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Wednesday, 11 September 2019

The Brexit economy

Whilst Boris has a breather to consider how best to tackle the Gordian Knot of Brexit (a mess, it is being reported, exacerbated by Bloody Blair's machinations on behalf of  our European friends across the negotiating table - does anyone else think it's about time he lost the by now purely decorative 'right honourable' and 'PC' post-nominal?) let's take a quick look at Eurozone matters. 

The pound remains depressed but at €1.12 or thereabouts is where its been all year. Gold on the other hand is through the roof; oscillating at around £950/oz since the referendum three years ago, this Summer it soared to around £1,250 and is still today at around £1,200. The UK economy is still in robust shape, if not thriving, but clearly this cannot go on - the global slow-down and more importantly, investment and other key decisions by business that have been postponed time after time as Brexit drags on are taking their toll. Business and the economy need certainty more than anything; even the CBI, whose Remain stance on behalf of about 3% of UK businesses has been aggressive against Brexit, must admit that we need, as the Septics say, closure.

The Eurozone is in the doldrums and about to get worse. As the Telegraph reports, Cristine Lagarde, who narrowly escaped jail with her conviction for complicity in a fraud, takes up the Presidency of the ECB. She brings a unique brand of incompetence and poor judgement to the role. There may be some consolation for the feminists in that the grave errors she is about to make are about to be made by a woman, but few consolations for the rest of us. She's not an economist she's a schmoozer and cannot bring to the role the genius required to get the Eurozone out of intensive care -
They can do nothing about Brexit, they can do nothing about trade tensions, they cannot force Germany to loosen the fiscal purse strings, they have no answers to growing political instability, and they cannot force the pace of innovation and structural reform as Europe requires. Central banks have been reasonably effective in keeping the patient alive during the political paralysis of the last ten years, but they can provide no long term cure for the chronic nature of today’s economic ills.
Poor Sajid Javid's spending review was lost in the Parliamentary noise, but I think he is making the right moves. Plenty to include in the Conservative election leaflets, anyway - but it was a budget for more than that. Unlike the dreadful turncoat Hammond, he's actual budgeting for Brexit - and that's a first.

27 comments:

r_writes esq. said...

Is there nothing a politician can't do better than one who is qualified?


I only ask, because not only do these frauds apply and insinuate themselves into such roles, they think that it is their god given right.

Jack the dog said...

Nice to see the Blair creature is coming out from under its rock; nothing is more certain to guarantee a timely and thorough Brexit that that piece of shit parroting off.

He is such political poison that is the only possible outcome. WHat these bastards are forgetting is that in a struggle between the establishment and the people the people always win, and the British establishment has become the establishment by ducking these fights in the past; that is the magic of the uncodified constitution.

If they are now going to forget that history lesson presumably under the baleful unfluence of our Napoleonically codified neighbours, they're fucked. But between here and there it could get deeply unpleasnat and the ramifications will be immense.

They'd do much better to step back from the brink.

If only the stupid bourbon bastards had the intelligence to realise it, Boris is trying to save their bacon.

Anonymous said...

With Osborne out of the running for the IMF post, why didn't Boris put him forward for the EU Trade Commissioner role?

We're knackered now that the job has gone to that Irish feller.

JPM said...

There would seem to be some exasperation, at the UK's loss of influence over economic matters in the European Union.

Funny, that.

Dom Green said...

Reading Colette Brown in today's Irish Independent makes it clear that Carrie really needs to take Boris in hand and dress him properly before sending him out into the real world.

A hair cut won't go amiss either.

Raedwald said...

Yeah but any man up against a perfectly groomed gayer at a photoshoot would come up short. I bet Boris doesn't waste an hour a day cleansing his pores or whatever. He probably spent less than an hour getting ready too, I bet.

John Brown said...

You mention the remain campaigning CBI.

This organisation does not publish a list of members or from whom it receives its funding, although we do know it does receive some funding from the EU.

So we have no idea who it is representing and how much of it is actually "British".

Mark said...

There is NO SOLUTION to the eurozone catastrophe.

Either Germany will have to start making fiscal transfers that would make the Versailles reparations look like a tax break (and which they could not afford even if they wanted to) or the southern economies (and not just them) are completely deindustrialised.

Well we all know the boche don't we? And they wonder why "populism" is on the march.

"Loss of influence over economic matters"?

If they want to put a sticking plaster on the San Andreas fault that's up to them. Nothing they can do in the real world would be any more effective.

Anonymous said...

Good to see the relaxation on foreign student numbers.

At least we'll have super qualified vegetable pickers out in the fields.

Dave_G said...


People like Lagarde are only the face of the ECB and most certainly not part of the actual machinations. Far easier to make her the fall guy than expose the actual criminals behind events - the BIS.

Carney's recent speech mentioning the fall of the US$ as the global reserve currency and the potential for a new digital currency to replace it should have had more attention - he wouldn't be saying such things if there weren't plans afoot. We need to be more aware of the topics they discuss (and often dismissed as conspiracy theory) since they are so brazen about the way they manipulate events they really couldn't care less what we think or what we might try to do.

Events really do seem to be heading towards a giant shift (or 'conclusion' if you will) but it would be a smarted man than me that predicts the final outcome or the pace of events that precede them.

JPM said...

The prorogue has just been ruled as unlawful.

Mark said...

Time to bring this government down and have an election then?

Liberista said...

Sir, a few random comments;

"The pound remains depressed but at €1.12"
and that is a good thing, isnt it? at least this is what the "economists" claim: systematic currency debasement is very good for the economy. (this is of course utter nonsense)
"Business and the economy need certainty more than anything;"
absolutely true. i suspect anyway most businesses have already planed for all possible scenarios.
"and cannot bring to the role the genius required to get the Eurozone out of intensive care"
in principle, no government or bureaucracy can improve the economy. all they can do is take from jack and give to joe, thus worsening the economy in general. the best a government or bureaucracy can do is do nothing.
all the UK has to fear is the vendettas from the EUrocracies. they might try to punish UK with unreasonble measures and restrictions.

regards

JPM said...

Not really, Mark, the argument for a central fiscal capacity in the euro area is often inspired by cross-state fiscal transfers in the US. However, capital markets in the US are much more important for shock absorption than fiscal transfers. Fiscal transfers across states absorb 9% of asymmetric shocks in the US, while capital markets (cross-border factor income and capital depreciation) absorb 48% and credit provision to the private sector absorbs another 17%. In the euro area, the contribution of capital and credit markets to absorption of asymmetric shocks is limited to 12%. Shock absorption through financial channels is therefore more than five times as small in the euro area compared to the US. Strengthening these financial channels is the most effective way to increase the resilience of the euro area.

That's what they'll likely do.

Mark said...

The US is a real economy that grew organically. The Eurozone is a political construct imposed from above on disparate economies with a long history of divergence. The usual mechanisms of divergence - interest rates, exchange rates - were closed off.

The eurozone was built "over the fault lines of an earthquake zone" but the voice of Cassandra was contemptuously ignored.

In a real economy - which the Eurozone manifestly is not - between 3 and 8% (Ithink) of GDP circulates from richer to poorer regions via the various internal transfer mechanisms. I think the rough eurozone equivalents - the various bungs and handouts - come to at most 0.5% (and I think this covers ALL flows - please correct me if I'm wrong anybody).

All the Eurozone seems to have is the target2 balances underwritten by Germany. And from the above, you can see the scale of the problem. Fiscal transfers of the scale needed 1. Are far too large to be practical 2. Would be between countries who in the real world have a long record of enmity which the EU deluded itself has somehow disappeared. Germany is going to give "reparations" (which I would posit is how it could well be interpreted) to poland and greece? Well, best of luck with that.

The Eurozone HAS failed. It can be kept going but only by causing increasing economic pain to those countries which don't start "get" and end "many". It's just delaying the inevitable. And the longer this is delayed (but what real world choice do they have?) the bigger the disaster.

Fixate on this "ya boo sucks" sabotage of the referendum if you wish. You may even get treason's deal through, but it fundamentally changes nothing.

We didn't create the catastrophe but those who call themselves British who are determined to keep us inside will have to explain - and maybe sooner than they think - their theatrics over the last three years.

Dave_G said...


Usual calls from Labour (re the 'illegal' prorogation) for a new referendum with 'accept terms as-is or remain' as the choices but, as we expect, no embarrassment over the way the REAL referendum was ignored and no reason why another shouldn't be either.

Same applies to EVERY referendum from here-on-in. ALL can be ignored given the example currently set.

Perhaps this is the aim - remove referendums as a democratic and public process to make change and leave it all to the 'experts' in Parliament.

If we end up bypassing the Brexit referendum process we should be able to bypass ANY Government ruling. Free-for-all.

Mr Ecks said...



Only in Snotland Cheesy--with different laws. Won't fly down South and if it does just means more people see the stitch up for what it is.

JPM said...

The judgement hinged on whether they thought that Johnson was telling the truth in what he said to the Queen.

Given that the English High Court had recently said - I paraphrase - that it was quite normal for politicians to lie to the country, the Scots reasonably concluded that on a balance of probabilities he was not.

That part of it is sheer poetry.

The Scottish ruling is binding on the UK Government, as Scotland is a part of the UK.

Mark said...

@Cheerful

Mr Ecks is perfectly correct. A LOT of
people will see this as a stitch up.

Why can't you see what remainiacs have been doing to perceptions of government and institutions for the last three years?

So Boris will appeal and 31st is getting closer. Surely if a new parliament were to start on 14th october, treason's deal could be voted on again as is. If the parliamentary session is not prorogued then there will have to be changes. What if they refuse to negotiate (why should they?)
- not a blatant refusal of course, but the sort of obfuscation they are so good at. Can they negotiate, what meaningfully can they concede given the "populist" turmoil all around them?

See my comments above. Do you not think that remainiac MPs might be setting legal precedents that could be used against them in future? (and not a distant future).

The next election when it actually comes will be very interesting.

JPM said...

Yes, when it comes it will. Latest comres poll shows Tory lead cut to one percent over Labour.

Mark said...

There's only one poll that matters, the one grandad semtex specifically is blocking despite calling 100 or so times for it.

Not quite as many times as treason May's "no deal is better than a bad deal" but what the hell.

Do you think he's about to change his mind?

Anonymous said...

Stone me JPM you are so desperate.

So desperate to be right about everything; and yet you're willing to throw everything away to be right; democracy, civility, even basic human decency.

The country is doomed if cunts like you ever win out.

Mr Ecks said...


Cheesy--you are so full of shit. Scots rulings are NOT binding and it is a civil court anyway.

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Anonymous said...

Ecksie,

Its all bollocks any way. There's no legislation on proroguing.

That's why the London court last week said, its not a matter for the court. The Supreme Court will say the same thing.

Span Ows said...

JPM 11:07

Why not post the link to your copied and pasted paragraph? Or at least mention source:

https://voxeu.org/article/more-stable-emu-does-not-require-central-fiscal-capacity

"The argument for a central fiscal capacity in the euro area is often inspired by cross-state fiscal transfers in the US. However, capital markets in the US are much more important for shock absorption than fiscal transfers. Figure 1 shows that fiscal transfers across states absorb 9% of asymmetric shocks in the US, while capital markets (cross-border factor income and capital depreciation) absorb 48% and credit provision to the private sector absorbs another 17%. In the euro area, the contribution of capital and credit markets to absorption of asymmetric shocks is limited to 12%. Shock absorption through financial channels is therefore more than five times as small in the euro area compared to the US. Strengthening these financial channels is the most effective way to increase the resilience of the euro area (Buti et al. 2016)."

mongoose said...

Mr JPM, Sir, it is the Euro - and the pretence of a convergent economic vector - that has killed the EU. There is no such vector; it is an ongoing hubristic suicide.