Financial Times: The UK economy is a ticking time bomb

Sovereign Man’s Simon Black quotes of the “scathing assessment” by the Financial Times on the UK’s political economy

(bold original)

Despite being an otherwise staid, traditional news service, the professional banking division of the Financial Times recently released an utterly scathing assessment of the British economy.

It was entitled, “The UK economy is a ticking time bomb,” and the editor didn’t pull any punches in completely shattering the conventional fantasy that ‘all is well’, and that advanced economies can simply print and indebt their way to prosperity.

I’ll quote below, emphasis mine:

“What is the problem? Quite simply, the key numbers are terrible. According to the OECD, after five years of ‘austerity’ the UK’s budget deficit is 5.3%, down from 11.2% in 2009.

“In other words, it has gone from being close to meltdown to a situation that is merely dreadful.

“Since the government is spending more than it earns, it is hardly surprising that it is borrowing more, and that the debt-to-GDP has risen from 68.95% in 2009 to 93.30% in 2013, again according to OECD figures.

“As the UK is currently growing it should really be running a budget surplus, providing it with the means to run deficit financing during the next downturn.

“This is one of the tenets of the Keynesian philosophy that underpins a lot of left-of-centre economic thinking.

“Unfortunately Europe’s political parties of all persuasions have bastardised Keynes’ ideas – running deficits in both good and bad times – so as to render them almost meaningless.

“To make matters worse the UK, again similar to most advanced economies, is an ageing society with pension, welfare and healthcare systems that are wrongly structured and financially unsustainable.”

“We can blame the politicians for failing to be honest with the electorate about the challenges ahead.

“Or we could blame the voters who punish at the ballot box any party that tells them anything other than good news and wants to hear that taxes can be cut, spending raised and the budget balanced all at the same time.”

Statistical Inflation Diverges from Reality: In UK, e-Cigarettes and Craft Beers have been included

Governments arbitrarily conjure up statistical numbers to show what they want to show…

So e-cigarettes, craft beers, streaming music among other items have been included in the UK’s government statistical measure of inflation.

From the BBC (bold mine)

E-cigarettes and specialist "craft" beers have been added to the basket of goods used to measure the UK's inflation rate.

The additions are part of the Office for National Statistics' (ONS) annual revision of the basket.

The cost of music streaming services has been added as well, but sat-navs have been dropped.

The basket of goods currently contains 703 items and services, of which 13 are new this year after eight were removed.

The inflation rate currently stands at a record low of 0.3%, as measured by the Consumer Prices Index.

Price survey

The ONS said that e-cigarettes had been added because many smokers were using them.

Sales of "craft" beers have been brought in because more money is being spent on them, along with a rise in the shelf space devoted to those beers in shops and supermarkets.

Although only around 700 items have their prices tracked each month, many are measured in several places. So 110,000 prices are collected from 20,000 shops in the UK, with another 70,000 prices measured online.

Revisions to this year's basket continue to reflect the fast-moving change in the use of technology.

For 2015, the cost of music streaming services has been included, along with subscriptions to online console computer games.

Headphones have been added too, as well as mobile phone accessories such as covers and chargers.

So the average UK residents have now been shown as being smokers and craft beer drinkers, yet pity the non-smokers and non craft beer drinkers.

Yet how “many” is “many” as to merit the inclusion of e-cigarettes in the basket? Even among craft beer drinkers, not everyone spends the same. Some spend more than the others. What if the monied class have been spending more on craft beers for retail outlets to devote shelf space on them? If this supposition holds true then this skews the weighting of the inflation basket to the expenditures by the monied class. Or said differently, the CPI basket may reflect more on expenditures by the elite than by the average.

The point of the above hasn’t been about e-cigarettes or craft beer drinkers but about how statistics accurately reflect on the individual’s spending patterns.

This differentiates between statistics—aggregation of numbers based on arbitrary parameters set by political agents—and economics—how resources are allocated subjectively by individuals.

Economics Drives Politics: Scotland’s Independence Referendum

Will Scotland secede from the United Kingdom? This will be determined by a referendum in September 18th. 

As for a background on this, Sovereign Man’s Simon Black explains: (bold mine)

Anyone who’s ever seen the movie Braveheart has heard of William Wallace, one of the original heroes of Scottish independence.

Though Mel Gibson’s highly fictionalized account was one of the most historically inaccurate movies in modern cinema, Wallace did, in fact, lead Scottish rebels against English invaders. And he died for his cause.

Wallace was severely tortured after being convicted of high treason against King Edward I; he was dragged by horses, hung nearly to the point of death, revived, relieved of his manhood, ritualistically disemboweled, made to watch his entrails set ablaze… then finally beheaded.

Not the way you want to go.

That said, the movement for Scottish independence lived on, and England folded in 1357, ending a 60-year war between the two nations.

For the next 350 years Scotland remained an independent state until… go figure… a financial crisis.

In a desperate attempt to become (almost overnight) a major world trading power in the 17th century, the government of Scotland backed a comically ill-fated attempt to colonize Panama.

It failed miserably. Yet the investment in the Darien Scheme (as it was known) amounted to up to half of Scotland’s total money supply.

When it went bust, Scotland was nearly broke.

There had already been a push to reunify with England for some time. And with the country’s economy in shambles, unification seemed like a good move.

Today Scotland again finds itself debating the question of its independence, fueled once more by economics.

It’s easy to point to a number of different causes of rebellion, revolution, and dissent. But ultimately it’s economics that matter more than anything else.

When times are good and everyone is prosperous, few people want to rock the boat. No one has an incentive to change the system when it’s working so well. 

Only when the prosperity begins to collapse do people have a strong motivation to change the status quo. 

Suddenly the jobs are less plentiful, the taxes are higher, the standard of living is lower, and the costs are greater. And people demand change. 

The greater the pain, the greater the desire to shake things up. And it’s happening across the world.

In Europe, separatist and extreme parties are gaining ground on the heels of an economic depression that has besieged the continent for several years now.

In France, Spain, Italy, Greece, etc., people are fed up with the current state of affairs, and they are agitating to split off from their current political leadership.

Likewise, Scottish voters are going to the polls in just over a week to decide if they should break away from the UK.

And from the looks of things, the independence movement has a very strong chance of winning.

A wave of secessionist movements around the world have been underway.

Crimea has just seceded from Ukraine, early this year.

There is one is Venice (from Italy), in Catalonia (from Spain), in Quebec (from Canada) and in Transnistria (from Moldova). 

Secessions (political decentralization) have been part of the growing political trend brought about by the ongoing and deepening failures of political economic centralization which has been a product of the (top-down) industrial era. The coming crisis will magnify such transition.

And secession trends will likewise be reinforced by the deepening of the information age (bottom-up) where connectivity via social media networks facilitates the enhancement of community (net lingo: tribal) based non-contiguous relationship

Bubbles Everywhere: BoE’s Mark Carney: UK housing market approaching “warp speed”

A few months back, a group of UK realtors approached the Bank of England (BoE) and asked the latter to put a brake on what they see as a simmering housing bubble. 

Today, BoE governor Mark Carney warns of UK’s housing market approaching “warp speed”.

From the Bloomberg: (bold mine)

Bank of England Governor Mark Carney may be struggling to prevent Britain’s housing market from reaching what he calls “warp speed.”

About two-thirds of 27 economists in a Bloomberg News survey said property in the U.K. is at risk of overheating. The survey, published today, also showed that the outlook for the economy has improved, with forecasts for growth this quarter raised to 0.7 percent from 0.6 percent last month.

Carney has already taken a first tilt at the market, ending some incentives on mortgage lending in a program the central bank started last year to boost credit. House prices rose to a record in November, Acadametrics said today, while home-loan approvals and sales are increasing, bolstered by a strengthening economy, government incentives and record-low interest rates…

Carney has justified his decision to revamp the Funding for Lending Scheme by saying that taking small steps now will curtail the need for bigger measures later on.

“There’s a history of things shifting in the U.K. and the housing market moving from stall speed to warp speed and underwriting standards slipping,” he said in New York on Dec. 9. Developments “merit vigilance but not panic,” he said.

Acadametrics and LSL Property Services said today house prices rose 0.6 percent last month as transactions exceeded 77,000, the most for a November since 2007.

More on record prices from another related Bloomberg article: (bold mine)

U.K. house prices rose to a record in November as strengthening demand pushed values higher in all regions of England and Wales, Acadametrics said.

Values increased 0.6 percent from October to an average 238,839 pounds ($390,900), the real-estate researcher and LSL Property Services Plc (LSL) said in a report today. Prices reached an all-time high in London and parts of the southeast as average values climbed 4.9 percent from a year ago. In London, prices surged an annual 9.2 percent in the quarter through November.

The source of funding for UK’s corporate sector comes mainly from bond issuance and banking loans…

...where the distribution of loans by industry from financial institutions and from the BBA panel of lenders have mostly been in real estate, hotel and restaurants and construction based on BoE data.

The above distribution closely resembles bank loan distribution in the Philippines.

Meanwhile residential mortgages have likewise turned around…

…as consumers go on a borrowing spree.

And its not just in housing.

When the BoE began its second wave of QE from late 2011 until 2012…

…this coincided with the bullmarket in UK’s equity bellwether, the FTSE 100.

What would likely put a halt on a housing and stock market approaching “warp speed”? Again aside from bubbles collapsing from its own weight, the likely answer will be higher interest rates. 

Yields of UK’s 10 year sovereign bonds appear to have gotten a ‘second wind’  and seems headed higher. 

Again the bond vigilantes lurks behind the shadows and remains a key threat to ubiquitous bubbles in the global financial markets, including those in the UK.

European Economic Recovery? UK Industrial Production Unexpectedly Drops

Again we see another example of the difference between what people say and what people actually do. 

Earlier, UK’s economy has been touted as emerging “strongly from the deep recession of recent years” , due to a big jump on the purchasing managers index (PMI) which rose from 54.8 in July to 57.2 August – “its highest level in two and a half years” (the Guardian).

The reality turns out different, contra consensus expectations UK’s industrial production fell "most in almost a year"

From Bloomberg:

U.K. industrial production unexpectedly fell in August by the most in almost a year, casting doubt on the strength of the third-quarter recovery.

Industrial output dropped 1.1 percent from July, when it gained 0.1 percent, the Office for National Statistics said today in London. The median forecast of 30 economists in a Bloomberg News survey was for an increase of 0.4 percent. Factories cut output by 1.2 percent, with pharmaceuticals contributing most to the decline.

Whether in the Eurozone or Japan, the establishment’s spin machine eventually faces wrenching reality

UK Realtors ask Bank of England to Put a Brake on Bubbles

Below is an interesting report stating that in the United Kingdom, beneficiaries of the indirect asset transfer via zero bound rates have been appealing to authorities to put a dampener on an alleged housing bubble.

From the Financial Times (hat tip zero hedge) [bold mine]

Estate agents and surveyors have become so concerned about the dangers of another unsustainable housing boom that their trade body is urging the Bank of England to limit national house price growth to 5 per cent a year…

“The Bank of England now has the ability to take the froth out of future housing market booms, without having to resort to interest rate increases,” said Joshua Miller, senior economist at Rics.

“This cap would send a clear and simple statement to the public and the banking sector, managing expectations as to how much future house prices are going to rise. We believe firmly anchored house price expectations would limit excessive risk taking and, as a result, limit an unsustainable rise in debt.”

The Rics intervention comes as data this week have reinforced a sense of recovery in the UK housing market and sparked warnings that a new bubble could be forming.

Average house prices hit another record high last month, according to figures published on Friday by the LSL/Acadametrics House Price Index, rising 3.2 per cent to £233,776 over the year to August.

It is important to point out how rare it is for beneficiaries of current policies admit to the risks of an inflating bubble. And that their call to contain bubbles signify as Posttraumatic stress disorder (PTSD) or stigma from the previous unpleasant experience expressed through the fear of another bubble bust.

As previously pointed out, a parallel universe exists in UK where asset prices continue to surge even as the economy struggles.

Asset booms in UK has led to a quasi-stagflation where statistical inflation rates have been higher than statistical economic growth rates whether annualized or by quarter.

Yet like in China or elsewhere, once the inflation genie has been let out of the proverbial lamp, hardly any regulatory caps have been successful in taming of bubbles. 

Besides bubbles have been convenient tools to generate statistical growth that embellishes the image of political authorities.

And proof of this is that despite BoE governor Mark Carney’s promise to keep interest rates low via “forward guidance” to supposedly bolster growth, which has rightly been met by skepticism by some of the Members of the Parliament (MP), yields of UK government bonds suggests that the halcyon days in the real estate and the stock markets appear to have been numbered—with or without the BoE’s action.

If the current trends of the bond markets persist, then eventually the bond vigilantes will force the hands of (global) central banks to officially hike interest rates which places all malinvestments forged via a regime of zero bound rates under intense pressure. 

By then, UK realtors will have their demands met, but sad to say that they are likely to endure anxiety relapse from another terrifying episode of a bubble bust. 

UK’s Blossoming Libertarian Movement?; The Clash of Generations

The libertarian movement seems to be blossoming among English youths.

The Economist observes:

Polls show that the young are more relaxed than others about drugs, sex, alcohol, euthanasia and non-traditional family structures. They dislike immigration, but not as strongly as do their elders. And they are becoming ever more liberal. The BSA has tracked attitudes for three decades. It shows that the young are now far more tolerant of homosexuality, for example, than were previous generations at the same age.

Experimenters with new technologies, fashions and ideas, young people in Britain and elsewhere have long tweaked established social institutions. But their iconoclasm goes further than this. Young Britons are classical liberals: as well as prizing social freedom, they believe in low taxes, limited welfare and personal responsibility. In America they would be called libertarians.

Here is where it gets interesting:

More than two-thirds of people born before 1939 consider the welfare state “one of Britain’s proudest achievements”. Less than one-third of those born after 1979 say the same. According to the BSA, members of Generation Y are not just half as likely as older people to consider it the state’s responsibility to cover the costs of residential care in old age. They are also more likely to take such a hard-hearted view than were members of the famously jaded Generation X (born between 1966 and 1979) at the same stage of life.

The above shows of the intensifying generational conflict brought about by the welfare state.

People “born before 1939” have been the primary beneficiaries of UK’s welfare programs which originated during the 1906-1914 Liberal Welfare Reforms era.  In a Ponzi scheme, they represent the initial investors whose "return" “are “paid out of the investments of new entrants”.  

The new entrants in today’s Ponzi-welfare programs are the young generation, who plays the role of funding the entitlements of the Liberal Welfare generation, which has been intermediated by UK’s welfare state. 

The fragile state of UK’s fiscal conditions reveals that welfare expenditures account for the 25.9% of GDP according to the Wikipedia.org.  This has substantially contributed to the UK’s deteriorating debt conditions now at 90% of GDP. The above chart reveals of the breakdown of UK’s government spending budget

Given the increasing burden from entitlements which has been shouldered by today’s youths, welfare programs are getting to be less appreciated. The wider the generation gap, the more likely resistance on welfare policies.

Add to this globalization and the deepening of the information age,  the rise of UK classical liberals would seem like a natural outgrowth

Yet should libertarian politics deepen, this will likely worsen generational conflict at the risks of triggering social upheaval. Parasites will struggle to resist from losing their hosts.

Nonetheless UK classical liberal-libertarians seem as gaining significant grounds in terms of politics. 

The UK’s Independence Party (UKIP) said to be a democratic libertarian party headed by Nigel Farage may win next year’s European Parliament elections.

From Daily Mail

David Cameron expects the UK Independence Party to win next year’s European Parliament elections despite his pledge to hold an in/out referendum on Europe.

A senior Conservative source said it was now taken as a ‘reasonable assumption’ in Downing Street that UKIP would top the poll next May – sparking a fresh round of Tory bloodletting on Europe just 12 months before the General Election.

The UKIP also performed strongly in the latest local elections.

From the Telegraph:

Nigel Farage, the party’s leader, was jubilant after it emerged that one in four voters supported Ukip in the elections in 35 councils in England and Wales.

The rise of the party cost the Conservatives three local authorities, although Ukip did not win control of any councils.

So the rising politics of decentralization or the renaissance of classical liberalism likewise chimes with the deepening of the information age.

Incidentally, in the latest protest against the Turkish government, this headline seem to herald the spreading of classical liberal-libertarian movement across the world (hat tip Cato’s David Boaz)

Protesters are young, libertarian and furious at Turkish PM, says survey

Why Bank of England’s Small Business Loans Program May Fail

Talk about central banking wizardry. 

The Bank of England (BoE) will extend lending programs to small and business enterprises for another year even if such measure has initially failed.

From Bloomberg:

The Bank of England will extend by one year its plan to provide cheap loans to companies and consumers and make credit available for small companies, enhancing a nine-month-old program to aid the economy.

The Funding for Lending Scheme will now last until January 2015, and will make lending to small companies more attractive and open to non-bank lenders, the BOE and the Treasury said in London today. The government says its program has lowered borrowing costs by about 100 basis points and provided 13.8 billion pounds ($21 billion) between its creation and December

“This is a big boost for the small and medium sized businesses that are at the heart of the British economy,” Chancellor of the Exchequer George Osborne said in an e-mailed statement. “This innovative extension will now do even more for small and medium sized businesses so that they can play their full part in creating new jobs.”

Osborne is expanding the program on the eve of economic statistics that may show Britain’s economy was close to an unprecedented triple dip in the first quarter. The announcement also precedes an audit of the U.K. by the International Monetary Fund, whose delegation visits London next month after the fund said Osborne should ease his austerity plan to aid growth.

Today’s extension to the FLS will allow banks to borrow 10 pounds next year for every 1 pound they lend to small companies in 2013, the Treasury said. If they wait to extend the loan until next year, the amount they can borrow under the plan is halved to 5 pounds for every pound loaned. Banks can borrow 1 pound for every pound loaned with the rest of the program.

The premise here is that access to finance has been the key barrier besetting the Small and Medium scale businesses.

While it has been true that UK’s overleveraged economy has forced households and firms to pay down debts, that’s only part of the story.

The main obstacle to small and medium scale businesses has been the domestic economy and domestic demand, this is according to the latest survey by the Federation of Small Businesses (FSB).

John Walker, National Chairman of FSB says another factor influencing the weak economy and demand has been inflation

Though our members are feeling more optimistic, the outlook remains challenging with domestic demand weak. Consumer spending has been subdued by inflation, eroding disposable incomes, with inflation expected to remain above the target level in 2013. In this quarter, members report that three cost elements – fuel costs, input prices and utility bills – are increasing their overheads and while down from 12 months ago, the last three quarters of 2012 showed these cost pressures persisting.

So this should be a great example of how inflationism distorts the economic calculation that leads to a stagnating economy amidst elevated inflation or stagflation

The Bank of England has basically increased their balance sheet by almost three times since 2008. 

Over the same period, UK’s statistical consumer price inflation rate remains lofty despite the deleveraging by households and firms. 

Yet as pointed out by the article, UK’s economy is facing the risks of a triple dip recession. (charts from tradingeconomics.com)

In short, all money printing by the BoE has failed to deliver what has been promised—a recovery.

Instead what all the money printing has done has been to keep the bubble in the property sector afloat. 

While UK’s average housing prices have been down from 2007, they remain above the pre-bubble bust levels. This goes the same with housing pe ratios (chart from Nationwide.co.uk)

Another area which BoE’s QE has positively influenced has been the stock market.

UK’s FTSE 100 has been on the rise since 2011 (blue trend line), even as the economy fumbled from one recession to another. Another wonderful example of a parallel universe. The FTSE has been up 8.6% year to date as of yesterday’s close. (chart from Bloomberg)

In other words, all cheap credit and money has done has been to incentivize speculation (asset bubbles) at the expense of the productive sector of the economy. 

Why invest in businesses when the costs of operating one have been unpredictable and when financial markets, especially backed by an implicit Bank of England Put, would give a better yield?

Since the inception of the FLS, the BoE’s recourse to cheap credit has also failed to boost lending to the SMEs.

What this means is that the BoE’s FLS credit program hardly addresses the roots of the problems, which hasn’t been about credit. The BoE fails to see that her inflationist policies has functioned as one of the principal obstacles to economic recovery.

Yet like typical political authorities, who wants to be seen as “doing something”, the expedient action has been to do the same thing over and over again and expecting different results. Unfortunately, the outcome will likely go against their wishful expectations. 

Murray Rothbard on Margaret Thatcher and Thatcherism

UK’s former Prime Minister Margaret Thatcher  passed away at the age of 87, yesterday. She was known as the “Iron Lady”, which according to the Wikipedia had been due to “her uncompromising politics and leadership style”. 

Murray N. Rothbard, the great dean of the Austrian school of economics, wrote about the accomplishments or legacies of Ms Thatcher and "Thatcherism": (Chapter 63, The Exit of the Iron Lady Making Economic Sense)

Mrs. Thatcher's departure from British rule befitted her entire reign: blustering in rhetoric ("the Iron Lady will never quit") accompanied by very little concrete action (as the Iron Lady quickly departed).

Her rhetoric did bring free-market ideas back to respectability in Britain for the first time in a half-century, and it is certainly gratifying to see the estimable people at the Institute of Economic Affairs in London become Britain's most reputable think-tank. It is also largely to the credit of the Thatcher Era that the Labour Party has moved rightward, and largely abandoned its loony left-wing views, and that the British have decisively abandoned their post-Depression psychosis about unemployment rates ever being higher than 1%.

The Thatcher accomplishments, however, are a very different story, and very much of a mixed-bag. On the positive side, there was a considerable amount of denationalization and privatization, including the sale of public housing units to the tenants, thereby converting former Labour voters to staunchly Conservative property owners. Another of her successes was breaking the massive power of the British trade unions.

Unfortunately, the pluses of the Thatcher economic record are more than offset by the stark fact that the State ends the Thatcher era more of a parasitic burden on the British economy and society than it was when she took office. For example, she never dared touch the sacred cow of socialized medicine, the National Health Service. For that and many other reasons, British government spending and revenues are more generous than ever.

Furthermore, despite Mrs. Thatcher's lip-service to monetarism, her early successes against inflation have been reversed, and monetary expansion, inflation, government deficits, and accompanying unemployment are higher than ever. Mrs. Thatcher left office, after eleven years, in the midst of a disgraceful inflationary recession: with inflation at 11%, and unemployment at 9%. In short, Mrs. Thatcher's macroeconomic record was abysmal.

To top it off, her decisive blunder was the replacement of local property taxes by an equal tax per person (a "poll tax"). In England, in contrast to the United States, the central government has control over the local governments, many of which are ruled by wild-spending left Labourites. The equal tax was designed to curb the free-spending local governments.

Instead, what should have been predictable happened. The local governments generally increased their spending and taxes, the higher equal tax biting fiercely upon the poor and middle-class, and then effectively placed the blame for the higher taxes upon the Thatcher regime. Moreover, in all this maneuvering, the Thatcherites forgot that the great point about an equal tax is precisely that taxes have to be drastically lowered so that the poorest can pay them; to raise equal tax rates above the old property tax, or to allow them to be raised, is a species of economic and political insanity, and Mrs. Thatcher reaped the proper punishment for egregious error.

Read the rest here

Ms. Thatcher, R.I.P.

Statist Tax Fantasies Unmasked: Two-Third of UK Millionaires Vanish

Once again, reality has made an abject spectacle of popular statist’s fantasies about “class warfare” or “soak the rich” tax policies where tax rates are seen as having linear effects on tax revenues. 

The axiom “if you tax something, you get less of it” seems to have been proven valid anew.  

In Britain, 2/3 of millionaires swiftly vanished (or in just a year!) in the face of 50% tax rate increase. 

From the Telegraph, (bold mine)

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes…

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

The above account shows that amplified elevation of tax rates equals a considerably smaller tax base and significantly lower tax revenues. Maybe politicians should learn about the Laffer curve or the elasticity of taxable income.

In terms of politics of taxation, the Philippines seems to have a parallel experience: When taxes on gold sales were substantially raised, this prompted for a surge in gold smuggling and a similar collapse in tax revenues.

The same phenomenon will likely beset the local version of the proposed sin taxes, which is being pushed by international agencies as Moody’s and the IMF. 

As side note, is the Philippines in a crisis for them to keep intervening by pushing absurd policies (higher mining taxes, SMS tax etc...) and whetting on the insatiable spending appetites of local politicians for a debt financed consumption driven model of economic development?

Yet the blowback from its legislation will likely boost the informal economy and lubricate further corruption, in the same way sin taxes failed in the UK,

We should learn from the lessons from the unmasking of, or the blatant failures of political magical thinking.