Showing posts with label IMF. Show all posts
Showing posts with label IMF. Show all posts

Tuesday, January 17, 2017

Leave - why wait?

By the time you read this, events will have kind of overtaken it but please do read on.

Today, Tuesday 17 January, 2017, UK Prime Minister, Theresa May will lay out the framework for Britain’s exit from the European Union – Brexit.

It’s entirely possible that her speech will have had a bit of a re-write in the last couple of days, to take account of comments by soon to be US President Trump and by the lead EU negotiator, Michel Barnier.

President Trump has indicated a desire for the USA to conclude a free trade treaty with the UK, as soon as possible.  So no more ‘back of the queue’ from the Britain-hating Obama

M. Barnier has apparently recognised the importance of the City of London to the European Union’s financial system.  ‘Apparently’ because having said this in an interview with the ‘remain’ leaning Guardian newspaper, he then sought to backtrack.   Whatever!   Barnier’s position will become clearer over time though I suspect the recent comments are closer to reality than his politically inspired backtracking.

Both though show that Brexit doesn’t presage the doom-laden future that the ‘remainers’ and global ‘experts’ predicted.  Indeed, even the Bank of England Governor now seems to recognise that the immediately greater risk from Brexit is to the EU rather than Britain.  On the same track, the IMF, headed by convicted criminal, Christine Lagarde, have rowed back on their gloomy predictions for the UK economy and are now upgrading their growth predictions for the UK economy.  Also they and other so called experts have come to recognise that the UK was the strongest  economy in the world, during 2016.  And yes, Remainers, that includes 6 months of the ‘dark Brexit winter’ that started on June 23rd, 2016!

Anyway, to Theresa May’s speech and my hopes for it.

Ted Yarborough, writing for the Daily Globe, has succinctly outlined the five key points that Theresa May needs to ensure are met.  These are:

1.     UK having complete sovereignty over its borders and free movement of people to end.

2.     UK to have free trade with the EU outside of the Single Market and Customs Union

3.     European courts and European Law to have no jurisdiction in the UK

4.     Future contributions to the UK are up for negotiation

5.     Open borders, with the Republic of Ireland to remain.

Ted covers these issues very well and so I won’t repeat his arguments.  I would add the following though.

On the day that the UK invokes Article 50 of the Lisbon Treaty, signalling its intent to leave the European Union, the UK should actually leave the EU, that very day. 

Okay, I know that that will freak out some people and the ‘Remainers’ will have all sorts of ‘conniption fits’ but stay with me a moment.

Such a move will require emergency UK legislation – I am thinking of a simple one paragraph law that states that as of this date, existing EU law that is on the UK Statute book will remain in effect, even though Britain is no longer a member of the European Union until such time as it is repealed.

That gets us over the immediate legal ‘hump’.

Why leave the same day? 

Well, firstly, bureaucrats have an awful habit of dragging things out.  The recently-resigned UK ambassador to the European Union, Sir Ivan Rogers, had indicated he thought it would take 10 years to conclude a treaty.  That would be a nice ‘little earner’ for Eurocrats and lawyers and a great chance to pad-out the pension pot.  Incidentally, why does any country have an ambassador to the European Union?  It isn’t as if it is a country!

Secondly, nothing concentrates the mind of those conducting the negotiations more, than having a deadline.  On the converse, an open-ended timeline – say ten years – means that talks will drag on and on and progress is bound to be glacial.  Indeed, one would suspect that this is a ploy of the ‘Remainers’  - drag it out so that the British people lose interest and then quietly drop the whole exercise.  And, in the interim, the EU’s freedom of movement policy continues to swamp the UK with migrants for which the UK does not have the resources.  There is currently much talk in the UK media, of a crisis in the NHS.  Apart from those people called ‘health tourists’ who travel to the UK, take advantage of free at point of delivery healthcare and then head home to their own country, without paying for the service they received, the UK NHS simply wasn’t designed for such numbers as it is now being called upon to serve.  UK’s immigrant population jumped from 3.8 million to 8.4 million, in the last 10 years or so.  Such growth is unsustainable.  Just think about that increase.

Thirdly, a repeat of the second – nothing concentrates the mind more than the cash tap being turned off.  Yes, on the day we invoke Article 50, we cease contributions to the EU.  Why on earth would we pay a membership fee for a club for which we have ended membership?  Both ‘Leavers’ and ‘Remainers’ seem to agree that the net contribution is £8.5 billion a year.  Other than providing a welcome reduction in government spending, this will focus the Eurocrats in speeding towards a treaty.  The UK is the third largest contributor to the EU budget.  We account for more than 12% of the total.  Whatever the outcome of the negotiations, this would suggest that the much needed cuts to the bloated EU spending will have to be made.  Better late than never, I suppose.

Another reason is that leaving immediately will ‘lance the boil’ in the UK.  This will provide a ‘crossing the Rubicon’ moment and will allow Britain’s politicians to move on from the result and to focus on the way forward. To focus on how Britain can benefit from the opportunities presented by Brexit.  How Britain can roll back the role of the State in the life of Britons by repealing the more petty and intrusive EU inspired legislation.  (If I were in charge, my mantra would be repeal unless you can show how a law or regulation benefits the UK people and show the cost-benefit case for your assertion.  And this would apply to all such legislation!)

Finally, leaving immediately allows the UK to press on and conclude free trade treaties with other countries.  In the interim, WTO rules would apply but we can take advantage of the apparent desire of trading partners to conclude agreements.


So, hopefully, Theresa May has already thought of this or reads the above and tells the EU that we  will leave the organisation by the self-imposed March 31, 2017 deadline.

Leave now – why wait?


Leave the Single Market

Leave the Customs Union


Leave the corrupt and undemocratic European Union.

Monday, October 14, 2013

Banking patterns, debt junkies and Fiscal diarrhoea

Have you noticed how financial institutions are starting to get worried about the possibility of a US default, if the US borrowing limit isn't raised?

First we had the head of the World Bank, Jim Yong Kim, expressing 'concern'.  Now we have Christine Lagarde, who took over as head of the International Monetary Fund, from Dominque Strauss Kahn after he was implicated in a sex scandal, saying her piece.

Ms Lagarde, the former finance minister of France, has warned that a default by the US could tip the world into recession and massive disruption.   Leave aside for a moment any thoughts or doubts about any former minister from a country such as France, opining on debt.  Forget that France's debt represents >90% of GDP!

Ms Lagarde and Mr Kim are joined by Jamie Dimon from JP Morgan (yes the same JP Morgan that has got $23Bn stashed away to cover expected legal charges for allegedly inappropriate banking behaviour, yes the same JPM that paid a fine of more than $900M just last month for bad behaviour)

I find it worrisome that these 'mega bankers' seem to have learned nothing from events in 2007 and 2008.

Here we have a US Government that continues to spend money far, far in excess of what it takes in.  The debt junkies that are running the US government (Democrats and Republicans) know that the US' economic model is unsustainable.  They know!  However, these 'patriots' fiddle and prattle about Obamacare (they can do this because Congress is exempt from the Affordable Care Act!) while the US burns!

Think about going to see a banker, let's call him Jamie-Kim Lagarde.  You have been called in because once again you are maxed-out on your credit cards and overdrafts.  You have been told to bring along with you a budget for the next year.

JKL:  Well when I look at this budget, I see that you want to spend more money next year than you are earning.

You:  Yes that's right.  I have all of these things and people that I need to pay because they think they are entitled to this, plus I have a couple of things that I like to do and, hey, these toys ain't cheap!

JKL:  I understand, consider yourself lucky that you don't have to spend a fortune on lawyers.  Anyway, what is it you want to do?  I keep thinking that giving you extra credit maybe isn't the best solution because you just keep coming back for more.

You:  But I need this, people will starve, chaos, in our household, will ensue...

JKL:  Wait!  I didn't say we wouldn't give you more money but, you know, I just want to avoid you getting into the same situation as some Europeans that we lent money to.  These guys got into a pickle and kept promising they would repay but then they couldn't.  They even 'stole' money from other people's bank accounts but my bank still lost money!

You:  I hear you and I have spoken to some of my neighbors about their over-spending.  I mean some of these folks think they have a god-given right to spend other people's money and that the government or someone else will just print and keep on printing the extra money they need.

JKL:  Yeah, well let's not go there.   OK, we will give you some extra credit but before you start jumping up and down, this is going to cost you.  As well as extra interest, I need you to get together with a few of your buddies and kick-up a ruckus somewhere.  I have interests in some businesses that would benefit from coming in after you have done your bit and fixing things up!

You:  You got a deal, buddy.  See you next year!

Of course, on the personal level it wouldn't happen that way.  JKL would simply take all that you have, to the world declare you bankrupt and a deadbeat, and then ask his shareholders to stump up money to fill the losses.  All the time, ensuring that his fat pay checks and bonuses continue to roll in and pushing governments to continue so called 'quantitative easing' as no one can now afford to turn-off this cheap source of finance.

Only in the USA!

Actually that's untrue, same applies in Japan, Europe and elsewhere.  Though, the USA does kind of excel at fiscal diarrhoea