NPC Dedication of Francis Asbury statue, Washington, DC 1924
A reader’s comment at the Guardian. Interesting.
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.
Corbyn says: ‘I did all I could’. But that’s not a defense, that is a problem, if that’s all you got.
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.”
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.
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. 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.
“..financial services companies have flocked to London because it lets them do what they cannot do at home..”
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.
Ouch: “..most consumers owe more than 75% of their monthly salary to financial institutions..”
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.
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.
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.
Hudson. Always. Good.
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.”
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.
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’.”