Brexit

[Buckminster]

From MA:

If the Queen hadn't abdicated her duty, she'd realize that Her Majesty's Government had lost the confidence of Parliament and was unable to govern. May just got found in contempt of Parliament! It's ridiculous that May is going to stagger on when it's clear the government no longer has the support of Parliament or the people. The Westminster system is specifically supposed to prevent this situation.

Pretty much nobody likes May (although we respect how tough she has had it...). However, the alternatives are not obvious and will almost certainly deepen the division between the Brexit halves. The Conservatives sure are lucky that Corbyn is so left wing. He used his question time with May to talk about non-brexit issues this week if you can believe it. This has been him throughout - simple for May to brush off.

 

[neroden]

In the distant past, situations like this led to (for example) four general elections in two years. Which worked, and sorted things out.

May's obstinate, undemocratic insistence on remaining in power, and the Tories' insistence on keeping her there, and the DUP's unwillingness to go to election, are just... bad for democracy. There's now a *consensus* that May "cannot govern".

The problem with the US system is precisely that we have to wait for the next Presidential election in order to get rid of a President who can no longer govern. This is *why the Parliamentary system is better*. And it works! --- in most countries with a Parliament. But apparently it doesn't work in England any more -- that's messed up!

I would say that the UK is currently in a constitutional crisis. In previous crises, there was typically a merry-go-round of prime ministers and elections (and sometimes Kings!) until someone proved capable of governing. It was when the ruling party obstinately refused to go to election that things got *dangerous and violent*.

 

[Buckminster]

In the distant past, situations like this led to (for example) four general elections in two years. Which worked, and sorted things out.

May's obstinate, undemocratic insistence on remaining in power, and the Tories' insistence on keeping her there, and the DUP's unwillingness to go to election, are just... bad for democracy. There's now a *consensus* that May "cannot govern".

The problem with the US system is precisely that we have to wait for the next Presidential election in order to get rid of a President who can no longer govern. This is *why the Parliamentary system is better*. And it works! --- in most countries with a Parliament. But apparently it doesn't work in England any more -- that's messed up!

I would say that the UK is currently in a constitutional crisis. In previous crises, there was typically a merry-go-round of prime ministers and elections (and sometimes Kings!) until someone proved capable of governing. It was when the ruling party obstinately refused to go to election that things got *dangerous and violent*.

Neroden - I don't like disagreeing with you, because I will lose (because you always win). Autonomous timelines and now this..

Anyway:-
May has not played her cards well it is true. However, she still has real support for her non-brexit work and even her Brexit work at a macro level. Most want a deal and she is trying to get one. The problem is that squaring the circle is not easy. Everyone can see that finding a solution that keeps the 2 halves happy is impossible. However, she is genuinely having a good go. The list of people to keep happy whilst keeping her job include:

• Her cabinet who have opposing views within it (and also not obvious leader)
• Her Ministers who have opposing views within it
• The civil servants who will mostly be bremoaners and have huge power collectively
• Conservative backbenchers who have opposing views amongst them and include groups like the ERG and 1922
• Parliament have opposing views
• The Conservative party / grass roots - very important on electing a new Conservative leader
• The people who still have opposing views
• The media (Daily Mail is strong and supporting her deal but Guardian would leave us in the EU in a heartbeat)
• EU 27 countries have opposing views although much better coordinated than the Brits
• The manifesto that she ran on with various red-lines

This is why Cameron didn't continue and why May still has the job. Nobody else wants it!
Apart from the Corbyn who is too daft to realise the complexity by a long margin. He is a long term eurosceptic leading a party full of bremoaners. Doesn't know what to do with himself except for privatising our railways in the middle of brexiting....

In short, I don't think that we have a constitutional crisis - just a problem to be overcome....
I am sticking with my expectation that we will get a tweak to the deal on exiting the backstop after a period of time (10 years?) without the EU's say so. That would probably do it, after May has dogmattically bored us to death with it all..

 

[Dutchie]

The easiest is to give Northern Ireland back to the Republic (I think the majority of people of Northern Ireland and the Republic want that anyway) and go cold turkey in March

 

[Buckminster]

The easiest is to give Northern Ireland back to the Republic (I think the majority of people of Northern Ireland and the Republic want that anyway) and go cold turkey in March

I suspect that you are not joking so I will give you a reply.
Brexit is easy in comparison. I don't say that lightly.
Remember the Falklands - the crazy brits - we haven't changed much.
We have just made a stand on Gibraltar also in the Brexit negotiations.
They can have Scotland if that helps...

 

[Dutchie]

I suspect that you are not joking so I will give you a reply.
Brexit is easy in comparison. I don't say that lightly.
Remember the Falklands - the crazy brits - we haven't changed much.
We have just made a stand on Gibraltar also in the Brexit negotiations.
They can have Scotland if that helps...

Well I was kind of joking but in all seriousness it would be the easiest solution. Just as easy as saying "yes" to leave the EU, that was a very easy decision and look at the mess that has brought you. I just don't see a way out other than hold another vote and hoping that the people make a different choice this time.

 

[Buckminster]

Teresa May has delayed the Brexit vote in UK parliament - not enough support. Major issue she wants to address with EU is the backstop. I am sticking with putting a 10 year sunset clause on it. Being tied to the EU's rules without a say so is still not going down well with the Brexiteer and remainer politicians. Also, forever is a long time... Nobody has suggested this however so perhaps I am clueless...
10 year sunset puts the emphasis on both parties coming to a trade deal sooner rather than later - which both parties ultimately want.

 

[Fact Checking]

Mod: I went to move these two posts elsewhere - they ended up here. Too bad....I'm not moving them again. And they're much too interesting and informative simply to vaporize.

Global warming and the rest seems false or at least no one can prove it yet.

Is your global warming denial of religious nature, or can it be changed with new data?

Here's the latest data:

[Source.]

Don't be the Mark Spiegel of climate science, who instead of "There's no Tesla demand!!!" is insisting on "There's no global warming!!!".

 

[Fact Checking]

Is your global warming denial of religious nature, or can it be changed with new data?

Here's the latest data:

[Source.]

Don't be the Mark Spiegel of climate science, who instead of "There's no Tesla demand!!!" is insisting on "There's no global warming!!!".

The image was not visible on the desktop - here is a better inline image of the latest global warming data:

I predict that as temperatures rise, people will be more willing to purchase EVs and will be more willing to invest into $TSLA as well, which is the obviously the more 'future proof' investment, compared to coal, oil and natural gas industry investments.

This probably has an effect on $TSLA price action already, it's just that we don't know the exact extent of it.

 

[Tslynk67]

Cheshire cat, I believe Paulus and the chicken have given the response I was too slow to put out. "In the EU" is an important qualifier here!

Maybe Tesla will need a UK factory if they do finally manage to leave the EU - certainly if they crash out without a deal, the tariffs might be prohibitive.

Then again, the UK economy may well tank for years to come, so people won't be able to afford nice cars either.

 

[cheshire cat]

Maybe Tesla will need a UK factory if they do finally manage to leave the EU - certainly if they crash out without a deal, the tariffs might be prohibitive.

Then again, the UK economy may well tank for years to come, so people won't be able to afford nice cars either.

As. The lady said " I don't -get my hats, I have them" (Or I'm alright Jack). However, perhaps a good spot to pop this in for later discussion, re: the impending model 3 sales launch .
This Friday, almost un-noticed, one of the biggest events in financial history is set to come to an end.
The European Central Bank is expected to confirm the end of its asset purchase programme, known in the jargon as Quantitative Easing (QE), under which it has bought more than €2.6trn worth of government and corporate bonds.
The scheme was launched by Mario Draghi, the ECB's president, on 9 March 2015 in a bid to kick-start growth in the eurozone economy and rebuild confidence. As they used to say in examinations.--------Discuss

 

[neroden]

As. The lady said " I don't -get my hats, I have them" (Or I'm alright Jack). However, perhaps a good spot to pop this in for later discussion, re: the impending model 3 sales launch .
This Friday, almost un-noticed, one of the biggest events in financial history is set to come to an end.
The European Central Bank is expected to confirm the end of its asset purchase programme, known in the jargon as Quantitative Easing (QE), under which it has bought more than €2.6trn worth of government and corporate bonds.
The scheme was launched by Mario Draghi, the ECB's president, on 9 March 2015 in a bid to kick-start growth in the eurozone economy and rebuild confidence. As they used to say in examinations.--------Discuss

The Eurozone is still attempting to enforce their insane "balanced budget" / "not allowing enough money printing" restrictions on Eurozone members, which is basically a "you have to have a recession" formula for everyone except Germany. (And eventually Germany). The only hope is for national governments to (a) reject the Eurozone regulations and (b) print their own money and (c) tell the ECB to go to hell. If France joins with Spain and Italy they probably can tell Germany and the ECB to go to hell.

This has been the only solution since 2008. It's ridiculous that it's been taking so long.

 

[Fact Checking]

The Eurozone is still attempting to enforce their insane "balanced budget" / "not allowing enough money printing" restrictions on Eurozone members, which is basically a "you have to have a recession" formula for everyone except Germany. (And eventually Germany).

Yes, and this is by accounting necessity: over 70% of the EU's GDP is internal, i.e. between EU members.

I.e. the only way you can reach a 'balanced budget' and a trade surplus is if you export more to your EU partners than you import from your EU partners. Guess what, in the last 10+ years Germany exported 1,000 billion Euros more to partners than imports, so Germany is the primary cause of the trade imbalance.

Basically Germany was lending money to Italy, Spain and Greece and Germans were buying private property in those regions (the Eurozone mandates free flow of funds and investments) and those flows of funds were financing gigantic housing bubbles that crowded out local manufacturing (because investing in housing was much more profitable than investing in production), and Southern Europe essentially bought German cars from that money, i.e. consumed that money via imports from the north.

Then once this vendor financed bubble burst Germany sanctimoniously went around and started preaching about the necessity of not running debt and exporting more than importing, and using the Eurozone payment system as a stick to beat other countries to their liking, while Greece and Spain was fighting 50%+ youth unemployment and social unrest for almost 10 years (!) ...

Very few in Germany understand the collective responsibility they have for the Eurozone situation of asymmetric inflation rates in a single shared currency. The Eurozone is basically a modern experiment for how the gold standard would work in modern economies: it would be terribly inefficient and wasteful.

 

[avoigt]

Yes, and this is by accounting necessity: over 70% of the EU's GDP is internal, i.e. between EU members.

I.e. the only way you can reach a 'balanced budget' and a trade surplus is if you export more to your EU partners than you import from your EU partners. Guess what, in the last 10+ years Germany exported 1,000 billion Euros more to partners than imports, so Germany is the primary cause of the trade imbalance.

Basically Germany was lending money to Italy, Spain and Greece and Germans were buying private property in those regions (the Eurozone mandates free flow of funds and investments) and those flows of funds were financing gigantic housing bubbles that crowded out local manufacturing (because investing in housing was much more profitable than investing in production), and Southern Europe essentially bought German cars from that money, i.e. consumed that money via imports from the north.

Then once this vendor financed bubble burst Germany sanctimoniously went around and started preaching about the necessity of not running debt and exporting more than importing, and using the Eurozone payment system as a stick to beat other countries to their liking, while Greece and Spain was fighting 50%+ youth unemployment and social unrest for almost 10 years (!) ...

Very few in Germany understand the collective responsibility they have for the Eurozone situation of asymmetric inflation rates in a single shared currency. The Eurozone is basically a modern experiment for how the gold standard would work in modern economies: it would be terribly inefficient and wasteful.

Allow me to politely state that this is a very US centric view on a matter where the fundamentals how global world economies work together differ fundamentally. Even how to grow and keep an economy growing differs along with accounting rules and the understand of goods, values of good as well what a trade deficit causes a.o..

To state that few Germans understand the collective responsibility in that respect is true in that sense that its a complex matter most people do not even try or want to understand but that is true for many parts of the world as well including the US.

I can confirm though that Germany as such is very well aware of the collective responsibilities and maybe one of the few countries where that awareness is not even stable but growing.

It sounds like an easy answer to reduce a trade deficit but the more important question is what causes it and what the underlying issue and influences are. There are many elements in global economics and the trade deficit is just one of many. So there is a tendency to oversimplify this and thats not helpful for a fact based discussion.

Its a larger topic that should not be discussed here IMHO.

 

[Fact Checking]

Allow me to politely state that this is a very US centric view on a matter where the fundamentals how global world economies work together differ fundamentally.

No, the fundamental Eurozone problem @neroden raised is simple arithmetics: it's mathematically impossible for all EU countries to be net exporters to each other, except if trade is perfectly balanced (i.e. near zero trade balances), i.e. if Germany reduces exports or increases imports: but in 2017 Germany exported 1,279 billion euros and imported goods of 1,034.6 billion euros - a trade gap of over +23%!

If you check historic charts this German trade gap opened with the creation of the Eurozone in 2000:

Germany's trade surplus tripled after the introduction of the Euro. By 2010, the start of the Euro crisis, Germany has exported around 1 trillion Euros worth of goods to EU trade partners.

By definition these EU trade partners have amassed a -1 trillion Euro deficit towards Germany.

These are simple facts and the rules of arithmetics are uniform everywhere: it's mathematically impossible for every EU country to have such a surplus towards other EU countries.

 

[Buckminster]

From MA:

No, the fundamental Eurozone problem @neroden raised is simple arithmetics: it's mathematically impossible for all EU countries to be net exporters to each other, except if trade is perfectly balanced (i.e. near zero trade balances), i.e. if Germany reduces exports or increases imports: but in 2017 Germany exported 1,279 billion euros and imported goods of 1,034.6 billion euros - a trade gap of over +23%!

If you check historic charts this German trade gap opened with the creation of the Eurozone in 2000:

Germany's trade surplus tripled after the introduction of the Euro. By 2010, the start of the Euro crisis, Germany has exported around 1 trillion Euros worth of goods to EU trade partners.

By definition these EU trade partners have amassed a -1 trillion Euro deficit towards Germany.

These are simple facts and the rules of arithmetics are uniform everywhere: it's mathematically impossible for every EU country to have such a surplus towards other EU countries.

Glad UK is not the only country in the EU doghouse..

So, since the last post, Teresa May has unconvincingly won the vote. Still unsure why the EU won't throw her a bone. The brits could make this a whole lot worse for themselves and the EU without a cap to backstop. I'm not sure that this will enough now either - parliament have tasted the blood that they have been smelling the last few months..

 

[avoigt]

No, the fundamental Eurozone problem @neroden raised is simple arithmetics: it's mathematically impossible for all EU countries to be net exporters to each other, except if trade is perfectly balanced (i.e. near zero trade balances), i.e. if Germany reduces exports or increases imports: but in 2017 Germany exported 1,279 billion euros and imported goods of 1,034.6 billion euros - a trade gap of over +23%!

If you check historic charts this German trade gap opened with the creation of the Eurozone in 2000:

Germany's trade surplus tripled after the introduction of the Euro. By 2010, the start of the Euro crisis, Germany has exported around 1 trillion Euros worth of goods to EU trade partners.

By definition these EU trade partners have amassed a -1 trillion Euro deficit towards Germany.

These are simple facts and the rules of arithmetics are uniform everywhere: it's mathematically impossible for every EU country to have such a surplus towards other EU countries.

I do not argue against an existing imbalance and I did not do it before so your statements does not address what I tried to express. Its known that German exports a lot and imports less.

That this above is a fundamental issue from Germany or Europe is your opinion and I have a very different opinion on global trade and the balances that go and should go along with them including other more important factors.

So, lets agree that we disagree.

This is an issue where the trade deficit is only a result or symptom out of root causes that indeed should be addressed. This has nothing to do with arithmetics I am afraid. The problem would not be solved if Germany would somehow "decide" to reduce exports and increase imports and BTW you cannot mandate this anyway.

The best way to get to a better balance is for instance if the US would support companies like Tesla better and help them to increase export. That would be good for all of those but politics in the last 3 decades for instance in the UK as well as the US has led to a reduction of key investment products value generation industries that did export a lot and instead strengthened the financial industry where the value generation behind can be disputed.

To believe that you ever will get a balanced trade deficit between trading partners is (no offense) a simplification for a more complex issue with many variables.

But lets really put this to bed now we won't solve that here and it will add no value to continue that conversation and distracts from why we are all really here...

 

[Fact Checking]

The problem would not be solved if Germany would somehow "decide" to reduce exports and increase imports and BTW you cannot mandate this anyway.

Of course you can mandate it: the U.S. does this kind of balancing via semi-automatic transfer payments between states. Growing, export-rich states like California or Texas pay very large sums into the federal budget - which for example helped balance Florida's social services payments when the housing bubble burst. (Which hit Florida the hardest.)

This is what prevented Florida from dropping into a decade long economic depression like Spain did. This is why Florida youth unemployment didn't reach 50%+ levels like Spain's.

This is the problem @neroden and me tried to outline. I did not talk about any solutions yet, because I don't think we agree on the problem to begin with.

Let me outline it with a Gedankenexperiment: let's suppose Europe consisted of 27 clones of the German society. Same mindset, people, culture and economic rules, regulations. (We could also make it 27 clones of Britain - exact national details don't matter much.)

The introduction of the Euro, and the flow of trillion Euros of North-German money into South-German countries would have created a similar housing bubbles in the south, export imbalances and depression economics with 50%+ youth unemployment in South-German countries - while North-German countries would be booming.

This is the simple asymmetrical outcome of the design flaws of the Eurozone: initial allocation of assets, free inter-country flow of funds, shared currency but lack of transfer payments.

This outcome is a direct, predicted and expected outcome of the macroeconomics of the Eurozone rules.

 

[neroden]

I can confirm though that Germany as such is very well aware of the collective responsibilities

Merkel sure as hell isn't.

If she were, her TOP PRIORITY would be to shred the Euro-treaty "budget deficit limits", and allow all EU countries to run as large a budget deficit as they need to to END UNEMPLOYMENT -- and make the ECB print money and give it to those governments to fund the deficits (not loan it, give it). That is Germany's actual responsibility. Germany is 100% responsible for the "hard money"/"gold standard" policies of the ECB -- they're the ones who put it into the treaties in the first place -- their responsibliity is to *remove* them. And they won't do it.

 

[neroden]

This outcome is a direct, predicted and expected outcome of the macroeconomics of the Eurozone rules.

And in case anyone was wondering who predicted it: Paul Krugman (very loudly, in the newspapers), and hundreds of other prominent economists, including every economist of all of the Keynesian schools, the monetarist schools, and the MMT schools. In other words, the economic consensus. Every serious economist said that the "balanced budget" and "no free money from the central bank" rules of the Eurozone treaties -- DEMANDED BY GERMANY -- would cause massive unemployment. Which they did.