THE BANK of England has admitted what it calls a ‘Michael Fish’ moment over its failure to predict the 2007-8 banking crash and its Brexit predictions which it says may turn out to be ‘just scare stories’.
The Bank of England’s chief economist has admitted his profession is in crisis having failed to foresee the 2008 financial crash and having completely misjudged the Brexit vote. On October 15th 1987, weatherman Michael Fish made his now infamous weather forecast. A few hours before the storm broke, he said: ‘Earlier on today, apparently, a woman rang the BBC and said she heard there was a hurricane on the way … well, if you’re watching, don’t worry, there isn’t!’ That evening, the worst storm to hit South East England for three centuries caused record damage and killed 19 people.
Andy Haldane, the Bank of England’s chief economist, said economic models had been ‘rather narrow and rather fragile’, which was ‘fine as long as the going was good’ but when the world was ‘tipped upside down’ by the 2007-8 crisis, they had failed to cope.
He added that there was a ‘disconnect’ between political warnings about Brexit and the ‘remarkably placid’ state of the markets, adding that the worst predictions may turn out to be ‘just scare stories’.
At an event at the Institute for Government in London, when it was put to him that the Bank of England had forecast a ‘hurricane’ after the Brexit vote which had not materialised, Haldane replied: ‘It’s true, and again fair cop.’
Haldane said: ‘It’s a fair cop to say the profession is to some degree in crisis. It’s not the first time it has happened. It happened back in the 1930s and during the Great Depression … It’s just that the models we had were rather narrow and fragile. The problem came when the world was tipped upside down and those models were ill-equipped to making sense of behaviours that were deeply irrational.’
Ill-equipped indeed! These economists have no grasp of ‘value’, which they confuse with the price of paper money. They believe money makes money and that the ‘value of a thing is just as much as it will bring.’ They have had years of Quantitative Easing (QE), the electronic equivalent of printing billions of pounds, euros and dollars, flooding them into the market as if they have value, building up mountains of debt!
Karl Marx rightly insisted that the labour power of the working class is the source of value in commodity production and that profit is the surplus value that the bosses legally steal from workers.
The mountain of debt run up by capitalist states is today much higher than it was in 2008. It has no value and its collapse is a matter of time, in fact very little time!
War on countries to steal their resources and war on the working class at home to squeeze more and more value out of each and every worker is the only way out of the crisis for the bosses and their blindfolded bankers, who confuse pieces of paper and electronic signals with money, that is gold, and value.
Since 2008, right across Europe, in the US and the UK the working class has been living through permanent austerity and it has provoked revolutionary outbreaks in 2016 and will provoke revolution in 2017.
It was Karl Marx who established that a system which can no longer provide even the most basic requirements of life, namely shelter, food, education and healthcare, is a system that deserves to perish.
He also identified the working class as its gravedigger. Capitalism is driving society backwards. It is a bankrupt system and has to go. That is why, once again the crystal ball gazing of the Bank of England is the frenzy of the blind. Haldane’s latest observation on behalf of the Bank of England that the markets remain in a ‘remarkably placid’ state, will make Michael Fish’s forecast seem relatively accurate in comparison.
There is an historic storm coming alright. The US debt is now $19.9 trillion and rising, total global debt has gone up by $57 trillion, driving the total world debt to $200 trillion. Europe is headed for bankruptcy, Greece’s national debt is 179% of its GDP, Italy’s 132.5%, Portugal’s 129.1%, Spain’s 100.1%. Anything over 100% is state bankruptcy.
In the centenary year of the Russian revolution, the working class will be driven forward to complete the world socialist revolution!