On 20Aug2016, a journalist, who favoured Remain, wrote an opinion piece in which he sought to adapt to a world in which Brexit might happen.
It’s a good piece, because it reveals so much about the Remainaic mentality. It probably revealed more than the Remainaic Resistance wanted to reveal, but, hey, that’s journalism for you.
The piece puts me in no mood to forgive or to forget. So let’s explain why. Warning - this post is long and does meander a bit to unbundle the false assumptions within the Remainiac case, including a preliminary debunking of the enduring myth of Keynesianism.
If Remainiacs just woke up to the glaringly obvious fact that the European Union is relatively irrelevant to its non-Eurozone members, then I’d have fewer problems with Remainaics. But it’s the clear Remainiac strategy of on-going deceit and sabotage that angers me. It simply can’t be met solely with a wordless, hard stare.
In this post:
- So far, so good: the sky has NOT fallen on our heads
- All the good news is historic, not prospective
- The impact on investment is unknown
- We all need to wait for UKGov to say something, as if UKGov actually matters
- Brexiteers are like cartoon road-runners!
- Are Remainiacs keen to promote a recession so as to say “We told you so!”? Even at the cost of civil war?
- The Bank of England has saved the world and the British people from themselves!
- Shock: HM Treasury got something wrong...
- … and the Treasury’s mistake was worse than Remainiacs could possibly have feared
- The UK shall still suffer as Europe suffers, whatever happens
- The City must look beyond Europe
- Endnote
So far, so good: the sky has NOT fallen on our heads
“So far, so good. On the evidence to date, the Brexit shock has failed to have the negative impact many Remainers - including me - feared it might do.”
Yup. No surprise here. That’s because, during the campaign, Remainiacs chose to call the wrong shots - deliberately the wrong shots - for emotional effect. The result was Project Fear.
Why be boringly rational when you can excite yourself with emotional tumultuous falsehoods about something you choose not to understand properly?
Much the same could be said of the Leave campaign, except that the Leave campaign mislead on ancillary details and counterfactuals (“Project Fantasy”). The Remain campaign - much like its 1970s predecessor - was based on one objective (to keep UKGov as a member of the European Union, at whatever cost), so any lie to support that objective was worth airing. Project Fear.
All the good news is historic, not prospective
“Most of the positive economic news has either been quite backward looking, or focused on domestic consumption, which thus far seems to have been substantially unaffected and may be getting something of a boost from the feel-good influence of Britain’s Olympic triumphs.”
Duh! Of course economic data is historic and based on domestic consumption! What else would it be?
Given how wrong all of the forecasters were - especially the ‘establishment’ forecasters of Treasury, the International Monetary Fund and various pro-European Union lobby groups - why would anybody want to believe anything they publish now?
The toxicity of distrust - the evidence that the elite will consistently lie its way to con the taxpaying voter, especially the interventions from Carno, Obama and Miliband D - has run deep, and shall remain deep for decades to come.
Why would a non-binding referendum - since which nothing has actually changed and nothing has happened - ever have any affect on anything that matters?
The comment about the Olympics is just plain snide, a classic left-wing tactic. Ignore.
“Unfortunately, a month or two of positive employment and retail sales data is not enough to be able to make final judgments.”
In a continuous, multi-layered, multi-time and multi-speed cycle that is an economy, at what single point in time would a “final judgement” ever be possible? What would the balance sheet for such final judgement need to look like to form a useful conclusion?
Brexit is not subject to a trial akin to a criminal case. There is no point in the future at which one can say for certain that Brexit had any effect ‘beyond all reasonable doubt’.
The timespan for drawing conclusions shall likely be 20 years in the future, and even then, that will be a set of interim conclusions with wide margins of error. What we measure depends on what strategy we choose, if we bother choosing a strategy at all. For example, the current UKGov has moved towards having an industrial policy, but the evidence might suggest that its industrial policy should be as vacuous as possible.
The impact on investment is unknown
“We’ve little idea yet what impact the vote might be having on business investment. “
Correct. Remainiacs didn’t know such impact during the referendum campaign either, so does the sentence amount to a confession that Remainaics knowingly lied during the referendum campaign?
I’ll wager that the referendum result might have caused some minor delays in business planning, but by October 2016, I would expect the plans as they stood at October 2015 to resume. I’ll exclude from the wager any business planning by mega-corporations that depended upon implicit, rule-breaking, exceptional sweetheart deals between government and corporation: I don’t want that sort of corruption anyway.
The idea that business would ignore consumers in a world where they need to find as much revenue as possible to overcome weak consumer demand and 0% interest rates is irrational. Remainiacs’ alleged uncertainty was irrational (it was obvious at the time), nothing more than fear for the sake of fear…. generated, of course, by Project Fear. A self-serving tautology, Q.E.D., that bizarrely resulted in lots of knighthoods.
We all need to wait for UKGov to say something, as if UKGov actually matters
“With still no proper understanding even of what kind of relationship the UK Government is trying to achieve with Europe…”
Why does this irrelevance matter?
What has the choice of UKGov’s relationships with other governments got do with how we live our lives, or invest our funds, or engage in corruption?
Are we going to buy more dishwashers (imported from China) each week if UKGov chooses to have a co-operative relationship with the EU? Or are we going to buy more condoms (manufactured in Harrogate) each week if UKGov chooses to have an antagonistic relationship with the EU? Join the dots for me please.
It doesn’t get any more simple than this. Why are Remainiacs so keen to worry about irrelevance?
Brexiteers are like cartoon road-runners!
“The image [of Brexiteers] that springs to mind is the cartoon character Road Runner, who keeps on running long after he’s left the edge of the cliff as if still on firm ground, only to look beneath him, realise he’s motoring on thin air, and plunge into the void.”
A very good characterisation of Remainiacs, running for their lives in total fear, seeded in their own purest ignorance, only to find that the ground has disappeared from underneath their own arguments.
And, just to prove how much contempt Remainiacs have for facts, it wasn’t the Road Runner who got caught out like as described. It was his adversary, Wily Coyote. And sometimes, an anvil - branded by Acme - fell on his head shortly after he landed.
(Actually, Remainaics strike me more like the pharisee (that’s the bit done by John Cleese) in the stoning scene of Life of Brian.)
Are Remainiacs keen to promote a recession so as to say “We told you so!”? Even at the cost of civil war?
“Many Remainers can reasonably be accused of undue negativity, or even of promoting a recession so as to punish the ignorant masses, as it were, for daring to defy the supposedly superior wisdom of their betters. “
Describing it as “reasonable” is an under-statement.
There are some very disturbed egos in positions of regulatory power who must bring about Project Smear (and Project Sabotage) in order to engineer circumstances for a second referendum, or to fabricate ‘evidence’ that enables these evil Remainiacs to say, “We told you so!”.
Until that point, the corollary objective is indeed to punish the masses without limitation. The disturbed egos in power don’t like being proven wrong, and their revenge shall be deliberate and terrible.
“But amid now rampant Brexit triumphalism, there is also a danger of the opposite being true. The road ahead is going to be hard. Let’s not fall into a state of Panglosian delusion about UK plc’s prospects. A healthy sense of realism is what’s needed most.”
I don’t recognise the characterisation of “Brexit triumphalism”. No Brexiteer that I’ve followed has been keen to ram victory down the throats of idiot Remainiacs, because there are far more important things to do in making Brexit as successful as possible. This Brexit thing is indeed going to be hard work, but it must be worth every shred of productive effort, in spite of the Remainiac sabotage every step of the way to re-engineer policy choices to fit their sick and twisted view in favour of ever-centralising government.
A healthy sense of realism is precisely what the leave voters had (except for a tiny minority of the Labour & UKIP, for whom immigration was the sole emotional issue), very different from the swivel-eyed, emotionally-driven stupidity of Remainiacs before, during and after the referendum campaign.
Then again… with Remainiacs still plotting against the UK’s national (and arguably, therefore, the European) interest, perhaps we should abandon attempts to heal divisions and soothe egos. After all, you don’t cure cancer by giving it a bunch of flowers: you kill it with chemotherapy. Perhaps we do need more “Brexit triumphalism”, ramming it down Remainiac throats, to encourage Remainiacs forcibly to go emigrate to their beloved European Union and take their resentful, guilt-ridden, racist, anti-British (anti-English?) misery with them?
As for a Panglossian delusion (note spelling, thanks), the only such deluded people are indeed the Remainiacs, with their trite emotional confusion between Europe and the European Union, their misportrayal of the European Union (and its Eurozone) as a land of bread and honey, their deliberate and disingenuous misportrayal of all Brexiteers as racist isolationists.
Most Panglossianly disturbed of all are those Remainiacs who believe that the vote for Brexit “robbed our children of their future”.... as if Europe has a future within its own diseased Eurozone and scloretic European Union! Ordinary Western European citizens have inflicted upon themselves long-term economic harm and suffering at their ballot boxes, by repeatedly voting in favour of deliberately unaffordable policy choices of protectionism, welfare and a general abolition of any necessary change that might result in reversible, short-term pain. Any European who thinks that the future should be more of the same is a raving Panglossian nutcase.
The Bank of England has saved the world and the British people from themselves!
“All the same, experience so far is encouraging. Thanks in part to monetary action from the Bank of England, and the expectation of a fiscal boost in the Autumn Statement, the impact of the vote to leave may very well end up not nearly as bad as the UK Treasury and others suggested it might be. “
Voilà. We can now reasonably conclude the Remainiac case is economically and financially illiterate.
We can also reasonably deduce that the Remainiac case actively chooses to ignore demographics, and demographics’ relevance to the deflationary cycle in which our economies appear to be, and how monetary policy compounds the deflationary cycle. (Ironically, the same journalist has written about demography, but appears to have chosen not to join the dots, or not to re-calculate his numbers to account for the supposed doom that Brexit apparently needs to be.)
We can also reasonably deduce that the Remainiac case chooses not to see the parallels between the world’s economy as at today and as at January 2010. The possibility (indeed, strong likelihood) of a resumption of failed a monetary strategy for economic growth is exterminated from the Remainiac mind. Instead, for Remainiacs, it’s all about Europe. Madness.
Therefore, we can also deduce that the Remainiac case has no intention to admit that its sinister narrative amounts to a ludicrous attempt to call for the defiance of economic gravity. This case amounts to the classic left-wing, mistaken beliefs of ‘control’, ‘planning’ and ‘statism’. For a Remainiac, the fight of the elite against us taxpaying plebs must apparently continue.
The Bank of England’s panic-stricken move to reduce interest rates is, at best, an attempt to reduce the value of sterling still further (to give UK a further cross-border advantage), or, at worst, an attempt to destabilise the UK economy further with its long-serving monetary policy of 0% interest rates (Project Smear). Given that the data to date suggest that the Bank should have done nothing in Aug2016, it is clear that the Bank’s choice to change interest rates in Aug2016 was irrational, so, on the balance of probabilities, the Bank’s choice is likely to be the latter (Project Smear).
The Autumn Statement is irrelevant. The usual deliberate mistake of left-wing Keynesian commentators keeps on coming out to play. The myth that government spending magically creates economic growth - complete with an “accelerator effect”, apparently - just won’t die, no matter how much evidence never existed to support belief in the myth in the first place. If public spending has any effect at all, it is most likely to bring forward consumption that would have happened anyway, and almost by definition at a disadvantageous short-term price. It’s a means of “mortgaging the future”, another classic left-wing mistake. And demographics underline just how wrong Keynesianism ever was. Why? Because old people spend less. Consequently, Keynesianism eats itself, yet statist policy wonks wrongly conclude that throwing more money at old people will encourage them to spend more, as if these ordinary old people were nothing more than bacteria that responded chemically to a compound added to a petri dish. Failing that, throwing money down the drain might also magically create economic growth. It’s all bad news for public sector managers whose income depends on the myth of Keynesianism.
Shock: HM Treasury got something wrong...
“... one thing the Treasury analysis very definitely did get wrong was the prediction that international investors would shun UK assets, causing a steep rise in risk premia together with an accompanying increase in underlying gilt yields.”
Yep. It was obvious at the time that it was wrong, too, because there is no logical connection between the investment potential of an asset and a government’s membership of a largely obsolete club of equally-obsolete governments.
As a consequence, we can reasonably conclude that the Treasury is economically and financially illiterate.
Then again, those of us with brain cells in our heads (especially those of us who have studied policy choices in UKGov over the years) have always known that the Treasury is economically and financially illiterate.
How so? Consider the Treasury’s track record over the past ten years. With a Labour Party controlling Parliament, Treasury implemented:
- A 10% rate of income tax, thus creating an insurmountable poverty trap amongst Labour’s own core supporters. In this context, a poverty trap is where net pay falls more quickly than the gross pay rises. Remember - unlike Labour’s Treasury - to account for social security, tax credits, housing benefits, council tax exemptions and so on;
- A reduction of the rate of VAT, to zero net effect over time. It was supposed to create a little Keynesian spending spree. Surprise, surprise: it didn’t;
- a new 50% rate of tax in the hope of collecting more tax revenue, only to see a near-immediate collapse of the tax base at the top-end of the income scale. The new 50% rate collected nearly nothing. Even today, I’d guess there are still Treasury employees, who support the Labour Party, and who still don’t understand why this happened;
- two ‘manuals’ of economic policy making [endnote 1 below] to provide the ‘intellectual’ framework (hah!!) for all of the above policies, none of which worked, none of which were obviously ever going to work, and yet we are still living with the consequences.
Since 2010, the same Treasury - under ‘management’ from the Conservative Party - embarked:
- Without irony, on a programme of “austerity”. The same left-wing people, who are typically Remainiac, took turns to decry the impending economic collapse (belying their continued belief in the myth of Keynesianism). Problem is, during this period of “austerity”, government spending rose. And still economic growth faltered. (Keynesianism busted, but still leftists peddle it!);
- On a pensions reform programme that killed-off the incentive to save into a pension scheme at all (especially for the wealthy middle-classes). Belatedly realising such fact, the Treasury then made pension contributions mandatory from modest or low-paid workers instead (“auto-enrolment”). Economically, this takes the form of stealth-tax rise, with several effects:
- Once in a pension scheme, the workers’ monies would be frittered away by management fees and poor investment choices by the fund managers, in their desperate hunt for yield to circumvent 0% interest rates;
- The Treasury’s objective is to create a secondary taxable base to conserve future tax revenues - sometime between 10 and 50 years into the future - being an insurance against a decline in the immediate-term income tax base. In effect, the same modestly-paid workers pay income tax four times:
- first as a direct income tax via the payroll this week/this month;
- second as a charge on their pension schemes, a charge which the scheme effectively launders onto the worker, even though saving for a pension scheme might not have been the worker’s choice;
- third as a direct income tax on dividend receipts of the pension fund;
- fourth as a direct income tax on whatever pittance of a pension is paid out to the worker on his retirement in 50 years time;
- Keynesians should hate all of this, because it takes spending money out of the productive economy. Has the Treasury given up reading its own literature per endnote 1 below?;
- On maintaining the current policy of an ‘independent’ central bank (Labour Chancellor Brown, 1997), whose continuing policy of 0% created this mess in the first place.
One simply couldn’t make it up.
… and the Treasury’s mistake was worse than Remainiacs could possibly have feared
“In fact, the reverse has happened. Spurred by a new round of central bank money printing, gilt yields have plumbed new lows. Unfortunately, this cannot necessarily be taken as a good sign, for what it suggests is an even deeper degree of risk aversion than we had before, and that was bad enough. This does not bode well for a swift rebound in business investment.”
In other words, Project Smear is arguably working. The Bank’s policy to continue destabilisating the economy via 0% interest rates continues unabated. The Bank of England just hit the economic brick wall that its own 0% interest rate policies have been building for ~20 years.
The irony would be delicious were it not for the collateral damage that this policy has achieved:
- erosion of private citizens’ cash savings (theft of modest wealth by stealth);
- asset-price bubbles (unaffordable housing);
- bias in favour of debt-capital instead of earned-capital (tax avoidance/erosion of the tax base; interest is ‘allowable’ for tax relief, dividends aren’t);
- and so on.
So why present Project Smear as a problem if it’s working?
As I wrote above, there are some very disturbed egos in positions of regulatory power who must bring about Project Smear (and Project Sabotage) in order to engineer circumstances for a second referendum, or to fabricate ‘evidence’ that enables these evil Remainiacs to say, “We told you so!”. Until that point, the corollary objective is indeed to punish the masses without limitation. The disturbed egos in power don’t like being proven wrong, and their revenge shall be deliberate and terrible.
So to complain that Project Smear presents avoidable risks to the UK economy is a wholly disingenuous, two-faced narrative. The narrative is a deliberately misrepresented position, done in such an elegantly manipulative way; classic left-wing tactics.
The UK shall still suffer as Europe suffers, whatever happens
“Look across the Channel and the omens are more worrying still. The Brexit vote has given Britain a devaluation boost. The opposite is true of the Eurozone, where any nascent recovery may again be stalling. Britain may be leaving the EU, but the need for constant stimulus to counteract the absence of demand among our Continental trading partners, ratcheting up foreign claims on the UK economy accordingly, shows no sign of abating. Sorry to be a wet blanket, but Brexit or no Brexit, this is very unlikely to end well.”
Oh dear, oh dear, oh dear. There’s is so much in the above quotation to unbundle, it’s hard to know where to begin.
First up, the “need for constant stimulus” is false. There is no need for constant stimulus. Defying economic gravity just wastes resources. It would be more efficient to accept that the aging population of Europe spends less, and to dismantle (quickly) the luxurious bells and golden whistles of our bloated welfare states. Less self-inflicted obligations means less pressure to perform the uneconomic. Less burden means less avoidance of obligations. Call it “off-balance-sheet debt write-offs”.
This matters. We - our generations - cannot afford to honour pension obligations that our ancestors conveniently agreed between themselves without consulting us. The fact that we weren’t born at the time that they stitched us up is no excuse.
How so? Current monetary policy (0% interest rates plus Project Smear) is working hard to undermine whatever chance we might once have to have meet those obligations honourably. So what are we left with? The inconvenient truth is that today’s pensioners didn’t save enough during their working lives. Even if they did, they chose to turn a blind eye to the financial mismanagement by governments that they voted for while they were earning (how terribly convenient!). So they should enjoy the consequences of not saving enough and voting in favour of criminally-negligent financial mismanagement, even if means working ‘til they drop, or suffering the unending poverty that their kids are facing having bailed-out the state pension Ponzi scheme. Morally, it’s not down to the kids (or the state) to bail the pensioners out.
Until today’s earning generations can see a viable incentive to take risk to gain profits, “stimulus” shall have zero effect (assuming it ever did).
Second up, the “nascent recovery” in the Eurozone is a long-term trend. For as long as monetary policy within the Eurozone is dysfunctional to its member nations, the member nations must reform at a deep, structural level. But this ain’t ever going to happen. The classic European mentality of “ban”, “protect”, “welfare”, “bail-out”, “fudge” and “corrupt” is as old as Europe itself. So, for as long as European governments obstruct any further wholesale marketisation of their still-state-managed economies, there shall be no sustainable economic growth.
This is because there shall never be any merit in private individuals taking economic risks fighting hard against a state that fights even harder against innovation and disruptive business models. This disruption is what is meant by “structural reform”, and too many evil vested interests successfully lobby both national governments and the European Commission to prevent competition within the market to the maximum possible extent. This is why the Single Market isn’t perfect, and is ultimately worth abandoning in the medium-term.
This is why the European Union offers no viable strategy to any of its member governments. Officially, the European Union requires its members to engage in marketisation. Unofficially, the European Commission turns a blind eye when the members refuse to change and perpetuate their statist protectionism, banning innovation and disruptive business models. The only thing a private citizen can do is emigrate to a more functional country with a more functional economy. Hence why many French working-age people have fled to London, to New York and to South-East Asia. The French refer to such emigrants as the “pigeon generation”; see Bonner; for entrepreneurs, see Economist Europe; see also public comments).
Third up, the “ratcheting up foreign claims on the UK economy” is just plain drivel.
All of which means one thing: UK must embrace the wider world as a hedge against the European economies disappearing up their own backsides.
Had the UK been free to do trade deals independently of Brussels, UKGov would never have needed to consider leaving the European Union.
The City must look beyond Europe
“The City can certainly still be successful post Brexit. But it must look further afield for its spoils. Regrettable, its position as the Eurozone’s de facto financial centre is a goner.”
Another short paragraph that demonstrates general unawareness of the real world.
The City has always needed to look beyond little tin-pot Europe for its spoils. Part of the problem of the European Union for the City (and everybody else, for that matter) is that the European Union sought to “ban” elements of the City’s trade and know-how. One of the more obvious “bans” was the ban on short-selling, in spite of the much needed short-term liquidity that short-selling brings.
European Union regulation for financial services (“MIFID”) also brings too much babyishly simplistic Winnie-The-Pooh regulation that creates paperwork for the sake of paperwork. It impeded sensible reactions to the credit crunch of 2008. Worse, such paperwork is determined at the member nation level, and thus enables the member nation to engage in “administrative” or “technical” barriers to entry. This might include “corporate racism”, as German regulator BaFin implicitly demonstrated with its comments about the location of the official seat of the merged entity of the London Stock Exchange and Deutsch Börse. Such paperwork creates unnecessary barriers to entry into financial markets (which what the lobbyists in Brussels want, remember?), and somehow achieves less than useful transparency in the way financial markets operate (which everybody else thinks they want, as if they’d understand it).
A major cost to banking within the European Union is that these same Winnie-The-Pooh rules would ultimately need to apply to EU banks even when dealing with customers outside the EU.
For example, the European obsession with “identity” - part of European wide anti-money laundering rules - give criminals an easy way to comply with anti-money laundering rules, but gives honest applications a near-impossible set of criteria with which to comply.
What do I mean? Let’s say you run a global group of companies and one of your foreign subsidiary needs a local bank account. Some of the more tin-pot banks of tin-pot Europe seem to think that you need to physically present your ultimate shareholder/beneficiaries in a local branch, in person, with their tin-pot national identity cards (as if they would be citizens of said tin-pot country!) so that they can squiggle on some magic paper and pretend that their identity is confirmed.
Right. OK. So how does this work? It would mean finding your ultimate shareholder/beneficiaries (where are the Cayman Islands, anyway?), flying them into said tin-pot Euro country, piling them into a chartered bus, bussing them to said tin-pot country’s tin-pot bank’s tin-pot branch and wasting an entire day as tin-pot branch staff run about like headless chickens in complete confusion as to what paperwork their tin-pot bank thinks it needs. And then the beneficiaries present their passports, not the tin-pot country’s national identity cards. OMG THEY’RE FOREIGNERS. AAAGH. Oh, and one of the beneficiaries comes from a part of the world where the concept of a single, fixed, unchanging, certain, provable identity is alien. So he has several passports in several names, some of which are in Arabic script, and all of them are genuine, authentic and legal. AAAAAAAAAGH. So the staff at the tin-pot branch go even crazier, panicking about how on earth they are going to comply with their own rules. One bank employee bursts into tears thinking about the possibility that the office photocopier might not be able to photocopy non-European alphabets.
Being honest is such hard work, for little reward.
Being rid of the European Union might mean that the City wants to wave goodbye to the European compliance nightmare for transactions that involve extra-EU customers, and an additional pricing opportunity for transactions that involve intra-EU customers, or cross-EU-border customers.
So, for the City, the future was always a far wider horizon that being locked into the spiral of regulatory despair that is the European Union.
Endnote
[1] HM Treasury's own two-part manual into economics:
“Reforming Britain's Economic and Financial Policy: Towards Greater Economic Stability”, Balls & O’Donnell, HM Treasury, 2002.
“Microeconomic Reform in Britain: Delivering Enterprise and Fairness: Delivering Opportunities for All”, Balls & O’Donnell et al, 2004.
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