Wednesday, December 12, 2018

Mrs May to go?

Mrs May is halfway to Australia, such is the big hole she has dug for herself - on the back of tunnel vision. The only way out is to keep digging or to get some large burly chaps to rush to the rescue at the last moment... but, no, the lady is going to keep on going until the dire end - leadership challenge, confidence motion and whatever else the gods can throw at her.

Tuesday, December 11, 2018

EU needs to offer better deal

Mrs May has dug herself into a nice hole, the only way out is an excuse for a second referendum... the only way she will support that is if the EU offers a better deal than they did to Cameron - five year residence test for access to welfare, etc., frozen payments into the EU budget so they go down in real terms and in relation to GDP, plus some concessions on the EU courts... the EU can dress it up as Eurozone countries moving to more integration and a looser arrangement with non-Euro countries.

The Brexiteers may explode with rage but they are not even 20 percent of parliament and Mrs May comes out of it as giving the choice back to the people and getting the best possible deal for remaining. Even if she is deposed she will still be a success in historical terms.

Monday, December 10, 2018

More Gibberish

Got to laugh, politicians complaining that Mrs May invoked article 50 too soon and should have done more negotiating first - forgetting that the EU refused to negotiate until Article 50 was invoked. Labour whining that we would be stuck in a customs' union indefinitely if the backstop was in play and then saying they want to keep us in the customs' union, not to mention paying huge sums for access to the single market. Right-wingers suggesting we might need some war-time grit to get through the first couple of years of a no deal exit, bound to go down well with a couple of generations who would scream child abuse if they had to walk more than a few metres to school. A day before the vote on May's deal, the EU courts confirm that we can unilaterally revoke article 50 - that has to be some kind of fix, and I say that as someone who wants to remain. Only sure thing, Mrs May loves power and will do what it takes to keep it.

Sunday, December 9, 2018

How bad will Brexit leave things?

I want to remain but don't actually believe the horror stories about the effect of leaving without a deal. Temporarily setting all tariffs to zero will solve most problems on our side of the Channel and the EU would be forced to follow suit just to keeps things calm at their end. You only have to look at the current French protests over a relatively minor matter of fuel tax rises to get an idea of how they would react to some serious downgrading in the loot they make out of selling to the UK. 

As long as the government explains why 50-100 billion in lost revenues have to be cut out of the budget and that interest rates will have to rise to help Sterling out, a couple of years down the line the country will bounce back stronger than ever. It is actually quite important to roll back the State as it has become far too intrusive and expands to feed off whatever revenue it can get its hands on.

Brexit isn't that big a problem in the context of the polar ice-caps melting away at a frightening rate and the Ebola virus mutating into strains that can't be cured and spreading ever faster through the populace.

Friday, December 7, 2018

Brexit Trade

Boris Johnson wants the threat of WTO rules and not paying the EU any money used to get a better deal - but would we be allowed to join the WTO if we defaulted on money owed to one of their members? Circa 20 million is due to be paid over the next forty years to cover various obligations and a similar amount over the implementation period to pay for access to the single market. The latter would not need to be paid if we left without a deal and went straight to WTO rules (if allowed). If that saving then went to offset removing all imports tariffs for the next two years it would get rid of the problem of our ports being clogged up (not at the EU end though) and push down the costs of products to offset the further ruination of Sterling - although higher interest rates and a drop of 50-100 billion in government spending would also be needed. Are Boris as PM and John Redwood as chancellor up to that job?

Wednesday, December 5, 2018

Brexit Debate

Nothing new in the parliamentary debate on May's deal. May mildly impressive, Corbyn so mealy-mouthed he couldn't even admit the possibility of a People's Vote. Like most of the shadow front bench, reasonably intelligent but brain ruined by silly Marxist mantras. Boris is fading from public favour and his pronouncements show why. My guess, the public are in favour of remaining versus no deal by 60/40 and more like 80/20 for MP's.

Just enough time for a general election and revoking article 50, something the LibDems should stand on - even if they don't win they most likely would hold the balance of power. Conservatives might win on a no-deal Brexit stance but would not have a majority so Lib/Dem-Labour coalition of sorts, the wannabe Marxists will do anything to get into power even if staying in the EU mutes their ambitions.

But you never know, Ken Clarke might finally make it as replacement PM, go out in a blaze of glory by revoking article 50, country before party...

Tuesday, December 4, 2018

Brexit and Growth

The government is relying on growth going forward to get it out of the debt trap set by Gordon Brown's all-consuming welfare state, itself constructed to make sure so many people were dependent on the State they could never bring themselves to vote for the Tories. The theory is that the growth will increase GDP so that the actual debt pile as a percentage of GDP will fall over time, to a more sustainable level. This is a bit different to Osborne's idea of running a budget surplus and actually paying the debt down and could tellingly be described as fiddling whilst Rome burns... at the moment, combined with Brexit, this represents the ruination of Sterling.

It also ignores the business cycle, the boom and bust nature of the market. Post 2008 governments around the world decided QE and very low interest rates were the way to avoid a deep recession, the UK particularly adept at ruining its currency and cutting interest rates close to zero, getting away with a relatively mild house price drop of 20 percent and lowering taxes to keep things ticking over. In the USA and many Euro countries there was a much deeper fall in house prices and much higher unemployment. That these countries are showing a higher growth rate than the UK should come as no surprise as the market was allowed to work its magic on poor assets and they are now bouncing back, albeit from a lower level.

Already governments are fretting that they have few tools to fight another recession - debt is far too high, interest rates are already ridiculously low, the populace is taxed so high Dennis Healey would be smiling in his grave... and no-one really knows what the effect of muting the market via QE will be on the next bust, especially in the UK which has low productive capacity, a total lack of any kind of self-sufficiency in food or other essentials and a remarkable reliance on services, which by their very nature tend to be easily relocatable to lower taxed regions.

One element of growth which the government relies upon is immigration, the more people in the country the more money the government makes, the better the GDP, especially if they can conveniently ignore expanding public services at the same time. This leaves the locals in a barely restrained state of rage, aiding the vote for Brexit. Nearly all the UK's problems are caused by having 5-10 million too many people in the country.

So what does all this mean for Brexit and growth. Conventional wisdom is the UK will continue growing but at a slower rate if we do Brexit. Right-wing Tories offer the hope of slashing public spending and taxes post Brexit which will then spur growth to new highs, especially if they can make most of the world a free trade zone. Historically, this kind of change does actually work, the less State you have - up to a point - the better things work. The problem is too many people have become reliant on the welfare system for the Tories to get a majority on the back of slash and burn of the public sector and their total inability to reign in the greed of post-nationalized industries does not inspire the populace with trust in their motives.

At the moment, we are going to have Brexit and the big State (Mayism) or Brexit and the all consuming state (Corbynism) and the only thing you can say about either is that when the next Bust hits the business cycle neither will work! The government should not have even considered Brexit until it had its finances in order and loaded to deal with the next recession.

Latest news is that the UK can unilaterally cancel Article 50 right up to the point of final agreement so Mrs May needs to eat some humble pie and admit that the government finances and the country's economic state are simply not up to the shock of Brexit in the context of the coming bust in the business cycle.