Jul 052017
 
 July 5, 2017  Posted by at 11:14 am Finance Tagged with: , , , , , , ,  4 Responses »
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Fred Lyon Golden Gate Bridge painter 1947

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)
David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)
Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)
The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)
Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)
China’s $162 Billion of Dealmaker Debt Raises Alarm
China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)
Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)
Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)
Austrian Troops To Control Migrants On Italy Border (R.)

 

 

Oh come on, get real. Heard that a million times before. This is insulting. Are people really stupid enough to believe Carney? Is he? Hell yeah. Well, here’s what Carney’s predecessor at the BOE, Mervyn King, said in 2007.

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)

Fundamental reforms undertaken since the US sub-prime mortgage market triggered the deepest global recession since the second world war have created a safer, simpler and fairer financial system, Mark Carney has said. With the 10th anniversary of the financial crisis next month, Carney said the world’s biggest banks were stronger, misconduct was being tackled, and the toxic forms of shadow banking were no longer a threat. Carney, as well as being governor of the Bank of England, is chairman of the Financial Stability Board, a body created by the G20 group of developed and developing nations in 2009 to recommend ways of remedying the flaws in the system highlighted by the crash.

In a letter to G20 leaders before their meeting in Hamburg later this week, Carney said: “A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. The largest banks are considerably stronger, more liquid and more focused.” The FSB chairman said there were still issues to be addressed, such as the risks posed by developments in financial technology (fintech) and the increased vulnerability of digital systems to cyber-attack. But at a press conference in London on Monday, Carney said: “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.” The financial crisis of 2007 began in the US mortgage market but rapidly went global as it emerged that banks and unregulated shadow banks were massively exposed in the market for derivatives and did not have enough capital when losses started to mount.

Public anger towards the financial system grew when the biggest banks were bailed out by taxpayers because they were deemed “too big to fail”. Carney said in his letter: “The largest banks are required to have as much as 10 times more of the highest quality capital than before the crisis and are subject to greater market discipline as a consequence of globally agreed standards to resolve too-big-to-fail entities. “A decade ago, many large banks were woefully undercapitalised, with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. A decade on, the largest banks have raised more than $1.5tn of capital, and all major internationally active banks meet minimum risk-based capital and leverage ratio requirements well in advance of the deadline.”

Read more …

Austerity is not about money, that has nothing to do with it. It’s about power, pure and simple.

David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)

David Cameron has intervened in the Cabinet row over easing up on austerity by attacking “selfish” politicians demanding higher spending. The former Prime Minister sided with Chancellor Philip Hammond by arguing it would be wrong to bow to growing public pressure and “let spending and borrowing rip”. A string of senior Tories, including Boris Johnson and Michael Gove, have called for the lifting of the one per cent pay cap on awards to millions of public sector workers. But Mr Cameron, speaking to a business conference in South Korea, said: “The opponents of so-called austerity couch their arguments in a way that make them sound generous and compassionate. “They seek to paint the supporters of sound finances as selfish or uncaring. The exact reverse is true. “Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”

In addition to the row over the pay cap, Education Secretary Justine Greening is pushing for a £1bn cash injection to end school funding cuts. New demands for higher spending added to the pressures on Mr Hammond today, as councils warned they faced a £5.8bn funding gap by the end of the decade. Meanwhile, the Chancellor used a speech to business leaders last night to urge his colleagues to join a “grown-up debate” about how to pay for higher spending. Mr Hammond acknowledged the public was “weary” of austerity, but insisted “we must hold our nerve” and not simply borrow more. Paul Johnson, director of the respected Institute for Fiscal Studies, said “political discipline seems to have fallen apart” in the Cabinet. Alistair Darling, the former Labour Chancellor, said the sight of Cabinet ministers publicly criticising the Chancellor over public sector pay made the Government appear “shambolic”.

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Don’t get your hopes up.

Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)

The most senior judge in England and Wales will hear a case attempting to overturn a ban on prosecuting Tony Blair over the Iraq war, the Guardian has learned. A private criminal prosecution against the former Labour prime minister was blocked in 2016 by Westminster magistrates court when it was ruled Blair would have immunity from any criminal charges. But that ruling by the district judge, Michael Snow, will be reviewed on Wednesday before the lord chief justice, Lord Thomas of Cwmgiedd, and Mr Justice Ouseley. The current attorney general, Jeremy Wright QC, wants the block on proceedings upheld. He will have a barrister in court to try to stop the attempted private prosecution. The hearing follows a decision by the high court in May, which has not previously been reported.

Then a high court judge said those wanting to prosecute Blair could have a hearing to seek permission for a court order allowing their case to go to the next stage. The judge in that case also said the attorney general could formally join in the case. Blair caused controversy when prime minister in deciding to take Britain into the invasion of Iraq in 2003, which was led by the US and sparked huge opposition. The private prosecution seeks a war crimes trial in a British court of Blair, the foreign secretary in 2003, Jack Straw, and Lord Goldsmith, the attorney general at the time the government was deciding to join the invasion of Iraq. The case seeks their prosecution for the crime of aggression. The attorney general in written submissions for Wednesday’s hearing says such an offence does not exist in English law, a claim which is disputed.

The private prosecution attempt is based on the findings of last year’s Chilcot report into the decision by Blair to join the invasion of Iraq, which is criticised, under the false pretext that Saddam Hussein’s regime had weapons of mass destruction. After the Chilcot report was released some families of British service personnel who lost their lives in Iraq said they wanted Blair prosecuted in the courts. This attempt at a private prosecution is brought by Gen Abdul-Wahid Shannan ar-Ribat, former chief of staff of the Iraqi army who is now living in exile. His lawyers are Michael Mansfield QC and Imran Khan, who acted for the family of Stephen Lawrence. In November 2016, a British court ruled against an application to bring a private prosecution. A district judge at Westminster magistrates court ruled Blair had immunity from prosecution over the Iraq war and that any case could also “involve details being disclosed under the Official Secrets Act”.

At the hearing at the Royal Courts of Justice in central London, lawyers for the attorney general will argue that the crime of aggression, while existing in international law, has never been included into English law by parliament. But the government’s stance appears to be undermined by Goldsmith. In his 2003 memo on the legality of the Iraq war, Goldsmith appeared to concede the key point of those now seeking his prosecution. “Aggression is a crime under customary international law which automatically forms part of domestic law,” he wrote.

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Britain is one scary place. I’m reminded of Travis Bickle: “Someday a real rain will come and wipe this scum off the streets.”

The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)

We don’t allow defendants in court cases to select the charges on which they will be tried. So why should the government set the terms of a public inquiry into its own failings? We don’t allow criminal suspects to vet the trial judge. Why should the government approve the inquiry’s chair? Even before the public inquiry into the Grenfell Tower disaster has begun, it looks like a stitch-up, its initial terms of reference set so narrowly that government policy remains outside the frame. An inquiry that honours the dead would investigate the wider causes of this crime. It would examine a governing ideology that sees torching public protections as a sacred duty. Let me give you an example. On the morning of 14 June, as the tower blazed, an organisation called the Red Tape Initiative convened for its prearranged discussion about building regulations.

One of the organisation’s tasks was to consider whether rules determining the fire resistance of cladding materials should be removed for the sake of construction industry profits. Please bear with me while I explain what this initiative is and who runs it, as it’s a perfect cameo of British politics. It’s a government-backed body, established “to grasp the opportunities” that Brexit offers to cut “red tape” – a disparaging term for public protections. It’s chaired by the Conservative MP Sir Oliver Letwin, who has claimed that “the call to minimise risk is a call for a cowardly society”. It is a forum in which exceedingly wealthy people help decide which protections should be stripped away from lesser beings.

Among the members of its advisory panel are Charles Moore, who was editor of the Daily Telegraph and the chair of an organisation called Policy Exchange. He was also best man at Letwin’s wedding. Sitting beside him is Archie Norman, the former chief executive of Asda and the founder of Policy Exchange. He was once Conservative MP for Tunbridge Wells – and was succeeded in that seat by Greg Clark, the minister who now provides government support for the Red Tape Initiative. Until he became environment secretary, Michael Gove was also a member of the Red Tape Initiative panel. Oh, and he was appointed by Norman as the first chairman of Policy Exchange. (He was replaced by Moore.) Policy Exchange also supplied two of Letwin’s staff in the Conservative policy unit that he used to run.

Policy Exchange is a neoliberal lobby group funded by dark money, that seeks to tear down regulations. The Red Tape Initiative’s management board consists of Letwin, Baroness Rock and Lord Marland. Baroness Rock is a childhood friend of the former Tory chancellor George Osborne, and is married to the wealthy financier Caspar Rock. Marland is a multimillionaire businessman who owns a house and four flats in London, “various properties in Salisbury”, three apartments in France and two apartments in Switzerland. In other words, the Red Tape Initiative is a representative cross-section of the British public. In no sense is it a self-serving clique of old chums, insulated from hazard by their extreme wealth, whose role is to decide whether other people (colloquially known as “cowards”) should be exposed to risk.

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“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said..

Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)

The Ontario government said overseas buyers accounted for just 4.7% of home purchases in the Toronto area over a recent one-month period. The new data is in line with other surveys, signaling that foreigners haven’t been major drivers of real estate prices in one of Canada’s most expensive markets. Non-residents bought about 860 properties between April 24 to May 26 in the so-called greater golden horseshoe region of Ontario which includes Toronto, Hamilton and Peterborough, the province said in a statement Tuesday. The finance and housing ministries began compiling the figures as part of a new housing plan announced in April meant to make homes more affordable and accessible for Canadian residents. One of the measures included a 15% levy as of April 21 on foreign investors buying residential property in Toronto and nearby cities.

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said in a statement. “While this is great news for the province, the resulting increase in speculative purchases and a spike in home prices created affordability challenges for many and posed a risk to the market.” Toronto is the latest Canadian city to target non-resident buyers, who are often accused of driving up the price of homes by using them as an investments. Prices and sales in the city had been on a tear until early this year, prompting some to point to non-resident factors as a source of the heat. Vancouver last year imposed a 15% foreign buyer tax that preceded a slowdown of sales and price growth, though it was short-lived as the market picks up speed again. Both cities followed the lead by Australia, which forces offshore buyers to purchase through a separate buying program.

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Buying the world with monopoly money.

China’s $162 Billion of Dealmaker Debt Raises Alarm

China struck deal after deal to acquire companies abroad over the last few years. Now the bill is coming due. The nation’s top corporate dealmakers, including HNA and Fosun International, must pay off the equivalent of at least $11.5 billion in bonds and loans by the end of 2018 – a feat now complicated by government efforts to rein in their aggressive rush overseas. That figure represents just a fraction of the total debt of 1.1 trillion yuan ($162 billion) that the Chinese companies have reported as they projected their money and influence around the world with a record number of acquisitions. The size of their obligations – and whether they will be able to shoulder them – has begun to worry global banks and investors now that Beijing has pressed companies to dial back their ambitions abroad.

“Those companies the banking regulator is checking on have very high financing demand for M&A activities,” said Xia Le, chief Asia economist at BBVA in Hong Kong. “But banks will heighten their risk control when lending to them going forward, which could increase their funding costs and hurt the pace of their expansion.” The moves threaten to end an era of easy access to money for the firms. People familiar with the matter said last month that China Banking Regulatory Commission asked some banks to provide information on overseas loans to HNA, Fosun, Anbang Insurance and Dalian Wanda. Yields on some bonds issued by the firms jumped. The CBRC is examining examples of acquisitions gone awry to assess potential risks to the financial sector, people familiar also said. To be sure, the companies, which are among the biggest private-sector firms in China, are sitting on a cash pile that they can tap to meet upcoming debt deadlines. They have more than 400 billion yuan of cash and cash equivalents…

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Too late now, boys.

China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)

China’s central bank said on Tuesday the shadow banking sector lacks sufficient regulation and the bank would give more prominence to financial risk controls. Compared with traditional bank lending, the opaque nature of shadow banking products make it easier for them to bypass regulatory requirements and provide credit to restricted areas, the People’s Bank of China said in its annual China Financial Stability Report released online. The central bank will increase supervision over the rapidly growing asset management industry to curb shadow banking risks, it said. Since the first quarter, the PBOC has included banks’ off-the-balance-sheet wealth management products in its examination of broad credit in its Macro Prudential Assessment (MPA) risk-tool.

The world’s second-largest economy faces major challenges, including excess industrial capacity, sluggish growth, high corporate leverage, mounting local government debt, property bubbles in some regions, and the deterioration of banking assets, the PBOC said in its report. As the economy still faces relatively big downward pressures, the bank pledged to create a favourable monetary and financial environment for the development of the real economy this year. The central bank also said it would strengthen coordination with other financial regulators to fend off systemic financial risks.

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Still can’t help wondering about the timing of this. Why now? What changed?

Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)

Arab states that have imposed sanctions on Qatar, accusing it of links to terrorism, were due to meet in Cairo on Wednesday to consider Doha’s response to a stiff ultimatum, but settlement of the dispute seemed far off. The editor of the Abu Dhabi government linked al-Ittihad newspaper wrote in an editorial that Qatar was “walking alone in its dreams and illusions, far away from its Gulf Arab brothers”. Foreign ministers of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain will consider whether to escalate, or less likely abandon, the boycott imposed on Qatar last month that has rattled a key oil-producing region and unnerved strategic Western allies. Qatar faces further isolation and possible expulsion from the Gulf Cooperation Council (GCC) if its response to a list of demands made nearly two weeks ago is not deemed satisfactory.

The Arab countries have demanded Qatar curtail its support for the Muslim Brotherhood, shut down the pan-Arab al Jazeera TV channel, close down a Turkish base and downgrade its ties with regional arch-rival Iran. They view Qatar’s independent diplomatic stances and support for 2011 “Arab Spring” uprisings as support for terrorism and a dangerous breaking of ranks – charges Doha vigorously denies. Qatar has countered that the Arab countries want to curb free speech and take over its foreign policy, saying their 13 demands are so harsh they were made to be rejected. The gas-rich state had raised its international profile dramatically in recent years, drawing on huge gas revenues, and developed its economy with ambitious infrastructure projects. It is due to host the soccer world cup in 2022.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said at a joint news conference with his German counterpart on Tuesday that its response was “given in goodwill and good initiative for a constructive solution”, but insisted that Doha would not compromise on its sovereignty. Gulf officials have said the demands are not negotiable, signaling more sanctions are possible, including “parting ways” with Doha – a suggestion it may be ejected from the GCC, a regional economic and security cooperation body founded in 1981. “A Gulf national may be obliged to prepare psychologically for his Gulf to be without Qatar,” the editor of the Abu Dhabi al-Ittihad newspaper said.

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The topic deserves better treatment than this.

Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)

Cecilia Mo thought she knew all about growing up poor when she began teaching at Thomas Jefferson senior high school in south Los Angeles. As a child, she remembered standing in line, holding a free lunch ticket. But it turned out that Mo could still be shocked by poverty and violence – especially after a 13-year-old student called her in obvious panic. He had just seen his cousin get shot in his front yard. For Mo, hard work and a good education took her to Harvard and Stanford. But when she saw just how much chaos and violence her LA students faced, she recognized how lucky she had been growing up with educated parents and a safe, if financially stretched, home. Now, as an assistant professor of public policy and education at Vanderbilt University, Mo studies how to get upper-class Americans to recognize the advantages they have.

She is among a group of scholars trying to understand how rich and poor alike justify inequality. What these academics are finding is that the American dream is being used to rationalize a national nightmare. It all starts with the psychology concept known as the “fundamental attribution error”. This is a natural tendency to see the behavior of others as being determined by their character – while excusing our own behavior based on circumstances. For example, if an unexpected medical emergency bankrupts you, you view yourself as a victim of bad fortune – while seeing other bankruptcy court clients as spendthrifts who carelessly had too many lattes. Or, if you’re unemployed, you recognize the hard effort you put into seeking work – but view others in the same situation as useless slackers. Their history and circumstances are invisible from your perspective.

Here’s what has gone wrong: hard work and a good education used to be a sure bet for upward mobility in the US – at least among some groups of people. Americans born in the 1940s had a 90% chance of doing better economically than their parents did – but those born in the 1980s have only 50/50 odds of doing so.

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Oh yes, the EU will fail yet.

A comment on Twitter: “The last time Austria had tanks on the Italian border it lost Trent and Trieste.”

Austrian Troops To Control Migrants On Italy Border (R.)

Austria is planning to impose border controls and possibly deploy troops to cut the number of migrants crossing from Italy, defense officials said, drawing a warning from Rome and reigniting a row over Europe’s handling of the refugee crisis. Tensions between European Union countries over how to share the burden of migrants flared in 2015 when hundreds of thousands, many fleeing wars in Africa and the Middle East, began arriving in EU territory, mainly via Greece, and headed for Germany, Austria and other nearby affluent states. Austria took in more than 1 percent of its population in asylum seekers at the time, which helped increase support for the far-right Freedom Party. Keen to avoid another influx, it said it would introduce controls at the busy Brenner Pass border crossing with Italy if one materialized there.

That has not yet happened but Italy recently asked other EU countries to help it cope with a surge in migrants reaching its southern Mediterranean shores from Africa, raising concern in Austria that many will soon show up at its border with Italy. That is a political hot potato in Austria, where a parliamentary election is scheduled in October with immigration shaping up as a central issue. Austrian Defence Minister Hans Peter Doskozil told the mass-circulation Kronen Zeitung in an interview published on Tuesday that he expected restrictions would be introduced along the Alpine boundary with Italy “very soon”. Other Austrian officials, including Interior Minister Wolfgang Sobotka, who oversees crossings like Brenner, said there was currently no reason to introduce controls and Austria remained vigilant, a stance Vienna has repeated for the past year.

Read more …

Jun 052017
 
 June 5, 2017  Posted by at 10:22 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Banksy Girl with a balloon 2002/2017

 

Gulf Countries Cut Ties With Qatar, Oil Price Jumps (CNBC/R.)
Saudi Arabia, Egypt, UAE, & Bahrain Cut Ties, Shut Borders With Qatar (ZH)
Theresa May Urged Not To Suppress Report Into Funding Of Jihadi Groups (G.)
Top Cameron Aide: Theresa May ‘Responsible’ For London Terror Attack (BI)
Against Terror, Is London Pride Enough? (NYT)
Nearly 10 Million Britons Are In Insecure Work (G.)
Banksy Offers Free Art To People Who Vote Against The Tories (Ind.)
World Bank Economist: Risks To World Economy Receded (AFP)
Italy Faces Borrowing Shock When ECB Removes Support – Pimco (Tel.)
Joe Biden Boasts of US Role in ‘Saving’ Greece (K.)

 

 

It’s not about Qatar. US neocons are testing a new way to get to Iran.

Gulf Countries Cut Ties With Qatar, Oil Price Jumps (CNBC/R.)

The governments in Saudi Arabia, Egypt and the UAE are all wary of the Muslim Brotherhood because it enjoys support as an Islamist party among a broad base, Sluglett said. In the case of Iran, he added, a key factor is the Trump administration’s threat to review a landmark deal that lifted most economic sanctions against Iran in return for curbing its nuclear and missile programs. “The Americans cannot unilaterally back out of the deal as it is the P5+1 [permanent five members of the U.N. security council and Germany], so they are using the GCC and Egypt to put pressure on any countries supporting Iran,” Sluglett said, referring to the Gulf Cooperation Council, which counts Qatar, Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain and Oman as members.

Charles Lister, a senior fellow at the Middle East Institute, responded on Twitter to the news by pointing out that Qatar “is very heavily reliant on food supplies accessed” through Saudi Arabia, so a closing of the borders poses a “very” serious challenge to Doha. For its part, Saudi Arabia accused Qatar of backing militant groups and spreading their violent ideology, in an apparent reference to its influential state-owned satellite channel al Jazeera. “(Qatar) embraces multiple terrorist and sectarian groups aimed at disturbing stability in the region, including the Muslim Brotherhood, ISIS (Islamic State) and al-Qaeda, and promotes the message and schemes of these groups through their media constantly,” state news agency SPA said. The statement went on to accuse Qatar of supporting what it described as Iranian-backed militants in its restive and largely Shi’ite Muslim-populated Eastern region of Qatif and in Bahrain.

Qatar said in May that hackers had faked remarks by its emir, Sheikh Tamim bin Hamad al-Thani, criticizing some leaders of fellow Gulf Arab states and calling for an easing of tensions with Iran, a regional adversary. But several Gulf Cooperation Council states rejected Qatar’s explanation, leaving local media to unleash a barrage of attacks accusing the emir of cozying up to Tehran. Qatar shares the world’s largest gas field, South Pars, with Iran. The commercial and business ties have irritated Saudi Arabia and other Gulf Cooperation Council countries at odds with Iran over Tehran’s support for Shia-linked militants. Sluglett noted that Qatar’s dealings with Iran center on the gas field and that Doha is uncomfortable at times with a hard push against Tehran: “They find it quite ridiculous to blindly follow U.S. views on Iran.”

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Saudi Arabia pointing to Iran as terror source is rich…

Saudi Arabia, Egypt, UAE, & Bahrain Cut Ties, Shut Borders With Qatar (ZH)

Just days after president Trump left the region, a geopolitical earthquake is taking place in the Middle East tonight as the rift between Qatar and other members of the (likely extinct) Gulf Cooperation Council explodes with Bahrain, UAE, Saudi Arabia, and Egypt cutting all diplomatic ties with Qatar accusing it of “speading chaos,” by funding terrorism and supporting Iran. The dispute between Qatar and the Gulf’s Arab countries started over a purported hack of Qatar’s state-run news agency. It has spiraled since, and appears to be climaxing now… just days after President Trump left the region. As Al Arabiya reports, Bahrain has announced it is cutting diplomatic ties with Qatar, according to a statement carried on Bahrain News Agency.

The statement on Monday morning said Bahrain decided to sever ties with its neighbor “on the insistence of the State of Qatar to continue destabilizing the security and stability of the Kingdom of Bahrain and to intervene in its affairs”. The statement also said Qatar’s incitement of the media and supporting of terrorist activities and financing groups linked to Iran were reasons behind the decision. “(Qatar has) spread chaos in Bahrain in flagrant violation of all agreements and covenants and principles of international law Without regard to values, law or morals or consideration of the principles of good neighborliness or commitment to the constants of Gulf relations and the denial of all previous commitments,” the statement read. Qatari citizens have 14 days to leave Bahraini territories while Qatari diplomats were given 48 hours to leave the country after being expelled.

Meanwhile, Bahrain has also banned all of its citizens from visiting or residing in Qatar after the severance of ties. Additionally, Bahrain has has closed both air and sea borders with Qatar. Saudi Arabia then confirmed the same – cutting ties and shutting down all sea, airspace, and land crossings with Qatar as well as dissolving Qatar’s role in the Saudi-led coalition fighting against Yemen. Emirates, Etihad, Saudia, Gulf Air, and Egypt Air are no longer allowed to fly to Qatar and Saudi Arabia is providing facilities, services to Qatari pilgrims. Egypt then followed, confirming it was cutting diplomatic ties. Then UAE confirmed it would cut ties, shut down all sky, water, and land crossings, and expel all Qataris within 48 hours. The Maldives also just cut diplomatic ties with Qatar.

All of this happens within 24 hours of Iran calling out ‘The West’ for ignoring the real sponsors of terrorism around the world and UK’s Labor party leader outright name-shaming Saudi Arabia’s funding of terrorism. As a reminder, documents obtained by Middle East Eye show strategic alliance includes pledge by Ankara to protect Gulf state from external threats… “In December 2015, Turkey announced, to the surprise of many, that it planned to establish a military base in Qatar. Behind the scenes, the agreement was about forming a major strategic alliance. After a 100-year hiatus, Turkey is militarily back in the Gulf and ramping up its presence overseas. In January, Ankara announced that it would also establish a military base in Somalia. Specific details about the Qatar agreement, which Turkey described as an alliance in the face of “common enemies”, remain scant, but Middle East Eye has acquired copies of the agreements, as well as further details, which include a secret pledge by Ankara to protect Qatar from external threats.

Did Qatar just get scapegoated in the ‘war on terror’? One thing seems clear, support for a Syrian gas pipeline will be dwindling and with it the need for a Syrian war. Notably, this raises further doubts about OPEC’s stability. As Bloomberg notes, while Middle East ructions have historically added risk premia to oil prices, discord here could theoretically put downward pressure on prices as OPEC members struggle to maintain unity and compliance on production cuts.

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Too late now. It’s not like she’ll volunteer to publish the report before June 8.

Theresa May Urged Not To Suppress Report Into Funding Of Jihadi Groups (G.)

Jeremy Corbyn and Tim Farron have challenged Theresa May over a long-delayed inquiry into foreign funding and support of jihadi groups in the UK, after the Home Office suggested the investigation may not be published. The inquiry into revenue streams for extremist groups was commissioned by David Cameron when he was prime minister and is thought to focus on Saudi Arabia. But the Guardian revealed last week that the report was still incomplete and its contents may not be published. The Labour leader used a speech in Carlisle on Sunday evening to challenge the prime minister over the delayed report. Corbyn referenced May’s speech after the London Bridge attack on Saturday, in which she said challenging terrorism would “require some difficult and often embarrassing conversations”.

In a speech that also criticised May for ignoring warnings about the impact of police cuts, he said: “Yes, we do need to have some difficult conversations, starting with Saudi Arabia and other Gulf states that have funded and fuelled extremist ideology. “It is no good Theresa May suppressing a report into the foreign funding of extremist groups. We have to get serious about cutting off the funding to these terror networks, including Isis here and in the Middle East.” The Liberal Democrat foreign affairs spokesman, Tom Brake, wrote to May last week asking her to commit to not shelving the report. Writing in the Guardian on Monday, the Lib Dem leader, Tim Farron, said it was essential the report was not suppressed. “Theresa May now has a choice. Does she publish that report or keep it hidden?” Farron said.

“Theresa May talks of the need to have some difficult and sometimes embarrassing conversations. That should include exposing and rooting out the source funding of terror, even it means difficult and embarrassing conversations with those like Saudi Arabia that the government claims are our allies.” The Conservatives were criticised last year for selling billions of pounds of arms to the Saudis. Cameron ordered the investigation as part of a deal with the Lib Dems in exchange for the party supporting the extension of British airstrikes against Islamic State into Syria in December 2015. The Home Office’s extremism analysis unit was directed by Downing Street in January 2016 to investigate overseas funding of extremist groups in the UK, with findings to be shown to the then home secretary May and Cameron. Eighteen months on, the Home Office said the report, originally due to be published in spring 2016, had not yet been completed and publication was not guaranteed, given the sensitive nature of the content. .

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May the cannabalism begin.

Top Cameron Aide: Theresa May ‘Responsible’ For London Terror Attack (BI)

The Prime Minister should resign over her alleged failure to prevent the London Bridge terror attack, a former senior aide to the last Conservative Prime Minister David Cameron has said. Former Downing Street director of Strategy, Steve Hilton, on Monday claimed the Theresa May was “responsible” for the attack that left seven people dead and many more injured, and called for her to resign rather than seek re-election. “Theresa May responsible for security failures of London Bridge, Manchester, Westminster Bridge,” he tweeted. “Should be resigning not seeking re-election.” Hilton posted an excerpt from a Daily Mail report, suggesting that security services had been warned about at least one of the terrorists behind the attack on Saturday.

The Mail reported that one of the attackers had featured in a documentary about extremists and been reported to the security services by friends concerned that he had been radicalised. The paper also reported evidence that the suspect had been quizzed by police last year. Previous reports have indicated that the terrorists behind the Manchester and Westminster attacks earlier this year were also known to security services. May is also under pressure to release a suppressed report Home Office report into the international funding of terror groups in the UK. The report was commissioned by the last coalition government in 2015 and due to be published last year but has never been emerged. The Home Office admitted last week that it may never be published due to the “very sensitive” nature of the report.

The report is expected to reveal links between Saudi Arabia and extremist groups in the UK. Critics of the government believe it has been suppressed due to the UK government’s ongoing trade relationships with the country. The UK recently approved £3.5bn worth of arms export licences to Saudi Arabia, despite criticisms over its involvement in the bombing campaign in Yemen.

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Keep calm as a myth.

Against Terror, Is London Pride Enough? (NYT)

Cultures live by myths. These create their own reality. Britons may not know much history, but they all know about the spirit of the Blitz, and many lived through the bombing campaigns of the Irish Republican Army of the 1970s and ’80s. Many will remember that, in 1984, on the day Prime Minister Margaret Thatcher and half her cabinet team were blown out of their beds in the early morning by the Brighton bomb, in which five people died, she insisted that the Conservative Party conference should still start as scheduled at 9.30 a.m. Terrorism, she said, would never cripple democracy. The country is proud of that stoicism, and on the whole, wishes to live up to it. And yet. Today, there is a ripple of unease spreading through Britain, after the third brutal and unexpected attack in three months. It is the chilling realization that whatever the antiterror strategy has been so far, it clearly hasn’t worked.

However many plots are being foiled, now that anyone with the access to a car or van, a kitchen knife or the internet can choose to kill, some will succeed. This is a bleak and, frankly, unbearable prospect, and it’s concentrating minds. My 25-year-old son says that what terrifies him and his friends is their impotence. If this were indeed the Blitz, they could join up. If it was the ’70s they could either fight the I.R.A. or lobby for peace talks. But here, they have no idea how to combat this, whom to talk to, how to do anything other than wait for the next atrocity to happen, and then send sympathy and hashtags in the aftermath. Others, seeing that good will and candlelit vigils have their limits, are demanding radical action. On social media and phone-ins, and in private conversations, some people are calling for the immediate internment of the 3,000 suspected radicals on the terrorist watch lists, or their deportation, or for mass aerial bombing of the Islamic States abroad.

None of these will be solutions, but everyone is beginning to understand that savagery may become a regular occurrence, rather than an exceptional one — unless whoever is in government can offer a different and more successful approach. That is why Prime Minister Theresa May, only days away from a general election where she is fighting to keep her parliamentary majority, announced this morning that “enough is enough” in the war against terrorism, and that “things need to change.” There had been too much tolerance of extremism in Britain. The police and security services should have all the powers they needed. The internet giants, Facebook and Google, must be held responsible for radicalizing material that appeared on their sites.

Mrs. May knows just how vulnerable she is on these issues. She is already performing unexpectedly badly in the election campaign, appearing wooden and uneasy in comparison to her Labour challenger. Normally, she and the Tories could count on scoring high for law and order, but Mrs. May is in the uncomfortable position of denouncing counterterror policies for which she herself has been responsible over the past six years (in five years as home secretary and one as prime minister).

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The result of what is it, 10 year, Tories?! That’s one in every three jobs? Or is it four? Talk about a gutted society… And then Brexit surprised?

Nearly 10 Million Britons Are In Insecure Work (G.)

Up to 10 million Britons or nearly a third of the UK workforce do not have secure employment, according to the GMB union, which has warned of a heavy impact on health and family life. The union’s research, unveiled at its 100th annual congress in Plymouth on Monday, attempts to quantify people in what it calls precarious employment – those in the gig economy, on zero- or short-hours contracts, temporary workers, the underemployed and those at risk of false self-employment. The data, based on a survey of nearly 3,500 people of working age, emerged before the publication this month of recommendations from Matthew Taylor, a former adviser to Tony Blair who was appointed by the current prime minister to lead a review into the gig economy. He is expected to recommend changes to the rights of self-employed workers.

Tim Roache, the GMB’s general secretary, said: “This paints a shocking picture of the modern world of work. Up to 10 million people go to work either not knowing what their hours are, if they’ll be able to pay the bills, or what their long-term prospects are. That’s a sorry state of affairs in the 21st century and a product of government’s failure to tackle bogus self-employment, the use of agency contracts as a business model and point-blank refusal to ban zero-hours contracts.” Further interviews of those who identified themselves as insecure workers found that 61% had suffered stress or anxiety as a result of their current job and the same proportion said they had been to work while unwell for fear of not being paid, losing their job or missing out on future hours. The rapid change in employment practices was highlighted by more than three-quarters of those interviewed who said they had previously been in permanent employment.

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Not sure it’s entirely legal.

Banksy Offers Free Art To People Who Vote Against The Tories (Ind.)

Banksy has offered fans an exclusive free print if they vote against the Conservatives in the general election. The artist posted on his website asking voters in six Bristol-area constituencies to send him a photo of their ballot paper showing that they voted against the Tories to receive a limited-edition work. He wrote: “Simply send in a photo of your ballot paper from polling day showing you voted against the Conservative candidate and this complimentary gift will be mailed to you.” The artwork is taken from his iconic “girl with a balloon” motif but now features a Union Jack flag in the balloon. Banksy said that it will be released on 9 June. However, critics have pointed out that this would contravene laws designed to ensure votes remain secret, and could also break rules against bribery.

In a “lawyer’s note” disclaimer, Banksy’s post added: “This print is a souvenir piece of campaign material, it is in no way meant to influence the choices of the electorate, has no monetary value, is for amusement purposes only and is strictly not for resale. “Terms and conditions to follow, postage not included.” Under Section 66 of the Representation of the People’s Act, it is a criminal offence to “induce a voter to display his ballot paper after he has marked it so as to make known to any person the name of the candidate for whom he has or has not voted”. It is also illegal to show the paper’s unique identification number. An Electoral Commission spokesman told the BBC: “Given the risk that someone taking a photo inside a polling station may be in breach of the law, whether intentionally or not, the commission’s advice is against taking any photos inside polling stations.”

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At the World Bank they get to smoke the good stuff.

World Bank Economist: Risks To World Economy Receded (AFP)

The World Bank is keeping its forecast for global growth in 2017 unchanged, because for the first time in years, no new risks have arisen to threaten the outlook. “Over the past four years this is the first time we didn’t have a downgrade and I think that’s very good sign. Growth is firming,” World Bank economist Ayhan Kose told AFP. The World Bank expects the global economy to grow by 2.7% this year, and 2.9% in 2018 and 2019, the same as the January forecast. And after 10 years of crisis and tepid recovery, keeping a stable growth forecast is news. Kose, who heads the World Bank’s Development Prospects Group, which twice a year prepares the global economic forecasts, attributes the good news to the fact the risks, while still present, have receded.

The issues that had the potential to derail the incipient recovery included stress in financial markets as they adapt to rising US interest rates, uncertainty over the stability of oil prices, and concerns about election outcomes in Europe. But after the Federal Reserve’s two rate increases in recent months, markets have reacted “very well,” European political uncertainty “has receded quite a bit” – French voters rejected the anti-EU candidate – and oil prices while still low, have stabilized after OPEC and non-OPEC oil producers extended the agreement to limit output. “All in all, we still think that risks are tilted to the downside but the risk profile is a little bit more improved today versus six months ago,” Kose said.

However, uncertainty over policies, especially US trade protectionism and immigration restrictions under the Trump administration, is having immediate, real impacts on conditions that could dampen growth, Kose cautioned. Companies may delay business decisions and postpone investments in the absence of “well-defined policies,” for example in a case where companies have cross-border operations impacted by the North American Free Trade Agreement which President Donald Trump has opened to renegotiation. Kose noted the “serious slowdown” in investment in emerging markets and developing economy already seen over the past six years. “We are of course worried about how policy uncertainty impacts investment growth and then ultimately impacts growth in the real economy,” he said.

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They won’t let Italy fall unless Beppe Grillo wins the next elections. Which by the way is quite possible.

Italy Faces Borrowing Shock When ECB Removes Support – Pimco (Tel.)

Italy faces a “horror” scenario when the ECB winds down its bond buying programme in a move that risks sparking a surge in the country’s borrowing costs, according to one of the world’s largest bond managers. The Pacific Investment Management Company (Pimco) said the ECB’s €60bn-a-month QE programme was “very supportive” for countries such as Italy and Portugal and had helped to limit volatility in these countries. Andrew Balls, chief investment officer for global fixed income, said removing that support was likely to push up bond yields in a country that has struggled to implement reforms and reduce its massive debt pile amid weak growth. Italian 10-year benchmark borrowing costs currently stand at around 2.2pc, compared with 0.2pc in Germany and close to 3pc in Portugal.

Mr Balls said funding Italy at these rates “doesn’t look particularly attractive” considering the risks facing the eurozone’s third largest economy. He said removal of ECB support raised the risk that Italy could be forced into a bail-out programme if its borrowing costs rose to unsustainable levels, even though the country has long lived within its means excluding debt interest costs. “The thing which fills me with horror is an environment where the ECB has finished QE, Italy does need support, and the message is you need to go to the European Stability Mechanism [the eurozone’s bail-out fund],” said Mr Balls. “Replaying the events of a few years ago with Portugal, Greece and others in the case of Italy would be an event that would raise an awful lot of risk – and you’d want to get paid a lot more than a 2pc return over 10 years to take that risk.”

While Pimco believes an Italian exit from the eurozone is “not our baseline”, Mr Balls added: “It doesn’t seem terribly unlikely either”. “Italy can’t grow,” he said. “You have limited political will to implement reform …In contrast to Portugal it’s big and systemic, but its not clear how Italy improves the situation. “In the event of a recession or shock it’s not clear how the policy apparatus deals with something as large as Italy.”

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In a piece on Cyprus, and Biden’s visit to Athens this week. Biden only cares about the impact of the Greek crisis abroad, not inside the country.

Joe Biden Boasts of US Role in ‘Saving’ Greece (K.)

President Obama and I were engaged with all parties in the Greek financial crisis, because we wanted to prevent Greece from experiencing financial collapse. Grexit would have had very serious long-term consequences for Greece and Europe – and could potentially have triggered a wider crisis of confidence in the global economy. We were concerned that in the high-stakes negotiation between Greece and its creditors, failure to reach a sensible agreement would have made all parties much worse off in the end. But because of each side’s desire to secure the best possible terms, this worst-case scenario was a real possibility.

While the ultimate decision was up to the leaders of Greece, the IMF, and the eurozone countries, I think we helped steer the conversation in a more pragmatic direction because of the credibility we had in Athens, Brussels and Berlin. We argued with the creditor countries that Greece had been saddled with an unsustainably high debt burden and that reform would only go so far with such a large debt overhang. At the same time, we encouraged the Greek leadership to think about how to demonstrate to its creditors that it had a credible roadmap for systemic economic reform, which was necessary. While a deal was reached and the worst of the crisis is behind us, we are not yet completely out of the woods. I believe the United States continues to have a role to play in supporting the parties as they move forward with discussions on Greece’s economic future.

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May 272017
 
 May 27, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , , , ,  13 Responses »
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Herbert Draper Lament for Icarus 1898

 

There are times when you have to talk about things when it appears most inopportune to do so, because they’re the only times people might listen. Times when people will argue that ‘this is not the right moment’, while in reality it’s the only moment.

A solid 99% of people will have been filled, and rightly so of course, with a mixture of disgust, disbelief and infinite sadness when hearing of yet another attack on civilians in Europe, this one in Manchester. An equally solid 99% will have failed to recognize that while the event was unique for the city of Manchester, it was by no means unique for the world, not even at the time it happened.

Though the footage of parents desperately trying to find their children, and the news that one of the dead was just 8 years old, touches everyone in more or less the same place in our hearts, by far most of us miss out on the next logical step. In a wider perspective, it is easy to see that parents crying for missing children, and children killed in infancy, is what connects Manchester, and the UK, and Europe, to parents in Syria, Libya, Iraq.

What’s different between these places is not the suffering or the outrage, the mourning or the despair, what’s different is only the location on the map. That and the frequency with which terror is unleashed upon a given population. But just because it happens all the time in other places doesn’t make it more normal or acceptable.

It’s the exact same thing, the exact same experience, and still a vast majority of people don’t, choose not to, feel it as such. Which is curious when you think about it. In the aftermath of a terror attack, the mother of a missing, maimed or murdered child undergoes the same heartbreak no matter where they are in the world (“I hope the Russians love their children too”). But the empathy, the compassion, is hardly acknowledged in Britain at all, let alone shared.

Not that it couldn’t be. Imagine that our papers and TV channels would tell us, preferably repeatedly, in their reports in the wake of an attack like the one in Manchester how eerily similar the emotions must be to those felt in Aleppo, Homs and many other cities. That would change our perception enormously. But the media choose not to make the connection, and the people apparently are not capable of doing it themselves.

None of that changes the fact, however, that British lives are not more valuable than Syrian and Libyan ones. Not even when we’ve gotten used to ‘news’ about bombings and drone attacks executed for years now by US-led coalitions, or the images of children drowning when they flee the area because of these attacks.

The overall theme here is that 99.9% of people everywhere in the world are innocent, especially when they are children, but their governments and their societies are not. That doesn’t justify the Manchester attack in any shape or form, it simply lays equal blame and condemnation for western terror attacks in the Middle East and North Africa, perpetrated by the people we elect into power.

This is something people in the west pay no attention to. It’s easier that way, and besides our media with great enthusiasm pave the way for our collective ignorance, by calling some other group of people ‘terrorists’, which while they’re at it is supposed to justify killing some other mother’s child.

There’s another thing that is also different: they didn’t start. We did. The British and French terrorized the region for many decades, since the 19th century, even way before the Americans joined in. The presence of oil, and its rising role in our economies, caused them to double down on that terror.

Yes, it’s awkward to talk about this on the eve of a deadly attack, and it’s easy to find arguments and rhetoric that appear to deflect responsibility. But at the same time this truly is the only moment we can hope that anyone will listen. And lest we forget, the UK carries an outsized share of the responsibility in this tragedy, both historically and in the present.

You can say things about the city coming together, or the country coming together, or “not allowing terrorists to affect our way of life”, but perhaps it should instead really be all the mothers who have children missing or dying, wherever they live, coming together. They all see their ways of life affected, and many on a daily basis.

Those mothers in Syria and Libya, who have been through the same hellhole as those in Manchester, are a lot closer to you than the politicians who send out jet fighters to bomb cities in the desert, or sell arms to individuals and organizations to control these cities for their own narrow personal gain, such as the governments of Saudi Arabia and Turkey.

The traumatized mothers in the desert are not your enemies; your enemies are much closer to home. Still, most of you will tend to react to fear and panic by looking for protection in exactly those circles that are least likely to provide it. The UK government under Theresa May, like those of Tony Blair, Gordon Brown and David Cameron before, is as cynically eager as their predecessors to send bombers into the desert, and sell arms to those living there.

We can illustrate all this with a few bits of news. First, the US-led coalotion, of which the UK is a substantial part, killed more civilians in Syria than at any time since they started bombing the country almost 3 years ago. They keep saying they don’t target civilians, but to put it mildly they don’t appear to go out of their way not to hit them. For instance, a single attack on Mosul, Iraq in March killed over 105 civilians. ‘Collateral damage’ in these cases, and there are hundreds by now, is a very disrespectful term. Moreover, the files released by Chelsea Manning show US soldiers killing people ‘with impunity’.

Deadliest Month For Syria Civilians In US-Led Strikes

US-led air strikes on Syria killed a total of 225 civilians over the past month, a monitor said on Tuesday, the highest 30-day toll since the campaign began in 2014. The Syrian Observatory for Human Rights said the civilian dead between April 23 and May 23 included 44 children and 36 women. The US-led air campaign against the Islamic State jihadist group in Syria began on September 23, 2014. “The past month of operations is the highest civilian toll since the coalition began bombing Syria,” Observatory head Rami Abdel Rahman told AFP. “There has been a very big escalation.” The previous deadliest 30-day period was between February 23 and March 23 this year, when 220 civilians were killed, Abdel Rahman said.

And it’s not as if the British didn’t or couldn’t know what was going on. That was clear as early as 2003, when Tony Blair couldn’t wait to join the Bush coalition to invade Iraq on the false premise of weapons of mass destruction. Before Libya was invaded, which led to Hillary’s disgusting ‘we came we saw he died’, Gaddafi, the one who did die, warned Blair about what would happen. It indeed did, which makes Blair a guilty man.

Gaddafi Warned Blair His Ousting Would ‘Open Door’ To Jihadis

Muammar Gaddafi warned Tony Blair in two fraught phone conversations in 2011 that his removal from the Libyan leadership would open a space for al-Qaida to seize control of the country and even launch an invasion of Europe. The transcripts of the conversations have been published with Blair’s agreement by the UK foreign affairs select committee, which is conducting an inquiry into the western air campaign that led to the ousting and killing of Gaddafi in October 2011. In the two calls the former British prime minister pleaded with Gaddafi to stand aside or end the violence. The transcripts reveal the gulf in understanding between Gaddafi and the west over what was occurring in his country and the nature of the threat he was facing.

In the first call, at 11.15am on 25 February 2011, Gaddafi gave a warning in part borne out by future events: “They [jihadis] want to control the Mediterranean and then they will attack Europe.” In the second call, at 3.25pm the same day, the Libyan leader said: “We are not fighting them, they are attacking us. I want to tell you the truth. It is not a difficult situation at all. The story is simply this: an organisation has laid down sleeping cells in north Africa. Called the al-Qaida organisation in north Africa … The sleeping cells in Libya are similar to dormant cells in America before 9/11.”

Gaddafi added: “I will have to arm the people and get ready for a fight. Libyan people will die, damage will be on the Med, Europe and the whole world. These armed groups are using the situation [in Libya] as a justification – and we shall fight them.” Three weeks after the calls, a Nato-led coalition that included Britain began bombing raids that led to the overthrow of Gaddafi. He was finally deposed in August and murdered by opponents of his regime in October.

What they are guilty of is no more and no less than Manchester. No hyperbole, but a warning from Blair’s own intelligence services back in 2003. The real weapons of mass destruction were not in Iraq, but in the White House and Downing Street no. 10. The CIA issued warnings similar to this.

British Intelligence Warned Tony Blair Of Manchester-Like Terrorism If The West Invaded Iraq

Before the 2003 invasion of Iraq led by the U.S. and U.K., he was forcefully and repeatedly warned by Britain’s intelligence services that it would lead to exactly this type of terrorist attack — and he concealed these warnings from the British people, instead claiming the war would reduce the risk of terrorism. We know this because of the Chilcot Report, the seven-year-long British investigation of the Iraq War released in 2016. The report declassifies numerous internal government documents that illustrate the yawning chasm between what Blair was being told in private and his claims in public as he pushed for war.

On February 10, 2003, one month before the war began, the U.K.’s Joint Intelligence Committee — the key advisory body for the British Prime Minister on intelligence matters — issued a white paper titled “International Terrorism: War With Iraq.” It began: “The threat from Al Qaida will increase at the onset of any military action against Iraq. They will target Coalition forces and other Western interests in the Middle East. Attacks against Western interests elsewhere are also likely, especially in the US and UK, for maximum impact. The worldwide threat from other Islamist terrorist groups and individuals will increase significantly.”

And it concluded much the same way: “Al Qaida and associated groups will continue to represent by far the greatest terrorist threat to Western interests, and that threat will be heightened by military action against Iraq. The broader threat from Islamist terrorists will also increase in the event of war, reflecting intensified anti-US/anti-Western sentiment in the Muslim world, including among Muslim communities in the West.”

Not long behind Blair came David Cameron, a man after Tony’s heart:

Cameron Brags Of ‘Brilliant’ UK Arms Trade As EU Embargoes Saudi Arabia

European ministers have embarrassed David Cameron by voting to impose an arms embargo on Saudi Arabia on the same day the British prime minister praised the UK for selling “brilliant” arms to the country. Speaking at a BAE Systems factory in Preston, the prime minister said the UK had pushed the sale of Eurofighter Typhoons to countries in the Middle East, including Oman and Saudi Arabia. [..] Cameron’s speech in Preston came at the same time the European Parliament voted to impose an EU-wide ban on arms exports to Saudi Arabia, citing criticism from the UN of its bombing in Yemen.

Asked at the talks how he was helping to export the planes, Cameron said: “With the Typhoon there is an alliance of countries: the Italians, Germans and ourselves. We spend a lot of time trying to work out who is best placed to win these export orders. We’ve got hopefully good news coming from Kuwait. The Italians have been doing a lot of work there. The British have been working very hard in Oman.” The vote will not force EU members to comply with the ban, but will force the government to examine its relationship with Saudi Arabia.

In the last year the British government has sold £3 billion (US$4.18 billion) worth of arms and military kit to the Gulf state, as well as providing training to Saudi forces. A report released by Amnesty International on Friday called the ongoing trade with Saudi Arabia “truly sickening,” and urged governments to attend meetings in Geneva on Monday to discuss the implementation of the Arms Trade Treaty (ATT). The report names the UK, France, Germany, Italy, Montenegro, the Netherlands, Spain, Sweden, Switzerland, Turkey and the US as having issued licenses for arms to Saudi Arabia worth more than £18 billion in 2015.

The arms sold include drones, bombs, torpedoes, rockets and missiles, which have been used by Saudi Arabia and its allies for gross violations of human rights and possible war crimes during aerial and ground attacks in Yemen, the campaign group said. Control Arms Director Anna Macdonald said: “Governments such as the UK and France were leaders in seeking to secure an ATT – and now they are undermining the commitments they made to reduce human suffering by supplying Saudi Arabia with some of the deadliest weapons in the world. It’s truly sickening.”

British MPs from Cameron’s own party didn’t like it either, but what meaning does that have if it takes 5 years to issue a report, and moreover he can simply refuse to give evidence?

MPs Deliver Damning Verdict On David Cameron’s Libya Intervention

David Cameron’s intervention in Libya was carried out with no proper intelligence analysis, drifted into an unannounced goal of regime change and shirked its moral responsibility to help reconstruct the country following the fall of Muammar Gaddafi, according to a scathing report by the foreign affairs select committee. The failures led to the country becoming a failed a state on the verge of all-out civil war, the report adds. The report, the product of a parliamentary equivalent of the Chilcot inquiry into the Iraq war, closely echoes the criticisms widely made of Tony Blair’s intervention in Iraq, and may yet come to be as damaging to Cameron’s foreign policy legacy.

It concurs with Barack Obama’s assessment that the intervention was “a shitshow”, and repeats the US president’s claim that France and Britain lost interest in Libya after Gaddafi was overthrown. Cameron has refused to give evidence to the select committee. In one of his few reflections on his major military intervention, he blamed the Libyan people for failing to take their chance of democracy.

The committee, which has a majority of Conservative members, did not have Chilcot-style access to internal papers, but took voluminous evidence from senior ministers at the time, and other key players such as Blair, the chief of the defence staff, Lord Richards, and leading diplomats. The result of the French, British and US intervention, the report finds, “was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of Isil [Islamic State] in north Africa”.

It seems obvious that if there were an impartial international body with the power to prosecute, Bush, Cheney, Blair, Cameron, Hillary etc. etc. (don’t forget France) would be charged with war crimes. And Obama too: his ‘shitshow’ comment must be seen in light of the ‘we came we saw he died’ comment by Hillary Clinton, his Secretary of State. Think he didn’t know what was happening?

Another person who should be charged is Theresa May, Cameron’s Home Secretary from May 2010 till July 2016, and of course Britain’s present PM, who sells as much weaponry to Saudi Arabia as she possibly can while the Saudi’s are shoving the few Yemeni’s they leave alive back beyond the Stone Age. And then May has the gall to talk about humanitarian aid.

Theresa May Defends UK Ties With Saudi Arabia

Theresa May has defended her trip to Saudi Arabia, saying its ties with the UK are important for security and prosperity. The prime minister is facing questions about the UK’s support for the Saudi-led coalition which is fighting rebels in neighbouring Yemen. Labour Party leader Jeremy Corbyn said UK-made weapons were contributing to a “humanitarian catastrophe”. [..] Mrs May said humanitarian aid was one of the issues she would be discussing on her trip. “We are concerned about the humanitarian situation – that’s why the UK last year was the fourth largest donor to the Yemen in terms of humanitarian aid – £103m. We will be continuing with that,” she told the BBC.

[..] Mr Corbyn called for the immediate suspension of UK arms exports to Saudi Arabia. He criticised the “dictatorial Saudi monarchy’s shocking human rights record” and said the PM should focus on human rights and international law at the centre of her talks. “The Saudi-led coalition bombing in Yemen, backed by the British government, has left thousands dead, 21 million people in need of humanitarian assistance and three million refugees uprooted from their homes,” he said. “Yemen urgently needs a ceasefire, a political settlement, and food aid, not more bombing. “British-made weapons are being used in a war which has caused a humanitarian catastrophe.”

The one person who would probably not be in front of such a court is Jeremy Corbyn, opponent of May’s in the June 8 elections. Though there is the issue that he never protested in much stronger terms as an MP. Still, if you have to pick one of the two, what is not obvious?

Theresa May Claims Selling Arms To Saudi Arabia Helps ‘Keep People On The Streets Of Britain Safe’

Theresa May has staunchly defended selling arms to Saudi Arabia despite the country facing accusations of war crimes, insisting close ties “keep people on the streets of Britain safe”. Jeremy Corbyn called on the Prime Minister to halt those sales because of the “humanitarian devastation” caused by a Saudi-led coalition waging war against rebels in Yemen. The Labour leader spoke out after the Parliamentary committee charged with scrutinising arms exports said it was likely that British weapons had been used to violate international law.

The Saudis stand accused of bombing multiple international hospitals run by the charity Médecins Sans Frontières, as well as schools, wedding parties and food factories. In the Commons, Mr Corbyn linked weapons sales to the ongoing refugee crisis, which he said should be Britain’s “number one concern and our number one humanitarian response”. He added: “That is why I remain concerned that at the heart of this Government’s security strategy is apparently increased arms exports to the very part of the world that most immediately threatens our security.

The British Government continue to sell arms to Saudi Arabia that are being used to commit crimes against humanity in Yemen , as has been clearly detailed by the UN and other independent agencies.”

But, in response, Ms May pointed out she had called on Saudi Arabia to investigate the allegations about Yemen when she met with the kingdom’s deputy crown prince at the recent G20 summit in China. The Prime Minister dismissed Mr Corbyn’s suggestion that “what happened in Saudi Arabia was a threat to the safety of people here in the UK”. Instead, she said: “Actually, what matters is the strength of our relationship with Saudi Arabia. When it comes to counter-terrorism and dealing with terrorism, it is that relationship that has helped to keep people on the streets of Britain safe.”

May’s, and Britain’s, utterly mad stance in this is perhaps best exemplified, in one sentence, by her comments during the speedy trip she made to Turkey, again to sell more arms to an at best highly questionable regime. Why do it, why drag your entire nation through the moral gutter for $100 million or a few billion? The military industrial complex.

Theresa May Signs £100m Fighter Jet Deal With Turkey’s Erdogan

Theresa May issued a stern warning to Turkish president Recep Tayyip Erdogan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner.

And once again, no, none of this justifies the Manchester bombing. Neither a government nor an extremist movement has any right to kill innocent people. But let’s make sure we know that neither does.

There’s another aspect to the story. MI6 had close links to the Libyan community in Manchester.

‘Sorted’ by MI5: How UK Government Sent British-Libyans To Fight Gaddafi

The British government operated an “open door” policy that allowed Libyan exiles and British-Libyan citizens to join the 2011 uprising that toppled Muammar Gaddafi even though some had been subject to counter-terrorism control orders, Middle East Eye can reveal. Several former rebel fighters now back in the UK told MEE that they had been able to travel to Libya with “no questions asked” as authorities continued to investigate the background of a British-Libyan suicide bomber who killed 22 people in Monday’s attack in Manchester.

Salman Abedi, 22, the British-born son of exiled dissidents who returned to Libya as the revolution against Gaddafi gathered momentum, is also understood to have spent time in the North African country in 2011 and to have returned there on several subsequent occasions. Sources spoken to by MEE suggest that the government facilitated the travel of Libyan exiles and British-Libyan residents and citizens keen to fight against Gaddafi including some who it deemed to pose a potential security threat.

One British citizen with a Libyan background who was placed on a control order – effectively house arrest – because of fears that he would join militant groups in Iraq said he was “shocked” that he was able to travel to Libya in 2011 shortly after his control order was lifted. “I was allowed to go, no questions asked,” said the source. He said he had met several other British-Libyans in London who also had control orders lifted in 2011 as the war against Gaddafi intensified, with the UK, France and the US carrying out air strikes and deploying special forces soldiers in support of the rebels.

“They didn’t have passports, they were looking for fakes or a way to smuggle themselves across,” said the source. But within days of their control orders being lifted, British authorities returned their passports, he said. Many Libyan exiles in the UK with links to the LIFG [Libyan Islamic Fighting Group ] were placed on control orders and subjected to surveillance and monitoring following the rapprochement between the British and Libyan governments sealed by the so-called “Deal in the Desert” between then-British Prime Minister Tony Blair and Gaddafi in 2004.

According to documents retrieved from the ransacked offices of the Libyan intelligence agency following Gaddafi’s fall from power in 2011, British security services cracked down on Libyan dissidents in the UK as part of the deal, as well as assisting in the rendition of two senior LIFG leaders, Abdel Hakim Belhaj and Sami al-Saadi, to Tripoli where they allege they were tortured.

Torture one day, passports the other. Lovely. And it still gets better: MI6 didn’t just have close contacts with Libyans in Manchester, it knew the alleged perpetrator’s family, and used his father multiple times as on operative:

Manchester Attack as MI6 Blowback

According to Scotland Yard, the attack on the crowd leaving the Ariana Grande concert at Manchester Arena, 22 May, has been perpetrated by Salman Abedi. A bankcard has been conveniently found in the pocket of the mutilated corpse of the ‘terrorist’. This attack is generally interpreted as proof that the United Kingdom is not implicated in international terrorism and that, on the contrary, it is a victim of it.

[..] In 1992, Ramadan Abedi [Salman’s father] was sent back to Libya by Britain’s MI6 and was involved in a British-devised plot to assassinate Muammar Gaddafi. The operation having been readily exposed, he was exfiltrated by MI6 and transferred back to the UK where he obtained political asylum. He moved in 1999 to Whalley Range (south of Manchester) where there was already resident a small Libyan Islamist community. In 1994, Ramadan Abedi returned again to Libya under MI6’s direction. In late 1995 he is involved in the creation of the Libyan Islamic Fighting Group (LIFG), a local branch of Al-Qaeda, in conjunction with Abdelhakim Belhadj.

The LIFG was then employed by MI6 again to assassinate Gaddafi, for a payoff of £100,000. This operation, which also failed, provoked heated exchanges within British Intelligence, leading to the resignation of one David Shayler. Other former members of the LIFG have also lived at Whalley Range, including Abedi’s friend Abd al-Baset-Azzouz. In 2009, this last joined Al-Qaeda in Pakistan and became a close associate of its chief, Ayman al-Zawahiri. In 2011, al-Baset-Azzouz is active on the ground with the NATO operation against Libya.

On 11 September 2012, he directs the operation against the US Ambassador in Libya, Christopher Stevens, assassinated at Benghazi. He is arrested in Turkey and extradited to the US in December 2014, his trial still pending. Nobody pays attention to the fact that Ramadan Abedi has linked LIFG members to the formation of Al-Qaeda in Iraq and, in 2011, he takes part in MI6’s ‘Arab Spring’ operations, and in LIFG’s role on the ground in support of NATO. In any event, Abedi returned to Libya after the fall of Gaddafi and moves his family there, leaving his older children in the family home at Whalley Range.

According to the former Spanish Prime Minister José Maria Aznar, Abdelhakim Belhadj was involved in the assassinations in Madrid of 11 March 2004. Later, he is secretly arrested in Malaysia by the CIA and transferred to Libya where he is tortured not by Libyan or American functionaries but by MI6 agents. He is finally freed after the accord between Saif al-Islam Gaddafi [Gaddafi’s son] and the jihadists.

Luckily, perhaps the Brits are not that stupid:

Half of Britons Blame UK’s Foreign Wars for Terror Attacks at Home

Slightly over a half of people in the UK agree that the nation’s involvement in wars abroad has increased the terror threat to the country, a poll out Friday has showed. The survey found that 53% of 7,134 UK adults sampled by YouGov said they believed wars the UK supported or fought were in part responsible for terror attacks at home. [..] Labour leader Jeremy Corbyn, who made a speech earlier in the day to mark his return to general election campaigning, said UK’s war on terror had not worked. He cited intelligence experts who said foreign wars, including in Libya, threatened the country’s security.

If that is true, Theresa May obviously should have no chance of winning. May can and will try to use the horror of Manchester, and the subsequent pause in the campaign, to strengthen her position in the upcoming election, by playing on people’s fear and making them believe she’s in control. Even if the very attack itself makes clear that she’s not. The Tories have already attacked Corbyn for saying their policies have failed; it was the wrong time to say that, according to them.

But it’s not. It’s the very best time. This is when people pay attention. And having this discussion doesn’t disrespect the victims of Manchester. If anything, it shows more respect than not having the discussion. Because you want to make sure this doesn’t happen again, neither here nor there. And to achieve that, you have to look at why these things happen.

An 8-year old child in Manchester, just like one in Mosul or Aleppo, is innocent. Yourself, perhaps not so much. The politicians you vote into power, and the media you read and watch to inform you, not a chance. Guilty as hell.

 

 

Aug 042016
 
 August 4, 2016  Posted by at 9:22 am Finance Tagged with: , , , , , , ,  5 Responses »
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Howard Hollem George Lane April 1942
“George Lane, served in the last war with the British Army from Vimy Ridge to the Occupation. Two of his sons are in the American Army, one with the Air Corps in Australia. His daughter volunteered for the Women’s Army Auxiliary Corps. Seven of his nephews are in the British Army”

 

 

With the Bank of England about to announce its latest set of desperate measures today, the first since the Brexit, I accidentally stumbled upon an article I wrote on January 16 2012, well over 4 1/2 years ago, in the Automatic Earth’s last days at Blogger. Posting it again here seems appropriate 5 weeks after the Brexit, because the article shows you that the referendum result did not come out of nowhere, no matter what many people claim. The British economy was already doing very poorly, and already failing millions of people, going into 2012.

Note: of course not all predictions made back then played out the way they were made, but I’m more interested in the overall picture. For instance, unemployment numbers are not as dire as forecast, but that hides the deterioration in the quality of jobs, and what they actually pay, much as that happens in the US. Bubbles in stocks and housing hide a lot too. David Cameron’s rule has been hard on the poorer British people, and it will take a long time for that to be corrected. I changed the coding just a little bit (Blogger vs WordPress), nothing big, so it looks a bit different. Here’s from early 2012, happy time travel:

 

 

Ilargi: There is a relative silence in the international financial press when it comes to Britain. The economic situation of continental Europe gets almost all the attention. Every now and then someone in France or Germany states that Britain, too, should be downgraded, like when S&P cut the ratings of 9 European countries, but such statements attract hardly any interest at all. This might not be overly wise, though.

At the end of last year, Tyler Durden at ZeroHedge published a graph from Haver Analytics/Morgan Stanley that should probably have sounded alarm bells quite a bit louder than it did.

Still, this graph would seem to indicate that the only core issue in the UK is its outsize financial sector with its outsize debt. From time to time, however, news articles pop up that seem to indicate there’s more going on than trouble in the City of London.

I found this one alarmingly interesting, for instance, from James Hall in the Telegraph on January 4:

One million people take out emergency loans to pay mortgage

Almost one million Britons have taken out an emergency ‘payday’ loan to help pay their rent or mortgage in the last year, according to Shelter, the housing charity.

The high degree of borrowing highlights the ‘spiral of debt’ that people are falling into to keep a roof over their head, Shelter said. The charity also found that seven million Britons are relying on some form of credit to help pay their housing costs.

Campbell Robb, Shelter’s chief executive, said: ‘These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.’

Ilargi: Payday loans to pay off your mortgage? Sounds like perhaps Britain has a substantial hidden real estate problem, a pre-shadow inventory one that could spiral out of control at a rapid clip.

On January 9, the same James Hall had this follow-up:

Six million households have only five days’ savings

Around six million households would be unable to survive for more than five days if they stopped being paid, such are the low levels of savings among Britons, new research shows.

A new report from First Direct, the bank, warns that one in three UK households have less than £250 in accessible savings. A fifth of all households have no savings at all.

The bank said that £250 is the equivalent of three days’ average monthly household take-home pay. With average monthly outgoing currently at £1,536, these savings would last just five days.

Ilargi: Obviously, the two groups, those that take out loanshark payday loans to keep a roof over their head, and those that live paycheck to paycheck, overlap each other to a large extent.

Still, what makes it striking is the sheer number of people affected. One million people need emergency loans to keep their families in their homes, while six million households have nothing whatsoever saved for a rainy day.

If we put the average household size at 2.5 people, that means that, out of 60 million living in Britain, 2.5 million are on the verge of losing their homes, and 15 million, or 25% of the population, risk having to cut on their basic needs, food and heating, if they hit even the slightest speedbump.

And what are the chances this situation will improve any time soon? It doesn’t look good; in fact it looks set to worsen. While there’s no lack of denial, an increasing number of voices admit that the British economy has already slipped back into recession. This is from the BBC this morning:

UK in recession say Item Club economic forecasters

The UK may have already slipped back into recession, economic forecaster the [Ernst&Young] Item Club has warned. The think tank said gross domestic product shrank in the final quarter of last year and would contract again in the current three-month period.

It said that even if the eurozone could resolve its problems the UK economy would grow by just 0.2% this year. It also predicted unemployment would rise by a further 300,000 to just below three million people. [..]

Meanwhile, the Chartered Institute of Personnel and Development said unemployment would stay above 2.5 million until at least 2016, peaking at 2.9 million next year. Chief economic adviser John Philpott said the jobless rate would rise to 8.8% at the end of next year. [..]

Another forecast from the Centre for Economics and Business Research said the UK would actually shrink this year by 0.4% and by a full 1% if the eurozone broke up.

Ilargi: Nor is it hard to find an ironic twist in all this. In what depicts a fast growing chain of events, Zoe Wood reports for the Guardian:

Royal Bank of Scotland pulls out of deal to rescue Peacocks

More than 13,000 retail jobs are on the line at value fashion group Peacocks after Royal Bank of Scotland walked away from restructuring talks at the heavily indebted retail chain.

Peacocks may have to appoint administrators after the state-backed lender had an abrupt change of heart about a deal to refinance the retailer’s £600m debt pile, which would have involved risking more money in the business. RBS and Barclays were in the driving seat of the complex debt-for-equity negotiations – which were said to involve 18 funds and lenders – as they are owed the most. Both banks are owed more than £100m.

Peacocks’ advisers have been trying to put together a rescue deal for months, but talks broke down at the weekend, leaving the future of the store, which has 550 branches and employs around 10,000 staff, hanging in the balance. [..] “It’s quite a complex deal,” said one insider. “It was all going well until RBS walked away last week. There are still conversations going on.” [..]

RBS is facing a series of tough decisions this year as a number of struggling high-street chains, including HMV and Clinton Cards, are reliant on its largesse. “Each company restructure is judged on its own merits, but clearly the difficult conditions that retailers face is an important factor,” said an RBS spokesman. [..]

A string of high-street chains including La Senza, Blacks Leisure and Barratts Priceless have called in administrators in recent weeks as trading failed to produce enough cash to cover costs such as rent and interest payments on loans.

Ilargi: With the country in a recession, but hardly anyone willing to concede that to date, least of all its government, it’s no wonder that things like this happen, mostly hidden from sight.

The ironic twist to it is provided by that fact that RBS is 70% owned by the British government, which has poured billions of pounds into the bank, and then lets it make decisions that cost 10’s of 1000’s of jobs.

I don’t want to get into a political debate about this; however, protecting banks with taxpayer funds, but not jobs, is a decision that is of course as political as it is ironic. Letting bailed out bank executives make decisions that cut all these jobs and at the same time pay themselves multi-million dollar bonuses is way beyond ironic.

But all of the above is just today’s prologue. I received an article yesterday that outdoes it all, and then some.

John Ross, Visiting Professor at Antai College of Economics and Management at Jiao Tong University in Shanghai writes a real stunner on his blog Key Trends in Globalisation:

The incredible shrinking UK economy

The magnitude of the blow suffered by the UK economy since the beginning of the financial crisis is very considerably minimized by not presenting it in terms of a common international yardstick. Gauged by decline in GDP, using a common international purchasing measure, dollars, no other economy in the world has shrunk even remotely as much as the UK.

As most countries produce only annualized GDP data it will be necessary to wait before a comprehensive global comparison can be made for 2011. However it is clear no substantial growth in dollar terms took place in the UK economy during that year – GDP at national current prices rose only 1.4 per cent between the 1st and 3rd quarters and the change in the pound’s exchange rate against the dollar during the year was a marginal 0.3 per cent.

Therefore there will have been no significant recovery from the UK data set out in Table 1 below, and the gap between the UK and other European economies, which form the next worst performing major group, is too great to have been qualitatively affected by changes in the Euro’s exchange rate – the Euro declined against the pound by only 3.3 per cent in 2011.

Table 1 shows that the fall in UK GDP in 2007-2010 was $562 billion compared to the next worst performing national economy, Italy, with a decline of $65 billion – i.e. the decline in UK GDP in the common measuring yardstick of dollars was more than 8 times that of the next worst performing national economy. Table 1 shows the 10 national economies suffering the greatest declines in dollar GDP.

It is also extremely striking that the UK’s decline was more than two and a half times that of the entire Eurozone.

The UK accounted for a somewhat astonishing 77% of the EU’s decline.

Expressed in percentage terms the situation is no better. Of all economies for which World Bank data is available only Iceland, with a decline in dollar GDP of 38.4%, suffered a worst percentage fall than the UK – even bail out economy Ireland, with a fall of 18.4%, outperformed the UK economy.

Two trends intersected for the UK’s performance to be so much worse than that of any other economy. First, contrary to the government’s anti-European rhetoric, UK economic performance in constant price national currency terms has been significantly worse than the Eurozone during the financial crisis (Figure 2). [..]

… between the beginning of 2008 and the beginning of 2012, the pound’s exchange rate has fallen by 21.0% against the dollar compared to the Euro’s 11.4% drop in the same period. The multiplicative effect of the severity of the relative drop in constant price GDP and the fall in the pound’s exchange rate accounts for the unequalled decline in UK GDP in dollars.

As at present the UK economy shows no substantial sign of recovery, the present UK government, which maintains a steadfastly ostrich like attitude towards Europe in particular, and most other countries in general, may argue that a measure in terms of dollars at current exchange rates is irrelevant – the UK currency is the pound and what counts is constant price shifts. Such an argument is false and an attempt to disguise the true scale of the decline of the UK economy.

The internationally unmatched decline in UK dollar GDP is a huge fall in real international purchasing ability. The far higher than targeted inflation in the UK during the last two years, which has substantially eroded the population’s living standards, is itself in part a reflection of the decline in the UK’s exchange rate and consequent raising of import prices. In short, the decline in the international purchasing power of the UK’s economy translates into a direct fall in real incomes.

It may also be seen that the government’s claim that the UK is outperforming Europe and the Eurozone is entirely without foundation even in constant price national currency terms. But when measured in terms of real international comparisons, i.e. in dollars, the UK’s performance is incomparably worse than Europe’s.

It appears extremely unlikely that the UK’s economy will escape from this circle of decline in the next period. The austerity policies pursued by the present UK government have substantially slowed the economic recovery that was taking place in 2009 and the first part of 2010 – between the 3rd quarter of 2010 and the 3rd quarter of 2011 the UK economy grew by only 0.5%. [..]

Even if any partial recovery takes place, for example by some increase in the exchange rate of the pound against the Euro, the sheer magnitude of the decline in the UK economy makes it implausible that this could be on a scale sufficient to reverse the fall in its relative international position.

Ilargi: Britain lost 20% of GDP from 2007 – 2011. Against this backdrop, and don’t let’s forget the over-600% debt to GDP ratio just for Britain’s financial sector, which will inevitably lead to more – calls for – bailouts, what is the Cameron government’s response?

First of all, austerity measures. Which will hit those people very hard who are in the bottom 25% or so who already have no savings, no nothing, to fall back on. And which will also lead to a rise in unemployment, which in turn will exacerbate the vicious problem circle.

Cameron also distances himself, and his country, from continental Europe, even though that is Britain’s main export destination. How smart is that?

Britain is a country of relatively large regional disparities as well as wealth disparities. The already rich center increasingly sucks up the remaining wealth of the periphery of society. There is then only one possible outcome of those one million people paying their rents and mortgages with payday loans: the British housing bubble will burst sooner rather than later.

Tax revenue has only one way to go as well. Down. So what will Cameron use to support the banks? How will he attempt to prevent a large scale repeat of last year’s Tottenham riots?

Looking at all this, we also need to wonder how much longer, and why in the first place, Britain is perceived as a safe haven, with its sovereign bonds – gilts – much sought after. Sure, Britain has its own currency and central bank, it can “print”, it can do QE 1001, but it’s not as if it hasn’t already tried that route. And still lost 20% of GDP.

Whatever it decides to do, it seems safe to presume that Britain might well steal some of the limelight away from Greece and Italy in the not too distant future.

 

 

Me in 2016 again for a moment: after reading this -I wrote it 55(!) months ago-, does the Brexit still surprise you?

 

 

Jun 292016
 
 June 29, 2016  Posted by at 8:06 am Finance Tagged with: , , , , , , , ,  1 Response »
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Walker Evans Shoeshine stand, Southeastern US 1936

16 Reasons To Celebrate Brexit’s Win (Bandow)
Brexit, a Step in the Right Direction (OTM)
Brexit Pulls Central Bankers In Conflicting Directions (WSJ)
When Central Planning Fails (ZH)
Cameron Wins Brexit Breathing Space At Gloomy EU Summit (AFP)
Draghi Wishes for a World Order Populists Will Love to Hate (BBG)
Exposure Of Asian Economies To UK Banks Will Cause Sharp Slowdown (SCMP)
Japan Inc.’s Yen Nightmare Looms at Large Exporters (BBG)
Robot Lawyer Overturns 160,000 Parking Tickets In London And New York (G.)
Oil Is Still Heading to $10 a Barrel (A. Gary Shilling)
A Zombie Is A Terrible Thing To Behold (Jim Kunstler)
Elites, ‘You’re Fired!’ (Dmitry Orlov)
The World Is Rejecting Globalization (Bernie Sanders)
Dutch PM Rutte Wants ‘Binding’ Assurances Over EU’s Ukraine Deal (R.)

A tas less Brexit than the past few days. Since most of the ‘journalism’ is so ‘end of the world’ one-sided, let’s start with some different views.

‘Doug Bandow is a former Special Assistant to President Ronald Reagan and author of Foreign Follies: America’s New Global Empire. He is a Senior Fellow at the Cato Institute.’

16 Reasons To Celebrate Brexit’s Win (Bandow)

1. Average folks took on the commanding heights of politics, business, journalism and academia and triumphed. Obviously, the “little guy” isn’t always right, but the fact he can win demonstrates that a system whose pathways remain open to those the Bible refer to as “the least of these.” The wealthiest, best-organized and most publicized factions don’t always win.

2. Told to choose between economic bounty and self-governance, a majority of Britons chose the latter. It’s a false choice in this case, but people recognized that the sum of human existence is not material. The problem is not just the decisions previously taken away from those elected to govern the UK; it’s also the decisions that would have been taken away in the future had “Remain” won.

3. Those governed decided that they should make fundamental decisions about who would rule over them. The Eurocrats, a gaggle of politicians, bureaucrats, journalists, academics, lobbyists and businessmen were determined to achieve their ends no matter what the European people thought. A constitution rejected? Use a treaty. A treaty rejected? Vote again. A busted monetary union? Force a political union. And never, ever consult the public. No longer, said the British.

13. Schadenfreude is a terrible thing, but almost all of us glory in the misfortune of at least some others. The recriminations among the Remain camp in Britain are terrible to behold. Labour Party tribunes blame their leader Jeremy Corbyn, whose Euroskeptic past created suspicions inflamed by his criticisms of the EU while nominally praising it. His supporters blame the Scottish nationalists for not turning out their voters. Former Liberal-Democrat Party leader and deputy Prime Minister Nick Clegg trashed Cameron and Chancellor of the Exchequer George Osborne for seeking political advantage by holding the referendum. The Scots are mad at the English. Irish “republicans” in Northern Ireland also are denouncing the English, while their longtime unionist rivals are trashing the republicans. The young are blaming the old for ruining their futures. Apparently, America isn’t the only home for myopic bickering.

14. Sometimes the advocate of a lost cause triumphs. Nigel Farage has been campaigning against the EU forever, it seems. Yet every advance appeared to trigger a retreat. His United Kingdom Independence Party picked up support, but then had to shed some of those whose views really were beyond the pale. UKIP was able to break into the European Parliament, which it hated, but won only one seat at Westminster, despite receiving 3.9 million votes, or 12.6% of the total, in last year’s election. One reason was that Cameron and the Tories stole his issue, promising a referendum on the EU—in which they then opposed separation. Election night he admitted that it looked like the UK would choose to remain. Except the British people ended up taking his advice.

Read more …

From Charles’ “correspondent” Ron. Brexit as a natural phenomenon. “I believe we have entered a critical but wonderful age, the age of reemergence of decentralization and decentralized governance; may we preserve this opportunity for the gift that it is to life, liberty and property.”

Brexit, a Step in the Right Direction (OTM)

“Mankind’s fundamental quest is to survive and prosper by solving scarcity. BREXIT is simply a modern example of an old pattern of behavior that seeks to resolve scarcity, (the shrinking pie of economic opportunity and ownership), through reconfiguration of relationships to reallocate resources to enable more equitable equilibrium in supply and demand. As a prelude to BREXIT, housing in Britain, in particular, had become out of reach for those that have labored under the assumption that hard work, education, and a good job would lead to an ability to own a home, which many young Britons now find economically out of their reach; many Britons blame the government’s monetary policy of 0% interest rates for inflation and unaffordable housing.

In another sign of frustration, a few years ago a graffiti sign expressed a sentiment of the youth in Britain, one of them posted at Bell Lane near Liverpool St. Station, it read: ‘Sorry, the lifestyle you ordered is out of stock.’ The Bank of England has continued policies that have contributed to the exasperation expressed through the referendum, this along with the burdens of having an open country and economy that increased labor supply which in turn increased demand for housing and available credit to driving the asset bubble. This type of scarcity, being seen in Britain, is very common throughout history and is generally driven by the confluence of interests that connects and drives centralized, unified policies between bankers, merchants (in today’s world global corporations) and governments.

Turning back the clock a bit, I would like to include a couple of quotes by an amazingly brilliant and eloquent commentator in economics, Fredic Bastiat in his writings from 1850: 1) “I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law – by force – and to compel us to pay for them with our taxes.” 2) “Self-preservation and self-development are common aspirations among all people. And if everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing. But there is also another tendency that is common among people. When they can, they wish to live and prosper at the expense of others.”

Read more …

Currency wars with an twist.

Brexit Pulls Central Bankers In Conflicting Directions (WSJ)

ECB President Mario Draghi urged central banks to better coordinate policies to confront the problem of ultralow inflation in an era of slow global growth, underscoring the conundrum he and his associates face in the wake of Britain’s vote to leave the European Union. The guardians of the global monetary system face conflicting pressures as they seek to support their economies amid new turbulence. They also run the risk that their efforts will work at odds with each other and destabilize the financial system. Central banks should examine whether their policies are “properly aligned,” Mr. Draghi said at an ECB conference in Portugal. He further warned that currency devaluations aimed at boosting national competitiveness are a “lose-lose” for the global economy.

“In a globalized world, the global policy mix matters—and will likely matter more as our economies become more integrated,” Mr. Draghi said. “The speed with which monetary policy can achieve domestic goals inevitably becomes more dependent on others.” His warning resonated as central banks try to respond to the looming Brexit. Last week’s vote sent currencies spinning, pushing up the dollar and Japanese yen and driving down the euro and the British pound. It also sent investors away from stocks and risky bond investments. Markets settled on Tuesday after two days of sharp selling of risky assets. The Bank of England faces the risk of recession paired with the threat of inflation. If it lowers interest rates to boost growth, it could put additional downward pressure on its currency which stirs inflation. If it stands still, economic growth could suffer.

Read more …

Diminishing returns on the biggest debt drive in history will diminish with a vengeance.

When Central Planning Fails (ZH)

Things have not been going according to plan for Kuroda-san and his policy-making ‘Peter-Pan’s in Japan. Since The Bank of Japan unleashed NIRP on its ‘saving’ community – which, according to the textbooks would force money to reach for riskier investments, pumping stocks up, or flush cash into inflationary consumption – stock prices have collapsed and bond prices have exploded… In fact, in six months, bonds are outperforming stocks by a central-bank-credibility-crushing 70%!!! Rate cuts…not working.

And it’s not just The BoJ that is struggling – since The Fed hiked rates, The S&P is down 3.5% and Treasuries are up 16%!!

Read more …

Behind the rhetoric, the EU is powerless to demand on the timeline. Moreover, guys like Juncker and Tusk are starting to fear for their cushy jobs.

Cameron Wins Brexit Breathing Space At Gloomy EU Summit (AFP)

EU leaders gave Britain breathing space Tuesday by accepting it needed time to absorb a shock Brexit vote before triggering a divorce but insisted the crunch move could not wait months. A humiliated Prime Minister David Cameron came face-to-face with European colleagues for the first time since last week’s vote at a Brussels summit which leaders said was “sad” but pragmatic. Trillions of dollars have been wiped off world markets since Thursday’s vote to leave the EU, while the United Kingdom’s future has been thrown into doubt after Scotland said it would push for a new independence referendum. Further shockwaves juddered through British politics as Jeremy Corbyn, leader of the main opposition Labour party, vowed to fight on despite losing a crushing no-confidence vote among his party’s lawmakers.

Thousands of people took to the streets of London, which voted overwhelmingly to stay in the EU, to protest against the referendum result, waving EU flags and placards saying: “Stop Brexit”. After hours of talks in Brussels, EU President Donald Tusk said that he understood that time was needed “for the dust to settle” in Britain before the next steps can be taken. But reflecting wider concerns of a domino effect of other states wanting to leave, EC president Jean-Claude Juncker said Britain did not have “months to meditate”. He set a clear timetable for triggering Article 50, the EU treaty clause that begins the two-year withdrawal process, after Cameron’s successor takes office in early September. Juncker said that if the new prime minister was a pro-remain figure, Article 50 should be activated “in two weeks after his appointment” – but if it was a supporter of the leave campaign, “it should be done the day after his appointment,” he added.

Read more …

Note how the term ‘populist’ is regurgitated by media like Bloomberg, and then applied to anyone ‘we’ are supposed to eye with suspicion. Beppe Grillo, Nigel Farage, Hugo Chavez, Podemos, there’s a long list by now, and all they have in common is resistance to ‘The Model’. Problem of course is, when used this way, a term loses its meaning. But for now, everyone takes for granted that anyone who’s a Euroskeptic is also per definition a populist.

Draghi Wishes for a World Order Populists Will Love to Hate (BBG)

Mario Draghi has just pushed the boundaries of central banking further into the realm of globalization, at a time when globalization is on the run. Following the work of Reserve Bank of India Raghuram Rajan and others, the ECB president on Tuesday became the most senior global central banker so far to call for more explicit policy cooperation between jurisdictions. Draghi’s aim is to mitigate the damaging cross-border side-effects brought on by the combination of monetary activism and tighter global financial links. “We have to think not just about whether our domestic monetary policies are appropriate, but whether they are properly aligned across jurisdictions,” Draghi said at the ECB’s annual policy forum in Sintra, Portugal. “In a globalized world, the global policy mix matters.”

While Draghi made no explicit reference in the speech to the U.K.’s June 23 decision to quit the EU, a powerful rejection by voters of globalization, he told European leaders just hours later that he leans toward the more pessimistic forecasts of the impact of Britain’s vote on growth in the rest of the region, according to a document obtained by Bloomberg News. [..] Policy coordination is a laudable thought as long as it’s not taken too far, said Omair Sharif at Societe Generale in New York. “What he’s getting at is simply the idea that we don’t have a great understanding of all the financial linkages and capital flows,” Sharif said. “That certainly does call for better understanding among central banks, not necessarily coordinated policies.”

Read more …

It was all borrowed growth anyway. And you can’t borrow growth.

Exposure Of Asian Economies To UK Banks Will Cause Sharp Slowdown (SCMP)

Asian economies may slow down sharply and currencies may be pushed broadly lower as the Brexit contagion hits Asia, with Hong Kong likely to fall into a recession and the Chinese yuan to decline further, according to analysts. Britain’s dramatic decision to break from the European Union has roiled financial markets and sent shockwaves across the globe. Asian economies could soon feel deeper pains through several channels, including the financial sector, trade, investor confidence, and investor psychology, according to analysts from Nomura on Tuesday. “It’s not a temporary contagion. There are going to be several waves [on Asia],” said Rob Subbaraman at Nomura in a conference call.

Subbaraman said his team had slashed GDP growth forecasts for all major economies in the region and put Asia’s aggregate growth at 5.6% in 2016, down from a previous projection of 5.9%. In the region, Hong Kong may be hit the most, with its 2016 GDP likely to shrink by 0.2%, compared with a previous estimate of 0.8% growth. In 2015, Hong Kong’s economy grew by 2.4%. Singapore’s projected growth rate for 2016 was also cut sharply to 1.1%, versus an estimate of 1.8% previously. “Hong Kong and Singapore are both financial hubs and very exposed to UK banks,” said Subbaraman. “They also have managed exchange rates, which give central banks less leeway in rate policy. There is also a risk that the HIBOR (Hong Kong Interbank Offered Rate) rates could start rising.”

In particular, the reasons that they forecast an “outright recession” for the Hong Kong economy are mainly related to a stronger Hong Kong dollar, which is rising with the US dollar amid global risk aversion. Hong Kong’s reliance on exports also leaves it exposed to Brexit risks, as the city’s merchant exports to the UK and the rest of the EU accounted for 14% of GDP in 2015, the highest in Asia, Nomura analysts said.

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More currency wars with more twist.

Japan Inc.’s Yen Nightmare Looms at Large Exporters (BBG)

For a sense of how much the surging yen will hurt Japanese earnings, look at the gap between where companies expected the currency to trade and where it actually is. On average, large manufacturers calculated their earnings forecasts assuming the yen would be about 114 per dollar, based on data from the Bank of Japan. With the yen’s latest rally, the gap with that forecast is the widest since the global financial crisis in 2008.

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Cities won’t be happy with this. Parking tickets are a large source of income.

Robot Lawyer Overturns 160,000 Parking Tickets In London And New York (G.)

An artificial-intelligence lawyer chatbot has successfully contested 160,000 parking tickets across London and New York for free, showing that chatbots can actually be useful. Dubbed as “the world’s first robot lawyer” by its 19-year-old creator, London-born second-year Stanford University student Joshua Browder, DoNotPay helps users contest parking tickets in an easy to use chat-like interface. The program first works out whether an appeal is possible through a series of simple questions, such as were there clearly visible parking signs, and then guides users through the appeals process.

The results speak for themselves. In the 21 months since the free service was launched in London and now New York, DoNotPay has taken on 250,000 cases and won 160,000, giving it a success rate of 64% appealing over $4m of parking tickets. “I think the people getting parking tickets are the most vulnerable in society. These people aren’t looking to break the law. I think they’re being exploited as a revenue source by the local government,” Browder told Venture Beat. The bot was created by the self-taught coder after receiving 30 parking tickets at the age of 18 in and around London. The process for appealing the fines is relatively formulaic and perfectly suits AI, which is able to quickly drill down and give the appropriate advice without charging lawyers fees.

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Shilling’s not had his strongest year so far, but duly noted.

Oil Is Still Heading to $10 a Barrel (A. Gary Shilling)

Back in February 2015, the price of West Texas Intermediate stood at about $52 per barrel, half of its 2014 peak. I argued then that a renewed decline was coming that could drive it below $20, a scenario regarded by oil bulls as unthinkable. But prices did fall further, dropping all the way to a low of $26 in February. Since then, crude rallied to spend several weeks flirting with $50 per barrel, a level not seen since last year. But it won’t last; I’m sticking to my call for prices to decline anew to $10 to $20 per barrel. Recent gains have little to do with the fundamentals that led to the collapse in the first place.

Wildfires in the oil-sands region in Canada, output cuts in Nigeria and Venezuela due to political unrest, and hopes that American hfracking would run out of steam are the primary causes of the recent spurt. But the world continues to be awash in crude, and American frackers have replaced the OPEC as the world’s swing producers. The once-feared oil cartel is, to my mind, pretty much finished as an effective price enforcer. Even OPEC’s leader, Saudi Arabia, is acknowledging the new reality by quashing recent attempts to freeze output, borrowing from banks and preparing to sell a stake in its Aramco oil company as it tries to find new sources of non-oil revenue.

The Saudis and their Persian Gulf allies continue to play a desperate game of chicken with other major oil producers. Cartels exist to keep prices above equilibrium, which encourages cheating as cartel members exceed their allotted output and other producers take advantage of inflated prices. So the role of the cartel leader, in this case Saudi Arabia, is to cut its own output, neutralizing the cheaters to keep prices up. But the Saudis suffered market-share losses from their previous production cuts. OPEC has effectively abandoned restraints, with total output soaring to as high as 33 million barrels per day at the end of last year:

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“..a zombie holding a bag of dog-shit is like unto the end of the world..”

A Zombie Is A Terrible Thing To Behold (Jim Kunstler)

The politics of Great Britain are now falling apart landslide-style. Since just about everybody in or near power can be blamed for the national predicament, there’s nobody to turn to, at least not yet. The Labour party just acted out The Caine Mutiny, starring Jeremy Corbyn as Captain Queeg. The Tory Cameron gave three months notice without any plausible replacement in view. Now Cameron’s people are hinting in the media that they can just drag their feet on Brexit, that is, not do anything to enable it from actually happening for a while. Of course, that’s what the monkeyshines of banking and finance have done: postponed the inevitable reckoning with the realities of our time: growing resource scarcity, population overshoot, climate change, ecological holocaust, and the diminishing returns of technology.

Britain illustrates the problem nicely: how to produce “wealth” without producing wealth. It’s called “the City,” their name for the little district of London that is their Wall Street. In the absence of producing real things, the City became the driver of the UK’s economy, a ghastly parasitical organism that functioned as the central transfer station for the world’s swindles and frauds, churning the West’s dwindling residual capital into a slurry of fees, commissions, arbitrages, rigged casino bets, and rip-offs. In the process, it enabled the ECB to run the con-job that the EU became, with the fatal distortions of credit that have put its members into a ditch and sent the private European banks off a cliff, Thelma and Louise style.

The next stage of this protean global melodrama is what happens when currencies and interest rates become completely unglued from their assigned roles as patsies in financial racketeering. Sooner or later we’ll know what’s going on in the vast shadowy gloaming of “derivatives,” especially the “innovative” arrangements that affect to be “insurance” against losses in currency and interest rate “positions” — bets made on the movements of these things. When currencies rise or fall quickly, these so-called “swaps” are “triggered,” and then some hapless institution is left holding a big bag of dog-shit. A zombie is a terrible thing to behold, but a zombie holding a bag of dog-shit is like unto the end of the world.

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Dmitry uses the same definition of fascism I did the other day. More people should, because it tells you who the real fascists are.

Elites, ‘You’re Fired!’ (Dmitry Orlov)

• Patriotism is one’s love of one’s native land and people. It is a natural, organic result of growing up in a certain place among a certain people, who have also grown up there, and who pass along a cultural and linguistic legacy that they all love and cherish. This does not imply that those not of one’s family, neighborhood or region are in any way inferior, but they are not one’s own, and one loves them less.

• Nationalism is a synthetic product generated using public education and is centered around certain hollow symbols: a flag, an anthem, some yellowed pieces of paper, a few creation myths and so on. It is supported by certain rituals (parades, speeches, handing out of medals) that comprise a civic cult. The purpose of nationalism is to support the nation-state. Where nationalism serves the needs of one’s native land and people, nationalism and patriotism become aligned; when it destroys them, nationalism becomes the enemy and patriots form partisan movements, rise up and destroy the nation-state.

• Fascism is the perfect melding of the nation-state and corporations, in the course of which the distinction between public and private interests becomes erased and corporations come to dictate public policy. An almost perfect expression of fascism is the recent transatlantic and transpacific trade agreements negotiated in secret by the Obama administration, which at the moment, to everyone’s great relief, seem to be dead in the water.

It should be obvious that fascism has to be defeated, and if we were to pick just one perfectly good reason to fire the transatlantic elites then it is to thwart this corporate power grab. But it does not stop there, because nationalism and patriotism are also in play. Patriotism is a natural, core human value without which all you have is a rootless population shifting about opportunistically. Nationalism is a relatively recent innovation (nation-states are a 17th century invention) and as such a dangerous one, but in the case of some of the older and more successful nation-states it does provide significant benefits: a cherished cultural tradition anchored to a national language and literature, the ability to keep the peace and to repel outside aggression. And then there is the EU, with its flag depicting a constellation of stars that are obviously orbiting something—something that could only be a black hole, since it is invisible.

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Bit by bit, Brexit gets defined in its real perspective. Bernie Sanders needs numbers too much to make his case, but the case is obvious.

The World Is Rejecting Globalization (Bernie Sanders)

Surprise, surprise. Workers in Britain, many of whom have seen a decline in their standard of living while the very rich in their country have become much richer, have turned their backs on the EU and a globalized economy that is failing them and their children. And it’s not just the British who are suffering. That increasingly globalized economy, established and maintained by the world’s economic elite, is failing people everywhere. Incredibly, the wealthiest 62 people on this planet own as much wealth as the bottom half of the world’s population — around 3.6 billion people. The top 1% now owns more wealth than the whole of the bottom 99%. The very, very rich enjoy unimaginable luxury while billions of people endure abject poverty, unemployment, and inadequate health care, education, housing and drinking water.

Could this rejection of the current form of the global economy happen in the United States? You bet it could. During my campaign for the Democratic presidential nomination, I’ve visited 46 states. What I saw and heard on too many occasions were painful realities that the political and media establishment fail even to recognize. In the last 15 years, nearly 60,000 factories in this country have closed, and more than 4.8 million well-paid manufacturing jobs have disappeared. Much of this is related to disastrous trade agreements that encourage corporations to move to low-wage countries. Despite major increases in productivity, the median male worker in America today is making $726 dollars less than he did in 1973, while the median female worker is making $1,154 less than she did in 2007, after adjusting for inflation.

Nearly 47 million Americans live in poverty. An estimated 28 million have no health insurance, while many others are underinsured. Millions of people are struggling with outrageous levels of student debt. For perhaps the first time in modern history, our younger generation will probably have a lower standard of living than their parents. Frighteningly, millions of poorly educated Americans will have a shorter life span than the previous generation as they succumb to despair, drugs and alcohol. Meanwhile, in our country the top one-tenth of 1% now owns almost as much wealth as the bottom 90%. 58% of all new income is going to the top 1%. Wall Street and billionaires, through their “super PACs,” are able to buy elections.

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This makes it look like Rutte plays hardball, or almost. In reality, he’s looking for ways to disregard the outcome of the Dutch referendum. Already, while the applicable law says that the outcome should be implemented by the government as soon as possible, Rutte just keeps pushing it forward. After July 1, when Holland is no longer chair of the EU, pressure will rise on both sides. But if Rutte tries to sign the Ukraine deal despite the referendum, ‘binding assurances’ or not, he should be voted out of office ASAP. The Dutch people said NO, and Rutte can‘t turn that into a YES.

Dutch PM Rutte Wants ‘Binding’ Assurances Over EU’s Ukraine Deal (R.)

Dutch Prime Minister Mark Rutte asked European Union leaders on Tuesday for “legally binding” assurances to address his country’s concerns over a trade and association deal with Ukraine and said The Hague would block it otherwise. The Netherlands is the only EU state not to have ratified the bloc’s agreement on closer political, security and trade ties with Kiev following a referendum in April in which the Dutch voted overwhelmingly to reject it. The agreement with Kiev, reached after Russia annexed Crimea from Ukraine in March 2014 and then backed rebels fighting government troops in the east of the country, is being provisionally implemented now, but its future hinges on the Netherlands.

“What we need is a legally binding solution, which will address the many worries and elements of the discussion in the Netherlands leading up to the referendum,” Rutte said after an EU leaders’ summit in Brussels to discuss the aftermath of Britain’s vote last week to leave the bloc. The debate around the referendum in the Netherlands, which showed dissatisfaction with Rutte’s government and policy-making in Brussels, zeroed in on whether the agreement with Kiev would herald EU membership for Ukraine and its 45 million people. “The exact form – I don’t know yet,” Rutte said. “It could be that we have to change the text, it could be that we can find a solution which will not involve changing the text of the association agreement. I don’t know yet.

“If I am not able to achieve that … we will not sign,” he said. “We will try to find a solution, it will be difficult, the chances are small that we will get there but I think we should try.” The whole deal could be derailed should The Hague refuse to ratify it, but a senior EU official said he hoped this could be solved by the end of the year.

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Jun 272016
 
 June 27, 2016  Posted by at 9:10 am Finance Tagged with: , , , , ,  9 Responses »
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Harris&Ewing District National Bank, Washington, DC 1931

I Walked From Liverpool To London. Brexit Was No Surprise (G.)
UK Will Emerge From Brexit Just Fine, It’s Europe That’s In Trouble (CNBC)
Britain ‘May Never’ Trigger EU Divorce (AFP)
Post-Brexit Global Equity Loss Of Over $2 Trillion Worst Ever: S&P (R.)
Firms Plan To Quit UK As City Braces For More Post-Brexit Losses (G.)
Brexit: Most Commentaries Miss The Point (Kuttner)
Raw Democracy: Why The British Said No To Europe (Pilger)
China Devalues Yuan Most In 10 Months, Warns Of Brexit “Butterfly Effect” (ZH)
Why Xi Refuses to Let China’s Zombies Die (Pesek)

The real world.

I Walked From Liverpool To London. Brexit Was No Surprise (G.)

On 2 May this year, I set off to walk from Liverpool to London, a journey of 340 miles that would take me a month. I was walking in the footsteps of the People’s March for Jobs, a column of 300-odd unemployed men and women who, on the same day in 1981, exactly 35 years previously, had set off from the steps of St George’s Hall to walk to Trafalgar Square. In the two years after Margaret Thatcher had been elected, unemployment had gone from 1 to 3 million, as her policies laid waste to Britain’s manufacturing base. In 1981, we saw Rupert Murdoch buy the Times and Sunday Times. We witnessed inner-city riots, unprecedented in their scale and violence, in Liverpool and London. The formation of the SDP split the left. The Tories lost their first assault on the coal miners, capitulating over the closure of 23 pits.

My father, Pete Carter, was one of those who organised the original walk. My journey was an attempt to work out what had happened to Britain in the intervening years. What I saw and heard gave me an alarming sense of how the immense social changes wrought by Thatcherism are still having a profound effect on communities all over England. It also meant that when I awoke last Thursday to the result of the EU referendum, I wasn’t remotely surprised. I left Liverpool the week of the Hillsborough inquest verdict, flowers and scarves still adorning lampposts. The inquest had finally vindicated the families of the 96 killed at the 1989 FA Cup semi-final, exposing the lies and cover-ups of the police, the media and the political class, who had spent over a quarter of a century traducing not only those fans, mostly working class, but also the city and its people.

In fact, that demonising had found expression in 1981, too, when Geoffrey Howe suggested to Thatcher privately that, after the Toxteth riots, Liverpool should be subject to a “managed decline”. I walked through Widnes and Warrington, past huge out-of-town shopping centres and through the wastelands of industrial decay. In Salford, down streets where all the pubs were boarded up and local shops, if you could find them, had brick walls for windows and prison-like metal doors, I found an Airbnb. My host was selling her terraced house. I sat in her living room as the estate agent brought around potential buyers. They were all buy-to-let investors from the south of England, building property portfolios in the poverty, as if this was one giant fire sale.

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“..an uncanny gemütlichkeit..”

UK Will Emerge From Brexit Just Fine, It’s Europe That’s In Trouble (CNBC)

The British never wanted to be part of a German-dominated European federal super state. The exit from the EU will allow the U.K. to reclaim parts of national authority that its political elites ceded to unelected Brussels officials free of any meaningful democratic oversight. The scare-mongering about the end of the U.K. and the unraveling EU is meaningless. My guess is that the U.K. will do better that the unwieldy “union” of 27 countries whose leaders have yet to figure out where they are going. But let’s take a look at the U.K. first. The first good sign is that the leave leaders are behaving in the tradition of the British battle cry: “Keep Calm and Carry On.”

They are watching the fury and the confusion in Berlin, Paris and Brussels. The leading voices in these capitals are screaming for an expeditious divorce as a swift and exemplary punishment (yes, to deter other would-be exit followers), because the Europe’s oldest parliamentary democracy spoke for the rest of the continent and dared to denounce the EU’s failing ways. In case you wondered, that is how low the ideal of European brotherhood and union has fallen. These muddled up and agitated minds in Paris, Berlin and Brussels will just create more chaos and alienate more people who were looking at the EU as a haven of peace and prosperity. The leave people, by contrast, are playing with an uncanny gemütlichkeit. They are saying that they are Europeans, and that they just want to build a close European relationship of a different kind.

Will that work? All we hear now is that it won’t. Well, maybe there is some prescience in there, but please take a look at these numbers. The U.K. is by far Germany’s most profitable export market. Last year, Germany’s trade surplus with the U.K. came in at €51 billion, accounting for 34% of the German surplus with the EU. That surplus was also 42% higher than the German trade surplus with France, Berlin’s largest European trade partner. With its €89.3 billion worth of exports to the U.K. last year, Britain is Germany’s third-largest export market, after the U.S. and France. Will Germany give this up by shutting the U.K. out of a free-trade agreement with the EU? Of course it won’t.

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It’ll be fun to see the hot potato being tossed around.

Britain ‘May Never’ Trigger EU Divorce (AFP)

Britain “may never” trigger the formal divorce process with the EU despite last week’s referendum in which the country voted to leave, EU diplomats said Sunday. “My personal belief is they will never notify” the EU about their intention to leave, a senior EU diplomat said on condition of anonymity. A state leaving the EU must formally notify the European Council of all 28 EU leaders under Article 50 of the 2007 Lisbon Treaty, setting the clock ticking on a two-year period for Britain to negotiate its divorce. “We want London to trigger Article 50 now, to have clarity. I expect, as we can’t force them, for them to take their time,” the diplomat added. “And I would not exclude, it’s my personal belief, that they may never do it.”

The official did not specify if he believed Britain would avoid it by holding a new referendum, or simply dragging out the process to extract a better divorce deal, but said all such decisions were up to London. Cameron has said he will resign by October and that it is for his successor to launch the process and lead the negotiations. Despite growing pressure from EU leaders, Cameron was not expected to trigger Article 50 at an EU summit on Tuesday, another senior EU official said. Britain’s EU partners believed the notification should come by Christmas at the latest. “There cannot be any kind of negotiation with Britain before there is a notification.”

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A distorted view because of the gains prior to the referendum. Everything was getting pumped up by expectations of no Brexit, and than that ‘gain’ was lost again. it’s like a gambler who wins big only to lose it all again at the end of the night. Did he lose, or just draw?

Post-Brexit Global Equity Loss Of Over $2 Trillion Worst Ever: S&P (R.)

The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices. Global markets skidded following the unexpected result from the June 23 referendum, in which Britons voted to withdraw from the EU by a 52% to 48% margin. Markets in mainland Europe were hit the worst, with Milan and Madrid each down more than 12% for their biggest losses ever. Britain’s benchmark FTSE 100 was down nearly 9% at one point on Friday, but rallied to close down 3.15%.

The route started in Asia, with the Nikkei .N225 down 7.9%, and carried over into Wall Street as the S&P 500 fell 3.6%. Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital in New York, said the severity of the sell-off was partly due to investors misreading the outcome and betting the wrong way. “People positioned themselves longer because they thought the market was going to pop,” he said. “We knew that we were going to sell off pretty hard and people were kind of shocked by the market.” In dollar terms, Friday’s loss overtook the previous record from Sept. 29, 2008, the day when Congress rejected a $700 billion bailout package for Wall Street during the financial crisis. On that day, global markets lost $1.94 trillion.

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The Guardian has a hard time losing.

Firms Plan To Quit UK As City Braces For More Post-Brexit Losses (G.)

British businesses have warned that Brexit will trigger investment cuts, hiring freezes and redundancies as the consequences of leaving the European Union threaten to destabilise markets further this week. The survey by the Institute of Directors (IoD), which found that the majority of businesses believed Brexit was bad for them, comes amid fears that investors will wipe billions more pounds off share values on Monday morning, and signs that the pound, which hit a 30-year low on Friday, was coming under further pressure from trading in Asia. Sterling was down more than 1% as the Asian markets opened late on Sunday. [..]

[..] fears are spreading that an estimated 100,000 roles could be lost in the financial sector if banks press on with contingency plans to move jobs out of the UK. The political uncertainty gripping the UK following the resignation of prime minister David Cameron and turmoil in the Labour party has put the City on alert for more volatility. With fears that the economic turmoil following the result will tip the country into recession, the snap poll of IoD members found that company bosses were considering a range of options, including hiring and investment freezes and relocating some of their operations. Simon Walker, the IoD’s director general, said the organisation would not “sugar-coat” the damaging outcome: “A majority of business leaders think the vote for Brexit is bad for them.”

“Businesses will be busy working out how they are going to adapt and succeed after the referendum result,” said Walker of the group which has 34,500 members, ranging from start-up entrepreneurs to chief executives of multinational companies. “But we can’t sugar-coat this, many of our members are feeling anxious.” In the poll, 36% of IoD members said the outcome of last Thursday’s vote would lead them to cut investment in their business whereas just 9% said the opposite was true. Just under half said it would not change their investment plans.

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“..He will be remembered as the worst British prime minister ever….”

Brexit: Most Commentaries Miss The Point (Kuttner)

When the original institutions that later became the E.U. were created in the 1940s and 1950s, the international system was designed on the ashes of depression and war to rebuild an economy of full employment and broad based prosperity. The system worked remarkably well. In the 1980s, as a backlash against the dislocations of the 1970s, Margaret Thatcher came to power in Britain (and Ronald Reagan in the US). Their policies returned to a dog-eat-dog brand of capitalism that benefited elites and hurt ordinary people. By the 1990s, when the European Economic Community became a more tightly knit European Union, it too became an agent of neo-liberalism.

Policies of deregulation ended in the financial collapse of 2008. The austerity cure, enforced the gnomes of Brussels and Frankfurt and Berlin, is in many ways worse than the disease. Rising mass discontent has failed to dethrone the elites responsible for these policies, but it has resulted in lose of faith in institutions. The one percent won the policies but lost the people. So, yes, the Brits who voted for Brexit got a lot of facts and details wrong. And Britain will probably be worse off as a result. But they did grasp that the larger economic system is serving elites and is not serving them. The tragedy is that we are further away from a reformed EU than ever. A progressive EU, more in the spirit of 1944, is not on the menu.

The exit of Britain will give even more power to Angela Merkel’s Germany, architect and enforcer of austerity. The rest of Europe will become more like Greece economically and more like the British rightwing politically. there will be more far-right populist movements for other nations to quit the EU. This has already begun in France and the Netherlands, two of the founding nations of the European Community — and ones that also benefit, on balance, from the EU. [..] What makes this vote so tragic is the absence of enlightened leadership, either in Britain or on the continent, to propose something better. Prime Minister David Cameron, who proposed the reckless gamble of a referendum as a tactical feint to paper over an intra-party schism, may now be responsible for the dissolution of two unions — not just the EU, but the UK, as Scotland secedes. He will be remembered as the worst British prime minister ever..

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“Like the Labour Party in Britain, the leaders of the Syriza government in Athens are the products of an affluent, highly privileged, educated middle class, groomed in the fakery and political treachery of post-modernism. ”

Raw Democracy: Why The British Said No To Europe (Pilger)

The day after the vote, the columnist Martin Kettle offered a Brechtian solution to the misuse of democracy by the masses. “Now surely we can agree referendums are bad for Britain”, said the headline over his full-page piece. The “we” was unexplained but understood – just as “these people” is understood. “The referendum has conferred less legitimacy on politics, not more,” wrote Kettle. “ … the verdict on referendums should be a ruthless one. Never again.” The kind of ruthlessness Kettle longs is found in Greece, a country now airbrushed. There, they had a referendum and the result was ignored. Like the Labour Party in Britain, the leaders of the Syriza government in Athens are the products of an affluent, highly privileged, educated middle class, groomed in the fakery and political treachery of post-modernism.

The Greek people courageously used the referendum to demand their government sought “better terms” with a venal status in Brussels that was crushing the life out of their country. They were betrayed, as the British would have been betrayed. On Friday, the Labour Party leader, Jeremy Corbyn, was asked by the BBC if he would pay tribute to the departed Cameron, his comrade in the “remain” campaign. Corbyn fulsomely praised Cameron’s “dignity” and noted his backing for gay marriage and his apology to the Irish families of the dead of Bloody Sunday. He said nothing about Cameron’s divisiveness, his brutal austerity policies, his lies about “protecting” the Health Service. Neither did he remind people of the war mongering of the Cameron government: the dispatch of British special forces to Libya and British bomb aimers to Saudi Arabia and, above all, the beckoning of WWIII.

In the week of the referendum vote, no British politician and, to my knowledge, no journalist referred to Vladimir Putin’s speech in St. Petersburg commemorating the seventy-fifth anniversary of Nazi Germany’s invasion of the Soviet Union on 22 June, 1941. The Soviet victory – at a cost of 27 million Soviet lives and the majority of all German forces – won the Second World War. Putin likened the current frenzied build up of Nato troops and war material on Russia’s western borders to the Third Reich’s Operation Barbarossa. Nato’s exercises in Poland were the biggest since the Nazi invasion; Operation Anaconda had simulated an attack on Russia, presumably with nuclear weapons.

On the eve of the referendum, the quisling Secretary-General of Nato, Jens Stoltenberg, warned Britons they would be endangering “peace and security” if they voted to leave the EU. The millions who ignored him and Cameron, Osborne, Corbyn, Obama and the man who runs the Bank of England may, just may, have struck a blow for real peace and democracy in Europe.

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Not a currency manipulator, but an innocent victim of Brexit. Well played.

China Devalues Yuan Most In 10 Months, Warns Of Brexit “Butterfly Effect” (ZH)

In a somewhat shockingly honest admission of the frgaility of the global financial system, Chinese Premier Li warns that a disillusioned British butterfly has flapped its wings and the entire global financial system could collapse. Responding to the plunge in offshore Yuan since the Brexit vote (down 7 handles to 5-month lows over 6.65), PBOC devalued Yuan fix by 0.9% (6 handles) – the most since the August crash – to Dec 2010 lows. Finally, we note USD liquidity pressures building as EUR-USD basis swaps plunge.

While Chinese stocks remain ‘stable’ (despite Goldman suggesting more pain is due – regional cost of equity to rise 50-75bps as risk appetite shrinks after Brexit, equal to 5%-10% index decline), the less managed rest of the world is struggling and China knows it…

Premier Li Keqiang said an increase in instability in a particular country or region could trigger the “Butterfly Effect,” which could, in turn, affect the global economic recovery and financial market stability, according to comments posted on Chinese central govt’s website. All economies highly dependent on each other and no country can manage alone, Li said during meeting with WEF executive chairman Klaus Schwab in Tianjin. Li called on all nations to enhance coordination and work together to address difficulties.

The shift in the Yuan Fix (red) seemed clear from the collapse in offshore Yuan… CNH > 6.65 (7 handles weaker than pre-Brexit)

[..] Here’s why Americans might want to care about this Brexit butterfly and China crash…

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Strong by Pesek. Go through Google (News) to access the whole article.

Why Xi Refuses to Let China’s Zombies Die (Pesek)

The staying power of AMC’s “The Walking Dead” with Chinese viewers is a wonder to behold. The most watched U.S. show in China even has mainlanders flocking to California for the July 4 opening of Universal Studios Hollywood’s newest attraction: a walk-through park that lets you act the part of post-apocalyptic survivor fleeing the flesh-eating undead. Soon enough, though, China’s 1.4 billion people may be able to get their zombie fix at home, where the government is staging the economic equivalent of their favorite TV experience. That’s because President Xi Jinping’s pledge to breathe new life into a staggering growth model faces its own untimely death (adding to the world’s grief over the U.K. exiting the EU).

The first real sign of China’s zombification was Beijing’s failure to attack overcapacity in industries ranging from shipbuilding to steel to mining to cement. In March, the Financial Times provoked anger in Beijing with its “China’s State-Owned Zombie Economy” headline, along with many others in the foreign media. The second hint came in April, when Xi’s government rolled out plans for a Japan-like debt-to-equity swap program. The International Monetary Fund pounced, warning that securitizing loans might “worsen the problem” by supporting “zombie” companies better off disappearing. Now comes indications of a stealth effort to boost stimulus to hit this year’s 6.5% growth target, even as Xi insists he’s tackling the excesses imperiling China’s future.

Officially, Beijing’s fiscal deficit including off-balance sheet items will be about 3% this year. Economists at UBS and elsewhere now say it’s higher than 10%. In other words, the invisible hand of the state is playing an increasing role in an economy Xi claims to be turning over to the private sector and market forces, deadening China’s animal spirits. These behind-the-curtain shenanigans mean the Zhu Rongji moment investors crave to rebalance growth engines isn’t afoot. China’s premier from 1998 to 2003 shook up the state sector as rarely before, shuttering lifeless enterprises and killing more than 40 million jobs. Xi needs to pull off an even bigger feat if he’s going resurrect a reform process that’s had few obvious successes.

Read more …

Jun 262016
 
 June 26, 2016  Posted by at 8:57 am Finance Tagged with: , , , , , , ,  2 Responses »
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NPC Dedication of Francis Asbury statue, Washington, DC 1924

Cameron Has Snookered Boris On Brexit, Article 50 (G.)
Brexit: ‘Half’ Of Labour Shadow Cabinet Set To Resign (BBC)
How David Cameron -And Jeremy Corbyn- Blew It (Pol.)
Brexit Is A Bear Stearns Moment, Not A Lehman Moment (Hunt)
Why the UK Said Bye Bye to the EU (Escobar)
Brexit ‘Perfect Storm’ For South Africans Overloaded With Debt (Fin24)
The Other Side To The UK’s Housing Crisis (O.)
Revolts of the Debtors: From Socrates to Ibn Khaldun (Michael Hudson)
Vital Refugee Centre On Lesbos Forced To Close (Mirror)

A reader’s comment at the Guardian. Interesting.

Cameron Has Snookered Boris On Brexit, Article 50 (G.)

If Boris Johnson looked downbeat yesterday, that is because he realises that he has lost. Perhaps many Brexiters do not realise it yet, but they have actually lost, and it is all down to one man: David Cameron. With one fell swoop yesterday at 9:15 am, Cameron effectively annulled the referendum result, and simultaneously destroyed the political careers of Boris Johnson, Michael Gove and leading Brexiters who cost him so much anguish, not to mention his premiership. How? Throughout the campaign, Cameron had repeatedly said that a vote for leave would lead to triggering Article 50 straight away. Whether implicitly or explicitly, the image was clear: he would be giving that notice under Article 50 the morning after a vote to leave.

Whether that was scaremongering or not is a bit moot now but, in the midst of the sentimental nautical references of his speech yesterday, he quietly abandoned that position and handed the responsibility over to his successor. And as the day wore on, the enormity of that step started to sink in: the markets, Sterling, Scotland, the Irish border, the Gibraltar border, the frontier at Calais, the need to continue compliance with all EU regulations for a free market, re-issuing passports, Brits abroad, EU citizens in Britain, the mountain of legistlation to be torn up and rewritten … the list grew and grew. The referendum result is not binding. It is advisory. Parliament is not bound to commit itself in that same direction.

The Conservative party election that Cameron triggered will now have one question looming over it: will you, if elected as party leader, trigger the notice under Article 50? Who will want to have the responsibility of all those ramifications and consequences on his/her head and shoulders? Boris Johnson knew this yesterday, when he emerged subdued from his home and was even more subdued at the press conference. He has been out-maneouvered and check-mated. If he runs for leadership of the party, and then fails to follow through on triggering Article 50, then he is finished. If he does not run and effectively abandons the field, then he is finished.

If he runs, wins and pulls the UK out of the EU, then it will all be over – Scotland will break away, there will be upheaval in Ireland, a recession … broken trade agreements. Then he is also finished. Boris Johnson knows all of this. When he acts like the dumb blond it is just that: an act. The Brexit leaders now have a result that they cannot use. For them, leadership of the Tory party has become a poison chalice. When Boris Johnson said there was no need to trigger Article 50 straight away, what he really meant to say was “never”. When Michael Gove went on and on about “informal negotiations” … why? why not the formal ones straight away? … he also meant not triggering the formal departure. They both know what a formal demarche would mean: an irreversible step that neither of them is prepared to take.

All that remains is for someone to have the guts to stand up and say that Brexit is unachievable in reality without an enormous amount of pain and destruction, that cannot be borne. And David Cameron has put the onus of making that statement on the heads of the people who led the Brexit campaign.

Read more …

Corbyn says: ‘I did all I could’. But that’s not a defense, that is a problem, if that’s all you got.

Brexit: ‘Half’ Of Labour Shadow Cabinet Set To Resign (BBC)

Up to half of the shadow cabinet is set to resign in a bid to force Labour leader Jeremy Corbyn to step down, the BBC’s Laura Kuenssberg understands. It follows the sacking of shadow foreign secretary Hilary Benn by Labour leader Jeremy Corbyn overnight. Shadow health secretary Heidi Alexander has said “with a heavy heart” that she is resigning. Mr Corbyn faces a vote of no confidence over claims he was “lacklustre” during the EU referendum. A Labour source told the BBC Mr Corbyn had “lost confidence” in Mr Benn. Mr Benn, who is to appear on the Andrew Marr Show shortly, said there was concern about Mr Corbyn’s “leadership and his ability to win an election”. He added: “There is no confidence to win the next election if Jeremy continues as leader.

“In a phone call to Jeremy I told him I had lost confidence in his ability to lead the party and he dismissed me.” The Labour party campaigned for Remain during the referendum, which saw the UK voting to leave the EU by 52% to 48% on Thursday. Ms Alexander, who joined Mr Corbyn’s shadow cabinet last year, tweeted: “It is with a heavy heart that I have this morning resigned from the shadow cabinet.” In a letter to the Labour leader, she wrote: “Our country needs an effective opposition which can hold the government to account.” The letter continued: “As much as I respect you as a man of principle, I do not believe you have the capacity to shape the answers our country is demanding and I believe that if we are to form the next government, a change of leadership is essential.”

Read more …

Blinders.

How David Cameron -And Jeremy Corbyn- Blew It (Pol.)

Jeremy Corbyn never budged. Not even Barack Obama could have convinced the Labour leader to help David Cameron make the case against Brexit. Less than a month before the historic EU referendum, the team assembled by Cameron to keep Britain in the EU was worried about wavering Labour voters and frustrated by the opposition leader’s lukewarm support. Remain campaign operatives floated a plan to convince Corbyn to make a public gesture of cross-party unity by appearing in public with the prime minister. Polling showed this would be the “number one” play to reach Labour voters. Senior staff from the campaign “begged” Corbyn to do a rally with the prime minister, according to a senior source who was close to the Remain campaign.

Corbyn wanted nothing to do with the Tory leader, no matter what was at stake. Gordon Brown, the Labour prime minister whom Cameron vanquished in 2010, was sent to plead with Corbyn to change his mind. Corbyn wouldn’t. Senior figures in the Remain camp, who included Cameron’s trusted communications chief Craig Oliver and Jim Messina, President Obama’s campaign guru, were furious. Even at more basic levels of campaigning, Labour were refusing to cooperate. The party would not share its voter registration lists with Stronger In, fearing the Tories would steal the information for the next general election. “Our data is our data,” one senior Labour source said when asked about the allegation.

In desperation, the Remain strategists discussed reaching out to the White House to intervene directly. Obama had met Corbyn during a trip to London in April, when the American president argued forcefully for Remain. They wondered: Maybe Obama could call the Labour leader and convince him to campaign with Cameron? Don’t bother, Labour aides told them. Nobody was going to coax their boss into sharing a public platform with Cameron. The idea was dropped before it reached the White House. “We can’t stand there every week and wail away at you for prime minister’s questions and then get on stage with you,” a senior Corbyn aide said at one tense meeting three weeks before the vote, according to a Remain source.

By that point in the campaign, Cameron’s team was starting to panic. Their once-comfortable polling lead, at one time around 10 percentage points, was falling. The tide seemed to turn. Remain had built its case around a sober message centered on the economic risks of a so-called Brexit from the EU. Suddenly in the final month of the race, the message was drowned out by a rancorous argument over migration.

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Would tend to agree, but there’s no reason why the same distance in time should apply.

Brexit Is A Bear Stearns Moment, Not A Lehman Moment (Hunt)

Brexit is a Bear Stearns moment, not a Lehman moment. That’s not to diminish what’s happening (markets felt like death in March, 2008), but this isn’t the event to make you run for the hills. Why not? Because it doesn’t directly crater the global currency system. It’s not too big of a shock for the central banks to control. It’s not a Humpty Dumpty event, where all the Fed’s horses and all the Fed’s men can’t glue the eggshell back together. But it is an event that forces investors to wake up and prepare their portfolios for the very real systemic risks ahead. There are two market risks associated with Brexit, just as there were two market risks associated with Bear Stearns.

In the short term, the risk is a liquidity shock, or what’s more commonly called a Flash Crash. That could happen today, or it could happen next week if some hedge fund or shadow banking counterparty got totally wrong-footed on this trade and — like Bear Stearns — is taken out into the street and shot in the head. In the long term, the risk is an acceleration of a Eurozone break-up, which is indeed a Lehman moment (literally, as banks like Deutsche Bank will become both insolvent and illiquid). There are two paths for this. Either you get a bad election/referendum in France (a 2017 event) or you get a currency float in China (an anytime event). Brexit just increased the likelihood of these Humpty Dumpty events by a non-trivial degree.

What’s next? From a game theory perspective, the EU and ECB need to crush the UK. It’s like the Greek debt negotiations … it was never about Greece, it was always about sending a signal that dissent and departure will not be tolerated to the countries that matter to the survival of the Eurozone (France, Italy, maybe Spain). Now they (and by “they” I mean the status quo politicians throughout the EU, not just Germany) are going to send that same signal to the same countries by hurting the UK any way they can, creating a Narrative that it’s economic death to leave the EU, much less the Eurozone. It’s not spite. It’s purely rational. It’s the smart move.

Read more …

“..financial services companies have flocked to London because it lets them do what they cannot do at home..”

Why the UK Said Bye Bye to the EU (Escobar)

Brexit defeated an overwhelming array of what Zygmunt Bauman defined as the global elites of liquid modernity; the City of London, Wall Street, the IMF, the Fed, the European Central Bank (ECB), major hedge/investment funds, the whole interconnected global banking system. The City of London, predictably, voted Remain by over 75%. An overwhelming $2.7 trillion is traded every day in the “square mile”, which employs almost 400,000 people. And it’s not only the square mile, as the City now also includes Canary Wharf (HQ of quite a few big banks) and Mayfair (privileged hang out of hedge funds). The City of London – the undisputed financial capital of Europe — also manages a whopping $1.65 trillion of client assets, wealth literally from all over the planet.

In Treasure Islands, Nicholas Shaxson argues, “financial services companies have flocked to London because it lets them do what they cannot do at home”. Unbridled deregulation coupled with unrivalled influence on the global economic system amount to a toxic mix. So Brexit may also be interpreted as a vote against corruption permeating England’s most lucrative industry. Things will change. Drastically. There will be no more “passporting”, by which banks can sell products for all 28 EU members, accessing a $19 trillion integrated economy. All it takes is a HQ in London and a few satellite mini-offices. Passporting will be up for fierce negotiation, as well as what happens to London’s euro-denominated trading floors.

I followed Brexit out of Hong Kong – which 19 years ago had its own Brexit, actually saying bye bye to the British Empire to join China. Beijing is worried that Brexit will translate into capital outflows, “depreciation pressure” on the yuan, and disturbance of the Bank of China’s management of monetary policy. Brexit could even seriously affect China-EU relations, as Beijing in thesis might lose influence in Brussels without British support. It’s crucial to remember that Britain backed an investment pact between China and the EU and a joint feasibility study on a China-EU free trade agreement.

Read more …

Ouch: “..most consumers owe more than 75% of their monthly salary to financial institutions..”

Brexit ‘Perfect Storm’ For South Africans Overloaded With Debt (Fin24)

Brexit does not bode well for SA consumers who are already heavily in debt and SA is on the eve of a perfect storm, which is going to affect everybody – especially the poorest of the poor, who spend more than 50% on food” cautioned Neil Roets, CEO of debt management firm Debt Rescue, on Friday. Roets said the fact that most consumers owed more than 75% of their monthly salary to financial institutions, showed just how dire the situation in SA actually is. In his view, the decision by British voters to exit the European Union is going to have far-reaching negative economic consequences for South Africa and South Africans should prepare themselves for hard times ahead.

“The United Kingdom is the biggest single investor in the SA economy and with the massive uncertainty about the actual impact of the UK leaving the EU, we can expect severe volatility in the markets and quite possibly a further slowdown in the economy,” said Roets. “This is going to have a direct impact on the workforce in the form of rising prices and possible layoffs. With the rand already under pressure, imported goods are going to significantly increase in price. These goods include things like crude oil and maize meal, which is in short supply from local growers.” Roets pointed out that virtually everything South Africans consume is transported by road and, therefore, one can expect the prices of commodities such as food to increase further still.

On top of that increases in the fuel and diesel prices are predicted. Ian Wason, CEO of DebtBusters, said on Friday Brexit could just be the last straw that breaks the back of SA consumers overloaded with debt. He pointed out that the immediate impact of the Brexit announcement saw the rand drop 6% from midnight to Friday morning at 06:30. “A vulnerable rand impacts all South Africans, but those with high levels of debt will feel it most. In addition to currency volatility, SA would have to renegotiate its trade relations with the UK, which accounts for over 25% of SA’s total trade,” said Wason.

Read more …

Intensely sad story. This is why there is a Brexit. The dismantling of the entire economy by Cameron. The referendum was the only way people could have a say.

The Other Side To The UK’s Housing Crisis (O.)

Visiting houses with estate agents, you get a sense of the place the second the door opens. You breathe it in. This particular house smelled of the woods. It was a hot day but it was cold inside and as the door shut behind us our daughter reached up quickly to be carried. The first odd thing was how the rooms were seemingly interchangeable: a bath, a chair, an empty glass. “There’s nobody actually… living here, is there?” we asked. “Doesn’t look like it!” the agent chuckled. The wires were exposed. Damp climbed the paint. The second odd thing was that all the doors were locked. It was only when one opened that we realised why: every silent room was occupied by a different tenant. People were living here, but barely.

It was when we turned to go up to the first floor (another unplugged oven, a broken window) that I saw the man’s legs. I realised immediately I was waiting for a corpse – the house was dying, it expected a corpse. So it was almost worse when I saw that he wasn’t dead; he was terrified. Fiftyish, crouched, cowering behind the bannisters, he was scared to see strangers in his house, and he was blindly pissed, or high, or ill, and he was shaking. It wasn’t until my partner quietly told him we’d leave that I realised we could. At the door we bumped into a woman with a dog. She said she was the owner’s sister. Did she know that people were living there, we asked. “Don’t worry about them,” she smoked. “They’re all on two-week contracts.”

I asked the estate agent if he was as shocked by what we’d seen as I was. “Yes,” he said. “It shouldn’t have been on for that price.” Shocking. Would we be interested in making an offer? I was a bit shaky when I got on the train. Later, I was shaky, too, when we talked about what might happen to that cowering man. We talk so much in tuts and despair about the housing crisis in London, my friends resigned to the knowledge that they’ll never afford a flat, destined to spend half their salaries on rent and be moved on at a landlord’s whim. But while I’d seen the upheaval, the lives diluted into three blue Ikea bags, I hadn’t yet seen this up close. It’s not quite homelessness; it’s not quite not.

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Hudson. Always. Good.

Revolts of the Debtors: From Socrates to Ibn Khaldun (Michael Hudson)

In Book I of Plato’s Republic (380 BC), Socrates discusses the morality of repaying debts. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair and just to pay back what one has borrowed or received. Socrates replies that it would not be just to return weapons to a man who has turned into a lunatic. Because of the consequences, paying back the debt would be the wrong thing to do. At issue is not the micro-economic morality of paying a debt, but how this act affects society. If a madman is intent on murder, returning his weapon to him will enable him to commit unjust acts. The morality of paying back all debts is not necessarily justice. We need to take the overall consequences into account.

A similar logic may apply to today’s debate over whether Greece should pay back the IMF and ECB for the money that they have provided since 2010 to save bondholders from losses on loans (largely by French and German banks). The terms oblige the Greek government to pay in full instead of writing down debts to reflect the actual ability to pay. The IMF staff calculated repeatedly that Greece had no way of paying off these debts, so the IMF violated its own articles of agreement (and its “No More Argentinas” rule) that it should not lend to countries which, in the judgment of its research staff, have no foreseeable means to pay. IMF board members also protested to the bondholder bailout – all to no avail.

The morality of paying off the IMF and ECB is analogous to paying off the madman discussed by Socrates. At issue is what should be saved: wealthy creditors from loss (and the morality that all debts should be paid), or the overall economy from unemployment and misery leading to emigration, worse health and shorter lifespans. They have used their debt leverage to demand that Greece impose austerity, increase unemployment (now running at an enormous 25% for IV-2015 – I-2016), scale back pensions to retirees, and privatize public infrastructure to pay creditors – while running a budget surplus to suck even more money out of the economy. [..]

What really is at issue is the selfish and abusive behavior of creditors. Later in the Republic (Book VIII, 555d-556b), Socrates talks with Glaucon, pointing to the “negligence and encouragement of licentiousness in oligarchies.” Their greed, Socrates explains, inserts the parasitic “sting of their money into any of the remainder who do not resist.” The effect is to burden many Athenians with debt, to suffer foreclosure on their land and disenfranchisement, fostering “the drone and pauper element in the state.” This leaves the people (the demos) to “conspire against the acquirers of their estates and the rest of the citizens, and be eager for revolution.”

Read more …

Been following Kempson off and on. He seems a good guy. But I don’t know exactly what happened. Asked our friend Kostas, who was on Lesbos a few days last week, to contact Eric, see if he could help. Haven’t heard back yet.

Vital Refugee Centre On Lesbos Forced To Close (Mirror)

Neck deep in freezing waves, Philippa Kempson battled to pull a little boy from a sinking boat crammed with 80 people. Terrified six-year-old Mohammed, who had arrived at the Greek island of Lesbos after a perilous 1,600-mile journey from Syria, was just one of thousands of refugees Philippa and her husband Eric have helped. But now the British expat couple, who run a beachside refuge for migrants called Hope Centre, face being closed down after a ruling by local authorities. They have been told their 20-room centre – a former holiday hotel – can no longer be used to provide shelter, food or clothing. It cannot even be used as a warehouse to store supplies so everything in it has to be removed by a deadline of tomorrow.

The couple, who are also being hit with a €10,000 penalty for running a hotel without a licence, claim they are the victims of an island backlash against the migrants. They even say they have received threats on Facebook such as “There are three roads out of town, pick one” and that some locals want to “erase” them from existence. Philippa, 43, said: “The authorities are using the law on hotel licensing to seal the Hope Centre so we won’t be allowed back in. “To do this when people continue to risk their lives travelling to Europe is inhumane. “We are not running a hotel – we don’t have a functioning swimming pool or a bar. “We are a refuge offering a warm place for those arriving off the boats. “There is a loss of humanity here. It’s clear the tide is turning against the influx of refugees and some people don’t want them. “It’s a case of ‘Not in my backyard’.”

Read more …

Jun 242016
 
 June 24, 2016  Posted by at 10:16 am Finance Tagged with: , , , , , , ,  9 Responses »
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Stephen Green 18×24 inches. 2016. Acrylic on canvas. MuseumofAwesomeArt.com

Well, they did it. A majority of Britons made clear they’re so fed up with David Cameron and everything he says or does, including promoting the EU, that they voted against that EU. They detest Cameron much more than they like Nigel Farage or Boris Johnson. It seems that everyone has underestimated that.

Cameron just announced he’s stepping down. And that points to a very large hole in the ground somewhere in London town. Because going through a list of potential leaders, you get the strong impression there are none left. Not to run the country, and not to negotiate anything with Brussels. Which has a deep leadership -credibility- hole of itself, even though the incumbents are completely blind to that.

But first Britain. The Leave victory was as much a vote against Chancellor George Osborne as it was against Cameron. So Osborne is out as potential leader of the Conservatives. Boris Johnson? Not nearly enough people like him, and he fumbled his side of the Leave campaign so badly his credibility, though perhaps not being fully shot, is far too much of an uncertainty for the Tories to enter the upcoming inevitable general elections with.

Who else is there? Michael Gove? Absolute suicide. Likeability factor of zero Kelvin. That bus these guys drove around which proclaimed they could get £350 million extra a week for the NHS health care system in case of a Brexit will come back to haunt all of them. Just about the first thing Farage said earlier when the win became clear, was that the £350 million was a mistake.

I guess you could mention Theresa May, who apparently wants the post, but she’s an integral part of the Cameron clique and can’t be presented as the fresh start the party so badly needs.

 

Talking about Farage, who’s not Tory, but Ukip, he’s done what he set out to do, and that means the end of the line for him. He could, and will, call for a national unity government, but there is no such unity. He got voted out of a job today -he is/was a member of the European Parliament- and Ukip has only one seat in the British parliament, so he’s a bit tragic today. There is no place nor need for a UK Independence Party when the UK is already independent.

Then there’s Labour, who failed to reach their own constituency, which subsequently voted with Farage et al, and who stood right alongside Cameron for Remain, with ‘leader’ Jeremy Corbyn reduced to the role of a curiously mumbling movie extra. So Corbyn is out.

Shadow finance minister John McDonnell has aspirations, but he’s a firm Remain guy as well, and that happens to have been voted down. Labour has failed in a terrible fashion, and they better acknowledge it or else. But they already had a very hard time just coming up with Corbyn last time around, and the next twist won’t be any easier.

Cameron, Osborne, Corbyn, they have all failed to connect with their people. This is not some recent development. Nor is it a British phenomenon, support for traditional parties is crumbling away everywhere in the western world.

 

The main reason for this is a fast fading economy, which all politicians just try to hide from their people, but which those same people get hit by every single day.

A second reason is that politicians of traditional parties are not perceived as standing up for either their people nor their societies, but as a class in themselves.

In Britain, there now seems to be a unique opportunity to organize a movement like (Unidos) Podemos in Spain, the European Union’s next big headache coming up in a few days. Podemos is proof that this can be done fast, and there’s a big gaping hole to fill.

Much of what’s next in politics may be pre-empted in the markets. Though it’s hard to say where it all leads, this morning there’s obviously a lot of panic, short covering etc going on, fact is that as I write this, Germany’s DAX index loses 6% (-16.3% YoY), France’s CAC is down 7.7% (-18.5%) and Spain’s IBEX no less than 10.3% (-30%). Ironically, the losses in Britain’s FTSE are ‘only’ 4.5% (-11%).

These are numbers that can move entire societies, countries and political systems. But we’ll see. Currency moves are already abating, and on the 22nd floor of a well-protected building in Basel, all of the relevant central bankers in the world are conspiring to buy whatever they can get their hands on. Losses will be big but can perhaps be contained up to a point, and tomorrow is Saturday.

By the way, from a purely legal point of view, Cameron et al could try and push aside the referendum, which is not legally binding. I got only one thing on that: please let them try.

As an aside, wouldn’t it be a great irony if the England soccer (football) team now go on to win the Euro Cup? Or even Wales, which voted massively against the EU?

 

Finally, this was of course not a vote about the -perhaps not so- United Kingdom, it was a vote about the EU. But the only thing we can expect from Brussels and all the 27 remaining capitals is damage control and more high handedness. It’s all the Junckers and Tusks and Schäubles and Dijsselbloems are capable of anymore.

But it’s they, as much as David Cameron, who were voted down today. And they too should draw their conclusions, or this becomes not even so much about credibility as it becomes about sheer relevance.

Even well before there will be negotiations with whoever represents Britain by the time it happens, the Brussels court circle will be confronted with a whole slew of calls for referendums in other member states. The cat is out of Pandora’s bag, and the genie out of her bottle.

Many of the calls will come from the far-right, but it’s Brussels itself that created the space for these people to operate in. I’ve said it before, the EU does not prevent the next battle in Europe, it will create it. EC head Donald Tusk’s statement earlier today was about strengthening the union with the remaining 27 nations. As if Britain were the only place where people want out…

Holland, France, Denmark, Italy, Spain, Hungary, they will all have calls for referendums. Greece already had one a year ago. The center cannot hold. Nor can the system. If referendums were held in all remaining 27 EU member states, the union would be a lot smaller the next morning. The Unholy Union depends on people not getting a say.

The overwhelming underlying principle that we see at work here is that centralization is dead, because the economy has perished. Or at least the growth of the economy has, which is the same in a system that relies on perpetual growth to ‘function’.

But that is something we can be sure no politician or bureaucrat or economist is willing to acknowledge. They’re all going to continue to claim that their specific theories and plans are capable of regenerating the growth the system depends on. Only to see them fail.

It’s high time for something completely different, because we’re in a dead end street. If the Brexit vote shows us one thing, it’s that. But that is not what people -wish to- see.

Unfortunately, the kinds of wholesale changes needed now hardly ever take place in a peaceful manner. I guess that’s my main preoccupation right now.

 

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
Yeats

Jun 222016
 
 June 22, 2016  Posted by at 1:08 pm Finance Tagged with: , , , , , , , , ,  10 Responses »
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Founding father of the EU, French economist and financier, Jean Monnet

I stumbled upon an article by Day of the Jackal author Frederick Forsyth, published last week in the Daily Express, that I think every Briton and European and everyone else should read. Forsyth doesn’t delve into the American pressure to form a European Union as a counterweight to the Soviet Union, he sticks with ‘founding father’ Jean Monnet and his reasoning behind the particular shape the Union took. And that is bad enough.

All Forsyth has to do is to quote from Monnet’s work, and I have to admit that while reading it I increasingly got the feeling that it’s quite remarkable that no-one, especially no journalist, does this. It’s there for everyone to see, but that means little if and when no-one actually sees it.

I have repeatedly talked about how the very structure of the EU self-selects for sociopaths and/or worse, but perhaps not enough about how that was deliberately built into the design. A feature not a flaw.

And I don’t think Monnet ever thought about how structures like that develop over time, in which the flaws in that design become ever more pronounced and the more severe cases of sociopathy increasingly take over the more powerful positions. A development that is well visible in present day Brussels.

For me, as I’ve written before, being here in Athens these days is plenty testimony to what the EU truly represents. Not only do we need to help feed many tens of thousands on a daily basis, depression levels are up 80% or so and life expectancy is plunging because proper health care is ever further away for ever more people in a country that not long ago had a health care system anyone would have been proud of.

That is the EU. And, yeah, Britons, do reflect on the NHS. Sure, you can argue it’s not the EU but Cameron and his people that are breaking it down, but it’s also Cameron who is pleading with you to vote to stay in the union.

If it can do this today to one of its member states, it will do it tomorrow to others, and more, if it sees fit. The benefits of the union flow to a select few countries, and to a select few within those countries. And ever fewer are selected as economic policies continue to fail.

It is frankly beyond me to see why anyone would want to be part of that. It’s not about Boris Johnson or Nigel Farage or George Osborne, that is just more deception. It’s about being ruled by midgets, as Forsyth puts it.

Here are some snippets from Frederick Forsyth’s article:

Birth of superstate: Frederick Forsyth on how UNELECTED Brussels bureaucrats SEIZED power

There was nothing base or inhumane about Jean Monnet, the French intellectual now seen as the founding father of the dream, nor those who joined him: De Gasperi the Italian, Hallstein the German, Spaak the Belgian and Schumann the Frenchman. In 1945 they were all traumatised men. Each had seen the utter devastation of their native continent by war and after the second they swore to try for the rest of their lives to ensure nothing like it ever happened again. No one can fault that ambition.

First Monnet analysed what had gone wrong and became obsessed by one single fact. The German people had actually voted the Austrian demagogue into the office of chancellor. What could he, Monnet, learn from this? What he learned stayed with him for the rest of his life and stays with us today in the EU.

The continent of Europe, from western Ireland to the Russian border, from Norway’s North Cape to Malta’s Valletta harbour, must be unified into one huge superstate. Politically, socially, economically, militarily and constitutionally.

There could be no war between provinces so war would be banished. (For a man who had witnessed the Spanish Civil War that was an odd conclusion but he came to it. And there was more).

As coal, iron and steel were the indispensable sinews of war machinery, these industries should be unified under central control. Thus would also be prevented any single state secretly rearming. That at least had the benefit of logic and the Coal and Steel Community was his first success.

But the big question remained: how should this Europe-wide single state be governed? Then he came to the conclusion that still prevails today. In the 1930s democracy had failed. In Germany, Italy and elsewhere desperate people had flocked to the demagogues who promised full bellies and a job in exchange for marching, chanting columns.

So democracy must go. It could not be the governmental system of the new Utopia. It was not fit to be. (He was already president of the Action Committee for the Superstate, his official title. There is nothing new about the word superstate).

Instead there would be a new system: government by an enlightened elite of bureaucrats . The hoi polloi (you and me) were simply too dim, too emotional, too uneducated to be safely allowed to choose their governments.

It never occurred to him to devise a way to strengthen and fortify democracy to ensure that what happened in Italy and Germany in the 1920s and 1930s could not happen again. No, democracy was unsafe and had to be replaced. (This is not propaganda, he wrote it all down).

He faced one last stigma as he sought the support of the six who would become the kernel of his dream: Germany (still ruined by war), France (fighting dismal colonial wars in Indochina and Algeria), Italy in her usual chaos, Holland, Belgium and tiny Luxembourg. How could the various peoples ever be persuaded to hand over their countries from democracy to oligarchy, the government of the elite? Let me quote from what he wrote:

“Europe’s nations should be guided towards the Super-state without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose, but which will eventually and irreversibly lead to federation.”

In other words he could not force them (he had no tanks). He could not bribe them (he had no money). He could not persuade them (his arguments were offensive). Hence the deliberate recourse to government by deception. Both nostrums continue to this day. Study the Remain campaign and the people behind it.

Almost without exception they are pillars of the establishment, London-based, accustomed to lavish salaries, administrative power and enormous privilege. None of this applies to 95% of the population. Hence the need for deception.

At every stage the Remain campaign has stressed the issue is about economics: trade, profits, mortgages, share prices, house values – anything to scare John Citizen into frightened submission. The gravy train of the few must not be derailed. Some of them are already sticking pins into a wax figurine of David Cameron for being soft enough to offer the proles a chance to recover their parliamentary democracy and thus their sovereignty.

Forsyth then continues with a bunch of typically British issues, and ends with:

[..] You have repeatedly been told this issue is all about economics. That is the conman’s traditional distraction. This issue is about our governmental system, parliamentary. Democracy versus non-elective bureaucracy utterly dedicated to the eventual Superstate.

Our democracy was not presented last week on a plate. It took centuries of struggle to create and from 1940 to 1945 terrible sacrifices to defend and preserve.

It was bequeathed to us by giants, it has been signed away by midgets.

Now we have a chance, one last, foolishly offered chance to tell those fat cats who so look down upon the rest of us: yes, there will be some costs – but we want it back.

Jun 192016
 
 June 19, 2016  Posted by at 2:39 pm Finance Tagged with: , , , , , , , ,  8 Responses »
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DPC White Star liner S.S. Olympic, sister ship of Titanic, NY 1911

The reason the Brexit debate has gotten so out of hand is nobody understands what it’s about.

The Brexit campaigns have started anew in the UK, and from what I’ve seen here from left field barely a thing has changed since the murder of MP Jo Cox. Neither side has any qualms about using her death to make their respective points. The main, and perhaps only real, point is that nobody understands what the vote is about. Jo Cox, bless her soul, didn’t either.

This lack of understanding is also, at the same time, the reason why the debate has gotten so out of hand. Nobody seems to understand it’s not about Cameron or Nigel Farage, or Michael Gove vs Boris Johnson, it’s about voting for or against the EU, for or against Juncker and Tusk and five other unelected presidents having a say in one’s life.

And that’s not all either. It’s about voting to leave, or remain in, a Union that is already dead and preserved only in a zombie state. Brexit is just one vote and many more will inevitably follow. Brexit is not the first, Grexit had that ‘honor’ last year. Later this month, elections in Italy and Spain have the potential to turn into preliminary Italix and Spexit votes. And then there will be more.

The reason why these things are taking place, and will be, going forward, is that the economies of all these countries are fast deteriorating. The sole reason why people have accepted the rule of Brussels coming from far away over their daily lives, is the promise that it would make those lives better and more comfortable.

That promise has been shattered. The EU has made things worse for most Europeans, not improved them. And when seen in that light, why should people agree to continue to be told what to do by those who’ve made them poorer? There’s no democratic model in which that remotely makes sense. There are only undemocratic models left.

Britain’s Brexit referendum has run head first into global developments, and there is no sign that any voice in the discussion recognizes this. They all think it’s about something else. And of course Cameron’s policies have devastated the country, and of course the even more right wing Leave campaigners would make that worse. But that’s not what this is about.

 

What Cameron missed when he called the referendum is not that some of his friends could turn on him and go Leave, what he missed is that so many Brits from both the left and the right would turn on him. He never expected that to happen. He always figured his manipulated rosy pink economic numbers would outweigh people’s actual daily lives.

This is a global phenomenon, it has little to do with Cameron himself, other than his neoliberal budget cuts are often even more extreme than those of many of his pan-European and indeed American and global peers. It has a lot more to do with the neoliberalism embedded in Brussels, which has installed technocratic governments in many countries, especially in southern Europe, all with disastrous consequences for the populations.

It’s an exact mirror image of what is happening in the US. The jobs numbers the government and media feed Americans look good once filtered through a hundred layers of manipulation, but people look at what job they themselves have, and what it pays them, and they look at their families, friends and neighbors, and then decide this just ain’t working out or adding up.

The Brexit vote is, in a nutshell, Britain’s last chance to hit the lifeboats and jump the Titanic before it hits the iceberg. This is not even because of the dictatorial character Brussels has taken on, which is starting to display cartoonish properties, it’s because the global economy has hit the debt iceberg well before the EU has.

Voting Remain in next week’s referendum comes down to “Let’s stay onboard so we can help rearrange the deckchairs. And while we’re at it, pick some nice tunes for the orchestra to play on the way down as we sink.”

 

If there’s one outstanding advantage to the Brexit debate, it must be that it has opened up British society to reveal all its festering boils, pimples, pustules, ulcers and neoplasms that had before remained veiled by either stiff upper lips or outright dumb-ass ignorance. Not that the ‘discussion’ has done anything to lift the dumb-assery, mind you; the intelligence level of the Brits has been exposed as yet another hidden sore.

Nothing typically British there either. Neither the people nor the politicians nor the media in the country show any sign of comprehending what is happening to them. Nobody is capable of taking a step back and seeing a bigger picture. Jo Cox’s death has done nothing to fix that issue. Indeed, if there’s one thing Britain has been, and still is, showing the world it’s that it’s incapable of solving its problems.

But that incompetence is not going to be alleviated by handing the reins to Cameron or Johnson, or Corbyn, or indeed Juncker and Tusk. The only remedy is a cold hard look at what’s really going on in Britain itself, a look at its place in a rapidly imploding global economic system, and a look at what being a part of the EU actually means.

To gauge that last bit, all one has to do is to look at Greece, at how the EU has forced the demise of the Greek economy, of its once magnificent health-care system, and of countless other segments of a society still mired today in inexorable decline. A look at the treatment of refugees holds a lesson or two as well.

The summarized lesson from all this is that Brussels will happily throw you under a bus if it feels that would further its ambitions. Of which the EU has many.

The treatment of Greece and the refugees has redefined the term ‘Union’, and everyone should take note.

 

In America, the Democratic and Republican parties have all but internally combusted and destroyed themselves. In Britain, Labo(u)r did that years ago through Tony Blair, and the Tories are doing it today by infighting over Brexit. None of these things are incidents or stand-alone events.

They are part of a much larger pattern, as evidenced by the popularity numbers of people like French president Hollande (8%?!). All but a few incumbent parties in the west are evaporating. And all for the same reason: the demise of the existing economic models and systems that they have based their policies and popularity on.

An economy in decline means the end of centralization and the end of existing political power structures. This is inevitable. Because both can exist only by the grace of ever growing economies. It’s what our economies are based on. It’s what our entire world view is based on. Sometime in the future historians will have a hard time understanding this, but for now it’s all we have, because it’s all we’re willing to consider: growth to infinity and beyond.

Which was, or seemed to be, kind of alright as long as there indeed was growth. But there no longer is any growth. And it will not return for a long time, arguably not in our lifetimes. Which makes it a problem that we haven’t prepared for the end of growth. Which is not terrible smart given that making a point for growth having stopped decades ago looks quite solid.

 

People in Britain try desperately to link Jo Cox’s murder to some sort of larger movement or entity, even if for all they know, for all they can know, the killer is just another warped individual who didn’t take his meds for a long enough period to make him go fully off kilter.

Yeah, he ordered some right wing magazines and books. But that doesn’t mean there’s a conspiracy behind the murder. Nor does it make this fascist and/or right-wing terrorism. Those claims are made solely in an effort to connect the tragedy to the Brexit vote. And that effort all by itself is a huge blemish on Jo Cox’s life, her death and her legacy.

To truly honor her would be to make sure you understand, and help others understand, what she herself did not.