilisation, as noted in the quote from a brilliant Greer article on the subject, seems to be tracking closely the Mayan civilisation which had a relatively “fast” collapse. This was because it was reliant on a non-renewable resource, fertile soil, in a similar way we are reliant on non-renewable fossil fuels.

There are not unlimited supplies of oil, gas and coal to sustain our civilisation for thousands of years to come and the consensus is that within decades we will be facing major supply problems, in particular oil.

And it isn’t just fossil fuels. Phosphate is a critical fertiliser that underpins the global food system which, if continued to be consumed at current levels, will be in critical shortages by 2040. Now, I would expect a degree of mitigation, adaptation and eventually strategic restrictions on the supply to global markets of such a strategically vital resource so it is unlikely to run out within twenty years. However, it is likely, given that the world population is likely to grow for at least another decade that demand for this critical resource will continue to grow for the foreseeable future.

Major supply problems for phosphate, geopolitical tensions over access and potentially even resource wars, are looking probable by the 2040’s. And that is just one non-renewable resource challenge the world is facing.

So where is all this taking us? My understanding is that our civilisation will peak, decline and collapse into a deindustrial Dark Ages within 150 years or so. Evaluating when we peaked as an industrial civilisation is a tricky art but the business-as-usual Limits to Growth modelling, which I originally reviewed here, indicates a global peak around 2020.

limits to growth update

Our finite world

 

There are alternative arguments, that within specific countries peaks occurred earlier. Greer himself argues that the United States peaked in the late 70’s in terms of energy per capita. For the sake of simplicity, I will go with a global “peak” which would indicate that our civilisation will end, 150 years from now, around 2170 AD.

How does this macro, and let’s be honest, slightly terrifying analysis, translate into our lives and perhaps more importantly our children and grandchildren who will bear the burden of handling this descent into a future Dark Ages?

This beautiful quote from John Greer describes the fate of a three generational American family over the next 150 years or so and it is a good description of any on our future destiny.

“Imagine an American woman born in 1960. She sees the gas lines of the 1970s, the short-term political gimmicks that papered over the crisis in the 1980s and 1990s, and renewed trouble in the following decades. Soaring energy prices, shortages, economic depressions, and resource wars shape the rest of her life. By age 70, she lives in a beleaguered, malfunctioning city where half the population has no reliable access to clean water, electricity, or health care. Shantytowns spread in the shadow of skyscrapers while political and economic leaders keep insisting that things are getting better.

Her great-grandson, born in 2030, manages to avoid the smorgasbord of diseases, the pervasive violence, and the pandemic alcohol and drug abuse that claim half of his generation before age 30. A lucky break gets him into a technical career, safe from military service in endless wars overseas or “pacification actions” against separatist guerrillas at home. His technical knowledge consists mostly of rules of thumb for effective scavenging, cars and refrigerators are luxury items he will never own, his home lacks electricity and central heating, and his health care comes from an old woman whose grandmother was a doctor and who knows something about wound care and herbs. By the time his hair turns gray the squabbling regions that were once the United States have split apart, all remaining fuel and electrical power have been commandeered by the new governments, and coastal cities are being abandoned to the rising oceans.

For his great-granddaughter, born in 2100, the great crises are mostly things of the past. She grows up amid a ring of sparsely populated villages surrounding an abandoned core of rusting skyscrapers visited only by salvage crews who mine them for raw materials. Local wars sputter, the oceans are still rising, and famines and epidemics are a familiar reality, but with global population maybe 15% of what it was in 2000, humanity and nature are moving toward balance. She learns to read and write, a skill most of her neighbors don’t have, and a few old books are among her prized possessions, but the days when men walked on the moon are fading into legend. When she and her family finally set out for a village in the countryside, leaving the husk of the old city to the salvage crews, it never occurs to her that her quiet footsteps on a crumbling asphalt road mark the end of a civilization.”

Only a lucky few, will escape the burden of poverty within neo-feudal conditions a century or so from now when our future descendants take the path described by John in the early 21st century away from the ruined cities to the villages.

In a world of warlords, military strongmen and neo-feudal aristocrats who own the future means of production (arable farmland, mines and traditional property in our towns and cities) it will be challenging, to say the least, to carve a profitable niche for our future families.

It is not impossible though. And it has been done before.

For those inclined, I would recommend acquiring arable farming land and good quality traditional property stock (e.g. pre 19th century) within those places within the world more likely to survive the coming collapse largely intact.

That could be in central-eastern Europe, Canada or parts of the far East. I would probably avoid the bulk of central America, north Africa and the greater Middle East, along with southern Europe and India given the likelihood that these areas of the world will be rendered uninhabitable by climate change or hugely impacted by the climate migrations, violence and chaos coming.

For those whose ambitions are more modest (and probably more sensible as a result), I would stick to the tips outlined recently in my post on the coming collapse of market economies. Most importantly, the key is to be useful in a world of the future and that will acquire learning, or to be precise re-learning, skills and traditions that have been lost in the developed world.

Deep Future