Brexit: give me a positive effect... XV

[Colin L]

Do you mean PIIGS? (Portugal, Italy, Ireland, Greece, Spain). Those countries are not causes, they are more like victims. The so-called "high debt" they have is manufactured debt due to the manner in which all EMU users are forced to operate in blanket fashion with no regard for local circumstances. Those countries actually ran austerity spending right up to the 2008 crash, whereas e.g. France was running huge deficits, yet the PIIGS countries were branded 'profligate'! The so-called "excessive" wage increases and spending is what allowed those countries to enrich mercantilist nations like Germany/Netherlands/France. Whatever any personalities may do or not do the Euro system has failure built into it. It has a central bank with no allied fiscal arm; in fact the entire conception is built around permanent separation of monetary and fiscal policy. A relic of the late 70s/early 80s. And it has barely altered in tone, though they've been forced to break their rules or crash the Euro.

It isn't diversification, but wholesale structural change required. Ideally it would be reinstatement of national currencies, free-floating. Since that's a long-term thing, it needs complete overhaul so they don't face a treasury-less central bank charged only with blunt monetary policy. The main problem is that each country is at the mercy of the ECB for clearing purposes (lending issued reserves as a central bank normally does for clearing purposes). This forces countries to actually borrow at 'market interest rates' to "temper" their spending.
The EU insisting its members move to the Euro has created a hellhole. As members try to meet the Maastricht criteria they are forced to act in ways antithetical to their economic well-being (such as e.g. Hungary). This encourages the 'creative accounting' concealing unavoidable forced debt, rather than just normal procedures for management.

Knowing that, why would the UK want to be embroiled in that system? To be sure the UK as a sovereign currency issuer can step back (as it did in the GFC) and just control the monetary/fiscal system in a direct way. Though what it did, as an EU member, was operate within similar lines: stabilising the mess and then imposing the same draconian austerity on its population as that done by the ECB. And it was entirely unnecessary, yet the UK as a member HAD to abide by dozens of agreed policies with regard to fiscal outlay. Thus it is correct to say EU membership permanently impedes a member country's ability to service its economy without destroying other members' parasitically. This is not the definition of cooperative growth or well-being.

What did the UK lose? Easy terms of trade and a right to cooperation (plus easy movement of people/capital which is another matter). That's pretty much it. Unless people think the ability to rise and profit at the expense of forcing PIIGS nations into austerity and misery is an EU benefit.

All of which rather adds to the lunacy of a Brexit given the UK had the best of all worlds, an independent currency, other carve outs and free access to the biggest free trade block in the world, all on our doorstep, and the Brexiteers still f@cked it up.

 

[wacko]

^^ it would be interesting to see if a majority of PIIGS citizens would vote in favour of reverting back to their old currencies...

 

[Le Baron]

All of which rather adds to the lunacy of a Brexit given the UK had the best of all worlds, an independent currency, other carve outs and free access to the biggest free trade block in the world, all on our doorstep, and the Brexiteers still f@cked it up.

It doesn't 'add to it'. It's a description of an out of the frying pan into the fire scenario. They could have jumped further to miss the fire, but chose not to. The currency sovereignty was impeded by membership and as I said in closing, the UK's charmed membership position was also at the expense of the EU's 'losers'.

 

[Le Baron]

^^ it would be interesting to see if a majority of PIIGS citizens would vote in favour of reverting back to their old currencies...

Clearly Greece did not, to the astonishment of some. There is now a culture of dependency as they fall to 'defaulting' propaganda spread by EMU die-hards.

 

[eternumviti]

Just for clarity, anyone who thought they were poking the EU in the eye by voting for the Tories to effect Brexit, are also grade-A idiots who don't understand what the UK needed to do. This is why I can be neither an EU cheerleader (positioned as: better that than free-fall) nor a Brexit blusterer, because both are positions of calamitous ignorance where it matters.
The bulk of talk about 'EU laws' in terms of fishing, travel etc is high order drivel put out for media consumption and geared towards sowing discontent.

I was expecting some such qualification to your previous post to come winging it's way through.

Voting to leave the EU boiled down to a moral choice. The more that I have learned about the EU over these last years, the more clear it is to me that the moral choice that I made was the right one. However, I have never seen Brexit as a victory, rather a failure, and one on the part of both the EU and the UK. Having said that, it was self-evident that the UK would never have been able to influence the overall direction of the EU, indeed that its particular and specific advantages of membership themselves set it ever more at the outside of the circle of influence as the EU both enlarged and amalgamated.

The opposite side of that moral choice of course exists in the extent and depth of the damage that leaving the EU as we have done has inflicted upon individuals, companies and the larger economy. At the moment the balance is, if I'm being very generous to Brexit, at best tenuous, certainly for those of us whose vote to leave was already the result of considerable soul-searching. There have, as I've elucidated here before, been moments of something like despair.

OK, you've alluded twice now to the belief that there were, in your opinion, potential benefits to Brexit, had it been done with greater consideration and by different people.

What were they, and who could have done it?

 

[Enfield boy]

Such a pity then that this moral choice was driven by and appears to benefit solely a bunch of amoral crooks.

 

[matthewr]

For the Euro to work, there would need to be enough social cohesion in the Eurozone that when Greece ran into its problems we could send (even more) money from Germany and France to fix things. Or, alternatively, have everyone be like the Irish and somehow be able to take generational levels of Austerity on the chin.

 

[Le Baron]

OK, you've alluded twice now to the belief that there were, in your opinion, potential benefits to Brexit, had it been done with greater consideration and by different people.

What were they, and who could have done it?

The benefit would have been in recognising the free-hand the UK government has (under any government) in fully mobilising domestic resources. I can see that Johnson understands perfectly well the UK's fiscal capabilities, but chooses to manipulate it for ideological gain. Dozens of those 'lexiteer' people warned Brexit voters of that outcome and that it would essentially be the same sort of situation which promoted actual Brexit dissatisfactions (global capital races to the bottom; poverty austerity), rather than deliverance. They ignored it and chose to focus on window-dressing issues.

Who do I think could have delivered a different outcome? Well there was no ideal alternative, but Corbyn/McDonnell's plan (even though flawed by fiscal rectitude overtones) offered something far closer to what would have been required. The criticisms of it from the usual suspects were the usual incoherent tripe. The bizarre situation where a large group of economic losers to globalisation chose to reject a plan to reverse the decades of fiscal penury and investment on the word of organs like The Sun/Daily Mail (and the likes of The Guardian) just blew my mind.

 

[Le Baron]

For the Euro to work, there would need to be enough social cohesion in the Eurozone that when Greece ran into its problems we could send (even more) money from Germany and France to fix things. Or, alternatively, have everyone be like the Irish and somehow be able to take generational levels of Austerity on the chin.

Maybe so, though the first step would be to pose the question: why would Greece run into problems? There seems little sense in planning a solution to a built-in problem, rather than addressing the cause. That's like deliberately exposing people to Covid and arranging vaccine provision for the outcome.

In Ireland's case it has 'solved' its situation by becoming a tax haven.

 

[tonerei]

Do you mean PIIGS? (Portugal, Italy, Ireland, Greece, Spain). Those countries are not causes, they are more like victims. The so-called "high debt" they have is manufactured debt due to the manner in which all EMU users are forced to operate in blanket fashion with no regard for local circumstances. Those countries actually ran austerity spending right up to the 2008 crash, whereas e.g. France was running huge deficits, yet the PIIGS countries were branded 'profligate'! The so-called "excessive" wage increases and spending is what allowed those countries to enrich mercantilist nations like Germany/Netherlands/France. Whatever any personalities may do or not do the Euro system has failure built into it. It has a central bank with no allied fiscal arm; in fact the entire conception is built around permanent separation of monetary and fiscal policy. A relic of the late 70s/early 80s. And it has barely altered in tone, though they've been forced to break their rules or crash the Euro.

It isn't diversification, but wholesale structural change required. Ideally it would be reinstatement of national currencies, free-floating. Since that's a long-term thing, it needs complete overhaul so they don't face a treasury-less central bank charged only with blunt monetary policy. The main problem is that each country is at the mercy of the ECB for clearing purposes (lending issued reserves as a central bank normally does for clearing purposes). This forces countries to actually borrow at 'market interest rates' to "temper" their spending.
The EU insisting its members move to the Euro has created a hellhole. As members try to meet the Maastricht criteria they are forced to act in ways antithetical to their economic well-being (such as e.g. Hungary). This encourages the 'creative accounting' concealing unavoidable forced debt, rather than just normal procedures for management.

Knowing that, why would the UK want to be embroiled in that system? To be sure the UK as a sovereign currency issuer can step back (as it did in the GFC) and just control the monetary/fiscal system in a direct way. Though what it did, as an EU member, was operate within similar lines: stabilising the mess and then imposing the same draconian austerity on its population as that done by the ECB. And it was entirely unnecessary, yet the UK as a member HAD to abide by dozens of agreed policies with regard to fiscal outlay. Thus it is correct to say EU membership permanently impedes a member country's ability to service its economy without destroying other members' parasitically. This is not the definition of cooperative growth or well-being.

What did the UK lose? Easy terms of trade and a right to cooperation (plus easy movement of people/capital which is another matter). That's pretty much it. Unless people think the ability to rise and profit at the expense of forcing PIIGS nations into austerity and misery is an EU benefit.

Yes but what you are saying imho is not true. We Irish ran amok buying houses at crazy inflated prices on the pyramid scheme hope that nothing ever loses value. The Greeks did the same.
It was lack of central control from the pension funds lending the money to Ireland and the abandonment of fiscal prudence and oversight by the Irish government and banks that caused our mess. Self inflicted.

You are also incorrect in relation to how we got out of the 2008 crash. Our corporate tax rate fell to 12.5% during the 1996 to 2003 period. We took our medicine and I think probably luckily got out of the crisis because of our young population or 800 year history of subjugation by the British which toughened us. The Greeks on the other hand were used to devaluing the drachma to get out of their messes. It was very interesting to see all the Nordost and high end hifi kit for sale on Ebay from Greece during that period

There are myriad reasons for what occurred and I am of the view if there was more centralized EU control with proper management and all the good policies you speak about it would be a much better scenario for all. But greed corruption, human nature and all the other political shenanigans make that very unlikely. The UK did not leave Europe to become a version of what you espouse. That is the big problem.

 

[tonerei]

For the Euro to work, there would need to be enough social cohesion in the Eurozone that when Greece ran into its problems we could send (even more) money from Germany and France to fix things. Or, alternatively, have everyone be like the Irish and somehow be able to take generational levels of Austerity on the chin.

Are you not forgetting oversight, prudence, due diligence, responsibility and eradication of corruption and cronyism?

 

[Le Baron]

Yes but what you are saying imho is not true. We Irish ran amok buying houses at crazy inflated prices on the pyramid scheme hope that nothing ever loses value. The Greeks did the same.
It was lack of central control from the pension funds lending the money to Ireland and the abandonment of fiscal prudence and oversight by the Irish government and banks that caused our mess. Self inflicted.

Ireland isn't funded by pension funds, Ireland's issue funds its pension funds (like all EU countries fund all EU pension funds, the money runs the other way). The rest coming from private personal debt. The Greeks were not especially profligate, they had a clash between running their economy in a way that it required and being led astray by notions of being supplied with Euros (plus the large influx of foreign money coming from Russian private venture capital). In any case as I stated they were running spending at a far lower rate than any of the four horsemen at the top of the EU tree. This is not speculation it is in the EU's own reports.

You are also incorrect in relation to how we got out of the 2008 crash. Our corporate tax rate fell to 12.5% during the 1996 to 2003 period. We took our medicine and I think probably luckily got out of the crisis because of our young population or 800 year history of subjugation by the British which toughened us. The Greeks on the other hand were used to devaluing the drachma to get out of their messes. It was very interesting to see all the Nordost and high end hifi kit for sale on Ebay from Greece during that period

I'm not 'incorrect'. Ireland has simply become a corporate tax haven. And its bailout from 2008 was the same as all the other bailouts, plus fiscal austerity. There was no special 'Irish magic'. It is now subject to the same fiscal austerity (or currently the illusion favoured by temporary relaxation of the rules) as any EU member save for the tax haven behaviour which is tolerated.

There are myriad reasons for what occurred and I am of the view if there was more centralized EU control with proper management and all the good policies you speak about it would be a much better scenario for all. But greed corruption, human nature and all the other political shenanigans make that very unlikely. The UK did not leave Europe to become a version of what you espouse. That is the big problem.

The policies I speak about are not compatible with more centralised EU control. You're not reading what I wrote. It's not mere greed and corruption; don't mistake this for a simple case of 'corrupt markets' behaviour, this is a structural problem way in excess of that.

 

[wacko]

For the Euro to work, there would need to be enough social cohesion in the Eurozone that when Greece ran into its problems we could send (even more) money from Germany and France to fix things. Or, alternatively, have everyone be like the Irish and somehow be able to take generational levels of Austerity on the chin.

Hasn't Ireland got the second highest GDP (PPP) per capita in Europe ? Neatly sandwiched below Luxembourg and above Switzerland. If that is 'generational levels of Austerity on the chin' hit me.

 

[Le Baron]

Hasn't Ireland got the second highest GDP (PPP) per capita in Europe ? Neatly sandwiched below Luxembourg and above Switzerland. If that is 'generational levels of Austerity on the chin' hit me.

Ireland is more allied to the Anglo world than other Eurozone members. While the Irish government was suppressing domestic demand through austerity from 2009 on, its major trading partners (such as, Britain, the US and China) were maintaining expansionary fiscal positions, which allowed Ireland to resume growth. It also has many people who moved to other EU countries (it has more foreign corporate influx, due to its tax regime, than FOM people) and so records distorted unemployment figures.

Growth recorded in Ireland has been an illusion (always measured by dubious juggling between GDP/GNP) and is foreign capital imports to the corporations who favour the tax breaks.

There's a lot to say about Ireland and its EU status, but my fingers are tired and people seem to be more content with falling back on orthodox drivel to justify personal political desires. So it's not worth it.

 

[Kirk]

Stands up to the elites ?? Putin is probably the richest man in the world.

Brexiteers don't always make sense.

 

[Kirk]

All of which rather adds to the lunacy of a Brexit given the UK had the best of all worlds, an independent currency, other carve outs and free access to the biggest free trade block in the world, all on our doorstep, and the Brexiteers still f@cked it up.

Brexit, in essence, was an admission of failure.

 

[Tony L]

Having said that, it was self-evident that the UK would never have been able to influence the overall direction of the EU, indeed that its particular and specific advantages of membership themselves set it ever more at the outside of the circle of influence as the EU both enlarged and amalgamated.

That’s only because we kept sending the absolute worst our politics had to offer; far right shit like Farage, Nuttal, Hannon etc etc. We kept sending grandstanding trough-feeding crooks, racists and con-artists, way too few decent MEPs who understood what the EU was and how it could benefit us.

Anyway the reality speaks for itself, the UK is a declining hellhole with empty shops, failing businesses, gross government corruption, mass poverty, evaporating human rights and rising energy costs.

Brexit is Brexit. It was never going to be anything else.

 

[Joe Hutch]

I guess that makes me almost as hypocritical as you, then.

I don’t see how it makes either of us hypocritical. But while I’m no Einstein, I wasn’t dumb enough to vote for Brexit, so I’m clearly brighter than you.

 

[Le Baron]

Anyway the reality speaks for itself, the UK is a declining hellhole with empty shops, failing businesses, gross government corruption, mass poverty, evaporating human rights and rising energy costs.

And from today the BoE's proposed method of dealing with the above is to raise interest rates. This is what they have been doing now for 40+ years. It certainly dampens demand, but at the cost of knee-capping investment borrowing rates. It's a blunt instrument. Rather than e.g. levying a tax on luxury assets or simply addressing supply shock issues.

 

[Nick_G]

I don’t see how it makes either of us hypocritical. But while I’m no Einstein, I wasn’t dumb enough to vote for Brexit, so I’m clearly brighter than you.