From the Guardian: How will Brexit affect Britain's trade with Europe?

Lafayette · Jul 1, 2016

DA60 said:
Britain will be just fine without the EU.

You're wearing blinders, which is why you only see the financial side of the matter?

London, where the young mostly work in Finance, voted overwhelmingly to remain. As did the youth in most of the rest of Britain that voted for an exit. (YouGov poll: "According to YouGov polling, 75% of young voters in the UK voted to remain in the EU. These are their voices, as well as those who were too young to vote, but wanted to have their say")

I would not underestimate the pressure building from those 75Percenters over the coming years as Britain scrambles to get its economy back-on-track - nor would I care to be around when it explodes ...
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Lafayette · Jul 1, 2016

HK.227 said:
But as previously inferred, it all depends on whether the EU takes a hostile or conciliatory stance towards the UK.

Given that 75% of British youth (voting and non-voting) wanted to remain in the EU, I suspect that the EU will make Brexit as painless as possible. Britain will be back within the next ten years.

But, next time, it will have to surrender the British pound ...

Basis for my remarks:
*Britain is a damn expensive country, which is why the retired have been flocking to France and Spain to live.
*The kids will become voters and the Labor as well as LibDems parties will pick up their vote. It was Labor that brought GB into the EU, it is the Tories who got GB out. The British Conservative Party is going to be paying their error a great long time.
*I happen to live in a part of France that has a lot of GB-citizens working in hi-tech. (All the Yanks went back because they cost too much on assignment.) They will be allowed to stay (on French work-visas), but I hear them say - at the bar - that they will mostly be applying for French citizenship (just in case). And that will be made dead-easy by the French government, as many have done so already attest.
*Ditto that remark for the rest of the EU. The Brits export easily since they have very solid hi-tech expertise.
*Most of the younger American resident community has "gone home". Only the elderly Yanks have remained because the French National Health Service is first-class and one helluva lot less costly than even ObamaCare ...
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joG · Jul 1, 2016

Lafayette said:
You're wearing blinders, which is why you only see the financial side of the matter?

London, where the young mostly work in Finance, voted overwhelmingly to remain. As did the youth in most of the rest of Britain that voted for an exit. (YouGov poll: "According to YouGov polling, 75% of young voters in the UK voted to remain in the EU. These are their voices, as well as those who were too young to vote, but wanted to have their say")

I would not underestimate the pressure building from those 75Percenters over the coming years as Britain scrambles to get its economy back-on-track - nor would I care to be around when it explodes ...
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If you will remember, the London young elite wanted the UK to sign the Maastricht document, while it was today's veterans of the EU that voted the country in to begin with but blocked entery of the catastrophic currency and Schengen treaties.

joG · Jul 1, 2016

Lafayette said:
Given that 75% of British youth (voting and non-voting) wanted to remain in the EU, I suspect that the EU will make Brexit as painless as possible. Britain will be back within the next ten years.

But, next time, it will have to surrender the British pound ...

Basis for my remarks:
*Britain is a damn expensive country, which is why the retired have been flocking to France and Spain to live.
*The kids will become voters and the Labor as well as LibDems parties will pick up their vote. It was Labor that brought GB into the EU, it is the Tories who got GB out. The British Conservative Party is going to be paying their error a great long time.
*I happen to live in a part of France that has a lot of GB-citizens working in hi-tech. (All the Yanks went back because they cost too much on assignment.) They will be allowed to stay (on French work-visas), but I hear them say - at the bar - that they will mostly be applying for French citizenship (just in case). And that will be made dead-easy by the French government, as many have done so already attest.
*Ditto that remark for the rest of the EU. The Brits export easily since they have very solid hi-tech expertise.
*Most of the younger American resident community has "gone home". Only the elderly Yanks have remained because the French National Health Service is first-class and one helluva lot less costly than even ObamaCare ...
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If the UK is abysmally stupid in the coming months and disregards the structure of and their position in the game that is one of many alternatives.

Lafayette · Jul 1, 2016

NO GREAT DIFFERENCE

joG said:
... while it was today's veterans of the EU that voted the country in to begin with but blocked entery of the catastrophic currency and Schengen treaties.

What "catastrophic" currency and Shengen-treaty?

Currency: The EU is on a parry with the dollar (at around 1.10, down from 1.35). So, the EU competes well with the US on international markets.

Shengen: Both the UK and the Denmark have "special consideration" (no passport control) like other Shengen signatories. About Shengen, excerpted from WikiP:

Twenty-two of the twenty-eight European Union (EU) member states participate in the Schengen Area. Of the six EU members that do not form part of the Schengen Area, four – Bulgaria, Croatia, Cyprus, and Romania – are legally obliged and wish to join the area, while the other two – the Republic of Ireland and the United Kingdom – maintain opt-outs. All four European Free Trade Association (EFTA) member states – Iceland, Liechtenstein, Norway, and Switzerland – have signed agreements on association with the Schengen Agreement, even though they are outside the EU. In addition, three European microstates – Monaco, San Marino, and Vatican City – can be considered de facto participants.

It's no BigDeal, tourist-traffic amongst the Central EU economies is not affected. But tourism is NOT the real problem.

A DIGRESSION

The Real Economic Challenge is having available the talent necessary for an advanced and functional Services-economy. The make the same complaint as regards the US, for which GDP is already about 80% a "Services Economy" (see here). And as I never tire of repeating: The EU and the US economies are migrating slowly into the Information Age, and the need for higher-skilled people is already rudely apparent.

Between the two economies (EU and US), however, obtaining higher qualifications are very different challenges.

Since early on, the leaders of the EU had a clear vision of Tertiary Education. That it should be very low cost to any citizen asking to embark upon a vocational, 2- or 4-year advanced degree. Which is the case presently in the EU.

Today, however, the average American student graduates with a $30K debt-albatross hanging around his/her neck. The EU student, same study qualifications, has zero-debt to repay.

I've got that wrong, have I? From the FRB, Student Loan Payment Status by Demographic and Education Characteristics, excerpt:

The average combined balance of student loan debt for those who report owing at least some money is $35,657 and the median balance is $18,000. When considering only student loans for one's own education, the average current balance is $30,182 and the median is $16,000

My Point: it is utter stupidity, given Uncle Sam's economic circumstance, to think that Tertiary Education (like Secondary Schooling) need not be Free, Gratis and For Nothing. Those children that do not benefit from a Tertiary Education - we will be paying their cost of Unemployment Insurance for decades to come.

Why do we have 15% of American families under the Poverty Threshold? Because they willingly want to be there? No way, José.

But, I have digressed - with apologies ...
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joG · Jul 1, 2016

Lafayette said:
NO GREAT DIFFERENCE

What "catastrophic" currency and Shengen-treaty?

Currency: The EU is on a parry with the dollar (at around 1.10, down from 1.35). So, the EU competes well with the US on international markets.
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I am sorry, but in the context of currency treaties this is a so off the wall comment, that it is either an attempt to troll or .... Anyway, that is where I stopped reading.

Lafayette · Jul 1, 2016

joG said:
I am sorry, but in the context of currency treaties this is a so off the wall comment, that it is either an attempt to troll or .... Anyway, that is where I stopped reading.

Yes, so the comparative value of the two principle trading currencies has no influence on international markets for goods/services?

Wow ... !
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DA60 · Jul 2, 2016

Lafayette said:
You're wearing blinders, which is why you only see the financial side of the matter?

London, where the young mostly work in Finance, voted overwhelmingly to remain. As did the youth in most of the rest of Britain that voted for an exit. (YouGov poll: "According to YouGov polling, 75% of young voters in the UK voted to remain in the EU. These are their voices, as well as those who were too young to vote, but wanted to have their say")

I would not underestimate the pressure building from those 75Percenters over the coming years as Britain scrambles to get its economy back-on-track - nor would I care to be around when it explodes ...
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I only care about the financial side of the matter (in this context). But my Father was English...so I do have some emotional stake in it.

The FTSE is much higher now then before Brexit.

The markets have spoken...Brexit was WAY overrated for Britain. It is far worse for the EU.

Britain is the fifth largest economy in the role...they will have NO TROUBLES WHATSOEVER getting new trade deals...none.

Britain will be fine (in so far as Brexit is concerned).

Lord Tammerlain · Jul 2, 2016

DA60 said:
I only care about the financial side of the matter (in this context). But my Father was English...so I do have some emotional stake in it.

The FTSE is much higher now then before Brexit.

The markets have spoken...Brexit was WAY overrated for Britain. It is far worse for the EU.

Britain is the fifth largest economy in the role...they will have NO TROUBLES WHATSOEVER getting new trade deals...none.

Britain will be fine (in so far as Brexit is concerned).

In USD terms the FTSE is still down 7%.

They will get trading deals, but I don't think they will get the one that made London the financial center that it is. I expect that UK based banks will not get the same abilities to clear transactions based from entities in the EU. Nor will the bankers have as easy a time getting to the EU as they do now for work.

Lets not forget that their is plenty of talk that the UK will not enact article 50 and leave the EU at all, or if they do the UK will be more like Norway, then truly out of the EU

Lafayette · Jul 3, 2016

DA60 said:
The FTSE is much higher now then before Brexit. The markets have spoken...Brexit was WAY overrated for Britain. It is far worse for the EU.

Not very consequential at the moment. That fact didn't seem to impress anybody on Brexit voting day.

The English will rue the day they ever voted for Brexit. In fact the other half of the nation that didn't has started to do so already - as their economy becomes like that of Iceland, Liechtenstein and Norway(also not members of the EU). Norway may have its oil, so of the three is doing rather well. Of course, if oil-prices remain in the doldrums, it is obvious that the Norwegian way-of-life is going to change dramatically. The other two countries are wholly irrelevant.

New trade deals with who? It's Main Export Partners (in percent of trade):
Germany - 10.8%,
United States - 10.4%,
Netherlands - 8.1%,
Switzerland - 7.2%,
France - 6.5%,
Ireland - 6.4%,
Belgium - 4.5%
(Cumulative percentage, EU - 36.3%!)

Put your thinking cap on! Britain has just refused to be the preferred trading-partner with the largest, richest and closest combined market-economy in the world!

That Massive Blunder is going to come home to roost in terms of well-being - unless smarter minds (than that of Farage) can minimize the damage and put up a re-entry vote in another five-years.

As for Cameron, who suggested this fiasco-vote - he'll never get reelected even dog-catcher. It's difficult to imagine what the is going to do for the rest of his life having royally screwed-up Britain ...
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Lafayette · Jul 3, 2016

brothern said:
...which was opposed to Angela Merkel's point about approaching the development quickly but with measure]

I quite like Angela, but her first efforts to welcome migrants with open arms were ill-conceived. They were perhaps justified by Germany's need for manpower as its people age and birth-replacement stagnates when retirement lowers the work-force size. Let's not forget her roots as an East German refugee from Communism, which must have influenced as well her decision.

She underestimated the magnitude of the migration - for which Europe shall evermore be obliged to Mr. Putin who made sure life became unbearable in Syria. Putin is upset with the major economic downturn helped along by the economic/financial blockage of Russia by the EU and US as punishment for Putin's invasion of the Ukraine. This tide of refugees fleeing to Europe is how he got even.

But, the EU's open-arms policy has come home to roost. Since, in a major turnaround, the EU has shut down the land route and reinforced policing of the sea routes.

And, most crucially, the wave of migration was the singular-most reason that put the Brexit No-Vote over the top.

Angela - a very smart lady - got this one very wrong. (Politicians, over time, may think they walk on water - until they don't ...)
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austrianecon · Jul 5, 2016

PeteEU said:
And Barclays? RBS failed long ago and is still a shambles. As for Deutsche Bank, it is too big to fail.

Barclays and RBS are in much better position. Barclays actually has Net Tangible Assets of $70b. DB for it size only has about $57b. DB also has about $72t in derivatives on it's books (that's 13% of the world's total). DB's market cap is about $20b and and it's corporate bond is rated BBB+.

DB can't be saved by Germany without EU okay (ask Italy). EU can't save DB either. DB's liabilities are 3 times that of the EU economy (think about that).

austrianecon · Jul 5, 2016

PeteEU said:
They will only be Euro members if they meet the criteria. So you need to get your facts straight as well.

No, those I listed are all obliged to join, period. Meaning they have to force criteria to be met but come 2020-2040, all those I listed will have the Euro (if the currency is still around).

austrianecon · Jul 5, 2016

Lafayette said:
Lucky them! The common Euro currency is a facilitator of trade.

Those EU-wanabees who employ a national currency do so by keeping their currency valued constantly the same at a pre-arranged rate. Otherwise, as happened in Europe, countries manipulate currency values (with their trading partners) to "beggar-thy-neighbor" in order to solve their own Trade Deficits.

We'll see if Britain starts doing the same as soon as a Tory government is reestablished. They are indeed capable of this sort of manipulative "beggar-thy-neighbor" chicanery with their largest trading partner.
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Euro currency isn't a facilitator of trade. There are other currencies in the world that trade is done in. Euro isn't special. It actually harms certain European countries with weaker economies such as Greece and Spain.

austrianecon · Jul 5, 2016

Lafayette said:
What a load of BS.

The German government will never let that happen. And Angela has oodles of money to spare for just such a happening.
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Uh, no and no. German government can't bailout anyone without approval from EU countries. Germany just nixed Italy's bailout of it's banks.

austrianecon · Jul 5, 2016

Lord Tammerlain said:
In USD terms the FTSE is still down 7%.

They will get trading deals, but I don't think they will get the one that made London the financial center that it is. I expect that UK based banks will not get the same abilities to clear transactions based from entities in the EU. Nor will the bankers have as easy a time getting to the EU as they do now for work.

Lets not forget that their is plenty of talk that the UK will not enact article 50 and leave the EU at all, or if they do the UK will be more like Norway, then truly out of the EU

And this is the ironic part.. You think EU banks and UK banks have an easy time working in NYC? US has no agreement with EU on these issues but the banks and Europeans still come to work in the US. It's pure shill fantasy that London will lose half of it's banking. Name one city in the EU that gives Banks what they want ( tax incentive and culturally diverse)?

Frankfurt sure a hell couldn't provide it or those Banks would have moved there years ago.

Lafayette · Jul 6, 2016

austrianecon said:
Uh, no and no. German government can't bailout anyone without approval from EU countries. Germany just nixed Italy's bailout of it's banks.

Which was not because the EU does not have the money. Just like the Fed, it can create Treasury Notes and - BINGO! - there's the money.

More importantly, the EU has a Euro-zone rule regarding deficits of no more than 3% of GDP. Those rules were never really applied until Germany started screwing down on them recently. More of the countries have begun to undertake the rule seriously.

Some countries, however, have to learn the hard way. And the hard-way is mostly found in the soft-underbelly of the EU. Namely Italy and Greece. Ireland has come out of its over-sized debt rather well. Spain and Portugal are mending well. Italy and Greece are "problematic".

So, it's a learning process. Besides, here are the overall debt of selected countries (i percent GDP):
*United States, 104.17%
*Euro-zone, 90.70%

Aren't you worrying about the financial stability of the wrong country/countries ... ?
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Lafayette · Jul 6, 2016

austrianecon said:
Euro currency isn't a facilitator of trade. There are other currencies in the world that trade is done in.

Bollocks (again). It has greatly facilitated inter-country trade in the EU, no longer strapped by currency fluctuations that dampened trade.

Marketing Blurb from the EU that make that point:

Supporting international trade
As the world’s largest trading power, with an open economy and a stable currency, the euro area is an attractive destination for other trading nations. Third-country companies are therefore increasingly willing to do business in euro. This means that when euro-area firms export or import goods they can invoice and pay in euro – reducing their costs and the risk of losses caused by global currency fluctuations. Thus, overall, the euro facilitates and encourages trade with the rest of the world.

Before the Euro, there were EU-countries that manipulated their currencies in a "beggar thy neighbor" manner for trade advantage. The EU had enough of it so it created the "snake", wherein national currencies could trade within a strict band. This didn't work so well either, so the euro was the answer.

Furthermore, there were key economic and financial considerations behind the adoption of the euro. From WikiP:

Countries are only allowed to begin utilizing the Euro when they have met certain requirements set about by the EMU. The criteria includes "a low and stable inflation, exchange rate stability and sound public finances."

The "sound public finances" bit is still work-in-progress in some EU-countries - but that is because of the Great Recession gifted by Uncle Sam to Europe. If country economies did stumble badly in the southern EU countries it was not because of the Euro, but awful country-management of budgets. These countries kept borrowing euros in order to maintain high expenditures (that supported employment). The only problem with that otherwise good idea (called Stimulus Spending) is that the southern countries already had large debts that they increased to borrow more money.

There came a point where all that suddenly stopped because neither the banks nor the ECB would continue funding the country budgets. And unemployment rates skyrocketed.

Yes, the needless Great Recession exported to Europe from the states has had a lasting impact in Europe; but like the US growth has come back

austrianecon said:
Euro isn't special. It actually harms certain European countries with weaker economies such as Greece and Spain.

The problem with both of those countries was internal mismanagement. Greece should never have been let into the EU, given that it went to Goldman Sachs to borrow billions in order to make its current account balance look good. Which it repaid after admittance.

austrianecon · Jul 7, 2016

Lafayette said:
Which was not because the EU does not have the money. Just like the Fed, it can create Treasury Notes and - BINGO! - there's the money.

I never said it was about money. It's about veto power other EU countries have.. mainly Germany who typically has a problem about it. The ECB can't just create European Bonds (treasury notes) because they don't exist.

Lafayette said:
More importantly, the EU has a Euro-zone rule regarding deficits of no more than 3% of GDP. Those rules were never really applied until Germany started screwing down on them recently. More of the countries have begun to undertake the rule seriously.

As absolutely zero to do what I brought up. Italy is well under that threshold at 2%. France, Spain and Greece are the biggest offenders. So there should be ABSOLUTELY no reason why Italy shouldn't be allowed to bailout it's banks to stop the spread of risk in the EU.

Lafayette said:
Some countries, however, have to learn the hard way. And the hard-way is mostly found in the soft-underbelly of the EU. Namely Italy and Greece. Ireland has come out of its over-sized debt rather well. Spain and Portugal are mending well. Italy and Greece are "problematic".

And this is why EU supports fail at the most basic understanding on how the euro has failed several countries and only benefited a few (Germany, France, and Netherlands). The cookie cutter policy at the ECB caused these issues.

These 3 countries you named are part of the PIIGS (the economies of the EU that were or still are close to dying). These countries have no trade advantages, no ability to inflate currency to eat up real cost of debt (a informal default) when using the Euro. All of these countries "benefits" from the Euro caused their issues. Ireland and Spain dealt with years of inflation (around 5% for almost 7 years) while the ECB was spitting out a 2% interest rate. They (Spain and Ireland) couldn't control it because they used the Euro. So money was just flowing through those two countries which allowed banks to take bigger risk cause capital (money) was cheap... Greece was given access to major borrowing sources and because it was in Euro, the ECBs lack of care for inflation in PIIGS (low interest rates) because Germany and France were struggling.

Lafayette said:
So, it's a learning process. Besides, here are the overall debt of selected countries (i percent GDP):
*United States, 104.17%
*Euro-zone, 90.70%

Aren't you worrying about the financial stability of the wrong country/countries ... ?
____________________________________

I actually argue about US debt problems as well.. with MMTers almost on a daily basis on this forum. So don't try to deflect.

austrianecon · Jul 7, 2016

Lafayette said:
Bollocks (again). It has greatly facilitated inter-country trade in the EU, no longer strapped by currency fluctuations that dampened trade.

Oh you are so full of it. Ireland, a Eurozone country, does 45% of it's exporting to non-eurozone countries (US, UK, Switzerland, and Japan) and 55% of it's imports come from non-Euro countries (UK, US, China, Japan, and Switzerland).

Germany

Greece

So the data tells us something different.

Lafayette said:
Marketing Blurb from the EU that make that point:

Bunch of EU fluff that actually addresses nothing. If you gotta buy **** from the US, UK, Japan, China or any other of other currencies in the world.. you still have floating currencies and manipulation.

Lafayette said:
Before the Euro, there were EU-countries that manipulated their currencies in a "beggar thy neighbor" manner for trade advantage. The EU had enough of it so it created the "snake", wherein national currencies could trade within a strict band. This didn't work so well either, so the euro was the answer.

Uh, no. Before the Euro there was the ERM and it was created for as part of deploying the Euro (20 year plan by the powers to be in the 1970s). The ERM system was created because the US blew up the Bretton Woods system in 1971.

Lafayette said:
Yes, the needless Great Recession exported to Europe from the states has had a lasting impact in Europe; but like the US growth has come back

Making up ****. BNP Paribas in August 2007 caused a liquidity crisis when it closed it's three funds it ran in housing assets when it said it didn't know how to value those assets. That set off the bomb. On August 9th 2007, the FED and the ECB pumped money into the market.

Lafayette said:
The problem with both of those countries was internal mismanagement. Greece should never have been let into the EU, given that it went to Goldman Sachs to borrow billions in order to make its current account balance look good. Which it repaid after admittance.

Or maybe the EU/Eurozone should have actually looked at the books instead being expansion happy.

Lafayette · Jul 7, 2016

austrianecon said:
I never said it was about money. It's about veto power other EU countries have.. mainly Germany who typically has a problem about it. The ECB can't just create European Bonds (treasury notes) because they don't exist.

Wrong again. You're making a bad habit of it.

See here: List of government bonds by country (EuroZone)

austrianecon said:

And this is why EU supports fail at the most basic understanding on how the euro has failed several countries and only benefited a few (Germany, France, and Netherlands).

Click to expand...

Just so much prattling it is really tiresome.

There are some problems with too much debt in the EuroZone but nothing of any serious magnitude.

What is serious is the lack of Stimulus Spending to get the EU out of an economic slump. Just like the US had some years ago (2010) when the troglodytes in the HofR refused such spending. Which is why it took yet another four years for the US economy to crawl out of the doldrums.

Ditto Europe for the exactly the same reasons. Borrowing money in a slump will be very costly, and the Germans are insisting on fiscal-responsibility. Because they know, when the good times come again (and they surely will), the politicians will want to turn on the spending-spigot. Fine, but only if they can pay the debt they incur.

And the EU (in Barlaymont) will come down hard if they do not adhere to the 3% annual debt limit, as they did not in the past.

austrianecon said:

I actually argue about US debt problems as well.. with MMTers almost on a daily basis on this forum. So don't try to deflect.

Click to expand...

Piffle. If you had an ounce of good sense, I wouldn't need to "inform you" of what is really happening in Europe...
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austrianecon · Jul 7, 2016

Lafayette said:
Wrong again. You're making a bad habit of it.

See here: List of government bonds by country (EuroZone)

Actually I am right and you are wrong. It's funny you don't even realize it.. you have a list of individual countries and the bonds they issue, sorta like US states do. There is NO BONDS issued by the EU Government (Eurobonds). Zip, Zero, None. I can't go out and buy EU Governmental bonds. I either have to buy Bunds (German), OATs (French) or DSL (Dutch).

So do you want to revise your statement?

Lafayette said:
There are some problems with too much debt in the EuroZone but nothing of any serious magnitude.

What is serious is the lack of Stimulus Spending to get the EU out of an economic slump. Just like the US had some years ago (2010) when the troglodytes in the HofR refused such spending. Which is why it took yet another four years for the US economy to crawl out of the doldrums.

More prattling of delusions.

US did stimulus spending about $2.8t worth between 2008-2011. US economy was recovered and in fact when those "troglodytes" forced Government spending cuts didn't even cut spending. They cut the rate of budgetary increases from 5% to 3% each year.

EU can't do a stimulus as it has no way to issue debt (eurobonds). The 2008 EU stimulus was actually done on a country by country basis via those countries issuing the debt. So for example Germany issued Bunds for it's stimulus.

Lafayette said:
Ditto Europe for the exactly the same reasons. Borrowing money in a slump will be very costly, and the Germans are insisting on fiscal-responsibility. Because they know, when the good times come again (and they surely will), the politicians will want to turn on the spending-spigot. Fine, but only if they can pay the debt they incur.

And the EU (in Barlaymont) will come down hard if they do not adhere to the 3% annual debt limit, as they did not in the past.

EU can't do a stimulus as it has no way to issue debt (eurobonds). The 2008 EU stimulus was actually done on a country by country basis via those countries issuing the debt. So for example Germany issued Bunds for it's stimulus.

Lafayette · Jul 8, 2016

austrianecon said:
you have a list of individual countries and the bonds they issue, sorta like US states do..

Yep, they are called Euro-bonds, which you said did not exist. Period.

M... R... A...
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austrianecon · Jul 8, 2016

Lafayette said:
Yep, they are called Euro-bonds, which you said did not exist. Period.

M... R... A...
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They are not euro bonds. You are a fool..

Lafayette · Jul 8, 2016

austrianecon said:
They are not euro bonds. You are a fool..

They are denominated in euros - and I'm the fool ... !?!
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