Britain's New Winter of Discontent

Written by Adam English
Posted September 30, 2021

Food shortages, lines for fuel that can't be found, cold and unpowered houses, and grave rumblings of a winter without Christmas.

It looks like there will be little reprieve for Britain this year.winter of discontent

Though the root causes aren't identical, it will be painfully reminiscent of the winter of 1978 to 1979 for many.

Lorry drivers were striking, wide swaths of the country were cut off from supplies by the strike and brutal winter weather, the government was an incompetent and complacent mess, and inflation was a menace.

It was dubbed the “Winter of Discontent” in a more literal interpretation than Shakespeare ever intended in the opening soliloquy of “Richard III,” but it was an apt name for it nonetheless.

Unfortunately for the rest of us, Britain will be far from alone in its troubles this winter.

What many ignorantly hoped would be transient issues, gone by the end of summer, are rapidly spreading to become worldwide crises and the implications are profound.

Global Shortages, Soaring Costs

Hop halfway around the globe and we're seeing the same issues rearing their ugly heads in China.

In spite of nearly bottomless pockets and unprecedented levels of state planning, Chinese companies and citizens are facing existential threats.

Factories are being shuttered. Wages are being lost.

Dire warnings of food shortages, lost crops of soy and corn, and even the failure of water systems.

Malls are closing at 4 p.m., cellular networks are failing, traffic lights are off. Widespread blackouts as freezing temperatures are approaching rapidly.

Desperate pleas for more coal are going out, but there seems to be little capacity to quickly stamp out the issue.

The scale of the problem has quickly displaced concerns about the implosion of real estate-giant Evergrande.

Goldman Sachs estimated that as much as 44% of China's industrial activity has been hit by power shortages so far.

No Reprieve and the Threat of Revolution

The UN just released a report showing that global food prices were up 33% in August, year-over-year.

The surge has pushed the Food Price Index to levels not seen since 1974 and 1975 in the wake of the Oil Crisis.

un food price index chart

That is no coincidence with fuel and shipping costs continuing their steep climbs with no end in sight.

That also illuminates how there will be no reprieve in sight. With a global shortage of shipping containers and capacity, there is little interest in shipping food at low prices and low profit margins.

Instead, what little capacity isn't under contract already will keep chasing manufacturers and exports of far more profitable goods and resources.

And with the pandemic still raging worldwide, government revenues are increasingly failing to keep up with the fuel and food subsidies.

Without those subsidies, many are prone to face increased unrest and rebellion. The Arab Spring revolutions were all about these. History is replete with famine leading to radical governmental collapse and replacement.

Look to the dynasties of Ancient China and Europe for historical examples, or the Bolshevik Revolution for a much more modern and well-documented one.

Calling This What It Is

It seems governments still think this is going to all just up and vanish sometime soon, if they can just run down the clock.

This is especially true in the U.S. and Europe, which have long been insulated from the worst of the global market swings since they are seen as safe harbors for wealth in troubled times.

This “wait-it-out” mentality increasingly looks like something that will only make matters worse. We should be calling this what it is.

It is a failure to deal with rampant and persistent inflationary pressures. It is also a sign that much longer-term inflationary effects than many are willing to recognize are becoming entrenched in economies around the globe and the global economy itself, and contagion guarantees everyone will be affected.

The western world's immunity is far from guaranteed and its complacency towards debt and deficits has greatly weakened it.

Central banks have no tricks left to blunt the impact inflation can and will have, and governments have leveraged generations of wealth to fund just a couple decades of extreme excess.

As the stock market moves toward its first monthly drop since March and bond yields surge upwards, investors can't ignore the toll this is taking on the economy and their own wealth.

The Outsider Club's Jason Simpkins certainly hasn't, and his readers are already set with a strong hedge. You can check out what he has to offer here.

Take care,

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Adam English

follow basic @AdamEnglishOC on Twitter

Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page

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