Independence And Its Consequences

Britain left the EU on the last day of January and is an independent nation once more. The new Johnson government is confident that Britain will do well outside the EU. Free trade will be embraced, and a no-deal outcome, now dubbed an Australian trade relationship, holds no fears for the British government.

This article summarises the political and economic consequences of this historic moment. The fly in the ointment is there is no sign that Britain’s government understands the importance of sound money, which will be crucial in the event a global economic and financial credit crisis materialises.

Independence and trade negotiations

Having given independence to all its colonies, now it’s Britain’s turn. On 1 February the UK became politically independent and entered an eleven-month transition period while trade terms with the EU and other trading nations are negotiated, with the objective of entering 2021 with freedom to trade without tariffs with as many nations as possible. If Britain succeeds in its initial objectives these trade agreements will include not only the EU but also America, Japan, South Korea, Canada, Australia, New Zealand, the other trans-Pacific Partnership nations and a host of sub-Saharan African nations in the Commonwealth. It amounts to about two-thirds of the world measured by nominal GDP, of which only 21% is with the EU.

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Dutch Court Orders Government to Cut CO2 Emissions 25% by EOY 2020

Re-Blogged From WUWT

Dutch Farmer Protest. Image source Breitbart

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More Evidence That a Cold Climate Kills

Re-Blogged From WUWT

From the EARTH INSTITUTE AT COLUMBIA UNIVERSITY and the “Columbia’s press release writers have no shame” department comes this load of tosh presser trying to give readers a lesson on Brexit. On the plus side, the paper shows the MWP being warmer than today on Scotland and says nary a word about “Brexit”.


In ancient Scottish tree rings, a cautionary tale on climate, politics and survival

A 1600s famine with echoes in the age of Brexit

Using old tree rings and archival documents, historians and climate scientists have detailed an extreme cold period in Scotland in the 1690s that caused immense suffering. It decimated agriculture, killed as much as 15 percent of the population and sparked a fatal attempt to establish a Scottish colony in southern Panama. The researchers say the episode–shown in their study to have been during the coldest decade of the past 750 years–was probably caused by faraway volcanic eruptions. But it was not just bad weather that brought disaster. Among other things, Scotland was politically isolated from England, its bigger, more prosperous neighbor that might have otherwise helped. Propelled in part by the catastrophe, the two nations merged in 1707 to become part of what is now the United Kingdom. Such a famine-related tragedy was never repeated, despite later climate swings.

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Post-Brexit Planning

Brexit will be done by the end of next month, when trade negotiations with the EU will begin. Importantly, Britain’s negotiating position has strengthened immeasurably, and the new government is not afraid to use it.

This Conservative government has a greater sense of political and economic direction than Britain has seen in a long time. Unbeknown to the public, not only will the establishment that obstructed Brexit be side-lined, but a slimmed-down post-Brexit cabinet through a network of special advisers lead by Dominic Cummings will revolutionise central government, reducing bureaucracy and refocusing resources on public service objectives instead of wasted on process.

But there is a dichotomy. While both the government and the new intake of MPs lean towards free markets, Cummings and Johnson will increase government intervention to secure their electoral advantage for the future, and to ensure a planned outcome in a world which in following decades will be dominated by new large Asian economies.

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Global Industrial Slump And Brexit Dance Go On

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

The Brexit saga continues. Both the U.S. and China’s industrial sectors suffer from the trade war. How will the Fed react to these downside risks tomorrow? The expectation is that it’ll cut rates, but will that really happen? And how will gold take to that?

Brexit Dance Goes On

Last week, we wrote about the Brexit saga, diving into the latest battles between Johnson and Parliament. But the drama has not ended yet. As we concluded one week ago, “Brexit is far from over, and British politics may surprise us again.” Indeed, Johnson wanted to call a snap general election in December to gain more leverage in the House of Commons, but the UK parliament has rejected Johnson’s proposal. For the third time. But Boris does not like losing, so he proposed today a new bill that lowers the number of MPs requires to pass the decision to hold an early election from two thirds to simple majority.

In the meantime, the EU agreed to the Brexit extension until the end of January 2020. Importantly, the EU offered a “flextension,” which means that the UK could leave before the deadline if a deal is approved by the British Parliament. Brexit is still far from concluded and snap elections could significantly change the political landscape. But one thing is sure for now, the possibility of a non-deal Brexit has been postponed until January 31, 2020 at least. This should reduce the safe-haven demand for gold, but also support the pound and euro against the U.S. dollar, gold’s nemesis.

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Is Your Freight Prepared for Brexit?

By Alina Grace of Haulystic Innovations

Aren’t you getting frustrated listening to different scenarios about Brexit every day? Brexit is around the corner and we still do not have a clear picture on what is going to happen to UK and the world after the 31ST of October, 2019. Logistics is an industry that has adapted to economic and political changes throughout the years.

So, why do we worry about Brexit?

Is the fact that United Kingdom will leave the EU, with or without a deal, so important that will change the landscape of the global supply chain services forever?

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Casting Off The EU Millstone

Introduction

It should have been no surprise that Boris Johnson is now Prime Minister. It should also be no surprise he will implement Brexit on 31 October, the last date agreed between Mrs May’s government and the EU. Johnson was elected by Conservative constituency members to do just that. His cabinet appointees are fully supportive, including ex-Remainers (that’s politics!) and he has appointed an aggressive rottweiler, Dominic Cummings, as his Brexit enforcer. Already, his influence over Brexit strategy can be detected. There are no compromises to be had, a point which slower minds in the commentariat find difficult to comprehend and accept.

It is likely there will be an agreement on the way forward after Brexit, which could involve a transition period, but nothing like that agreed with Mrs May. If, as seems unlikely, the EU digs its heels in, the UK will walk away. That is the message being given by the new administration.

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Leaving the EU is ‘More Vital Than Climate Change’

  • Climate change came third in list of priorities voters identified for Government
  • Eleven per cent of participants mentioned climate as top issues facing country
  • Second place was ‘tackling poverty’ on 12%, and ‘resolving Brexit’ top at 24%

Resolving Brexit should be the Government’s number-one priority – and is more important to voters than issues such as climate change, according to the results of a new survey.

Thirty-six per cent of people questioned by pollsters Opinium identified Brexit as the most important issue facing politicians.

MPs have so far been unable to reach a majority in the House of Commons to break the deadlock surrounding our departure from the EU – yet last month, they found enough common ground to declare a ‘climate emergency’.

Climate change came third in the list of priorities voters identified for the Government – 11 per cent mentioned it – while in second place was ‘tackling poverty’ on 12 per cent.

You Know Things are Falling When…

…when the stock market’s decade-long bottom trend becomes its new top trend and then it can’t even make it back up to that line as a top trend.

We’re sloughing away now, and it can be a long slide to the bottom or endless side-winding of big ups and downs that go nowhere, just as the market has now gone nowhere for fifteen months.

Yes, if you bought in January, 2018, (when I said the market would fall) and held, you have made nothing (unless you did well on dividends)! If you continue to hold, the odds are you will do worse than nothing; but, hey, you did get to enjoy a heck of a roller-coaster ride. If, on the other hand, you sold in January of 2018 and put your money in cash, you made 2% a year with worry-free smooth sailing every day of the year. Here’s the proof on stocks:

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US & World Issues Affect Gold Market

By Andy Hecht – Re-Blogged From Gold Eagle

Summary

  • The dollar steps on the rally with a bullish reversal last week.
  • Issues around the world warn not to get too bearish.
  • Technical levels to watch in gold on the up and the downside.
  • Gold mining stocks are waiting for gold to make a move – GDX is likely to outperform gold if the price breaks higher.

Gold is a safe haven asset that market participants tend to flock to during periods of fear, uncertainty, and inflation. The yellow metal is both a commodity and a financial asset, making it unique. Along with its many industrial and ornamental uses, gold serves as an asset for countries around the world that hold the metal as part of their foreign currency reserves. Not only do central banks, governments, and monetary authorities hold gold, but they have been net buyers of the precious metal over the past few years. China and Russia are both absorbing their domestic production and purchasing the metal in the international market to build reserves.

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How A ‘No Deal’ Brexit Could Lead To The “Lehmanization” Of Europe

[Some of us think the disaster is way overdone. -Bob]
By Mark O’Byrne – Re-Blogged From Gold Eagle

(The Telegraph) — Odds of a ‘no deal’ Brexit next week have risen markedly, as the Commons fails to coalesce around a viable alternative to Theresa May’s deal, while once again rejecting the “best possible deal” negotiated between the prime minister and the EU27, albeit by a smaller, yet still considerable, margin than in the past.

This is why, for the first time in a while, speculation about ‘no deal”s impact, not only on the UK, but on the European, and broader global, economy is at the forefront of the market’s mind, as investors have finally been forced to confront the reality that the UK crashing out of the EU next week isn’t only possible, but extremely probable.

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London Property Slide Worsens With Biggest Drop Since 2009

By Mark O’Byrne – Re-Blogged From Gold Eagle

3.8% fall y/y in Q1, the seventh straight decline in values – Nationwide
– Nationally, U.K. real-estate market remains ‘subdued’
– Some of the weakness relates to Brexit as economic uncertainty impacts sentiment

London continued to lead the U.K.’s weakening property market at the start of 2019, with prices falling the most since the financial crisis a decade ago.

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Continuing Brexit Travails

  • Mr Barclay voted against a Government plan for a delay to Brexit last night
  • He said he would support a short extension to Article 50  but not a long one 
  • Mrs May expected to make third attempt to get a Brexit deal thought next week 
  • Mr Barclay said: ‘If we don’t have a deal then we should leave with no deal ‘

Is May about to lose her THIRD Brexit secretary? Stephen Barclay hints he could quit if PM backs a long extension to Article 50 saying ‘we shouldn’t be afraid to leave with no deal’

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UK’s May Faces No-Confidence Vote After Brexit Plan Crushed

By Associated Press – Re-Blogged From Newsmax

British lawmakers on Tuesday overwhelmingly rejected Prime Minister Theresa May’s divorce deal with the European Union, plunging the Brexit process into chaos and leading to a no-confidence vote in her government.

Moments after the vote, May said it was only right to test whether the government still had lawmakers’ support to carry on. Lawmakers will vote Wednesday in a no-confidence motion from opposition leader Jeremy Corbyn that could trigger a national election.

The House of Commons’ 432-202 vote against May’s plan was widely expected, but it was still devastating for her fragile leadership. It came after more than two years of political upheaval — and was the biggest defeat for a government in the House of Commons in more than a century.

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Three Things That Will Definitely Happen In 2019

By John Rubino – Re-Blogged From Dollar Collapse

Much about 2019 is uncertain. But a few things are pretty much guaranteed, including the following:

Government debt will rise at an accelerating rate

Like a life-long dieter who finally gives up and decides to eat himself to death, the US is now committed to trillion-dollar deficits for as far as the eye can see. And that’s – get this – assuming no recession in the coming decade. During the next downturn that trillion will become two or more, but in 2019 another trillion-plus is guaranteed.

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Time Is Money…Money Is Time

By Alasdair Macleod – Re-Blogged From Silver Phoenix

Life’s but a walking shadow, a poor player who struts and frets his hour upon the stage and then is heard no more. 

(Macbeth)

Our limited time, our brief candle as Shakespeare’s Macbeth had it earlier in the soliloquy quoted from above, may count for very little in the grand scheme of things, but is of the utmost importance to each of us personally. Unlike the other dimensions, height, breadth and depth, the fourth is almost infinite, but individuals enjoy only a small part of it, our three-score years and ten. Time moves on. What really matters is not wasting it.

We may appear to others to be wasting time. But it is not wasting it when we take a break, recharge our batteries, or stop to think. Pleasure-seeking, pursuing happiness, removing uneasiness is making good use of time. We are all different and enjoy different things, so wasting time is not time wasted so long as it our personal choice. No one can allocate time as effectively as the individual. It is intensely personal.

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G20 and the Financial War

By Alasdair Macleod – Re-Blogged From Goldmoney

This weekend, the G20 nations meet at Buenos Aires. The most important issue will be America’s use of trade policy, ostensibly to bring an end to China’s unfair trade practices. Rather, it could mark a significant milestone in the cold war against China and drive the global economy into a slump.

Introduction

President Trump initiated the trade war with China. There is a widespread assumption he is pursuing his “art of the deal”, coming into negotiations aggressively to get a satisfactory compromise. Therefore, the script goes, China will be forced to climb down on its restrictive practices, technology and patent theft, and modify its Made in China 2025 (MiC2025) initiative to open it to American corporations. Trade negotiators from both sides have been working in the background to achieve some sort of progress before Presidents Trump and Xi meet at the G20 this weekend, which buoys up hopes of a positive outcome.

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UK MP Jacob William Rees-Mogg Rips Theresa May With Letter Of No Confidence

By Mike Shedlock – Re-Blogged From Freedom Outpost

We need politicians who are clear, concise, articulate, well-educated, and correct. I found one. Alas, he’s from the UK.

Please consider this video clip of UK MP Jacob William Rees-Mogg. He slammed Theresa May with a letter of no confidence then fielded questions from the public.

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Psychology Of Systemic Consensus

By Alasdair Macleod – Re-Blogged From Silver Phoenix

We are all too familiar with established views rejecting change. It has nothing to do with the facts. Officialdom’s mind is often firmly closed to all reason on the big issues. To appreciate why we must understand the crowd psychology behind the systemic consensus. It is the distant engine that drives the generator that provides the electricity that drives us into repetitive disasters despite prior evidence they are avoidable, and even fuels the madness of political correctness.

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Will Gold Prices Soar After March 2019?

By Arkadiusz Sieroń– Re-Blogged From Gold Eagle

After the Salzburg summit, the prospects of the Brexit deal are gloomy as never before. Will gold gain on failed talks between the EU and the UK?

Cake Philosophy And Gold

The Salzburg summit was held last week. It was an informal summit of heads of the EU member states or governments. The participants discussed immigration, internal security and Brexit. The negotiations between the UK and the EU attracted the most attention, as Donald Tusk, the European Council president, said that the Chequers plan for Brexit “will not work” and mocked Theresa May’s negotiating strategy in social media (he posted a picture of May and himself at a cake stand with the caption: “A piece of cake, perhaps? Sorry, no cherries.” Continue reading

What if Brexit Happened Without an Exit Deal?

Re-Blogged From Stratfor

Highlights

  • If the March deadline for the United Kingdom to exit the European Union arrives without a Withdrawal Agreement between both parties, Brexit would happen with no transition period, forcing businesses to immediately adjust to the new rules defining EU-UK relations.
  • Under a “no-deal” scenario, British exporters would face EU tariffs that are low on average, but high in specific sectors like automobiles and agriculture.
  • The strongest economic effect of a no-deal scenario would be felt in the United Kingdom and its close trade partners, like Ireland, the Netherlands and Belgium.
  • Without a deal, London and Brussels would probably arrange temporary agreements to minimize disruptions while they continued to negotiate.

EU Chief Brexit Negotiator Michel Barnier (R) and Britain's Brexit Minister Dominic Raab hold a joint press conference after their meeting at the European Commission in Brussels on July 26, 2018.

(JOHN THYS/AFP/Getty Images)

 

Negotiators for the United Kingdom and the European Union are racing the clock to reach agreements on a long list of remaining issues before the United Kingdom formally leaves the bloc on March 29, 2019. Ongoing discussions are focused on a Withdrawal Agreement that would establish the legal terms of the Brexit and a political declaration outlining the general framework for future ties between the European Union and the United Kingdom. London and Brussels would ideally like both documents to be finalized in time to be signed during a European Council summit in October. But negotiators are still far apart on both deals, opening the door for a no-deal scenario, in which Brexit would happen without any prearranged conditions. If that happened, the economies and the political and institutional systems of both would have to cope with a number of possibly disruptive effects.

 

The Big Picture

Stratfor’s Annual Forecast noted that the European Union and the United Kingdom would spend the year trying to figure out what their future relationship would look like in the wake of Brexit. Furthermore, it said that disagreements over the future of the Irish border would be one of the main obstacles to a deal, and that the British government would remain internally divided on the approach to negotiations. The complications leave open the possibility that the Brexit date will arrive with no agreement over how to handle a host of issues.

 

See 2018 Annual Forecast

See Europe section of the 2018 Annual Forecast

See Brexit and Beyond

The Current Situation

London and Brussels are already aligned on several aspects of the Withdrawal Agreement. For example, the United Kingdom has agreed to pay its “Brexit bill” — some 39 billion pounds ($52 billion) to the European Union to honor its financial commitments to the bloc, and both have pledged to preserve the residency rights of EU citizens living in the United Kingdom and likewise of British citizens on the Continent. They have also negotiated a transition period that would allow the United Kingdom to remain within the EU single market until December 2020. This would give both parties time to adapt to the new reality and to negotiate a trade agreement.

But the Withdrawal Agreement is not complete, and several sticky issues remain unresolved, including future cooperation on police and judicial issues and the role of the European Court of Justice in the United Kingdom after Brexit. But by far the most controversial issue remains the eventual status of the border between Northern Ireland and the Republic of Ireland. Both parties want the border to remain open, but they cannot agree on a way to accomplish that. In March, negotiators settled on a “backstop option” that would leave Northern Ireland in the EU customs union if a better solution cannot be found before Brexit day arrives. In July, however, the British House of Commons voted to make that option illegal, possibly complicating the chances of reaching a border agreement (the bill has yet to be ratified by the House of Lords).

 

British Prime Minister Theresa May’s government is internally divided between those who want to keep close ties with the European Union and factions pushing for a hard exit. This has forced May to seek compromise with both groups, often resulting in complex policy proposals. Further complicating the situation are the divisions in the British Parliament between hardliners and softliners, meaning that even if May can hold her government together, she cannot guarantee that her proposals will pass parliamentary muster. The European Union, in the meantime, says that it will not approve an ad hoc agreement with the United Kingdom, insisting that it must follow an existing trade model, whether that be membership in the single market or the customs union or a free trade agreement.

 

British Trade With the EU

What a No-Deal Scenario Would Mean For Trade

If the two sides fail to reach a Withdrawal Agreement by early 2019, or if they sign a deal that either the British Parliament or the European Council reject, it would most likely force the United Kingdom to exit the European Union under a no-deal scenario. While EU rules allow for the negotiation period to be extended after the March 2019 deadline, the bloc would likely demand concessions on a soft exit in exchange, a prospect that British politicians could find unacceptable.

Without the Withdrawal Agreement, beginning March 30, 2019, the United Kingdom would find itself suddenly out of the single market, and EU laws and regulations would no longer apply to it. The European Union would treat the United Kingdom as it would any other country with which it has no agreements, applying tariffs and customs controls, and enforcing EU sanitary and phytosanitary standards for British goods. The new border controls would cause delays at borders and ports, and supplies of food and other goods would stack up as they awaited inspection. (The British government recently suggested that in a no-deal scenario, it could waive checks to keep traffic moving, but it would require the European Union to do the same.)

Without a deal, World Trade Organization (WTO) rules would govern relations between the European Union and United Kingdom. British exporters would have to contend with EU tariffs that are low on average (roughly 5 percent). However, the rates run higher in specific sectors (10 percent for cars, for example, and an average of 11 percent on agricultural products). EU exporters, in turn, would have to deal with whatever tariffs London decides to impose. Even if the United Kingdom unilaterally reduced or eliminated its own tariffs to prevent an escalation of the price of imports, non-tariff barriers (such as standards and regulations) would still create obstacles for bilateral trade. The United Kingdom could try to remain aligned with EU standards and regulations to limit disruptions in trade, but it’s only natural that over time, the two would progressively drift apart.

 

EU Import Tariffs, Select Goods

The effects of a no-deal situation would be even more pronounced in the case of services, which constitute about 80 percent of the British economy. The British financial sector would lose the “passporting rights” that allow companies to sell their services within the single market without having to apply for authorization in each country. Without those rights, the financial services sector, which accounts for more than 6 percent of Britain’s gross domestic product, would be among the main losers. Although not every financial activity would be affected in the same way (banks that operate domestically would not be as affected as other activities that rely on foreign customers), a no-deal could deal a heavy blow to the sector.

 

 

UK Financial Services Trade with EU Countries

And the impact on services would go well beyond finance. Providers of professional and business services, like legal, accounting, advertising, architectural and engineering services, now have relatively unrestricted access to EU countries through the single market. In a no-deal scenario, London would have to reach specific agreements with Brussels to preserve this access. Similarly, a no-deal would mean that for British airlines to maintain the access to European markets that they now enjoy though the European Common Aviation Area, London would have strike a new agreement with the European Union. At the same time, to preserve their access to the single market, companies in a wide range of other sectors would have to move some of their operations to continental Europe.

Under a no-deal scenario London would be free to sign free trade agreements with any countries it wishes to (such as the United States and Australia). But negotiating, ratifying and enforcing such deals takes years. In the meantime, the United Kingdom would lose access to the free trade agreements that the European Union already has with countries like Canada, Japan and South Korea.

What Else Would Be Affected?

If no Withdrawal Agreement is signed, the future of the roughly 3.6 million EU citizens living in the United Kingdom and the 1 million British nationals living in the European Union would be thrown into doubt. There would not be massive deportations, but they would remain in a legal limbo for weeks, if not months, until their status was defined.

The United Kingdom would be free to set an independent immigration policy, and considering that this was one of the key issues in the Brexit referendum campaign, London would probably impose restrictions, such as work visas or annual quotas, on future migrants from the European Union. Associations representing sectors from tech and manufacturing to construction and tourism have warned that doing so could create a shortage of skills in the British economy, as it would be harder (or at least involve more layers of bureaucracy) for British employers to hire workers from the European Union. Should the United Kingdom decide to impose restrictions for short-term visitors as well, the tourism sector would feel the pinch. And should the European Union retaliate by imposing visas for British tourists, that would hurt tourism destinations like Spain and Portugal.

At the same time, in a no-deal scenario, British individuals, companies and institutions would lose access to EU financing in areas such as education and scientific research. The European Union would also likely restrict, or even exclude, British participation in continental projects such as the Galileo GPS system or in regulatory entities such as the European Medicines Agency.

Without a Withdrawal Agreement, London would probably refuse to pay the Brexit bill, at least initially. That would leave less money for the EU budget and force spending cuts. The British government would be able to redirect that money to domestic needs, such as compensating British farmers for lost access to EU agricultural subsidies. But refusing to pay the Brexit bill would sour UK-EU relations and make it harder for London and Brussels to negotiate the bilateral agreements needed to cope with the effects of Brexit. As a result, London would probably agree to make the payment at some point.

The Economic Impact Would Be Spread Unevenly

Trade, supply chains, capital movement and migration flows between the European Union and United Kingdom are so tightly entwined that the economic impact of a no-deal scenario would be felt in both. But the effects would be spread unevenly. A recent International Monetary Fund (IMF) report found that if the European Union and the United Kingdom start trading under WTO rules, the economic growth of the 27 remaining EU countries would fall by as much as 1.5 percent by 2030. Countries with close ties to the United Kingdom like Ireland, the Netherlands, Denmark and Belgium would feel a particular sting, but the pain would be much milder in those with bigger economies or weaker UK ties like Italy or Spain. The biggest downturn would come in the United Kingdom itself, where the economy could contract by as much as 4 percent in the decade after Brexit. According to the IMF, softer versions of Brexit (like a comprehensive free trade agreement or remaining in the single market) would lead to softer economic impacts everywhere.

In January, British media published a leaked internal British government document that paints an even darker picture. That report estimated that British economic growth would be reduced by as much as 8 percent in the first 15 years after Brexit in a no-deal situation, compared to reductions by 5 percent under a free trade deal and by 2 percent with membership in the single market. Impact reports by private companies offer different figures, but most agree that trade under WTO rules would be the most disruptive scenario for both the United Kingdom and the European Union, and that the British would feel the strongest impact.

The unprecedented situation presented to Europe’s political, economic and institutional actors by a no-deal scenario would generate confusion and uncertainty. But the chaos would not necessarily last for a long period or affect every aspect of EU-UK relations the same way. Even in a no-deal scenario, both parties would still be interested in reaching a permanent trade agreement, which means that negotiations between London and Brussels would likely continue. In the meantime, the United Kingdom and the European Union would probably reach temporary deals to try to minimize disruptions as much as possible, with many people carrying out business as usual while they waited for further instructions. A no-deal scenario would trigger a significant change after four and a half decades of British membership in the EU, but while its ties with the Continent would be disrupted, they would not be completely severed.

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Return of the Euro Crisis: Italy Quakes, Rest of the World Shakes and Merkel’s Empire Breaks

By David Haggith – Re-Blogged From Great Recession Blog

Europe’s many fault lines are spreading once again, bringing the endless euro crisis saga back in 3-D realism. Italy gained a new anti-establishment government last week, even as Spain elected a new Socialista government that could crack Catalonia off from the rest of Spain. All of Europe fell under Trumpian trade-war sanctions and threatened their own retaliation. And Germany’s most titanic bank got downgraded to the bottom of the junk-bond B-bin.

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The Gently Rotting Debt-Ridden EU

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

The EU (Euro Union) as a political construction is in a state of terminal decay. We know this for one reason and one reason alone: its core principal is the state is superior to its people. A system of government can only work over the longer term if it recognises that it is the servant of the people, not its master. It matters not what electoral system is in place, so long as this principal is adhered to.

The EU executive in Brussels does not accept electoral primacy. It shares with Marxist communism a belief in statist primacy instead. The only difference between the two creeds is Marx planned to rule the world, while Brussels is on the way to ruling Europe.

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European Implosion Sends Panic Through Global Markets

By Michael Snyder – Re-Blogged From Freedom Outpost

told you to keep your eyes on Europe.  On Tuesday, widespread panic shot through European financial markets and this deeply affected U.S. markets as well.  The Dow Jones industrial average fell 391 points, and at this point the Dow and the S&P 500 have been down for three trading sessions in a row.  But the big news is what is happening over in Europe.  Tuesday’s crash represented the largest one day move for 2 year Italian bonds ever, and Italian bank stocks are now down a whopping 24 percent from their April highs.

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Law Of Comparative Advantage

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

The debates about Brexit and President Trump’s trade machinations have demonstrated the blindness of otherwise intelligent people to the Law of Comparative Advantage. Let me attempt a contemporary definition:

“The Law of Comparative Advantage states that an entity maximises its resources by producing that which gives the best return, while delegating production of all other products and services to other entities more cost-effective in their production”

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London Property Sees Brave Bet By Norway

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

– Sales in London property market at ‘historic lows’

– 65% fall in pre-tax profits in 2017 to £6.5m reported by London estate agents Foxtons – Foxtons warns 2018 will ‘remain challenging’ for London property – Norway’s sovereign wealth fund is backing London’s property market – RICS: UK property stock hits record low as buyer demand falls – Own physical gold to hedge falls in physical property

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Brexit Risks Increase

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

Brexit uncertainty deepens as UK government in disarray

– BOE warns of earlier and larger rate hikes for Brexit-hit UK

– UK property prices fall second month in row, London property under pressure

– No deal Brexit estimated to cost UK £80bn according to government analysis – Transition period causing major uncertainty for UK and pound – Pound expected to fall as Brexit fears remain into 2018

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Brexit – The Battle For Ideas

By Alasdair Macleod – Re-Blogged From GoldMoney

The battle for ideas in the Brexit debate comes down to two basic economic approaches. The neo-Keynesian macroeconomists in the permanent establishment, who manage the state as economic planners and regulators are on one side. They are naturally sympathetic with the policies and ideals of their EU counterparts. Against them are those who argue that in economics free markets must have primacy over the state.

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The Year That Was 2017

Re-Blogged From Stratfor

We would not be doing our jobs correctly if we only forecast the year ahead. Quite simply, we must be rigorous in examining the past, and that means taking a hard look at how well we did in determining the major trends of the year gone by. In every respect, 2017 was particularly unique because of the questions — and alarmism — surrounding the inauguration of U.S. President Donald Trump. Would the world see a dramatic warming of U.S. relations with Russia that would leave many Western allies in the lurch? Would a massive trade war break out between the United States and China? Would the Iran nuclear deal be torn up? These were all questions we sought to address as we pondered the changing dynamics of the global system. What follows are some of our key deductions, alongside honest appraisals of what we got right and wrong.

The year 2017 opened with a new U.S. president, and alarmism about the path Donald Trump would take.

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Europe, Brexit And The Credit Cycle

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Europe’s financial and systemic troubles have retreated from the headlines. This is partly due to the financial media’s attention switching to President Trump and the US budget negotiations, partly due to Brexit and the preoccupation with Britain’s problems, and partly due to evidence of economic recovery in the Eurozone, at long last. And finally, anyone who can put digit to computer key has been absorbed by the cryptocurrency phenomenon.

Just because commentary is focused elsewhere does not mean Europe’s troubles are receding. Far from it, new challenges lie ahead. This article provides an overview of the current state of play from the European point of view, and seeks to identify the investment and currency risks. We start with Brexit.

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Liberated British Might De-Prioritise Climate Change

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

British academics are worried that the British People might choose to de-prioritise climate policy, if they are allowed to make their own choices instead of being shackled to the EU bureaucracy.

What will Brexit mean for the climate? (Clue: it doesn’t look good)

December 1, 2017 8.05pm AEDT

With Brexit negotiations stuck on divorce bills and borders, complex issues such as climate change barely receive a mention. Yet the UK has agreements with the EU around emissions targets and technology transfer, and Brexit represents a significant threat to the UK’s progress on cutting carbon emissions.

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When a Pillar of European Stability Crumbles

Re-Blogged From worldview.stratfor.com

Highlights

  • Negotiations to form a German government collapsed Nov. 19, opening a period of political uncertainty as leaders try to form a minority government or even seek new general elections.
  • Prolonged political uncertainty in Germany will complicate France’s plans for eurozone reforms and delay discussions about financial and institutional reforms for months.
  • The situation in Germany could also delay negotiations about the United Kingdom’s future ties with the European Union.

Germany's role as the beacon of political stability and predictability in Europe is now in doubt. Negotiations to form a government collapsed Nov. 19 after the pro-business Free Democratic Party (FDP) left the coalition talks, opening a period of prolonged political uncertainty in the process.

(ODD ANDERSEN/AFP/Getty Images)
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Globalism in the Eyes of Two Beholders

By Rodger Baker – Re-Blogged From https://worldview.stratfor.com

The relative peace and prosperity in Europe may have shaped an idealistic approach to globalism.

The world over, the topic of globalism rarely fails to elicit a strongly held opinion. At its extreme in Europe, the march of globalization is accepted as a near-inevitability: In that view, it is no longer merely a path that should be taken, but the inexorable destination of humanity. As such, there is little room for assessing, much less understanding, alternative perceptions about the structure of the world, either internationally or domestically. Whether talking with a German economist, a British investor or an expatriate businessman in Spain, there is a near-bewilderment as to why anyone would want to pursue nationalism over globalism. As such, the bump in popularity for the Alternative for Germany party, the independence referendum in Catalonia and the Brexit are all seen as anti-historical trends. To them, the European Union remains the moral and political compass for the world, the guiding principle upon which the nation-state will be subsumed and a new global society will emerge.

In Asia, globalization is seen as a potential path, but not an inevitable one, and is viewed more often in economic than political terms. The nation-state firmly remains the unit of political and social organization, and while there are numerous initiatives to enhance cooperation among national entities, there is little movement toward the creation of a pan-national umbrella along the lines of the European Union. The Association of Southeast Asian Nations (ASEAN), one of the most aggressive Asian attempts at pan-national cooperation, explicitly promotes a policy of noninterference in national politics, recognizing the very different systems in each member country, rather than seeking to replace them with a regionwide political and economic structure.

Over the past 12 months, I have engaged with business leaders, government officials, researchers and members of the media in London, Berlin, Paris, Rome, Barcelona and The Hague, and in Auckland, Seoul, Beijing, Hong Kong and Singapore. Over the course of those discussions, a distinct difference in worldview between the “elites” of Europe and those of Asia became apparent. I use the word elite loosely here to describe the thin layer of society with the economic and social freedom to observe and assess the world in a manner disconnected from daily life. These are the economists, political scientists and bankers, the pundits, heads of major corporations, politicians and journalists. Their views shape much of the popular narrative, but one that often misses the underlying realities and beliefs held by a large portion of the societies in which they reside.

Now, all such broad-brush assessments are, by their nature, simplistic and superficial. There are certainly those in Asia who subscribe to the ideals of extreme globalism, and some among the European elite who recognize clearly that the Continental vision is just that — a vision and not an inevitability. But nonetheless, I noted the striking difference in tone between those I met in Europe and those in Asia. In part, the geopolitical developments in each region over the past several decades could explain this dichotomy.

 

Whereas Europe views the United States in ideological terms, Asia sees it in transactional terms.

Following the end of the Cold War, with the exception of the breakup of Yugoslavia, Europe has experienced perhaps its most stable multidecadal period in centuries. The European experiment appeared to be working. The peace and prosperity that spread across the continent allowed for the European Union to spread in kind, absorbing elements of the former Soviet bloc and even parts of the former Soviet Union itself. In guiding the economic and political directions of individual European nations, the European Union sought to erase the underlying nationalism that had riven Europe for millennia. But that noble goal failed to take into account the realities that remained below the surface. These were exposed dramatically with the global financial crisis in 2008, which forced the differences between the economic, social and political predilections underlying its systems to the surface once again, leaving the Europeans struggling with the growing gap between the globalized ideal and the national realities.

In Asia, no substantial periods of post-Cold War peace and cooperation ever really materialized. Even as it emerged as the region’s dominant economic regional power, China’s attention focused inward as it sought to manage internal social upheavalJapan fell into economic malaise. The two Koreas (despite a brief moment of sunshine) continued to spar. Extra-constitutional political change swept across Southeast Asia. The financial contagion that spread throughout the Asia-Pacific in 1997 sharpened many of these trends, leaving simply no long space of regional economic prosperity and political integration. Moves toward regional economic cooperation never went so far as seeking a common currency or centralized economic authority, and they certainly avoided linkage of economics and domestic politics.

Those differences in fortune play into the way each region views and reacts to both the perceived changes in U.S. policy direction and to rising nationalist sentiment around the world. In Europe, U.S. President Donald Trump is seen as globalization’s greatest threat, caricatured as the dangerous buffoon — a mirror image of the U.S. perception of North Korean leader Kim Jong Un. European nations have found it difficult to manage relations with the United States because they cannot accept that it may be sliding away from the extreme vision of globalization. In Asia, there are concerns about the direction of U.S. policy, but less in regards to globalization and more in terms of its direct economic and security effects. Whereas Europe views the United States in ideological terms, Asia sees it in transactional terms. Thus Asian leaders like Japan’s Shinzo Abe and even China’s Xi Jinping have been more adept at interpreting and engaging with Trump.

The geopolitical currents that have brought the continental neighbors to these dichotomous viewpoints will continue to shape the perceptions of their thought leaders, who in turn influence the political, economic and social directions of their societies. It’s clear that globalism will continue to evolve, both as an ideal and as a reality. Where it ends up may be a matter of perspective.

 

Rodger Baker leads Stratfor’s analysis of Asia Pacific and South Asia and guides the company’s forecasting process. A Stratfor analyst since 1997, he has played a pivotal role in developing and refining the company’s analytical process, internal training programs and geopolitical framework.

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London House Prices Are Falling

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

London house prices fall in September: first time in eight years

– High-end London property fell by 3.2% in year

– House sales down by over a very large one-third

– Global Real Estate Bubble Index – see table

– Brexit, rising inflation and political uncertainty causing many buyers to back away from market

– U.K. housing stock worth record £6.8 trillion, almost 1.5 times value of LSE and more than the value of all the gold in world

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The Fiscal Benefits Of Free Trade

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Western governments have an overriding problem, and that is they have reached or exceeded the bounds of taxation, at a time when legally mandated welfare costs are accelerating. Treasury departments in all the welfare nations are acutely aware of this problem, to which there’s no apparent solution. The economic recovery, so consistently forecast since the great financial crisis, has hardly materialised and has added to the problem.

There is, if treasury economists could only understand it, a solution in free trade.

One of the UK’s leading economists and Brexiteers, Patrick Minford, produced an interesting paper, which brought up this subject. It got little coverage in the press, and even that was extremely negative. Trading on the Future was the only economic modelling exercise that showed significant benefits for Britain from free trade.

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Support for Hard Brexit in the UK Hardens

By Don Quijones – Re-Blogged From WOLF STREET.

“Significant economic damage” is a “price worth paying.” But businesses are not so sure.

Europhiles hoping that time might heal or at least narrow the rift separating the UK and the EU after last year’s Brexit vote are likely to be sorely disappointed by the findings of a new poll jointly conducted by Oxford University and London School of Economics.

The survey reveals that there is more support for harder Brexit options because Leavers and a substantial number of Remainers back them. The survey’s findings bolster the case for the hard-Brexit-or-nothing position favored (at least publicly) by British Prime Minister Theresa May. The alternative — a so-called “soft” Brexit — would imply having to accept full freedom of movement for all EU citizens in return for some form of privileged access to the single market. Given that regaining control of UK borders was one of the key issues that swung the referendum in Brexit’s favor, such a proposition was always unlikely to sway a majority of British voters.

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Brexit One Year Later, In Five Charts

By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com

One year ago, British voters cast their ballots in favor of leaving the 28-member European Union, defying multiple opinion polls leading up to the Brexit referendum that said the “remain” camp would notch a narrow victory.

In a pre-Brexit Frank Talk last year, I wrote that Brexit would be regarded as the most consequential political event of 2016. President Donald Trump’s surprise election notwithstanding, I stand by my earlier comment.

 

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Brexit And UK Election impact UK Housing

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

  • Growing evidence of slowdown in UK property market
  • Slow-down in activity in UK housing market in run up to UK election
  • Average UK house prices dropped in the three months to May
  • Halifax report annual house price growth fallen to a four-year low of 3.3 percent.
  • “Political instability breeds procrastination on the part of homebuyers and sellers”
  • Sterling drop will increase divide in housing market, first time buyers continue to struggle
  • House price growth has lost momentum, volumes continue to drop

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Brexit, Germany And Asia

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Britain’s general election went horribly wrong, with the Conservatives forced into a putative coalition with the Democratic Ulster Party. Theresa May’s failure to secure a clear majority has provoked indignation, bitterness, and widespread pessimism. The purpose of this article is not to contribute to this outcry, but to take a more measured view of the situation faced by the British government with regards to Brexit, and the consequences for Europe. In the interests of an international readership, this article will only summarize briefly the current situation in the UK before looking at the broader European and geopolitical consequences.

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Update On Brexit

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

This article looks at the background to Brexit negotiations and concludes that Britain is negotiating from a position of strength, while the EU is increasingly in a position of financial difficulty. Not only will the European Commission be forced to scale back its spending and redistribution of resources, but the euro project is threatened by capital flight between member states, despite the early signs of economic recovery which should be restoring market confidence. Politicking aside, pressure is mounting on the EU to defuse the disruption of Brexit by agreeing to a mutually beneficial deal as soon as possible.

EU Finances Are Getting Desperate

The EU cannot afford to prevaricate over Brexit because a bad Brexit risks causing it immeasurable harm. Not only does big business in Europe want a Britain with which it can freely trade, but confidence in the European Project is rapidly diminishing. The EU is a mega-state that is fading, and no one knows how to ensure its survival. Inevitably, the failings of the EU are catching up with it, and Britain’s leaving exposes the financial consequences of decades of bad management, capital destruction through wasteful redistribution and the lack of any contingency planning.

Britain’s €8bn annual contribution to the EU budget is almost the same as the cost of administering the whole Brussels establishment, so Brexit will create a budget shortfall that is almost total, which Brussels will have to make up from the remaining members. Inevitably, some of the redistribution to Brussel’s pet projects will end up being cut as well. It is for this reason that the Brussels politicians hope for a capital payment from Britain.

The Commission also has a commitment to redistribute member funds estimated at €238bn. It must have assumed prior to last year’s referendum that Britain would vote to remain and pay its share. Instead, it voted for Brexit, and the Commission will have to find the money from a capital contribution either from Britain, somewhere else, or cancel some of the projects. With these problems, the Commission is in a difficult position, wrong-footed by Brexit. And when Theresa May says no deal is better than a bad deal and means it, it really could mean an end to Brussels as we know it.

TARGET2 Deteriorates Further

Probably the most alarming statistic coming out of the Eurozone is the continual growth in TARGET2 imbalances. The chart below shows the latest position.

In a normally functioning TARGET2 system, imbalances should be minimal, as they were before the financial crisis. But the ECB says there’s nothing to worry about, which would be true if these imbalances are just a passing phase, to be reversed when normality returns. After nine years, this appears increasingly unlikely.

These imbalances arise because of capital flows, whereby money moves from one nation to another without any underlying trade. If a Spanish bank has deposits withdrawn from it, the Banco de España steps in and covers it. This creates an asset on the Bank of Spain’s balance sheet, matched by a liability on TARGET2. The redeposit in Germany is reflected by an increase in the German bank’s reserves held at the Bundesbank. The Bundesbank’s liability to the German bank is matched with a credit on TARGET2.

Therefore, TARGET2 reflects capital flight, or silent runs on some of the national banking systems. The surpluses at the Bundesbank, the Banque du Luxembourg and the Finnish Central Bank are all rising into new record territory. The Netherlands Central bank saw a dip ahead of the recent election, but that balance is on the rise again as well. On the most recent figures to March these balances totalled €1.186tn, up €119bn over Q1. The balance at the Bundesbank rose a further €14bn in April to €843bn, the figures for the other NCBs not yet being available. It is clear from these numbers that capital flight, particularly from Italy and Spain, is still increasing, despite reports of a tentative economic recovery.

The third largest negative balance is of the ECB itself at €183bn, which relates to the ECB’s QE policy. The negative balances at the NCBs are net of the credits created thereon, implying that the degree of capital flight from these countries is understated.

The imbalances on TARGET2 are ultimately the liability of the ECB, not the individual NCBs. Yet, there’s no provision in the ECB’s accounts for the risk of an NCB leaving the system. This is a good reason why a nation cannot be allowed to leave the Eurozone.

By the end of January, the ECB had bought an estimated €1.34tn of government bonds, €230bn of covered bonds (mostly pooled mortgages), and €60bn of corporate bonds. To these purchases can be added a further total of €220bn to date, giving us a total today of €1.85tn. The valuation risks on these bonds are not reflected on the ECB’s balance sheet, which at December 2016 disclosed only €160.8bn, listed under “Securities held for monetary purposes”. So, only 11% of the total bonds bought through QE by end-December are shown on the ECB’s balance sheet. Where the price risk lies on the other 89% is important, because when interest rates are normalised, the losses could be considerable.

In that event, the allocation of losses is decided by the ECB’s Governing Council, ruling on both the way and the extent to which losses are distributed between the NCBs and the ECB. And if price inflation really takes hold, not only will government finances and private sector debt be enmeshed in a debt trap, but the ECB and the NCBs will all need to be recapitalised as well.

EU Politicians Are In Panic Mode

Concerns over the EU’s finances are almost certainly behind the wild statements being made by some EU leaders. According to Jean-Claude Junker, Theresa May is living in another galaxy, which begs the question about his own galactic residence, relatively speaking. After requests from several member states, which suddenly realise they are going to lose subsidies, the Commission has mechanically increased its demand for an up-front payment by Britain from €60bn to €100bn. This is despite the EU’s own legal advice from the Commission’s lawyers that no money can be claimed. France, Hungary, Italy, Spain and Poland also want Britain to continue to pay their farmers after Britain has left the EU.

It’s become like an opera buffa, a satire on a barely tangential relationship between the EU Commission and British democracy. Jean-Claude Junker, prefacing a recent speech in French said somewhat absurdly that English is losing its importance in Europe due to Brexit, despite it being the most commonly spoken. This is the mentality against which Britain will be negotiating.

The politicking of the senior commissioners is far removed from democratic reality. When David Davis for the UK sits down opposite Michel Barnier for the EU, does he counter the demand for an up-front payment of €100bn with a lesser amount, or a counter-claim for Britain’s share of the estimated €154bn of assets owned by the EU, which the EU side fails to mention? A claim on EU assets is equally flaky. Davis can only accept a position in accordance with his legal advice, or at least not very far adrift from it, because he has democratic accountability, though Barnier does not. Both the EU’s and Britain’s lawyers say there’s no capital liability for Britain, and there’s no mention of it in Article 50, or articles referred to in it. Capital payments and asset claims are just a try-on.

The British position is that no treaty is better than a bad treaty, so most of the movement in negotiations must come from the EU side. As their treatment of Greece illustrated (conveniently reminded to us last week by Yanis Varoufakis in his new book, Adults in the Room), the EU might be obstinate to the point of destruction. Fortunately for Britain, it is not in the position Greece was, and can afford to walk away.

But the Commissioners know of no other approach other than to bully. Remember that when Ireland refused to ratify the Nice Treaty in a referendum, the EU told them to vote again, and get it right. They did the same again to Ireland over the Lisbon Treaty. Denmark was told to hold a second referendum on Maastricht, and to get it right as well. Perhaps they thought that by upping the cost of leaving, the UK might back down and go for a soft Brexit, or even decide to stay after a second referendum. So, when Junker had dinner with Theresa May on 26th April and was told plainly Britain’s point of view, he threw his toys out of the pram.

All they have achieved is to get the British electorate’s collective backs up, just as Obama did when he said Britain would go to the back of the queue on T-TIP. Thanks to these threats, it is now likely that Mrs May will have an even greater landslide victory in the upcoming general election, with an increased number of ardent Brexiteers for MPs.

All that is for public consumption. Fortunately, behind the scenes the officials doing the real negotiation are quietly making progress. Politicking is one thing, practicality is another. According to Daniel Korski, who was deputy head of the No 10 Policy Unit, writing in an article for last Wednesday’s Daily Telegraph, EU negotiators now accept it is in everyone’s interest to avoid a cliff-edge. Many months ago, Iain Duncan-Smith reported that German manufacturers had secretly agreed with Angela Merkel’s administration that any trade barriers would be minimal. The reality behind the rhetoric is European business, which after all employs EU residents and collects and pays the bulk of the taxes, will determine the outcome.

In theory, Britain has two years from March before formally leaving, though Article 50(3) allows for this period to be extended by agreement. This opens the possibility for transitional arrangements if need be. Furthermore, the EU side will be able to ratify the decision on the new basis of qualified majority voting. This means the support of Germany, France, Italy and Spain for an agreement should be sufficient, so Britain is likely to target these governments behind the scenes, along with their major corporations. The reality is European businesses want to protect their markets and investments in the UK, and perhaps to use the UK after Brexit as a springboard for global business.

Therefore, expect covert briefing by the British for the major European car manufacturers, the banks, and any other major multinationals based in these countries. Contentious issues, such as agricultural subsidies and citizens’ rights, while important, are unlikely to stand in the way of an agreement. However, the procedures of the EU, which involve all 27 nations being consulted, usually involves protracted lead-times. The only way trade and the rights of affected citizens can be agreed within the two-year time scale is for the Commission to initially work with Germany, France, Italy and Spain to complete negotiations, keeping consultations with the other states to the bare minimum, before presenting a final solution to the other states. Otherwise, a lengthy time extension will almost certainly be required.

There can be little doubt where the power lies. Britain can walk away, the EU cannot. Britain’s Commonwealth members rejoice at Brexit. Furthermore, Britain can rapidly come to a Most Favoured Nation agreement with China, which would take decades for the EU to achieve. China is already sending freight by rail to Europe, including the UK. A quick MFN deal with China opens a trade network which will eventually include the whole of Asia and those parts of Europe not bound by the EU. In the fullness of time, this is likely to be a far better arrangement for Britain than being restricted by the EU’s trade agreements. Combining the Commonwealth and Asia in a massive liberated trade arrangement has the benefit of making the UK a suitable base for European companies selling services into what promises to become the largest trading area in the world.

Being free of the EU is a no-brainer, and the British electorate is beginning to understand it. The City is also anticipating the new opportunities with growing relish.

All this assumes that the worrying TARGET2 statistics don’t presage a banking or financial crisis by March 2019. Nobody will be immune to a banking blow-up in Euroland, but from the British point of view there must be an urgency to get out of the EU before it happens. It also assumes Theresa May gets the electoral mandate she seeks on 8th June.

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The Mystery Behind Economic Growth

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

We learn, out of the blue, that “the Eurozone is performing well, but with opinions divided on the causes, doubts linger over whether it is a sustainable recovery” (Daily Telegraph, 19 April). We are also told that economic growth in the US is stalling, as evidenced by downward revisions by the Atlanta Fed, and the fact that the rate of increase in Loans and Leases by commercial banks is also stalling. The Bank of England was unable to forecast the strength of the UK economy in the wake of Brexit.

This article explains why this confusion occurs. It is clear the economics profession is ill-informed about the one thing it is paid to know about, and the commentary that trickles down to the ordinary person is accordingly incorrect. State-educated and paid-for economists always assume the private sector is the problem, when it is the burden of the state, and the state’s futile attempts to manage the consequences of its actions through the corruption of money.

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The Decline And Fall Of The Euro Union

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

This article identifies the headwinds faced by the EU in the wake of Brexit. Without the UK, not only does the EU lose much of its importance on the world stage, but the Commission’s budget is left with an enormous hole. That is the decline. The fall is well under way, with capital flight significantly worse than generally realised, as a proper understanding of TARGET2 imbalances shows. Not only is the ECB running out of options, but without major support from Germany, France and Italy, Brussels itself faces a financial crisis. In a highly unusual move, Jamie Dimon of JP Morgan in a letter to his shareholders this week backtracked on his earlier pre-Brexit threat to move jobs from London, declaring that the problem is Europe itself.

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Brexit’s Potential to Fracture the U.K.

Re-Blogged From http://www.Stratfor.com

Analysis

Splitting from the European Union will inevitably strain the United Kingdom’s territorial integrity. Those pushing for Scotland and Northern Ireland to secede from the United Kingdom are using Brexit to justify their agendas. Brexit will also open a debate between the central government in London and the country’s devolved governments about who will control the powers that will be repatriated from Brussels. With authority over policy areas such as agriculture, fisheries, industry and the environment returning to the United Kingdom after Brexit, the administrations of Wales, Scotland and Northern Ireland will push London to transfer many of those attributions to them.

Brexit's Potential to Fracture the U.K.

The independence movement in Scotland stands to gain momentum from the Brexit. (JEFF J. MITCHELL/Getty Images)

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Brexit Triggered…And Why Britain Should Succeed In The Negotiations

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

This is the week that Article 50 of the Lisbon Treaty was triggered, and the two years of negotiation between the UK and the EU commenced. Following this period, the UK formally leaves the EU. It is the first time a member state is leaving the EU, so the procedures are untested and the outcome uncertain. But it is not the first Brexit, as historian David Starkey has pointed out. Henry VIII gave similar notice to Rome and through several Acts of Parliament between 1532-34, removed papal powers and tithes, and achieved his Brexit. The chief Remainers, his Chancellor Sir Thomas Moore and Cardinal John Fisher, were executed in 1535.

Today’s Remainers can expect kinder treatment. But Britain has never been entirely happy giving away the legal supremacy from Parliament won by Good King Hal. When Britain joined the Common Market in January 1973, it was a trade bloc that made some strategic sense. The fashion was to belong to trading blocs, in the belief that the General Agreement on Tariffs and Trade (GATT), the forerunner to the World Trade Organisation, was not strong enough protection from trade barriers.

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Will Mid-March Madness Maul the Stock Market in 2017?

By David Haggith – Re-Blogged From Great Recession Blog

Many of the 2017 economic headwinds I’ve described will hit during the Ides of March, just as the Trump stock-market Rally shows signs of topping out. This might not be the Great Epocalypse — not all at once anyway — but a large and likely correction is looming. I think the bear is about to be let out of his cage.

Chaos emerged in emerging-market stocks last week, bond prices plummeted (yields rose to match their last 2016 high), stock-market volatility rose, and the Dow took its worst drop in 2017. Copper prices, a bellwether for recessionary conditions, saw their worst week since last September. It looked like the Trump rally in almost everything was rolling over last week, and that takes us into this week when several likely big bangs are scheduled to hit on the same day.

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Claim: Brexit Could Cause EU Opposition to Climate Change to Collapse

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

British Conservative Politician Ian Duncan MEP is worried that when Britain Leaves the EU, the entire European Union green programme could collapse, because Britain won’t be around to pay for it.

energy-plugged-in-coal

Brexit could ‘derail’ EU attempts to fight climate change and reduce greenhouse gas emissions, say MEPs

Exclusive: European Carbon Trading Scheme (ETS) could lose £1.7bn worth of funding once Britain exits the trade bloc

Shehab Khan@shehabkhan Wednesday 8 February 2017 16:45 GMT

Brexit could “derail” the European Union’s attempts to combat climate change and reduce greenhouse gas emissions, according to British MEPs.

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2017 Economic Forecast: Global Headwinds Look Like Mother of All Storms

By David Haggith – Re-Blogged From GREAT Recession Blog

Headwinds that are starting to assail deep structural flaws in the US and global economies form the basis for my 2017 economic forecast, which looks like an all-out economic crisis building throughout the world. Some of these headwinds are global; some more locally focused within the United States, but that which brings down the US economy wounds the world anyway. Ultimately, global concerns threaten the US, and US concerns threaten the globe. We’re all in this together, even as we seem to be flying apart in political whirlwinds everywhere and fracturing national alliances all over the world.

Even in the US where the Trump Triumph has ignited consumer and business hopes and inflamed the stock market, time is not on Trump’s side. Trump’s own key advisors — like Steve Bannon and Larry Kudlow — have stated unequivocally that Trump’s plans must happen quickly if they are going to save the US economy. Trump, himself, campaigned on the endless refrain that the US economy was rapidly approaching catastrophe. That’s why we needed to elect him. If we take the architects of these hope-inspiring plans at their word, 2017 is a make-or-break year for the US, and the clock is ticking against their success.

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Central Banks And Gold

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

The very near future is likely to see a sea-change in central bankers’ attitude to the gold allocation in their reserves. The failure of G20 monetary policy since the financial crisis is causing a general rethink, which may eventually lead to a new policy direction. For now, that is undecided, beyond a growing acceptance that today’s monetary policy does not work and the assumptions of recent decades, that gold as money should be phased out, might have been a mistake.

The idea, that Western central banks could banish gold from the monetary scene over time, has been disrupted by the persistence of Asian demand, fuelled by the remarkable economic progress of ex-communist states embracing capitalist methods. Western financial markets have hardly begun to grasp the wider implications of the shift in economic power from the heavily-indebted welfare economies, to China, Russia and other members of the Shanghai Cooperation Organisation, and their consequences for gold.

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The Fed’s “Third Mandate”

By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com

Lately, the Cartel has been throwing everything – including the kitchen sink – at Precious Metals; in silver’s case, vigorously defending its latest “line in the sand,” at the 200 DMA of $17.96/oz; and in gold’s, at its 200 day and 200 MONTH moving averages, both of which are roughly $1,266/oz.  And despite, as I mocked yesterday, the dollar index “rising” this week – due to heightened fear of a Eurozone breakup – they’ve been having an immense amount of trouble holding them down.

Yesterday, we saw the newest Cartel machination in action – of capping Precious Metal gains; no surprise, via the “Cartel Herald” algorithm, at the 12:00 PM EST “cap of last resort”; when Treasury bond auctions go, LOL, “well” – which I mock due to the fact that auction data is so comically easy to rig, to garner the desired “market” reaction.  Conversely, if such auctions go “badly” – i.e., a lower sale price than the prevailing market price – Precious Metal prices are smashed.  And of course, either way, PPT-supported stock prices are unaffected, subject only to the ubiquitous “dead ringer” algorithm, which “coincidentally” is centered around the Fed’s 10:00 AM EST “open market operations.”

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