Monday, 28 March 2016

Review of the week: the hysteria continues (still)

Well, what a week it’s been!

Project Fear remains in charge of the media.

In this review:
  • UK Govt Project Fear: electricity prices
  • UK Govt Project Fear: the end of the NHS
  • ING Bank of the Netherlands wades in
  • Richard Branson wades in: EasyJet and Ryan are apparently “shitting themselves” about Brexit
  • BBC Desert Island Discs dips a toe in: John Timpson supports Brexit
  • Petraeus wades in: Brexit would be dangerous
  • And still not a peep from the EurIn campaign about the optimal strategy of the European Union over the next 50 years that would make British membership compelling!

UK Govt Project Fear: electricity prices

On 24 March 2016, British Energy Secretary Amber Rudd injected some classical hysterical Project Fear bullshit into the blogosfear.  According to the Guardian, she said:

“If we left the European Internal Market, we’d get a massive electric shock because UK energy costs are likely to rocket by at least half a billion pounds a year – the equivalent of British bills going up by around £1.5m pounds each and every day.”

Supposedly, this data came from the National Grid, a monopoly of electricity and gas distribution in the UK.  So the forecast of bills rising by £1.5m pounds per day is questionable.

Rudd also went on about energy security.

“Relying on energy from abroad is not without risk. We have seen how countries such as Putin’s Russia use their gas supplies as a tool of foreign policy. Threatening to cut off supplies or drastically increase prices.

“We can’t let our energy security be hijacked as a political pawn to bring Europe to its knees. By working together in the European Union each member state can stop this becoming a reality.

“As a bloc of 500 million people, we have the power to force Putin’s hand. We can coordinate our response to a crisis. We can use the power of the internal market to source gas from elsewhere. We can drive down the price of imports, as has happened recently in eastern Europe.

“To put it plainly – when it comes to Russian gas, united we stand, divided we fall.”

A wonderful little theory, shame it doesn’t stack up to the real world.  Aside from the West’s relative impotence in dealing with Russia regarding Syria, Germany already relies upon Putin’s gas (so to speak).  So much for solidarity.  More like an untied Europe than a united Europe.

Project Fear in motion.

UK Govt Project Fear: the end of the NHS

On 26 March 2016, UK Minister Jeremy Hunt, Secretary of State for Health and thus responsible for the religiously sacrosanct National Health Service, commented in the Guardian that the economic shock of Brexit would imperil the NHS.

Hunt writes:

Even the most bullish Brexiteers concede that the short-term impact on the British economy would be a period of uncertainty and volatility. The independent Office for Budget Responsibility has said that “there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated”. And therein lies the risk to the NHS of leaving.

So the short-term cash flow issue is apparently more important than the long-term strategic issue.

Hunt then goes on to recycle numbers from economic models rigged to show what a complete disaster Brexit would be.

All nonsense.

Project Fear in motion.

ING Bank of the Netherlands wades in

On 25 March 2016, the Telegraph reported an analysis by Dutch bank ING about the impact of a Brexit on the Eurozone.  0.3% of Eurozone GDP would disappear and Ireland would lose 1.1% of its GDP.

Said the article:
Falling exports, weaker investment and a shift in the direction of EU economic policy away from free market reforms, would all combine to create a sizeable adverse shock to the continent, said Peter Vanden Houte and Carsten Brzeski, economists at ING.


The article reveals the underlying economic model assumes a fall in the value of the pound relative to the euro.  In other words, the model is rigged to show the effect of the assumption, but does not - cannot - prove the assumption.  But ING can’t know what effect Brexit might have on foreign exchange.  For all they know, the foreign exchange traders might have already priced-in the effect of Brexit, or might have already started adjusting their exposure to movements in GBPEUR.

As for the comment that Brexit would “shift the direction of EU economic policy”, this is laughable.  The UK is in the losing minority of votes at the Council of Ministers way more often than any other government.  Although there are caveats to this analysis, the message is clear enough: Europe really doesn’t need the UK.  The Bank Recovery and Resolution Directive (Lex) is a case in point: Germany wants shareholders and depositors to “bail-in” failing banks instead of taxpayers taxpayers “bailing out” failing banks, ramming directly against the cretinous “nationalise everything” mentality of Europe’s socialists.

Project Fear in motion.

Richard Branson wades in: EasyJet and Ryan are apparently “shitting themselves” about Brexit

On 27 March 2016, the Daily Mail reported an interview of Sir Richard “Beardie” Branson by Event magazine.  Branson thinks that Brexit means an immediate loss of access to European airspace.

I wonder if the Spanish and the Greeks are ready for the huge losses that would then arise from the holiday industry?  Will they just shrug and say, “Hey ho, c’est la vie.  Let’s get poorer.”?

I suspect that an immediate loss of access to European airspace is bullshit.  The Europeans aren’t stupid: if there’s money to be made, mountains will move, and surprisingly quickly.

But Branson might have a hidden agenda anyway.  The Mail quotes him:

“We [Branson] don’t believe a Brexit alone would drive up air fares, but the cost of travel could rise if Britain leaves the EU and the UK Government increases passenger duty and limits competition by allowing only one runway to be built in the South East of England.”

Ah, so it’s more about UK Govt policy than EU market access.


“I see this as the end of Great Britain as we know it today. I think it’s that serious. Great Britain may not stay Great Britain if we leave, Scotland could well depart [the UK]. We could become little England.”

Sounds very similar to former Prime Minister John Major’s narrative during the Scottish independence referendum campaign.

BBC Desert Island Discs dips a toe in: John Timpson supports Brexit

On 27 March 2016, the Telegraph reported the broadcast of John Timpson, chairman of a consumer-service business (a key cutter and cobbler), on Desert Island Discs.  The Telegraph wrote:

The retail magnate told BBC Radio’s Desert Island Discs that “risk averse, process-driven sort of people” want to stay in, but that “maverick” people like him are more likely to want to be out.

That does indeed seem to be the pattern of Brexiteers v EurIneers.

And as mavericks normally observe, risk-averse people - conservatives by nature - are often so risk-averse, they often resort to groupthink to rationalise their denial of an issue, so justify doing nothing… which is often the riskiest choice of (in)action.  Doh!

And this matters, precisely because of Cameron’s deal of 19 February 2016. Who is na├»ve enough to believe that the European Union in two years time will be anything like what it was on 19 February 2016, irrespective of how the British vote in their referendum? Former Polish finance minister Marek Dabrowski blogged on 09 March 2016 that the die is already so cast (Dabrowski's blog is well worth reading).

Petraeus wades in: Brexit would be dangerous
On 27 March 2016, the Guardian (amongst others) reported comments by David Petraeus - former US general and head of CIA, subsequently convicted of leaking secrets to his then lover - that Brexit would be dangerous for us all.

Petraeus reportedly said:

Given the dangers and challenges that threaten us around the world, this is a moment when the west and its institutions, including the EU, need to be drawing together – not pulling apart. At least from a national security standpoint, none of the problems the US and UK face will become easier to solve if the UK is out of the EU; on the contrary, I fear that a ‘Brexit’ would only make our world even more dangerous and difficult to manage.

It is, of course, nonsense.  Petraeus’ comments makes sense if the agenda is isolationism - like Donald Trump’s agenda - but Brexiteers all seem to be expansionist than isolationist.  Certainly for the traders amongst them, they seem to want better access to non-European markets than be hobbled with amazing access to dysfunctional European markets.

I’ve commented already on security matters; Petraeus’ comments are accordingly irrelevant.

Project Fear in motion.

And still not a peep from the EurIn campaign about the optimal strategy of the European Union over the next 50 years that would make British membership compelling!

Project Fear in full swing motion.

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