FDI: The Tories magic money tree and Brexit

Wrote another belter of a thread on Twitter.

Kindly the Twitter ThreadReader app made it into something that looks more like my usual blog posts.

Enjoy and best wishes for 2019!

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Lately I have become a bit obsessed with Britain’s trade deficit and Balance of Payments with the Rest of The World(ROW). Let me explain why, and what’s it got to do with #Brexit.
For me as a UK-expat in Euroland I have seen the value of my pension drop by 20% since the dreaded referendum.

Let’s home in on what happened around the time of the referendum. Although part of a longer term decline, the sharp drop did not go unnoticed by the commentariat.Sharp drop in Sterling rate highlighted June July 2016Cartoon of pound falling off cliff

Of course markets never like uncertainty, but I did notice that every time a Government Minister assured us it would be a ‘Soft #brexit’ there was a slight upturn. Mention ‘Hard Brexit’ or ‘no-deal’ and the short term gain was immediately wiped out.

n 1971, thirty three years after the post war Breton Woods conference agreement, the link between currencies and a the UK’ s Gold Reserves was effectively abandoned and Sterling became in effect free floating.Screen grab from Wikipedia Breton Woods article

The pound like many other currencies became a ‘Fiat Currency’Screenscrape from Wikipedia fiat currency article

In simple layman’s terms, the Pound, Dollar or Euro is worth as much as the people that use them and the markets that trade in them have confidence in the government that issues them. When the markets lose confidence you can end up with shock devaluation and hyper inflationImage of a trillion dollar Zimbabwean bank note

Watching iconic U.K. films like “Made in Dagenham”
and “the Crown” it always felt reassuring that in Cabinet Meeting scenes the U.K. balance of payments was always discussed as something of National importance. We must as a nation, never spend abroad, more than we can afford.Made in Dagenham film flyer

At some point in recent history, whatever passes for a competent Government in the U.K, must have given up the pretense of trying to match the level of imports into the country with the level of exports as a nation, the U.K. ships to the rest of the world.

So they invented FDI1

Definition of FDI

FDI is the magical money tree the Tories invented, when they no longer managed to keep the UK’s trade books balanced.

It happened around the same time Britain decided it did not want to join the Euro.

We no longer export as much as we import?

Let’s have a giant car boot sale!!

For sale the UK offered it’s Utilities, empty factories and warehouses, all with prime access to the emerging giant EU market that was developing on its doorstep. Hey presto. Our abysmal trade record solved. National Financial Accounts balanced and the Pound propped up by FDI🤗

All this happened without being honest to the UK electorate. Not joining the Euro was sold as a clever move. The country kept partying as if it was still 1999 while across the pond the EU economy, powered by Germany, went from strength to strength.

Of course with failing investment and falling productivity wages of ordinary working people in Britain fell behind.

Et on charlatans, who wreaked havoc on our economy, while lording it over, had to find a scape goat.

In true fascist style, an easy target was found: Immigrants!

This is the economic background story to #Brexit. It’s a story of mismanagement of the U.K. economy, at the same time as our EU neighbours did everything right.

@jeremycorbyn has understood some of the problems, but unless he first fixes #Brexit, he’s on a hiding to nothing.

Let’s look one more time at that league table of trading nations.

Look at who’s in the top ten and the bottom 10.

Where would we rather be?

Back in the EU fold or adrift alone in a globalised world?

Does anyone seriously think @LiamFox can fix this? That @jeremycorbyn can?Lust of countries by net exports: Six EU nations in top 10. EU although not a country in third position for referenceLust of countries by net exports: Bottom USA. Second from bottom on position 193 UK

Stop #Brexit with a #peoplesvote before it’s too late!

 

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About lasancmt

Passionate about Identity Management Disgusted at #ukip and #brexit
This entry was posted in #brexit and tagged , . Bookmark the permalink.

2 Responses to FDI: The Tories magic money tree and Brexit

  1. Ian Deloford says:

    Lasancmt has made a chilling analysis that seems very believable. As a remain supporter and campaigner I have avoided saying how bad the result of leaving might be; just that every effect is likely to be bad, slightly bad or occasionally have no effect. Good effects are almost non-existent so for someone like me only armed by common sense the cumulative effect of all the disadvantages approaching will obviously turn our economy downwards. The worry is that the downturn will gather momentum. Confidence is lost, putting off spending and investment and everything gets worse.

    The hostility we have directed at the 27 will have all sorts of negative effects. The lack of support from us for the EU that is obviously by far the most honourable law and order supporting world voice amongst USA, China, Russia, South America, the Arab world etc is quite shameful.

    I am an Englishman who always thought polite and constructive arguing was beneficial. Not a view shared by all my countrymen, many of whom make a joke, talk about the weather or trot out a cliché if politics gets mentioned. I am aware that most of the standard controversies have two sides to them. I can understand moderate lefties and those on the moderate right. But this Brexit business is different; there are virtually no arguments in favour of leaving; only slogans and misleading implications. A clear majority, according to the polls favour remaining now and yet politicians are frightened to lead.

    Brexiters and ambitious politicians trying to keep in with voters have taken to condemning a People’s Vote by saying that it doesn’t respect democracy. And they are using the ridicule ploy as well. Come on Brexiters, can’t you think up any proper arguments? Obviously voting is, by definition democratic. “But we had a vote, we should respect that!” That was then when all of us, me included, knew much less and clearly some false claims were made. So there is a good reason to say to the voters, “Are you sure?” If they are sure they can vote leave again. In view of the closeness of the 2016 result it is surely not unreasonable to be absolutely sure what the country wants. As for the ridicule gambit, “How many referendums do you want?” yes very amusing, but quite irrelevant. Only Brexiters stuck for proper arguments have mentioned that.

    We have a clear opportunity to recover from this absurdity. We can rescind or delay article 50, have a referendum as a country with a better understanding of what is involved, and make an informed choice. We will then be a chastened, wiser and hopefully, more humble member of the EU that uses its considerable influence in a good way.

    • lasancmt says:

      Thans Ian for your considered and considerable reply. I also hope for another vote, an informed people’s vote. I have just a nagging concern that even if Remain wins and turns the tide, the UK would still be in considerable trouble as a nation with their economy. First of all companies who have upped and moved, will not tell HR and Logstics to rewind the clock and move the business back to UK in a hurry.

      Furthermore the structural balance of payments and trade deficits are not instantly resolved or less acute if the UK rejoins the in the EU fold.

      One way to mitigate the economic disaster is to not only cancel Art 50, which the ECJ now has said the UK can do unilaterally, but to take the full plunge and join the Eurozone.

      If for arguments sake the UK joined the Eurozone assuming 1:1 exchange rate with the Euro, further downward pressure on the Pound by speculators would be instantly abated. The UK could continue importing the foodstuffs it need and the luxury cars rich City folk think they need. At the same time UK could continue building on its strength in services where it already has a positive trade balance. It could carve out a niche where UK is the services Capital of the EU, While Germany excels in manufacturing and the Dutch in trading.

      We can’t go back and leave things as they were!

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