Tuesday, 8 March 2016

Crony Corporatist Speaks Out


I fundamentally disagree with Mr Carney.  The act of exiting the EU may in the very short term lead to some uncertainty and fluctuations in the price of Sterling and the UK stock and Gilt markets.  But once it dawns on the capital markets that we are not paying out lots of money to the EU and are not on the hook for various bailouts and that we are not obliged to do all the mad and expensive interventions that the EU requires and crucially we can set out own banking solvency and capital requirements I think that Sterling will strengthen.  This is of course not necessarily good news for UK trade but it will excellent for paying off all those government debts.

And Carney has also said that as a consequence of this uncertainty he will need to flood us with liquidity.  Oh really?  IMHO the 'real' reason to do this is to have lots of lovely cheap credit land on people in a burst of joyful feel goodness and encourage high spending on toys and stuff. Bread and Circuses.

In any event Mr C has a woeful track record in money and interest rates. Commentators have been saying for years that its interest rate policy has been useless.  And it has managed to mis-use quantative easing  Deliberately?

Overall markets - that's me and you and bloke on the Clapham Omnibus by the way - hate uncertainty.  But they are really pretty quick to sort out the truth once things are clear. (Actually, I love uncertainty.  It's opportunity).

Dan Hannan is pretty good on this.

This is just Carney doing his corporatist bit for the global self defined elite.  'Elite' my arse.

Just came across this little gem.  Here (within the extended text). To paraphrase slightly - 'You cannot win an argument with the Bank of England with logic, because they argue by assertion'.  That applies to the whole financial regulatory structure.


Mark Wadsworth said...

Agreed. He'll do ZIRP and credit bubbles whether in or outside the EU, it's just that the excuses will be slightly different.

paulc156 said...

I find it hard to believe that the relatively well informed gilts markets haven't already figured out that we pay in more than we take out and that we're already off the hook for eurozone bailouts.
If they mark gilts down post 'out' vote it's because they think those factors are insignificant when compared to the potential years of endless wrangling and negotiations that will likely ensue...probably fir very little in the way of tangible benefits. That is we will still have freedom of movement and labour protections if we want good access.

Lola said...

P156. The Gilt market is being rigged - that's what Carney is going to 'issue liquidity' for. N'est pas?

paulc156 said...

Hmm. Rigging means driving down interest rates encouraging Sterling sell off. We know the biggest companies are going to either shelve or put investment plans on hold at least until we see how negotiations go on. That could take years! Certainly many months. Stronger sterling because we save a few billion on EU swings and roundabouts doesn't seem very plausible.

Mark Wadsworth said...

PC, you Remainers keep banging on and on about 'years of uncertainy' even though you must know it to be a lie.

There won't even be a millisecond of uncertainty.

paulc156 said...

I'm just about a 'remainer' but mainly because I have zero confidence in the integrity of the current government. I prefer the sclerotic straightjacket that is the EU to the cretins that are leading the campaign to exit.
As for the difficulties of 'renegotiations' being a 'lie'. That's clearly preposterous. No one actually knows. And if we can retain current treaties we still have the gargantuan task of eventually renegotiating the treaties we decide we want or must terminate. It appears we just don't have sufficient civil service personnel with the relevant expertise. This is just part of the uncertainty. We also don't have much idea just how badly investment will be hit, though it does seem safe to assume it will be hit quite hard initially. Thus far financial services and the motor industry are firm remainers...do we do anything else?

Lola said...

P156. FS are mostly remainers because they are biggest beneficiaries of EU cronyism. Except Neil Woodford https://woodfordfunds.com/economic-impact-brexit-report/
and me...(!)

The Gargantuan Task of unwinding/re-negotiating treaties is not that difficult. All we have to do is to write a letter to the other side and say that in accordance with International law we can carry on as before but on our own. Czech and Slovakia did just this.

Anonymous said...

Yeh I read that Lola. Czech and Slovakia are not analogous to the UK and the EU. Greenland is. It is not clear just how many treaties will need to be renegotiated. America, China and India have made clear that they would be more interested in a deal with the EU than one with Britain alone.
If they have to negotiate with the UK alone they will prioritise the EU negotiations [we would likely have to wait our turn] and it would be perverse to presume the UK could drive a better bargain than the EU, wouldn't it?
Renegotiation with the EU itself would require all states to accept and it's not clear they would offer good terms of access [unless we keep all the stuff Brexits are complaining about!}. I've read that though we import far more than we export to the EU most of the imports come from two countries. Germany and Spain. So two states might be more sympathetic. The rest will see the UK move as destructive and threatening at a time the EU is in trouble.

Also we export nearly half of our exports to the EU. We account for only 10% of EU exports. They will hold the whip hand. For all the above reasons I think it will more likely be a messy business than a seamless one and for what gains I haven't a clue.

DBC Reed said...

Paulc 156 gets my vote. I don't want national sovereignty if it just means the fabulous British ruling class gets to carry on ramping up real estate inflation to stay in power while deindustrialising the country at a rate of knots.I sympathised with the peasants in the televised War and Peace who welcomed Napoleon's invasion because he would give them free land.If we Brexit, our ruling-class arseholes will trash the place completely .

Lola said...

P156. I do see that it would be tough, but that's what we vote a government to do, hard things, so they'd better just get on with it. Personally I am prepared to put up with some short or medium term difficulties for longer term gain. For me it's more about self determination than anything and the fundamental incompatibility between the European economic tradition and law and ours.

DBCR. Considering that it is 'the British Ruling Class' that seems most keen on Remain, I reckon with that argument you are on a very sticky wicket. My view is the contrary for precisely the same reasons. Elections are a negative not positive thing. It's kicking people out that is important. Cameron didn't win. Milliband and Sturgeon lost. Extending that accountability bit onward we have de facto (and deliberately ) zero democratic accountability in the EU. We cannot kick out them and their grotty bureaucrats. We have more chance of sorting out Tory/Labour land value ramping out. For a start we could scrap VAT.
And for me it is about sovereignty. As I said to Paul above, the EU and UK traditions are very different. We have spent the last two hundred years at least four wars and endless treasure on trying to save 'Europe' from itself. Let's do what we did when we finally lost Calais and look West and to the Far East and Africa.

(Good streamed debate from the IEA last night, BTW)

Mark Wadsworth said...

PC and DBCR, those are weak arguments in favour of Remain, but unfortunately all the evidence shows they are invalid see Lola's comment. Why do you think Goldman Sachs is funding the Remain campaign?

Bayard said...

DBCR, the British Ruling Class, AKA the Political Elite, can be guaranteed to f*ck things up whether we remain or leave. The BRC is a product of our political system and that will be unaffected by Brexit.

paulc156 said...

Weak arguments MW, but stronger than the assertions about Brexit.
Forget GS, why does 75% of the motor industry want us in?
And exactly what do you think we're going to get by leaving that we couldn't get whilst staying in?
Lola pretty much says it's a point of principle. He hopes for some tangible gains in the long run. Sounds like small beer to me.

Mark Wadsworth said...

B, correctamundo. The BRC are shits, the EUrocrats are shits. Better to labour under one yoke than two.

PC: why does 75% of the motor industry want us in?

Where on earth do you get that from? Did their chairmen say that? Their workers? Their shareholders?

"And exactly what do you think we're going to get by leaving that we couldn't get whilst staying in?"

100,000 fewer socially incompatible 'asylum seekers'? We won't be dragged into TIFF by the EU. We could (probably won't, but could) reduce VAT rates and subsidies to farmland. No pressure to bail out the ECB/Greece/German banks. £10 billion a year EU net contributions saved. Fewer corporatist barriers to entry. Cheaper imports from rest of world etc.

It's a long list. We will lose things by leaving (I'm not denying that for one second), but it's a shorter list is all. This is not a choice between good and bad, it's deciding which is the lesser of two evils.

Lola said...

The thing about all this that really annoys me is the idea that the EU (or the UK for that matter) is 'free trade' and that 'free trade' needs an 'agreement'. 'Free Trade' came before states. States were mostly set up to stop free trade. So the truth is that what we need is the repeal of anti-free trade measures, not another bloody government agreement that we can be allowed to have free trade. Anyway the EU doesn't do free trade. It does customs union with massive regulation.

paulc156 said...

The asylum seekers figure sounds about as reliable as Cameron's claim to reduce net immigration to 100,000 by 2015. More plausible is Dover turns into Calais.
The 75% motor industry claim (9% actually favour brexit)is polling of the chief execs of uk based motor manufacturers.
As for TIFF (TTIP?)...Cameron is a firm supporter...this is what I mean. Your long list amounts to diddly squat...and yes we won't be cutting VAT either.

Lola said...

P156. You could look at this the other way round. The EU is doomed. One way or another it will fail. (Arguably it already has). But like all such failures no-one can predict when the final denouement will occur. These failures are characterised by the periphery being the first to fall away.

And, given what we know now would a referendum on joining the EU succeed? No, of course it wouldn't.

So why not recognise para 1 above, and accept the logic of para 2 and get out now before the chaos of EU failure engulfs us all?

Lola said...

Crikey! A. Heath writing something vaguely sensible and on topic apropos this debate.

Lola said...

Sorry to keep referring to the Torygraph, but here is another think piece that is on topic.
P156. I think that there is as much danger to the EU if (when?) we leave as to us. Probably more so.

paulc156 said...

MW. As for Greek bailouts how much have we paid so far?
I've seen net contributions of 7bn to EU.
The lower barriers to entry implies us doing away with lots of regulation. Fantasy I argue. If we want good access that won't happen and of course the UK already has the least regulated of EU markets according to the OECD. Our biggest barriers to entry are via planning restrictions...nothing to do with the EU.
That list is more like a one line entry.
Save £7bn in contributions. Peanuts compared to the sizeable fall in inward investment we can expect.

paulc156 said...

Lola I agree, the EU will feel threatened by brexit as similar sentiment might grow in France, Portugal, Italy etc...unless the EU ensure anything but an easy passage.
They will want to ensure nationalists looking on from elsewhere draw the right conclusions.

Mark Wadsworth said...

PC, I don't know why I bother arguing with you, but here goes…

"The asylum seekers figure sounds about as reliable as Cameron's claim to reduce net immigration to 100,000 by 2015."

DC had not intention of achieving that. It was Indian Bicycle Marketing.

"More plausible is Dover turns into Calais."

Nope, once here, they would quickly fan out across the country.

"The 75% motor industry claim (9% actually favour brexit)is polling of the chief execs of uk based motor manufacturers."

A handful of corporatist chief exec's mean fuck all. We joined the EU in 1973, within ten years, the motor industry was fucked.

"As for TIFF (TTIP?)...Cameron is a firm supporter"

He is BRC rent seeker, so of course he supports TIPP! Which in turn is why he supports EU membership. Which in turn is why I support Leave. So what's your point?

"Your long list amounts to diddly squat…"

That's just an insult. Try to be civil, eh, old chap?

"and yes we won't be cutting VAT either."

Agreed, sadly yes, VAT is the most Home-Owner-Ist of taxes.

"Save £7bn in contributions. Peanuts compared to the sizeable fall in inward investment we can expect."

Why the fuck does a major developed economy need 'inward investment'? That's Tory-New Labour code for 'selling off the family silver'. We can't all invest in each other, can we? You might as well argue, "EU membership makes it easier for large UK companies to shift jobs to low wage areas". Which is possibly true, but that's an argument for leave as well.

L, agreed. In a perfect world there would be no free trade agreements - it would be the natural course of things that everybody can buy or sell anything from or to anywhere else.

As Henry George said, imposing import tariffs is the same as the other country putting trade sanctions on you. It is madness.

paulc156 said...

Firstly, 'diddly squat' is not an insult ...particularly when compared to the pile of expletives you put in your post, eh old boy?

You asked why GS favoured staying in so I asked why 75% of motor manufacturers did so too. You asked what the figure of 75% referred to. I told you. You got pissed off.And no comparing the motor industry of 1973 to 2016 does not suggest there will be few repercussions from Brexit. They use the UK as a launch pad for EU exports. It's reasonable to assume they will reorient their production over time unless we quickly institute an agreement with the EU...one that keeps nearly all regs and freedom of movement and substantial funds (as per Norway)going into EU coffers.
The point about asylum seekers fanning out from Dover is besides the point considering that at this time hardly any can get here from Calais. Their fanning out is an argument for brexit?!

As for TTIP, that's the point I made earlier in the thread and since; We won't get better treaties than TTIP EVEN IF WE BREXIT. Or does Cameron hand power over to Farage if we vote out?

Don't get mad because your arguments are paper thin and I have the temerity to challenge them...it's not as personal as you seem to think. :)

Mark Wadsworth said...

PC, you are arguing like a Home-Owner-Ist.

You make an assertion, I debunk that assertion and instead of finding some evidence to support your point, you just drag up another myth:

.one that keeps nearly all regs and freedom of movement and substantial funds (as per Norway)going into EU coffers.

Yes, Norway has to pay an access fee. But it is not particularly large as a % of GDP (much lower than our gross contributions of 1% of GDP), and who says that as a ten times larger country, the UK couldn't hold out for something even better?

The "freedom of movement" which you say Norway offers (I will take your word for it) is a slightly separate topic and is not directly related to EU membership or otherwise.

And who said that 'freedom of movement' for Europeans within Europe is a bad thing? I think it is a good thing. You don't appear to have a point of view.

Can you please stop it now? Its getting a bit annoying.

Random said...

"They use the UK as a launch pad for EU exports."

Of course they do - they rely on 'export led growth.' That gives us power. They are screwed by their inflexible treaty. The EU is not really exporting, it is importing demand. Who are they going to steal demand from and how?

Remember the EU is in depression and the UK is growing.

"Don't get mad because your arguments are paper thin and I have the temerity to challenge them"

Your arguments are paper thin. Why wouldn't the Irish simply veto any restrictions on the UK that are likely to result in retaliation from the UK?

If they did it will just force separation and substitution even faster *in the UK* - much as it is doing in Russia. So realistically things would evolve over time in the way they do between any countries.

You can't compare the UK to Norway. The UK is the fifth largest economy in the world. Compare the UK to Japan. Oh wait - island nation, notoriously tight borders, exporting powerhouse.

"As for TTIP, that's the point I made earlier in the thread and since; We won't get better treaties than TTIP EVEN IF WE BREXIT."

Get a Labour government elected then.

"(as per Norway)"

The more you look at Norway and Switzerland the more you realise how tiny their economy is compared to the UK.

You do wonder how the USA, China, Japan, Brazil and Russia manage. Being large economies outside the EU.

But that's the side show. The framing of the little europeaner who can't see the other continents in the world.

The EU is, always has been and always will be a political question. Do we want to be part of a Federal United States of Europe, or not.

That's it! Everything else is beside the point.

Lola said...

Random. The point about Japan is exemplary. According to wiki their population is about double ours and their GDP is $4.843Tr per capita $38,216 v UK $2.950Tr / per capita $39,826 .

Looks the best reason yet that Brexit will work.

And P156 - just how many cars does Japan make and export Globally? We can do that.

DBC Reed said...

Europe is stressed out by the migrant/refugee issue which stems from Charlie Wilson's War when the Americans discovered they could arm Afghan jihadis with Stinger missiles to end Russian attempts to modernise the country by force, only for the jihad to suck in Osama Bin Laden and then spread into Middle East setting off mass terror as bad as a world war.In the meantime long years of Cold War by the Americans succeeded in splitting the Soviet satellite countries off (Poland etc)to be taken care of by the EU despite their much lower wages which meant in Northampton that long-established firms instantly decamped to obscure Polish towns.
Lola has romantic dreams of Free Trade in a Fotherington Thomas world of the brotherhood of man but with the Americans not respecting anybody's economic sovereignty and China absent-mindedly kiboshing the whole European steel industry with one swish of its tail, it may be that we need protection from these Orwellian states that are internally self-sufficient and see no need to co-operate.
As a veteran of a futile movement to establish a self sufficient Commonwealth Free Trade Area instead of the Common Market, I was forcibly made aware by former Blackshirts made over into the Union Movement by Mosley , that Europe was supposed to be a self sufficient market with few imports and exports and was intended to be vehemently anti American.De Gaulle embodied this philosophy.

Lola said...

DBCR. Crikey. Some many contradictions and self cancelling examples.

I really can't be arsed...(in a nice way)

Anonymous said...

MW. "You make an assertion, I debunk that assertion"
pot kettle black. Your first response on this thread "you must know it ['uncertainty regards treaties'] to be a lie". Set the tone nicely.

You say Norway's payments to the EU are not particularly large.
In Norway’s case, around 90% of Britain’s net payment per head, according to The Economist. I won't bother with a link since you seem to insist any argument against regardless of supporting evidence is 'assertion'.
I appreciate the work and information given out regards LVT and Citizens Income. Two things I would wholeheartedly support. Unfortunately in other areas I happen to have dissenting views. We know one or two of them don't we.
M, you can either ban me for insulting language [diddly squat already!!!] or just ignore me. It's no big deal to me either way.

Anonymous said...

And P156 - just how many cars does Japan make and export Globally? We can do that.

Yes Lola, in principle we obviously could. How to get there from here though is as ever a thorny issue. you would no doubt stress 'laissez faire'. The problem with Japan as an example of manufacturing dominance is I doubt you would want to attempt to emulate their methods. Just look at the history of Toyota. Ha Joon Chang has written on this and you will see what I mean.


DBC Reed said...

Nothing very contradictory about it.The US encouraged jihad in the Middle East and the breakaway of Soviet satellite states: the results are affecting Europe, not the USA which should be taking in the migrants they created.
With countries like the USA pursuing politically motivated economic policies, Free Trade doesn't stand a chance.It is not for purely economic reasons that Northampton's old established British Timken and Avon Cosmetics are now in Poland.

DBC Reed said...

Your champion Boris Brains Johnson has been on the telly prophesying after Brexit we can do completely Free Trade with USA and China! Nothing like trying suck up to the biggest trade gangsters on the globe!

Bayard said...

DBCR, from time immemorial, that has always been the problem rebels, revolutionaries and reformers have faced: if we are successful, how do we know our leaders won't sell us down the river once we've got them into power? George Orwell got it right with "Animal Farm".

Lola said...

DBCR Eh? When did I say that I championed Boris, exactly? He's followed my lead on Out and now I need to explain how the rest of life really works to the rent seeking buffoon. Clever tho'. And funny.

Lola said...

P156. Indeed, I haven't read your link yet, but I will. It looks to me that the whole of Nippon is nepotistic or cronyist in some way. I didn't say that we should operate like Japan. I said that we could make just as many cars, for example.