Companies that sell shonky products under false pretenses are typically prosecuted by the authorities. Those that sell shonky products generally are typically run out of business. But there is one class of such products that seem to escape the scrutiny of both the authorities and the market. Indeed, they seem to have bluffed many governments into believing that shonky is good. Last week, the patently irrelevant Moody’s rating agency downgraded Britain’s sovereign debt ratings from Aaa to Aa1. The fact it was headline news indicates how stupid we all are. The fact that George Osborne then had to lie about what it meant showed how stupid he is. The fact that the Opposition leader described it as a humiliating blow showed how stupid (and opportunistic) he is. How a company that was complicit in the financial crisis can command so much free advertising is beyond me. I must be stupid! The fact is that the latest ratings are without meaning or import.

It is a public holiday in Australia – celebrating our national day. For the indigenous Australians, it is symbolically “invasion day” – the day the colonialists came and usurped their rights and engaged in a systematic destruction of their culture and ensured they remain (collectively) among the most disadvantaged citizens on our Earth. So it is a day of shame really. It is also weird that we are gung-ho with nationalism today yet our head of state is the British queen. Taken together it is a confused society – hiding a deeply conservative form of prejudice, fear and paranoia with the anti-intellectual “larrikinism” that many associate with my nation. Not a very compelling mix to say the least. But then I know we need to be careful about generalisations like this. Today, among some pressing deadlines I took a little (depressing) journey into the latest national accounts release from the British Office of National Statistics – Gross Domestic Product Preliminary Estimate, Q4 2012. The narrative gleaned is terrible. It comes on the back of the ONS release of the – Public Sector Finances, December 2012 – which showed that budget deficit and public borrowing rose over the 12 months to December 2012. So at the half-way mark of this government’s tenure, the conclusion is clear – the British government has failed and is inflicting untold damage on its citizens – which has been temporarily interrupted but not curtailed by the Olympic Games.

The half-way mark came last week for the suffering, seemingly, ever stoical British. Why they are ever stoical in the face of an exploitative, class society where the rich always find ways to push the losses of their caprice and incompetence onto the poor is a cultural story I have never understood (despite living in Britain for a time in the 1980s). But the Autumn Statement (December 5, 2012) from the failed Chancellor marks the half-way point in the British government’s tenure on office. At this stage, the assessment is that it has unambiguously failed in its mandate and its now transparent attack on the poor is the only thing that is obvious. All that can be said is that the half-way mark is gone and the national election draws nearer every day. The pity is that the display by British Labour, in their response to the Autumn Statement, was worse than pathetic. They better hurry up with alternative policy development, which doesn’t include proposing deficit cuts that are more “humane” than the current Government’s approach.

The British Office of National Statistics published the latest National Accounts data for the third-quarter 2012 yesterday, which showed a modest burst of growth, consumer driven via the Olympic Games. It is a temporary spike in a downward trend. I will consider the growth data another day. It follows the release last week (November 21, 2012) of the latest – Public Sector Finances – for October 2012, which demonstrates why fiscal austerity is self-defeating. By failing to acknowledge that when non-government sector spending is insufficient to drive economic growth at levels sufficient to reduce unemployment there is a need for increased discretionary government net spending to support growth, the British government not only is creating an increasing economic malaise but failing to achieve its own (mindless) targets – a reduction in the deficit and outstanding public debt. The lesson is that fiscal austerity is self-defeating on all counts – the things that matter (the real economy including unemployment) and the things that don’t matter (financial ratios).

The British economy has entered a double-dip recession as a result of aggregate spending slowdowns driven by a pessimistic private domestic sector, a poor net exports outlook and the increasing impacts of the fiscal austerity. The result has been that unemployment is stuck at its elevated levels and will likely rise in the coming year if the government doesn’t change its tack. However, the official data released last week by the UK Office of National Statistics (see link below) shows us that if you are employed in Britain at present the chances of losing one’s job are slim. It is rising but still very small. What the gross flows data allows us to appreciate is that the much-focused on unemployment rate does not tell us about the chances that are worker will remain in that state, become employed or leave the labour force. Even those the risk of an employed person becoming unemployed is low, it still remains that the chances of an unemployed person remaining so is higher and significantly higher than before the recession. This is because the net flows into employment are too low relative to the labour force growth. This blog is the first of a few which attempts to encourage people to look deeper into the statistics and gain a wider appreciation of what is happening in the labour market. I will write more on it in further blogs when I have more time.

I am in working in Seoul all day today and then rushing to the airport to get back to Sydney – so this blog has to be quick. When I saw the headline in the UK Telegraph (October 20, 2012) – A rude awakening for those who refuse to play by the rules – I thought it could have referred to the British government who are intent on defying the rules of responsible fiscal policy by pursuing pro-cyclical austerity and who are seeing the unfolding problems that their policies were generating. I didn’t really think that but it should have been referring to the abandonment of proper fiscal practice in the UK. Upon reading the article I learned it was about the British government – in that it was written by the Minister for Employment. The article was like deja vu for me and the message was one that Australians will be familiar with. It said that the unemployed are in that state because they game the “most generous” system of support and benefits that the UK provides to its citizens. Forget about the lack of jobs. The smokescreen descends – the victims become the perpetrators.