Thought we'd seen the back of him

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bobscott
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Re: Thought we'd seen the back of him

Postby bobscott » Sun Feb 19, 2017 4:26 pm

Maud wrote:However, there is a rocky road ahead for a while, and I cannot understand why some people don't realise the problems this is going to create for the less well off in society.


Simple Maud. 'I'm alright Jack'. Bob.
Yesterday today was tomorrow. Don't dilly dally!

Kilkis
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Re: Thought we'd seen the back of him

Postby Kilkis » Sun Feb 19, 2017 4:45 pm

I think one of the problems is that people mostly get their information from the media, including me, and the media only seem able to deal in 10 second sound bites. The information, therefore, tends to be quite simplistic. Take for an example the automotive sector. It is presented as "It isn't in the interest of the EU or the UK to impose tariffs since Mercedes and BMW will still want to sell cars in the UK as much as the UK wants to sell them in the EU." This implies that the situation is symmetric but it very much isn't.

About two thirds of the components used to build a car in the UK are imported from the EU. Suppose a 10 % tariff was imposed on everything in the automotive sector crossing from the EU into the UK and from the UK into the EU. All those components would be subject to the 10 % tariff when they enter the UK. Obviously that isn't going to add 10 % to the cost of a car inside the UK but it will increase it. Exactly how much I don't know but let's say 5 %. When that car is exported to the EU it will also face a 10 % tariff so, in total it will be 15 % more expensive than it was before the tariffs were imposed. The cost of cars produced in the EU by Mercedes, BMW, Seat, Peugeot, Citroen etc will not have increased at all so it is going to be more difficult for UK export cars to compete with EU produced ones. Looking at it the other way the EU produced cars will also be subject to the 10 % tariff when they enter the UK but the locally produced cars will have also gone up by 5 % so the EU produced ones are only 5 % more expensive. Still a barrier but not as big. Even that analysis is over simplistic. Extra paperwork and customs inspections could cause further increases in cost on the incoming components, either directly or indirectly by introducing delays, which transforms into cost in today's JiT manufacturing methodology. That only worsens the asymmetry. The one thing you can say with some certainty is that tariffs always work to the disadvantage of the consumer, i.e. you and me.

I have no idea how much of the recent fall in Sterling is due to Brexit and how much to other economic factors. You can only really look at currency pairs so any changes are a result of what is happening in both countries involved. If you look at the Sterling - Euro pair it was falling before the referendum. It started to level off/recover when it looked like the vote would be to remain. It dropped suddenly back onto its previous downward trajectory once it was known the vote was to leave and continued on that path into October. Since then it has been recovering a bit. Against the US$ it is more like three steps. Flat up to the referendum, a big sudden step down to another flat and then a slower drop to a new flat in October. Obviously throughout that 12 month period things were happening in the EU and in the USA so what caused the moves, Brexit, Trump, Italian banking problems etc etc.? You can also look over the much longer term which tends to suggest that Sterling is in a long term decline against the dollar with periods of stability and/or respite.

Every country in the world wants to depress their currency to improve competitiveness. Obviously that can't happen since one country's up is another country's down. Every country in the world wants to get inflation increasing because it is the only solution to their debt problems, i.e. inflate away the value. All these actions have other consequences, however, and many can be very unpleasant. When inflation starts it has a habit of running away and it is then extremely difficult to stop. If central banks start to raise interest rates to slow inflation what happens to those in debt who now cannot afford their repayments? What happens to the companies who have taken on massive corporate debt to implement share buy back schemes who find that when they need to roll over their bonds the rate has tripled or quadrupled. They haven't invested the debt to increase income so where do they get the money to make the higher repayments? If companies start to default on their corporate bonds how long before we have a repeat of the sub-prime crisis with financial institutions like pension companies suddenly finding that the CDOs they have bought are worthless? There are plenty of bear traps out there apart from Brexit.

Overall I go along with the "nothing has happened yet" viewpoint. When article 50 is triggered it shouldn't be long before we know what the EU's negotiating position is and, depending on what it is, that could provoke changes that are clearly attributable to Brexit.

Warwick

bettyboo
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Re: Thought we'd seen the back of him

Postby bettyboo » Sun Feb 19, 2017 5:02 pm

Obviously not feasible but that is when Referendum Part 2 should be held, when people know more facts, I wouldn't be surprised if there would be a different result..

Kilkis
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Re: Thought we'd seen the back of him

Postby Kilkis » Sun Feb 19, 2017 5:23 pm

I think that is highly unlikely. In some countries, e.g. Switzerland, Iceland etc, referenda are commonplace. The UK is very referenda averse and normally avoids them like the plague. The government usually has no intention whatsoever of letting the people make decisions. Having two in as many years, i.e. Scottish Independence and the EU, was an anomaly, in the latter case because Cameron was frightened that UKIP would poach a lot of Tory seats. I can't see Theresa May repeating the mistake.

Warwick

Guy M
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Re: Thought we'd seen the back of him

Postby Guy M » Sun Feb 19, 2017 5:28 pm

Kilkis wrote:I think one of the problems is that people mostly get their information from the media, including me, and the media only seem able to deal in 10 second sound bites. The information, therefore, tends to be quite simplistic.
..... Every country in the world wants to get inflation increasing because it is the only solution to their debt problems.

Warwick


You are absolutely right - we all deal in sound bites and this forum is a good example: witness the statement about inflation; some inflation may be a good thing, but the Bank of England has inflation targets for a reason - there's no desire for the post oil shocks inflation of the 1970s, whatever that might do to levels of government debt. This illustrates the problem with the referendum: the public were asked to decide on a matter of huge significance with limited knowledge or information; they may or may not have made a sensible choice - who knows?

Maud
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Re: Thought we'd seen the back of him

Postby Maud » Sun Feb 19, 2017 6:13 pm

I agree with everything you say Kilkis. However, there is little doubt that the uncertainty over Brexit has affected the £'s performance in the financial markets. This is not just 'press reporting' but also statements from people like Mark Carney who have been interviewed 'live' on television. Yes....even he has got things wrong, but he is not the only one to make such comments.

It is also obvious to most people that the timing of the recent considerable devaluation of the £ has coincided with the vote for Brexit. The £ might have been over valued, but that has been the case for a while. If it wasn't the Brexit vote, why did this all happen suddenly now?

None of this still solves the problems of rising food prices and people struggling to pay their bills.....which wasn't the case for many of these same people before the £'s dip. What is happening in the automotive industry and elsewhere does not put food on their tables. GM is talking about selling their European manufacturing to PSA because of the lower £. Not everything can be blamed on the press.....and none of it helps the less well off, which was my point earlier.

Maud
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Re: Thought we'd seen the back of him

Postby Maud » Sun Feb 19, 2017 6:19 pm

Sorry Bob, just seen your comment. - Spot on!

Kilkis
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Re: Thought we'd seen the back of him

Postby Kilkis » Mon Feb 20, 2017 12:19 am

The problem, Maud, is distinguishing the underlying cause for Sterling devaluing against the US$ and the € and events, like the leave vote, that trigger a dip. It is easy to conflate the two. Correlation does not prove cause and effect although in some cases it may be a direct cause and effect. I think the underlying cause of Sterling devaluation is a stubbornly high deficit, an increasing debt mountain and, possibly more importantly, a massive current account deficit. All those things may be influenced by Brexit, either for better or worse depending on how you view the UK's prospects after Brexit, but they are not a direct result of the leave vote and they have not been significantly affected so far. I receive a lot of financial email newsletters from different sources dealing with various financial issues. Several of those were predicting a fall in Sterling against the US$ long before the leave vote and totally unrelated to the leave vote. The leave vote may have triggered a dip but it wasn't necessarily the cause. Most of my sources are contrarian and do not follow mainstream thinking. Mark Carney and most of the media only follow mainstream thinking.

The Bank of England has been doing two things for a very long time. Firstly it has been indoctrinating the public to believe that 2 % inflation is at least harmless and possibly a good thing. Secondly they have been rigging the indices so that the reported measure of inflation, i.e. CPI, is a lot less than what is happening in the real economy and that ordinary people experience. If they can achieve a high rate in the real economy while reporting something around 2 % they are laughing. Everybody gets screwed, the buying power of the debt they hold is dropping at a rapid rate but nobody complains. Mark Carney is not a neutral player in this game so don't believe all he says.

Warwick

YoMo2
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Re: Thought we'd seen the back of him

Postby YoMo2 » Mon Feb 20, 2017 8:40 am

I too, don't buy in to the school of thought that says Brexit is the cause of everything. It may turn out to be a disaster. It may turn out to be the best thing that ever happened to the UK. Nothing has happened yet, even if some would like to think it has.

One small point. Some foods have gone up because of disastrous weather in the countries we import from. It's not just the drop in sterling is it?

We all believe what we are predisposed to believe.

Andrew
"It's all in the implementation"

filippos
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Re: Thought we'd seen the back of him

Postby filippos » Mon Feb 20, 2017 11:23 am

Hear, Hear!

Kilkis
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Re: Thought we'd seen the back of him

Postby Kilkis » Mon Feb 20, 2017 3:32 pm

Please note that this post was made in reply to a post that seems to have been deleted while I was typing. I decided to leave it on the thread since the arguments in it do contribute to the debate.

I am sure I had no intention of appearing condescending but exactly what has changed? The UK is still in the customs union and still in the single market. Companies, both in the manufacturing and the service sector, can still trade with the EU unhindered in both directions. There is still free movement of people, goods, services and capital? When, as a consequence of the Brexit negotiations these things cease to be true then we will see changes in the Sterling - Euro exchange rate that are absolutely attributable to Brexit. Until then I disagree with your assertion that there is no doubt that the demise of Sterling is due to the Brexit vote. I think there is serious doubt if the current changes are due to Brexit, to some other factors or, more probably, a combination.

Also, so far the drop in Sterling has been relatively small. There was a sentiment drop from 1.3 to 1.2 on the day after the vote, when currency traders corrected their positions from thinking a remain vote was probable to the reality of a leave vote. Since then it has been ranging between 1.1 and 1.2, which is exactly what you would expect it to do when people are waiting to see what will happen next. If it is all due to Brexit what has happened in the Brexit debate between early October 2016 and now to make it rise from 1.10 to 1.17? In percentage terms that is almost as big a rise as the drop immediately after the vote.

When it comes to inflation I suspect the cost of oil has had as big if not bigger effect than Brexit. That has risen 70 % in the last twelve months and that affects all prices in many different ways, chemicals, energy for manufacturing, transport etc.

Warwick

filippos
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Re: Thought we'd seen the back of him

Postby filippos » Mon Feb 20, 2017 11:12 pm

Not involving Blair - at least, not yet - but I received a link to an interesting piece about what should happen to parliament after Brexit. It's a fairly long read but interesting regarding democracy in the UK. Essentially, I think, it argues what should happen whatever the referendum result had been. Unfortunately, I can't envisage the suggestions coming to pass with the bunch of self-serving charlatans representing us at Westminster.
The People in Parliament.

Peter W
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Re: Thought we'd seen the back of him

Postby Peter W » Tue Feb 21, 2017 12:06 am

We all believe what we are predisposed to believe.

Andrew


Yes, the name for this is Confirmation Bias, people tend to read and believe that which confirms their own views. Unchecked Confirmation Bias can have a very damaging impact on all areas of human activity. We are all prone to Confirmation Bias, the trick is to try to be aware of when that bias is in play.

Peter

Kilkis
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Re: Thought we'd seen the back of him

Postby Kilkis » Tue Feb 21, 2017 12:15 am

Wow. All those self serving charlatans out to undermine the result of the referendum. Shocking. They really are a terrible group of people. No understanding of democracy at all. No respect for the will of the people. Perhaps they should all be hung drawn and quartered. Did anybody notice that they voted 494 to 122 to trigger Article 50? That really did fly in the face of what the public voted for? Or is the problem that they had the temerity to debate some issues? Good god whatever next? Elected representatives debating important issues. Where will it end?

When the referendum was held can somebody point out to me where the people were asked to vote on the following issues?

    1 What should happen to the border between Northern Ireland and the Republic?
    2 What should happen to the border between Gibraltar and Spain?
    3 What should happen to EU citizens already resident in the UK?
    4 What should happen to UK citizens resident in the EU?
    5 What should happen to UK laws that are based on EU Directives that protect UK citizens from injury or death?
    6 etc etc

Could somebody tell me what the UK electorate decided should be done about these issues? If these issues are not appropriate for debate in the UK parliament where should they be debated? Should they be ignored or should we simply assume Theresa May will be mummy and know what is best. That somehow, perhaps by osmosis, she will know what UK citizens want.

Get a grip, guys. Parliament constantly ignores the will of the people and always has. Every poll held on hanging reveals that a majority of the public want it reintroduced. Every vote in parliament has rejected the idea. Long live parliament I say. In this case they didn't ignore the will of the people so stop moaning about it. You got what you wanted.

Warwick

filippos
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Re: Thought we'd seen the back of him

Postby filippos » Tue Feb 21, 2017 11:08 am

Kilkis wrote:Parliament constantly ignores the will of the people and always has.

Wasn't the main thrust of the argument that it shouldn't constantly ignore the people or, at least, give the people more say in who is representing them.
Kilkis wrote:Every poll held on hanging reveals that a majority of the public want it reintroduced. Every vote in parliament has rejected the idea. Long live parliament I say.

I don't agree with hanging either and we all know that polls are always right. Haven't they predicted accurately the results of the last two or three UK general elections, the June referendum and a recent American one? Governments don't necessarily have to hold referenda for everything, either. The recently departed ex-PM, you know, eeeeerm ........ oh, yes, Cameron, only promoted the June referendum because polls, focus groups and the consensus opinion predicted the result he wanted.

Of course the country needs a parliament but why should the members be selected by a relatively small coterie of senior party members at national and local level (and local party organisations of all colours are often allowed or bullied into selecting candidates only from a "head office" short list). What's wrong with cleaning up the postal voting system that's fallen into disrepute and is wide open to manipulation and fraud? What's wrong about providing photo ID at a polling station? At the last UK general election in which I was able to vote in person two of my neighbours had their votes stolen. They went to vote on their way home from work and were prevented from doing so because the voter list showed that they'd already voted. Their votes could have been cast by anyone knowing their names and address. Should the system not be made more secure?

I don't agree with every point in the article but I can see merit in some of the ideas it proposes. At the least it's has suggestions that bear discussion.


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