The crises of the past two years have killed the idea that markets will fix everything

theguardian.com:

It’s six months this week since Russia invaded Ukraine and, let’s face it, things could be going better. The conflict is dragging on and the economic costs of the war are rising. Europe has been pushed to the brink of a deep recession by the Kremlin’s weaponisation of energy.

But it is not just that Vladimir Putin has killed off the global recovery that followed the end of lockdowns. Just as significantly, he has also driven another nail into the coffin of laissez-faire economics. For the second time this decade, Britain – along with the rest of Europe – is on an economic war footing. Radical action is needed to prevent an economic catastrophe this winter, just as it was when Covid-19 arrived in early 2020.

Earlier this month the Bank of England predicted inflation, already at 10.1% would peak at 13%. That was before Russia’s state-owned Gazprom announced unscheduled maintenance work on one of its pipelines. Citi, a US investment bank, is predicting the annual increase in the cost of living will reach 18% next year, the highest since the mid-1970s. Britain is still affected by the spiralling global price of gas even though it is no longer importing energy from Russia.

Inevitably, workers are unhappy that their living standards are being hit by rising prices and are seeking higher pay to compensate. There are rolling strikes on the railways. An eight-day dock strike in the UK’s biggest container port, Felixstowe, began earlier this week, as did an indefinite strike by members of the Criminal Bar Association in England and Wales. The Royal Mail is next in line for industrial action.

Meanwhile, the Bank of England is raising interest rates in an attempt to prevent a wage-price spiral. Threadneedle Street accepts a recession and