The world is facing a financial crisis because we will be facing absolute shortages of oil, food, and raw materials very soon. And that changes everything.
Markets can never solve the problem of absolute shortages: they simply supply whoever can pay the most. If we leave allocation to the market, the vulnerable will be left with nothing.
The Economist forecasts that the oil crisis will hit us by June 2026 if the Strait of Hormuz stays closed, as it will. But all politicians are still talking about are fiscal rules. That is not good enough.
There are only two things that can manage this crisis now. We need rationing of food, petrol, and diesel to ensure they are distributed equitably, and not sold to the highest bidder.
And then we must increase taxes on large companies, commodity traders, and the highest earners and wealthiest people to ensure money can be reallocated to those who will otherwise suffer as a result of the inflation that shortages are going to create.
So, when we face a shortage we must not allow prices to change. If we face a shortage we must punitively tax those with the temerity to supply the thing in shortage.
Rising prices increase the incentive to produce the thing in short supply. Rising prices reduce demand for the thing in short supply. Increased profts are the mechanism by which greater supply is encouraged.
So, as we face shortages we must not use any of the tools we have at our disposal to increase suppl;y and reduce demand in the face of that shortage.
Instead we should tax the crap out of anyone with the temerity to reduce the shortage. Also, we should not allow demand destruction as prices rise – nope, we’ve got to keep demand constant in the face of shortage.
Glorious, eh?
What’s this about food shortages? Does Spud live on Saudi crude?
I think this is the fuss about the fertilizer shortage.
Which is largely irrelevant to this year’s N hemisphere crops. Next year is when it will hit.
Bangladesh’s boro rice season, the dry-season crop that accounts for roughly half the country’s annual rice production, is planted between December and February and fertilized through March, April, and May.
Miss the nitrogen application at transplant and tillering, and you lock in a yield loss of 20 to 40 percent for the harvest.
Bangla produces most of its own urea at four domestic plants that depend on Qatari gas shipped through Hormuz. Four of those five plants have shut down since March.
The boro season is underway now.
Think Sri Lankas organic lunacy on steroids
Well, yes, except the urea plants have 120 to 160 days in stock.
From the paper out there I write for…..
Locally a potash mine is being developed, and they were putting it into maintained inactivity last year as there’s a world glut. There is still a world glut, but when it’s over they can switch over to production within a week. So: what fertiliser shortage?
Edit: And anyway, aren’t we supposed to be not using fertiliser in order to remove our impact on poor Gaia.
WTF is “absolute shortage” supposed to mean? Any shortage is absolute in the short term. And markets are not only capable of solving them, but ideal for it.
Can you imagine the clusterfuck if people as malignantly retarded as the Spud tried to institute fuel rationing?
Aldi baked beans are still about the same price as 2 years ago. That’s a product with a 3+ year shelf life. Why are Aldi selling them now (with a multibuy deal) when in June, they’ll be able to sell them for far more when the Tre Professore’s apocalypse comes and it’s that or Soylent Green?
I’m sure that Spud has a clue, rather than the guys who are the most efficient food retailing company in Europe.
I know this is cold comfort to people in Britain who have suffered due to inflation, but food in supermarkets there seems remarkably cheap and generally decent quality. Although I say that as someone who lives in an expensive city, where most of the food is flown in and where almost all the supermarkets are owned by two firms. Soon to drop to one firm if media reports are correct….
You’ve got at least half a dozen players, fighting over your money, and as someone said, that gets you fierce competition. Aldi, ASDA and Lidl at the cheaper end, Sainsburys, Morrisons and Tesco in the middle, Waitrose and M&S at the top. And there’s also quite a lot of overlaps and no-one is exactly slumming it having Sainsbury’s biccies instead of the M&S ones.
I can never understand people who look at state garbage like the NHS and rail and want more of it. You get to the till and realise the tomatoes are dented, some woman will apologise and sprint off to get a new one. Walk into a railway station and the clock is 5 minutes wrong and no-one gives a fuck. FFS if it’s not going to be reasonably accurate, just smash it up.
We”re on the last day of another 3 week motorhome trip in France and my wife can confirm that our food bill is far higher than home. It was the same when we used to spend our time touring Germany and our trip Tom Ireland 2 years ago.
I’m happy though as my booze bill is about 33%.
He shouted about shortages and people ignored him. So now he’s trying it on with “absolute shortages”, thinking that sounds more urgent.
So MMT tells is there is a magic money tree. There is though no magic resource tree and there never will be.
So, in the face of an upcoming acute and absolute resource contraction (let’s go with that) his proposal is to reallocate loads of money.
I say again, in reality world markets will always operate whether you like it or not. Whether you legislate it or not.
About the only time that you can interfere in markets is where there is overwhelming support for it. If one of your neighbours was selling an RPG or organising dog fights, you’d go to the cops. So it’s like a massive police force.
How many people would report a neighbour who was smoking some weed? Or if there were two women in the flat above working as prostitutes? (my mate said they were the best neighbours).
If you brought in rationing of petrol coupons, people would just trade them. A little old lady who rarely goes anywhere would sell to someone who did.
When we were living in Germany and renting our Camborne house via an agent one of the tenants turned out to be a single mother working as a prostitute. We didn’t realise until one of our neighbours wrote and told us of the situation. At least she always paid the rent on time.
That should read “renting out our Camborne house”.
The trick there is for the prostitute to be real nice to the neighbours. “Oh, I’m just going to the shop, do you want anything?” then basically work out how to not get them to pay. Pop round with the odd nice bottle of wine. “I was going to drink this, but it’s too much for me”.
Like mobsters were always nice to the neighbourhood. Turkeys for everyone at Christmas, money spent fixing up the church. So if you see a guy dealing, you don’t go to the cops.
Yawn at 97 millionth prediction of a crisis from Mystic Spud.
I still have the petrol coupons Dad was issued in the 1970s. They didn’t do rationing so people got fuel “equitably”. You had to fill in a form. If they didn’t like your reason you didn’t get any.
Careful Tim, this line of thinking is what got you kicked off Forbes.
Richard M.’s only contact with a supply chain is when he buys a pocket of potatoes. He believes that the price of that pocket is set exclusively by the retailer. That’s like thinking that when you order in (with a side of mash and gravy), the guy on the scooter is to blame if the price has gone up.
Price gouging is unfair. So we must implement communism.
they simply supply whoever can pay the most. If we leave allocation to the market, the vulnerable will be left with nothing.
Not fair to the vulnerable, so we starve EVERYONE, and everyone is left with nothing. Fairness manifest.
But what’s not fair about a buyer deciding whether or not it’s worth the price to him? It’s a freedom exercised by everyone every day. Spud thinks he knows better than the buyers . . . billions of them.
Anecdata (repeated): local petrol station was hit with price gouging fine a few years ago after an emergency. Twice since then, when critical fuel shortages occurred, they slapped shut. Tens of thousands of gallons of precious fuel just sat in their tanks. No fuel is what fairness feels like. Commie dick Murphy calls for no food, to be fair.
Everything is built towards the end of having a Fat Controller in charge of your food, your water and your heat.
This is the biggest problem with settling the Moon and Mars – the possibility that there will one day be a Fat Controller in charge of your air.
Not even a Cohagen!
‘ere ‘ere!!!
Not the big problem for Mars. You can’t come back.
The world is beginning to admit it is facing a massive economic crisis. The damage from this crisis will continue for some time to come, by which I mean years, if not decades. The political response so far has been almost entirely wrong. Those who will suffer most are barely being mentioned, and what we need to do now is hardly being discussed. The fact is that what we need to do now is tax wealth more.
Is there any scenario under which we would tax wealth ‘less’? Or is the only way taxes can go up? By which logic why don’t we just expropriate assets from people and be done with it? Oh, I forget – that is actually your policy platform once the word salad elements are removed.
The crisis we’re going to face is one of a shortage of real goods. We are going to be short of oil. We are going to be short of food. We are going to be short of raw materials, and that will affect many jobs in the UK. We will be short of items to sell in our shops as well. Retail is going to be hit by what is happening. The fact is that what we’re going to have here is a crisis of availability, but that gives rise to a second and even greater crisis, which is one of allocation. The question is, in a world of shortages, who will have the means to survive? That is what worries me.
Well the shortage of oil is largely self-inflicted, and caused by policies people such as yourself swung behind. Now that the inevitable result of your lack of foresight is manifesting itself do we hear any contrition for supporting ‘Net Zero’? Crickets.
Is this forecasting on the lines of your ability to predict the past 57 recessions?
The markets cannot work in this situation. They have never been designed to. Markets will sell whatever is available to the highest bidder, and the rest will go without. That’s how we know markets work. That is how they’re designed to work, but that, in this situation, where we have an absolute shortage of resources, a crisis of availability, will mean that we will end up with a crisis of allocation, because so many people will be denied the resources they need to quite literally survive.
Alarmist bollocks on stilts. Indeed Markets are the key, as many have pointed out to getting out of the mess. What’s the response of actual Markets to the crisis in the Straits of Hormuz. Immediate attempts to reroute supply through the Red Sea route (Also risky due to the Houthis) but for finished goods much is being routed through Oman. Omani ports are beyond the straits of Hormuz. Additionally other manufacturing hubs both in China and beyond are likely to reroute and adjust prices accordingly but believe it or not, given commercial interests are involved then they have a vested interest in finding solutions. Rather unlike the state actually.
That is why I have argued that we need rationing of essential goods now. Food needs to be rationed at this moment. Petrol and diesel need to be rationed at this moment because if we don’t, we are going to be in a worse crisis soon when they begin to run out, and that is why I am arguing we need more tax on wealth now.
I wouldn’t trust this government to administer rationing in my Chiltern village of around 2,500 people. The notion it could be done nationwide without being a shit show that would make the current Iranian imbroglio look like a village tea dance is at best ‘optimistic’ and at worst delusional. The notion a government led by Keir Starmer ‘King Midas in reverse’ could take on a project of such magnitude is pure fantasy.
When the problem is allocation, we have to reallocate money as well as goods. Rationing can deal with the problem of allocating goods. Tax must deal with the problem of allocating money. That is the priority of this moment, but none of our politicians seem to get this as yet.
Goebbelsian assertion on the rationing. As for allocation of money one thing about rationing is it acts in lieu of taxation. Using the current situation as an excuse to implement hair brained schemes is distasteful in the extreme.
Rachel Reeves is talking to bankers, but not to trade unions and not to benefit claimants, and the media are talking about the jet fuel crisis, which might deny people the opportunity to go on holiday this summer, but that is the least of our worries. When we’ve got nothing to eat holidays aren’t that important. The fact is that the people who will suffer most have almost no voice in this debate right now, and they need one.
Well – here I agree. She should be talking to the public sector unions and saying their inflation linked final salary pension schemes will have to go as they simply aren’t affordable. I am guessing that isnt the conversation you had in mind?
Meanwhile, the IMF and the European Union are urging governments to be careful with their spending. They’re insisting that countries must maintain their fiscal rules despite the fact that the world is descending into chaos. They’re saying they must continue to operate within what they call their ‘fiscal space‘, which means they shouldn’t be increasing taxes, whilst they must ensure their ‘fiscal credibility’ by not borrowing too much.
I don’t hold a particular torch for either the IMF or EU but the notion that a commentator who is one of the most profoundly ignorant and evil extant in cyberspace knows more than they do is fanciful
All of this can be described by a deeply technical word, that word is ‘drivel’, because without exception, that is what these people are talking about. They lack the imagination to deal with the crisis we are now facing. People are going to starve. Businesses are going to collapse. Arguing about fiscal rules will not save them. All of this language assumes the old rules of engagement still apply. They don’t. The world is collapsing, and the rules are going to have to change. Pretending otherwise is not just foolhardy. It’s deeply dangerous.
Can someone get him a sandwich board (Would need to be a big one mind you) and put him in Hyde Park spouting this crap?
My argument is this: there are no real insurmountable obstacles to the programmes of change that are needed now. We most likely have sufficient resources to ensure that everyone can survive inside this new economy that we’re going to face: one of shortages, compared to the wasteful economy we’ve been living in. But what is lacking is the willingness to get those resources to the right people.
Yes – that’s right. He has considered all the contingencies and circumstances facing us and to my great surprise the solution involves implementing his fantasies of control and putting him in a position of responsibility. Rather along the lines of ‘Bear S£$%s in woods’ in terms of unpredictability.
Neoliberalism is completely unable to deliver that outcome because it does not believe in state intervention, and what we need is a state that wants to direct economic support to those people and industries that need it. Without that state at present, we cannot survive. The question then is not whether we can act. The question is whether we will act, and the answer has to be yes.
Yes – North Korea is best placed to ride out this particular storm. I’m sure if we reached out to Kim he might take you as an advisor?
So what must we do? The most effective response is to ration first. I cannot avoid that. We must be rationing fuel at present, and we must be considering how food might be rationed if it moves into a situation of shortage. That is vital.
But at the same time, what we know is that shortages will fuel inflation, and there are many people on fixed or low incomes who will be forced out of the market for these things if that happens. Inflation, in this sense, is something that is going to impose deep poverty, hardship, and extreme suffering on many. So we must ensure that money is reallocated to those who need it to buy the essential items that the market can supply if the state rations who can get them. That’s the point I’m talking about here.
Eat, rinse, repeat – again and this is by necessity a lengthy next post
So, we have to raise more money from those who have an excess of money to reallocate it to those who do not. This is the function of the state when it comes to a problem with regard to the allocation of money that threatens core well-being. Tax is the mechanism the state can use in this situation to relieve genuine, real poverty, and that is the crisis that we’re going to be facing.
So, who should pay more tax to provide this reallocation of resources within the economy?
Strangely your video equipment and other frivolities like toy railway sets remain curiously untouched.
Companies should. There are going to be many who will be making money as a consequence of this crisis. Those that do – the larger companies, almost invariably – must pay more corporation tax as a result.
We must look at other innovations as well. Those who are trading in commodity markets at present must pay more taxes. I am proposing that they should be paying a financial transactions tax on each and every deal that they undertake, and those that I’m talking about are the dealers in oil, the dealers in wheat, the dealers in rice, and other raw materials that we need to create the food we need to survive. These people will profit from shortage. We need to recover money from them by charging a direct tax on their trading activities, which tend in this situation to push up market prices.
And – and I can’t avoid this one – we will need to tax those with the greatest wealth and the greatest amount of income and gains derived from wealth within our societies. I set out in full how to do that in my Taxing Wealth Report. It was published in 2024. It’s more relevant than ever now.
We must equalise income tax and capital gains tax rates in the UK. That could raise tens of millions a year.
We must impose what I call an investment income surcharge on unearned incomes like interest, dividends, rents, and other such things in the UK. If a person earns more than £5,000 a year from these sources, although I would exclude pensions, this could raise more than just about anything else, maybe £18 billion a year.
We must charge VAT on the supply of financial services because these are only consumed by the rich, but quite bizarrely, they are exempt from VAT at present.
And we must consider raising income tax rates on those with incomes above, say, £200,000 a year, whilst removing some other anomalies within the income tax system, which at present prejudice those with higher incomes.
And at the same time, we do need to extend the national insurance charge to all higher levels of income. The absurd fact is that a present rate collapses for those earning over £50,000 a year.
So he is skint basically largely through the folly of his own choices and his ability to alienate almost everyone he encounters. Therefore the solution to the present crisis is to increase tax on all those who have something he doesn’t. What a sad, grasping individual he is. And how frustrating it must be to simply be posting anti-Trump videos alongside anti Israel screeds that then get ‘lots of likes’ and that be all you have in terms of relevance. For a Septuagenarian it’s really rather embarrassing.
“… We must charge VAT on the supply of financial services because these are only consumed by the rich,”
Nonsense on multiple counts. I once again invoke my “one web search” theory of refuting Spud and 30 secs later I find that apparently, 40% of UK adults have an ISA and 75% have a private pension.
And stretching it to a second search tells me they’re VAT exempt for multiple reasons including, you guessed it, EU directives.
VAT exempt means that one cannot reclaim input VAT, so not a big saving.
What’s this “we” shit, kemo sabe?
Raise your hand if you think Spud actually cares about anyone else. He is exploiting this crisis to destroy the status quo so world communism can sneak it.
At the start of Covid I realised that I wasn’t sufficiently libertarian. While the local council had an application system, including safeguarding checks and all that, one of the local councillors just set up a Facebook group. Anyone who needed things doing, ask. Anyone who can help, get in touch.
Within hours, people were arranging to get shopping for people, do errands. I fixed up a couple of laptops. No-one was asking for money. We got a bit of wartime spirit, which is what happens.
Operation Yellow Ribbon, where 38 US planes were diverted to Gander, Newfoundland on 9/11 is heartwarming stuff. A little town of 10,000 people put up 6500 people in their spare rooms for a few days and looked after them without asking anything.
The UAE pipeline was hardly being used, then Hormuz closed, supply dropped, prices when up, UAE pipeline went to full capacity, and they renewed investigating funding to increase capacity. All done by the market.
Jgh
As always an excellent and perceptive comment. Similarly a lot of finished goods are moving to use Oman as a port thus bypassing the Straits altogether. One feature of the various kleptocracies in the Middle East is they are very unlikely to allow themselves to be ‘held to ransom’ and they do have a lot of money to throw at the problem. Fortunately noone in Kuwait or Bahrain would have the slightest interest in the kind of Bullshit the Ely based theorist would come up with…
Anyone else noticed that prophets of doom always seem to be a little too excited by the prospect of doom?
Tbf, I want the collapse of the Attlee/Blairite architecture. I don’t see any alternative. It’s not a blood lust thing. I just don’t see any other way of defeating the monster. I mean, permanently defeating it.
The world is facing a financial crisis because we will be facing absolute shortages of oil, food, and raw materials very soon. And that changes everything.
Reminds me of Jimmy Carter in the 1980 presidential debate with Ronald Reagan:
Carter: “Only government can manage scarcity fairly.”
Reagan: “Screw that. We’re America. We’ll just make more.”
Of course, in Oz we just drill less!!!
Interestingly I saw a ‘poor me’ story last week on the BBC website about a care worker who was seriously considering jacking in work because of the rising fuel cost. Cue sad stare into camera. I did a few sums on his terrible situation. It was stated that he travels around 70 miles per day and puts £30 fuel in the tank every other day. Firstly why? Why is he wasting time and fuel filling up every other day? Next, his vehicle is only doing around 35mpg. Maybe that’s the short journeys but my sports car does the same. He gets paid 20p per mile by his employer so that’s £28 per 2 days…so he’s £2, £2 frigging short. And he’s going to have to give up work and go on the dole apparently! What they have t mentioned is that if he had a brain in his head he could claim the 25p allowable difference per mile up to 10,000 miles per year tax free from the government. Assuming he works full time he’s doing around 8750 miles per year so can claim around two grand back. So this isn’t a fuel too high problem it’s an employer not paying 45p per mile and employee not claiming the difference problem.
I am prepared to believe there are cases of genuine hardship in the UK, but this belief is undermined by the fact that every time a similar sob story appears in the Graun or the Beeb, it is undermined by basic maths and the “tragedy” could be solved with minimal use of common sense.