Thursday, 4 August 2016

Base rate down by and to 0.25%

Unbelievable but true, the BoE has just reduced the base rate. The graph now looks like this...



If you saw that in a hospital you'd say that patient is definitely dead. And that's not all, the Bank of England has announced additional measures:

  • £60bn more QE taking the total to £435bn - so about a quarter of our two trillion national debt  is funded by 'printed' money.
  • Another 'funny' £10bn will be used to buy corporate bonds to pump money into the country's biggest companies.
  • There will be a $100bn funding scheme for banks which is conditional on them passing the base rate cut through to customers - ie, banks get bribed. This is like the old Funding for Lending Scheme only with extra conditions. The FLS is the main reason savers get such a bad deal - the banks don't need their money, the BoE is printing money and giving it to the commercial banks. (Alright, lending it, strictly speaking.)

The whole plan seems to be to pump up indebtedness even further. The plan relies on the premise that people will take on as much debt as they can afford so debt needs to be made more affordable to keep the economy moving.

The plan is of course massively inflationary, but the inflation will mainly occur in asset prices (stocks, bonds, houses) which are not counted in the indexes so the BoE will be able to claim low inflation has been maintained.

And this is only the second last cut. Mark Carney, guv'nor of the BoE reckons he can squeeze out another cut down to just above zero before he is done.

Which does raise the question: can they go negative? The answer is: probably not. In theory it is doable, there are countries with negative rates, but you also have to consider what the public will wear. Applying negative interest to bank deposits could trigger a bank run as people decide just to keep their cash at home. After Northern Rock no one in government has any appetite for that.

Read the inane words of Mark Carney here.

Tuesday, 26 July 2016

France at war

Well, that didn't take long. Earlier today two or three muslims entered a Catholic church in Normandy and butchered an 84-year-old priest in a Halal-compliant manner (basically, throat cut while chanting Allahu akbar.) 

The French president visited the area and said quite explicitly - France is at war. So that's official then.

How they will pursue the war is not obvious. They do have their aircraft carrier, the Charles de Gaule in the Gulf attacking ISIS strongholds in Syria and Iraq, but how do they conduct the war on French soil?

During WW2 'aliens' were interned, for example the USA rounded up all Japanese people in the States, including those with US nationality, and kept them in camps for the duration of the war. Individually they may have done nothing wrong, but collectively they could not be trusted. And to be fair, America experienced almost no attacks from Japanese in the continental United States. The policy worked.

Does France have the will to intern its muslim population? They already live in distinct areas called banlieux, roughly "suburbs". At the moment inhabitants are given free rein to travel in the rest of France - that would have to change. Most likely President Hollande does not have what it takes to make that happen. But there are elections next year and a certain Madame Le Pen would have - and the more these attacks keep happening the closer she gets to the Elysee Palace.

Monday, 25 July 2016

Now bordering on open warfare

Islamic terrorism is coming thick and fast, and mainly in Germany, which is not surprising since Merkel invited in a million "refugees". 

In recent weeks we have had:

At some point we are going to have to acknowledge that this is now an open war. We have known the war was coming for years (see posts on this blog going back to 2008) but now it seems to have come.

Thursday, 14 July 2016

Boris Johnson is Foreign Secretary

How amazing is that? Just to recap, that Gove cove who was running Boris's campaign for the leadership of the Conservatives quits and says he is running himself and Boris, instead of batting Gove off like the no-hope political mosquito he is and soldiering on, comes back with: Oh no, I'm out, I'll support Theresa May instead.

Next thing you know Boris, who has never held any sort of government job before, however menial, is Foreign Secretary. Spooky, almost like there was some sort of a deal.

His appointment is actually inspired though. He gets the plushest office in Whitehall; his life will be constant first class travelling, wining and dining and glad-handing foreign Johnnies. The job calls for no talent whatsoever so he will struggle to mess it up. 

And best of all, he will probably not be allowed to keep his weekly column in the Daily Telegraph so Theresa May has just handed him a £250,000pa pay cut.

Boris: Woe is me, I'm so poor!

There is just one little downside: the buffoon is now in charge of both MI6 and GCHQ!

Tuesday, 12 July 2016

The right woman got the job

Neither Theresa May nor Andrea Leadsom were entirely right for the job of Prime Minister but of the two it had to be May. 

Leadsom it turns out was a bit of shell, a person of no substance. One could imagine that such career success she has had has been down to her now faded looks; she is the sort of woman one hires to decorate the office, but not the sort entrusted with anything serious. Sometimes a job title doesn't tell you whether a person is doing the work or just filling the suit, and Leadsom it seems can handle a sharp suit.

Her first big mistake was giving an assurance that all EU citizens in the UK would be allowed to remain; two problems with this: first, we must have reciprocal assurances from other countries for our own citizens abroad before we agree that, and second, some of the gains of Brexit cannot be achieved unless we rid ourselves of a significant tranche of immigrants. We have five million un- or under-employed citizens and freeing up jobs for them will be a big win from leaving the EU. It will convert them from benefit recipients to taxpaying workers; everyone wins (except the displaced migrants.)

Her second mistake was to walk into a trap carefully laid by the May team. Theresa May's advisers figured out early on that Leadsom was baby bonkers: they probably got the hint when Leadsom entitled her leadership hustings speech "Brussels, Bankers and Babies" and then focused rather a lot on the babies including advice on how to massage their brains. May dutifully gave an interview in which she regretted her childlessness. Leadsom blundered straight into the minefield and claimed May was unsuitable for leadership because she did not have children. The May side then replied with synthetic outrage which dominated the headlines for a day or so. Leadsom compounded her error by claiming she hadn't said what was reported, but the tape proved she had. 

So Leadsom fell by the wayside and we have May. The manner of her ascension proves that she has the "right stuff" to represent us in the Brexit talks and anecdotal accounts indicate she is a tough negotiator. The only problem is - she is not a man. She is not going to be taking Jean-Claude Druncker to Spearmint Rhino and extracting concessions from him while he stuffs angel dollars down a cleavage. All her negotiating is going to be done the hard way, around the conference table. But apparently she is good at that.

Friday, 8 July 2016

EU Article 50 invocation after 31st March 2017

Various commentators seem to be suggesting that after the 31st of March 2017 (next year) invoking Article 50 of the Lisbon Treaty to exit the EU will cease to be an automatic right for all EU member states and will require a qualified majority vote (QMV) in the European Council. 

In other words, we had better have triggered Brexit by then or we may not be able to. And other countries wanting to leave in the future may find it much harder than us.

But is this analysis true? Here is the full text of the Lisbon Treaty, you work it out...

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012M/TXT

Tuesday, 5 July 2016

Andrea Leadsom falls at first hurdle

For a day or two she was looking good. Unlike front-runner Theresa May, Leadsom has adequate Eurosceptic credentials; adequate but not perfect, she saw the light late in life - the  EU problem has been obvious to many of us for decades. She converted in 2013. However she was a Leaver during the campaign, which is good enough.

But then, just as she was looking like a contender, she went and said all Europeans already living in the UK will be allowed to stay here. She gave away too much too fast and showed she cannot be trusted as a negotiator. It sounds all nice and cozy to give reassurance to immigrants already here...but, big but, what about British citizens living abroad? There are half a million Brits in Spain; a quarter of a million in Ireland, two hundred thousand in France, a hundred thousand in Germany, and another two hundred thousand dotted around the other EU countries. Did Leadsom secure their position before conceding the point? No, she did not.

Naturally, like every other aspect of our relationship with the EU there is a massive imbalance. We have about 1.2 million citizens in the EU and they have about 4 million citizens here, so the power is all with us, just like it is in the trade arena.

This blog is happy to keep many of the EU citizens already here; even to operate completely open border with many Western European countries (France, Germany, Spain, the low countries, etc) but not for free. This concession should come at a price. There are things we will want from the those counties, starting of course with security of tenure for our own citizens abroad.

Does Andrea Leadsom not see this as a vital point? If not, she is not qualified for the top job.