Mansplaining why Greece, Spain and Italy should have never joined the Eurozone

Why is it that even fervent pro Remain British feel the need to enthusiastically nod their heads in agreement when yet again some pseudo economist mansplains why Greece, Spain and Italy never should have joined the Eurozone, why you can’t have a currency union without fiscal union and the Euro only benefits Germany?

I don’t know why such answers are so often upvoted by people who should know better.

Sure some of those answers even start with impressive eye opening statistics, but then soon are followed by conclusions where the flag doesn’t begin to cover the cargo.

I am so fed up with this whole ‘must have fiscal union’ thing for the Euro to work and South European countries must have their own currency to devaluate themselves out of trouble time and time again because they can only survive on us rich north European tourists tipping the waiters over there.

These statements are so often repeated in certain echo chamber bubbles, but seldom explore what the actual relationship is.

On top of that throw in a Nobel winner like Stiglitz, who’se Prize winning work had nothing to do with the Eurozone and it must be true.

I am with another economist on this one who quite easily debunks this nonsense.

Mankiw and Conventional Wisdom on Europe (https://johnhcochrane.blogspot.com/2015/07/mankiw-and-conventional-wisdom-on-europe.html)

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My personal Brexit takeaway

Today I am returning to my house in the French countryside after two Saturdays of anti Brexit protests in London, a radio interview on BBC Suffolk and many hours glued to the TV screen watching the antics in UK Parliament.

On Saturday a huge cry of Victory rose over Parliament Square when the Oliver Letwin amendment passed in the House of Commons.

This kicked Boris Johnson’s Brexit plans in the long grass.

Then on Wednesday he seemed to get his first victory in Parliament, when MPs allowed a Second Reading of his EU Withdrawal Bill. Had my trip been in vain?

Of course many MPs have their own individual reasons an fears, but it is Important to understand that the first vote last night, with the majority of 30, wasn’t a vote to support Johnson’s deal. It was a vote to create the opportunity to consider lots of alternative Brexit deals and a chance to append a second referendum.

The second vote was an emphatic defeat for Boris Johnson trying to push through this deal without scrutiny.

I am going home mission accomplished and the memory of holding my latest grandchild in my arms and the cuddles of the five others.

To hear the radio interview

Rewind to 7:40 and you’ll hear me being interviewed

https://www.bbc.co.uk/sounds/play/live:bbc_radio_suffolk

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Why does Britain need to strike it’s own trade deals?

There are some terribly naive Brexit voters, that think to increase trade, all you have to do is have half wits like Liam Fox and Liz Truss fly first class around the world signing bits of paper promising ‘Free Trade’.

They never explain what’s wrong with the sixty odd trade agreement we have with the world through our EU membership. What they mainly seem to achieve is to ‘roll over’ those deals, in other words continue them on the same terms as we had in EU. Is that what UK suffers this Brexit shambles for?

Anyway, before a country can benefit from exports, it has to have surplus production or at least the capacity to produce more than for its own internal needs and market. Let’s look at an example.

Britain is not self sufficient in food. It imports roughly 40% of the food it consumes in a year.

So increasing food exports seems counter productive, to say the least.

Yet it can be the case Britain has a surplus of a particular food while being short on another.

A good example is Welsh lamb. There we have a situation that nearly 60% is exported to EU. Apparently Brits are not fond of the taste of lamb. They prefer chicken nuggets and hamburgers.

But what do these economic dimwit voters say? We must import more lamb from our Commonwealth friends in New Zealand after Brexit. This would kill off every marginal Welsh hill farmer for good!

Same will apply to UK dairy industry. We cannot compete with the mega farms in New Zealand, but we can with French farmers in Normandy just across the channels. As long as we levy a bit of tax on New Zealand Milk. A small price to pay to keep our countryside folk in a job?

Meanwhile industrial producers like JCB and Rolls Royce Aerospace can export a success much as they like globally as well as to EU. The EU does not put tariffs on exports.

You really have to ask yourself: What planet are these Leave politicians on that keep repeating this mantra “UK must be able to strike its own trade deals”?

Liz Truss doesn’t know how to use a landline.

Liam Fox was told he couldn’t keep his Airmiles.


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What do I think of the deal announced on October 17 by EU and UK ?

I have been asked many times on Quora and Twitter what I think of this last minute deal that has been struck between UK and EU negotiators just before we reach another deadline set for October 31st and UK would crash out of the EU without a deal in a disorderly fashion.

First of all this is nothing like the hard fought breakthrough that the Johnson administration would like you to believe it is. This reheated deal was already offered to Theresa May more than two years ago.

The main difference is that the border between EU and UK has been moved to the middle of the Irish sea for convenience. Items removed from the Political Declaration also pave the way for erosion of workers rights, environmental standards and consumer protection.

Boris’ famous deal will fall at the first hurdle and here’s why:

It is my understanding that EU, UK and Republic of Ireland are all co-signatories to the Good Friday Agreement (GFA) and they want to avoid at all costs breaking international law by imperilling that Agreement. Creating a hard border on the island of Ireland would require ‘security installations’ which are prohibited in the GFA. Now they have agreed that to all intents and purposes Northern Ireland stays in the regularly sphere of the EU, there is no need for that border. What checking that still needs to be done would take place in commercial ports and those customs posts presumably would not be considered ‘security installations’ and be considered worthy of attacks by IRA terrorists.

Mind you the Unionists have already said they’ll vote against this deal anyway, so the deal will not pass parliamentary scrutiny and fall at the first hurdle. Boris Just does not have the votes. He may try to suggest that he had a deal and that therefore no-deal comes up trump again. Legal minds much stronger than mine assure me that this is an illusion.

That means that in two days, we’ll be back to asking for an extension.

This time for a GE and a People’s Vote.

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Commonwealth to the Brexit rescue

I always feel like banging my head against a brick wall, whenever Leave politicians utter the words ” we must have the ability to strike our own trade deals”.

Never in the last 3 years have I heard a single Leaver explain what’s actually wrong with the trade deals that the EU strikes on our behalf.

The only half valid point sometimes made, is that EU trade deals tend to focus on goodsf rather than services. But this is true for nearly all global trade deals. WTO trade talks in Doha on liberalising Services trade globally have been disappointing also. Countries just seem more protective when it comes to their services sector.

https://www.thebalance.com/what-is-the-doha-round-of-trade-talks-3306365

When I point out, the UK has the second largest trade deficit in the world, that doesn’t mean that I disrespect some of the world class industries the UK boasts. Rolls Royce Aerospace, Jaguar Landrover, JCB (I am sure I’ll think of others later) are world class and have no problem exporting globally while in the EU. The EU does not restrict them at all. That means leaving EU won’t liberate them.

The second thing that greatly annoys me of Leavers, is when they start reminiscing about their beloved Commonwealth.

Boris Johnson did it again during his conference speech. « We will trade more with the Commonwealth where billions of consumers await us. » he said to laud applause.

Doesn’t Mr. Johnson realise, that the average earnings of Commonwealth citizens are a tenth of the well heeled customers we serve throughout Europe?

If we take away the four richest Commonwealth members UK, Canada, Australia and New Zealand, Per Capita GDP drops below $900 per annum. These are hardly the same consumers our UK industry and service sector mainly caters for!

In Paris TGV terminals you can find smartly dressed commuters stocking up on Marks & Spencer’s ready meals retailing at €6.50 or two for a tenner.

Just in time supply lines powered by automated tellers can ensure their stocks are replenished from UK overnight, as most capitals in EU are only a eight hour truck drive away. When there’s no hold up at the border that is.

Just imagine how that would work for an equivalent M&S store in Delhi or Mumbay?

In other words, this let’s go global story is a Fata Morgana. Either we are already supplying these markets or the market is just not there for UK products. Too far and too dear for their purse.

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Trade wars, who’d have’m eh?

Answer posted on Quora today

https://www.quora.com/Why-are-there-so-many-trade-wars-between-countries-What-is-the-effect-on-the-world-economy/answer/Marcus-Lasance?ch=10&share=783d58c0&srid=BSU24

I am going to answer this trade war question in a very roundabout way. I feel passionate about this so please bear with me.

Trade wars happen because people have forgotten the role of money and why we use it.

Money is a temporary token for value. A country has oil to trade and needs wheat. The wheat takes another three months to grow and ripen so they take dollars and buy US wheat three month later. The IOU, which really is what money is, has been honoured and trade balance has been restored.

Nowadays people are so in awe of money, they think it has intrinsic value. So when they have paid for their shiny German car or latest Chinese smartphone, they think they’re fully settled up. But in fact they’ve made German and Chinese factory workers sweat and labour for worthless bits of paper with the Queen’s or Benjamin Franklin’s Head on them. This is worse than fobbing natives off with coloured beads of glass for gold and spices in the colonial days.

Of course all these IOUs pile up in the vaults of central banks abroad and eventually they will wing their way back to the countries who’s citizens had forgotten all about them.

Now they are used to buy their prime real estate and most efficient factories and utilities.

People feel like they are loosing a massive monopoly game and don’t like it.

When their President or a loudmouth like Farage says he’ll do something about it, they welcome him as a saviour.

But neither have an answer, because they also are in love with bits of paper. They don’t say, maybe I should have a better industrial strategy and create things of value we can trade so we can get back all our IOUs and maybe invest them better ourselves.

Before you reply, I am just a neo-mercantilist, I do know the value of a knowledge based economy and services.

The problem with the uneducated lazy masses that vote for Trump and follow Farage is that they don’t. They are not spoilt, they are ruined. They’ll never create anything of value. They think consuming creates value.

So all they want to do is blame foreigners more hardworking and better educated and they’ll cheer any kind of war. Thank god it’s still only a pseudo trade war.

Proudly Looking at the biggest container ship at Felixstowe not many Leave voting types realise that most of the containers being loaded are in fact empty returns.

Having the largest trade deficit bar America, does have this effect.

From List of countries by net exports – Wikipedia

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What is Boris’ big plan to get the UK economy going again after Brexit?

Lately I have become more active on the Social Media site Quora. Some of my answers are like mini blogs, so I’ll star sharing the best of them here on IdentitySpace.

After a no-deal Brexit Boris Johnson will try to pump up the UK economy with more hot air.

The British like to say they are special and have a ‘Services’ based economy, but what does that actually mean?

With a Masters in Business Administration, of course I have a good idea what goes on in those shiny skyscrapers in the City of London and how that brings in revenue from all over the world.

As an avid TV and movie watcher, I can also see how the BBC and other UK production companies produce brilliant content, music, film, drama, games and documentaries and how that copyrighted content is syndicated around the world and also brings in foreign revenues, not to be sneered at.

Where it all gets a bit hazy and incestuous is all these businesses where basically one UK citizen scratches another UK citizen’s back and they invoice each other. Again this total gets added to their GDP and makes the UK look big in nominal terms.

But how ‘real’ is this part of the UK’s GDP?

When I use a ‘Just Eat’ app on my iPhone to order a takeaway, that also adds to the ‘Services’ part of the UK economy and the Small and Medium sized Enterprises (SME) Sector is growing fast in numbers, but it doesn’t earn much foreign currency for UK plc. like the media industry, which is truly global. The ingredients of a typical UK pizza are probably mostly imported, so actually this activity worsens the UK trade deficit.

What we see with people like Boris Johnson and many Brexit voters is that they don’t distinguish between core economic activities that create wealth, like car manufacturing and farming, and secondary services sector activities that just multiply by recycling and distributing wealth other industries generate.

The Conservatives have no Industrial or trade policy. All they care about is their chums in the City of London.

With Brexit hitting the primary wealth generating industries of the UK first, there will be a huge knock-on effect for the secondary services industry in the UK. It will tumble like a house of cards, when British people tighten their belt in the Dunkirk spirit and stop spending.

All those Deliveroo and Uber drivers out of work! All the hair and nail salons. All the unaffordable childcare facilities closed.

To put it in simple terms, when the car plant shuts down, the hamburger van at the factory gate closes with it.

Because Johnson says “fuck industry” he will also deal a deadly blow to the Services sector, which now represents 80% of the UK’s GDP.

While in the EU, Britain was well placed to exploit their advantage in ‘Services’ with the advent of the Songle Market for digital services. Sadly with Brexit, that’s another sector where they’ll lose out.

There is no amount of hot air that can stop that. Brexit UK is heading for a catastrophic disaster. Most folk with half a brain can see this coming from miles away.

But some will make money out of this chaos.

Jacob Rees Mogg’s father even wrote a book about it!

How to Survive and Thrive during the Collapse of the Welfare State: Amazon.co.uk: James Dale Davidson, William Rees-Mogg: 9780684810072: Books

Some enterprising Brits will even find a new pitch for their hamburger vans!


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