Miscellaneous News

AndrewS said:

I agree it won't be the 1930s, but it's not going to be pretty.

Plus the fundamental issue around affordable housing is that construction has been nowhere near the demand due to population growth.

Brent as an oil benchmark is becoming irrelevant as oil production declines. Plus what does having a benchmark actually add to the economy?

Also, the UK is not a large car market, as it's only 2.6million vehicles sold, which is roughly 3% of global sales. In comparison, China is at 25million, USA is at 17million, the rest of the EU is at 10million.

Japanese FDI in the UK will reduce as they need access to the EU market, which is now in doubt.

I would agree the Marine insurance industry will remain, but it doesn't actually support that many jobs

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Housing problems. Yes. Welcome to the new world. You can rattle out a list of countries and cities around the world that have the same story. It has almost nothing to do with staying in or out of EU. If you insist it is, you'd have a hard time explaining what's going on in other parts of the world where the exact same thing is happening.

I wouldn't pooh pooh UK's crude oil production. If you compare time series of the crude oil production in Europe, UK is still right up there, even with the dipping down and flattening out.
There are not that many in the whole world whose crude has its own benchmark. Think of it as a whole ecosystem and supply chain that surround around that one number.

Same for the UK auto market. You are comparing its number with outlier points several standard deviation away from the mean of a meaningful relevant distribution. You should compare it with Germany or France at least. Again you would have a hard time explaining how could you describe UK market small.

Japanese are now laughing all their way to the bank for the investment contracts they signed before the Brexit. So don't cross out Japanese greed yet. It's still too early.

I can see the problem of self fulfilling prophecy going there in your sentiment.
UK won't see a technical recession anytime soon. It would be most likely a selective sector specific recession only. If London loses the passport, don't bet ECB to get up and running a comparable clearing mechanism just like one two and three. If clearing systems are that easy to replicate they have done it long time ago.

solarz said:

Taken in isolation, I would have no problem agreeing with your point. However, let's not forget that the current refugee crisis is a direct result of European and American interventionism.

While this may not be palatable public discussion points, the leaders of the EU will not be likely to forget that the UK was more than willing to participate in the spoils of war, but isn't willing to share the burden of repercussions.

The economic repercussions of Brexit is complex and unpredictable. However, that was never the real issue to begin with.

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I would say in parallel rather than in isolation. The "at whose expense while who benefits" question applies to every action, the question also applies at the international level as well as within each nation.

While nominally an entire nation is considered complicit in something like going to war, in reality the elite or even just a faction within the elite may be the real driver of a decision or action, or are the only ones who are fully aware of the real plan and reasoning behind it. Most of the rest of the nation may well be ambivalent, misguided, and/or ignorant about either the specific decision or action and/or the real plan and reasoning.

Housing problems. Yes. Welcome to the new world. You can rattle out a list of countries and cities around the world that have the same story. It has almost nothing to do with staying in or out of EU. If you insist it is, you'd have a hard time explaining what's going on in other parts of the world where the exact same thing is happening.

I wouldn't pooh pooh UK's crude oil production. If you compare time series of the crude oil production in Europe, UK is still right up there, even with the dipping down and flattening out.
There are not that many in the whole world whose crude has its own benchmark. Think of it as a whole ecosystem and supply chain that surround around that one number.

Same for the UK auto market. You are comparing its number with outlier points several standard deviation away from the mean of a meaningful relevant distribution. You should compare it with Germany or France at least. Again you would have a hard time explaining how could you describe UK market small.

Japanese are now laughing all their way to the bank for the investment contracts they signed before the Brexit. So don't cross out Japanese greed yet. It's still too early.

I can see the problem of self fulfilling prophecy going there in your sentiment.
UK won't see a technical recession anytime soon. It would be most likely a selective sector specific recession only. If London loses the passport, don't bet ECB to get up and running a comparable clearing mechanism just like one two and three. If clearing systems are that easy to replicate they have done it long time ago.

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Yes, housing issues are common in the world and have nothing to do with Brexit as it's mainly a domestic issue about being able to build upwards. Yet immigration and the high cost of housing was one of the main issues that the Brexit platform ran on.

Uk crude oil production has halved to only 1 mbpd which is about 1% of global oil production. And it's still dropping. In fact, the UK now has to import one third of its oil consumption needs. And what relevance is there in comparing UK oil production to Europe which is not known for is its oil? Also note that Brent is already losing its relevance because there aren't enough cargoes to continually price.

Have you actually looked at the auto production and consumption profile of the UK? Only 3% of global sales and most of factories in the UK have been built with access to the single market in mind. Note that the automakers in France and Germany rely on access to the rest of the single market as well.

And note that the financial ecosystem in London voted overwhelmingly to remain, because they knew they would suffer in a Brexit. Ditto for the car industry

I've just seen the growth forecasts slashed from 2% to 0.2% this year, which jibes with what we're seeing with most businesses postponing or canceling their UK investment plans until they know what is happening, yet there is now a political vacuum.

Those conservative senior members who cheered so loudly for Brexit are now realising the consequences and are now saying that EU freedom of movement will still apply, which means the UK will NOT have control over its borders.

Those same individuals also looked forward to replacing David Cameron as Prime Minister, yet now he has resigned, they realise being Prime Minister is a poisoned chalice as they either

1. Deliver Brexit and preside over the breakup of the UK following Scottish independence, along with the economic dislocation and recession for years to come because of Brexit

Or

2. Keep the UK in the EU after realising the consequences and become an object of ridicule

So we have a political vacuum and no decisions being made, which is feeding into economic uncertainty.

So it's a common understanding that each country has its own unique circumstances and where it stands on the economic pecking order. That's where the straight-jacket one size fits all values and norms create more problems than it solves.
What are you going to devalue when what you got is only one common currency?
You don't have the control over money base so national central banks from south are at the mercy of northern brethren to extend a lending hand.
With over Euro 1 trillions already in the hole, core member countries are not really entertaining the idea of throwing good money after the bad, they are not entirely sure how or when they would be paid back.
It's just a peanut what they dole back out to members since their budget itself is much smaller compared to national budgets and those funds don't even have anything to do with the national governments as they would normally go straight to programs they want to fund.
So much for fiscal policy that members enjoy.

That's why one should be very wary of straight jacket universal norms and values arbitrarily imposed on sovereign states without considering their circumstances and where they are along the development path.

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Yes, different places have different fiscal requirements, which are not taken into account in the Euro framework.

And yes, I think a single currency is a bad idea unless there is a political union that will allow for transfer payments to be made to poorer areas or places that get into trouble.

Yet whilst the authors of the Euro thought that a currency union would inevitably mean political union in the form of a United States of Europe, that has not happened.

If Brexit and the Euro crisis and the refugee crisis hadn't happened, then they could reasonably have hoped for the next generation to accept a European identity, based on the attitudes of the young versus the old.

But that still leaves one of the key requirements for a political union - which is a common public sphere for discussion - and for a linguistically diverse place like Europe that means a single common language and a single elected EU president.

Getting France, Germany, Italy etc to give up their languages and sovereignty would have been a long term project.

And the only plausible candidate for such a language would have been English, given that it is already the defacto lingua fraca of the Brussels government, European business and the young all over Europe.

I imagine it would have been a similar to the introduction of Putonghua in China/Singapore/Taiwan or French in Britanny over the past century.

@Yvrch

I can see the problem of self fulfilling prophecy going there in your sentiment.
UK won't see a technical recession anytime soon. It would be most likely a selective sector specific recession only.

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That view is incorrect. I'd put the odds as 50:50 right now on a technical recession.

UK Recession Forecast by Credit Suisse and Barclays, Not So say MP Morgan and Capital Economics

Will the UK fall into recession following the Brexit vote? According to a number of leading analysts the answer is yes, while another research house says the outlook is not all bad IF the Bank of England delivers a strong policy response.

Read more:

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We have different perspectives looking at the same things so what makes sense to you doesn't necessarily make sense to me.
I have done my part on a very small personal level trying to stem the tide of animal spirits as expectation and sentiment play a critical part in any modern economy, apart from the fundamentals.

This is a mighty complex matter and I'm not going to try to guess who will profit and who will loose when/if UK leaves EU. Still I want to say a few things.
It is true that the Leave campaigners lied trough their teeth, but the Remain campaigners weren't any more truthful.
Brent oil is a definition of mineral oil but the Brent field itself is exhausted.

More importantly the parliamentary Labour party has enacted a coup against the national Labour party and the leader that party elected with a 60% majority and that at a time when the parliamentary party should have its eyes in the interest of the country. This is going to play badly in the constituencies and is likely to lead to the selection of a lot of new candidate MP's. Why do it? I have long thought that the British parliament is pretty corrupt.

It is a mighty complex matter, and I live here so I have no choice but to figure out what is likely to happen and the consequences.

There is a Labour party coup, because the MPs know Jeremy Corbyn is a disaster. Note that his election was due to the radical left taking over the grassroots party organisation, despite a majority of the country/party being much more moderate.

Remember that the Labour Party MPs have all been directly elected by the people, and it is they who want to replace Jeremy Corbyn as their leader.

It's not really a corruption issue, but the extremists being more motivated. Look at how the Tea Party movement in the USA took control of the agenda against the moderates in the Republican party

It's interesting that the media is overwhelmingly pro-Remain, almost as much as it is overwhelmingly anti-Trump. I haven't seen anything this one-sided on domestic issues since the Occupy Wall Street protests.

There is a huge divide.

If you're liberal or young or educated or a professional or urban or globally minded, the vote was to remain.

But if you're conservative or old or uneducated or blue collar or rural or insular, the vote was to leave.

The media was actually split, as the Sun and the Daily Mail were pushing Brexit so much