Financial Times Watch (12 January 2023)

State Corporate Crime Watch

Today’s watch once again starts with the UK regulator watch. Today HM Revenue & Customs outgoing head of serious Fraud, Simon York, noted the agency’s new strategy to target tech savoy international fraudsters and the companies that enable them. Interestingly enough this comes a day after MPs criticises the £10bn a year the HMRC is losing to fraud. £10bn a year, though, may be a drop in the ocean; as the article goes on to note that UK citizens have £850bn overseas, £570bn in tax havens. And this is despite criminal sanctions since 2017 for facilitating tax evasion. But as the City of London is itself a well known tax haven, maybe the real concern for the regulators is keeping that money in the UK’s financial sector.

US War Watch

Next up is US War Watch, though maybe de-globalisation, decoupling or great power politics watch would be more appropriate. Anyway, we started yesterday with the latest on the Chinese axis, but today’s watch is more interested in the European Union (EU) leg, which is why this version is called US EU war watch

This part has been centred on the very un-neoliberal policy of Biden’s green energy subsidies. The EU in general is upset, mainly because ECB spending rules stops them emulating this policy. The result of which, they fear, is losing a lot of industry to the US.

Thus today’s watch reports the words of the German car industry, desperate for the EU to unleash the shackles and let them battle the American’s on a level playing field. Despite the US’s protectionist policies, the president of the German car lobby, Hildegard Muller, is still a true believer in globalisation. Yet she also notes that the system “...is no longer an automatic guarantee of prosperity.”

The mixed signal coming from Muller is because as well as being squeezed by the US, they also are being squeezed by the Chinese. The issue for the European giant is that 33% of all German cars are made and sold in China. But now the latter’s auto sector wants to make their own crap and sell it to their neighbours. Much like Germany was able to do after the introduction of the Euro in 2000 gave them a competitive advantage over their fellow EU members. The conflict in Ukraine has put that in sever danger now that German access to cheap energy is cut off.

For the Germans and the EU in general these issues are all contributing to the sense of a global unwinding of the world economy that has greatly benefited them since 1945.

Recession watch

Today's section begins with Capital Vs Labour watch begins with good news for workers in Japan, which invariably is bad news for developed nations central banks as a sign of growing labour power. What this will do to inflation there and how its central bank will react is unknown, but it is a long overdue decision. Indeed, it was prompted by the government’s call to raise wages that have stagnated over the last few decades. Whether this is an altruistic move by the Japanese government is hard to tell. The cynic in me says it is probably more related to the fact, as the article notes, that Japanese salaries are no longer competitive globally.

Next we move onto to recession watch, which notes the it is still  slowly coming. First commercial real estate transactions in the UK are at their lowest since 2010, driven by the cost-cutting tech sector. Gold meanwhile is going up boosted by the believe that the Fed will keep raising those interest rates in an attempt to reign in labour under control.

Despite all the gloom there is as always some good news for capital. UK food retailer, Sainsburys, saw a rise in its profits driven by price inflation. Not such good news for a UK working public battered by the “cost of living crisis” that has seen the country fall way down in terms of growth compared to its EU peers.

Alright, that’s all from me today. I will be back soon!