The EU referendum - 23rd June

[mikejh45]

Also, the IMF admitting a :censored: up of monumental proportions regarding their irresponsible support of the EU/Euro and their part in messing up the Greek economy which has angered the far east economies because of the waste of financial resources.

 

Lagarde has had to "man up" and apologise for the above.

 

How much is their reputation worth now?

[mikeroyboy]

 

 

An interesting read maybe for some on this board.

 

Provided by The Telegraph regarding the IMF’s Independent Evaluation Office (IEO).

 

To paraphrase a comment from 24hoursfromtulsehill; it’s satisfying to read a report that can identify the same problematic, misguided, misjudged, miss managed financial concept of 19 countries working harmoniously and profitably together as I can.

 

*************************

 

“The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

 

This is the lacerating verdict of the IMF’s top watchdog on the Fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

 

It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking break-down in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.

 

The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the Fund to rescue their own rich currency union and banking system.

 

The three main bail-outs for Greece, Portugal, and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000 percent of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the Fund between 2011 and 2014.

 

In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive "ad-hoc task forces". Mrs Lagarde herself is not accused of obstruction.

 

“Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located. The IEO in some instances

has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff," it said.

 

The report said the whole approach to the eurozone was characterised by “groupthink” and intellectual capture. They had no fall-back plans on how to tackle a systemic crisis in the eurozone – or how to deal with the politics of a multinational currency union – because they had ruled out any possibility that it could happen.

 

“Before the launch of the euro, the IMF’s public statements tended to emphasize the advantages of the common currency, “ it said. Some staff members warned that the design of the euro was fundamentally flawed but they were overruled.

 

“After a heated internal debate, the view supportive of what was perceived to be Europe’s political project ultimately prevailed,” it said.

 

This pro-EMU bias continued to corrupt their thinking for years. “The IMF remained upbeat about the soundness of the European banking system and the quality of banking supervision in euro area countries until after the start of the global financial crisis in mid-2007. This lapse was largely due to the IMF’s readiness to take the reassurances of national and euro area authorities at face value,” it said.

 

The IMF persistently played down the risks posed by ballooning current account deficits and the flood of capital pouring into the eurozone periphery, and neglected the danger of a "sudden stop" in capital flows.

 

“The possibility of a balance of payments crisis in a monetary union was thought to be all but non-existent,” it said. As late as mid-2007, the IMF still thought that “in view of Greece’s EMU membership, the availability of external financing is not a concern".

 

At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.

 

 

“In a monetary union, the basics of debt dynamics change as countries forgo monetary policy and exchange rate adjustment tools,” said the report. This would be amplified by a “vicious feedback between banks and sovereigns”, each taking the other down. That the IMF failed to anticipate any of this was a serious scientific and professional failure.

 

In Greece, the IMF violated its own cardinal rule by signing off on a bail-out in 2010 even though it could offer no assurance that the package would bring the country’s debts under control or clear the way for recovery, and many suspected from the start that it was doomed.

 

The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. “The board was not consulted or informed,” it said. The directors discovered the bombshell “tucked into the text” of the Greek package, but by then it was a fait accompli.

 

The IMF was in an invidious position when it was first drawn into the Greek crisis. The Lehman crisis was still fresh. “There were concerns that such a credit event could spread to other members of the euro area, and more widely to a fragile global economy,” said the report.

 

The eurozone had no firewall against contagion, and its banks were tottering. The European Central Bank had not yet stepped up to the plate as lender of last resort. It was deemed too dangerous to push for a debt restructuring in Greece.

 

While the Fund’s actions were understandable in the white heat of the crisis, the harsh truth is that the bail-out sacrificed Greece in a “holding action” to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.

 

A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced cut – what ex-finance minister Yanis Varoufakis called "fiscal water-boarding".

 

“The automatic stabilizers were not allowed to operate, thus aggravating the pro-cyclicality of the fiscal policy, which exacerbated the contraction,” said the report.

 

The attempt to force through an "internal devaluation" of 20pc to 30pc by means of deflationary wage cuts was self-defeating since it necessarily shrank the economic base and sent the debt trajectory spiralling upwards. “A fundamental problem was the inconsistency between attempting to regain price competitiveness and simultaneously trying to reduce the debt to nominal GDP ratio,” it said.

 

The IMF thought the fiscal multiplier was 0.5 when it may in reality have been five times as high, given the fragility of the Greek system. The result is that nominal GDP ended 25pc lower than the IMF’s projections, and unemployment soared to 25pc instead of 15pc as expected. “The magnitude of Greece’s growth forecast errors looks extraordinary,” it said.

 

The strategy relied on forlorn hopes that the "confidence fairy" would lift Greece out of this policy-induced nose-dive. “Highly optimistic” plans to raise $50bn from privatisation sales came to little. Some assets did not even have clear legal ownership. The chronic “lack of realism” lasted until late 2011. By then the damage was done.

 

The injustice is that the cost of the bail-outs was switched to ordinary Greek citizens – the least able to support the burden – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report.

 

“If preventing international contagion was an essential concern, the cost of its prevention should at have been borne – at least in part – by the international community as the prime beneficiary,” it said.

Better late than never.”

[opinions4u]

An interesting read maybe for some on this board.

 

Provided by The Telegraph regarding the IMFs Independent Evaluation Office (IEO).

 

To paraphrase a comment from 24hoursfromtulsehill; its satisfying to read a report that can identify the same problematic, misguided, misjudged, miss managed financial concept of 19 countries working harmoniously and profitably together as I can.

 

*************************

 

The International Monetary Funds top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

 

This is the lacerating verdict of the IMFs top watchdog on the Funds tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

 

It describes a culture of complacency, prone to superficial and mechanistic analysis, and traces a shocking break-down in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.

 

The report by the IMFs Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the Fund to rescue their own rich currency union and banking system.

 

The three main bail-outs for Greece, Portugal, and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000 percent of their allocated quota more than three times the normal limit and accounted for 80pc of all lending by the Fund between 2011 and 2014.

 

In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive "ad-hoc task forces". Mrs Lagarde herself is not accused of obstruction.

 

Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located. The IEO in some instances

has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff," it said.

 

The report said the whole approach to the eurozone was characterised by groupthink and intellectual capture. They had no fall-back plans on how to tackle a systemic crisis in the eurozone or how to deal with the politics of a multinational currency union because they had ruled out any possibility that it could happen.

 

Before the launch of the euro, the IMFs public statements tended to emphasize the advantages of the common currency, it said. Some staff members warned that the design of the euro was fundamentally flawed but they were overruled.

 

After a heated internal debate, the view supportive of what was perceived to be Europes political project ultimately prevailed, it said.

 

This pro-EMU bias continued to corrupt their thinking for years. The IMF remained upbeat about the soundness of the European banking system and the quality of banking supervision in euro area countries until after the start of the global financial crisis in mid-2007. This lapse was largely due to the IMFs readiness to take the reassurances of national and euro area authorities at face value, it said.

 

The IMF persistently played down the risks posed by ballooning current account deficits and the flood of capital pouring into the eurozone periphery, and neglected the danger of a "sudden stop" in capital flows.

 

The possibility of a balance of payments crisis in a monetary union was thought to be all but non-existent, it said. As late as mid-2007, the IMF still thought that in view of Greeces EMU membership, the availability of external financing is not a concern".

 

At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.

 

 

In a monetary union, the basics of debt dynamics change as countries forgo monetary policy and exchange rate adjustment tools, said the report. This would be amplified by a vicious feedback between banks and sovereigns, each taking the other down. That the IMF failed to anticipate any of this was a serious scientific and professional failure.

 

In Greece, the IMF violated its own cardinal rule by signing off on a bail-out in 2010 even though it could offer no assurance that the package would bring the countrys debts under control or clear the way for recovery, and many suspected from the start that it was doomed.

 

The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. The board was not consulted or informed, it said. The directors discovered the bombshell tucked into the text of the Greek package, but by then it was a fait accompli.

 

The IMF was in an invidious position when it was first drawn into the Greek crisis. The Lehman crisis was still fresh. There were concerns that such a credit event could spread to other members of the euro area, and more widely to a fragile global economy, said the report.

 

The eurozone had no firewall against contagion, and its banks were tottering. The European Central Bank had not yet stepped up to the plate as lender of last resort. It was deemed too dangerous to push for a debt restructuring in Greece.

 

While the Funds actions were understandable in the white heat of the crisis, the harsh truth is that the bail-out sacrificed Greece in a holding action to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.

 

A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced cut what ex-finance minister Yanis Varoufakis called "fiscal water-boarding".

 

The automatic stabilizers were not allowed to operate, thus aggravating the pro-cyclicality of the fiscal policy, which exacerbated the contraction, said the report.

 

The attempt to force through an "internal devaluation" of 20pc to 30pc by means of deflationary wage cuts was self-defeating since it necessarily shrank the economic base and sent the debt trajectory spiralling upwards. A fundamental problem was the inconsistency between attempting to regain price competitiveness and simultaneously trying to reduce the debt to nominal GDP ratio, it said.

 

The IMF thought the fiscal multiplier was 0.5 when it may in reality have been five times as high, given the fragility of the Greek system. The result is that nominal GDP ended 25pc lower than the IMFs projections, and unemployment soared to 25pc instead of 15pc as expected. The magnitude of Greeces growth forecast errors looks extraordinary, it said.

 

The strategy relied on forlorn hopes that the "confidence fairy" would lift Greece out of this policy-induced nose-dive. Highly optimistic plans to raise $50bn from privatisation sales came to little. Some assets did not even have clear legal ownership. The chronic lack of realism lasted until late 2011. By then the damage was done.

 

The injustice is that the cost of the bail-outs was switched to ordinary Greek citizens the least able to support the burden and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness the root of so much bitterness in Greece is finally recognised in the report.

 

If preventing international contagion was an essential concern, the cost of its prevention should at have been borne at least in part by the international community as the prime beneficiary, it said.

Better late than never.

Please could you paraphrase that for me.

[jorvik_latic]

Are you lot not :censored:ing bored of this???

[mikeroyboy]

Please could you paraphrase that for me.

The forthcoming negotiations between the UK and EU could be reversed to consider the EU's application to join the UK. After a referendum of course.

[mikeroyboy]

Obviously you're not.

Edited July 30, 2016 by mikeroyboy

[maddog]

Please could you paraphrase that for me.

Just said that to the husband. I've tried to learn a bit about politics from this thread. In reality, despite my efforts, I have no idea what people are bollocksing on about.

[piglinbland]

So here is the full report by the IEO -

 

http://www.ieo-imf.org/ieo/files/completedevaluations/EAC__REPORT%20v5.PDF

 

I fail to see how this damning indictment of the International Monetary Fund is relevant to Brexit and it's consequences, including the current impasse - which is what this discussion is about. Unless, of course, it's because Christine Lagarde is French.

 

I think there is a 'them and us' mentality creeping into the debate now. What is important to remember is that Britain's future economy and world standing are at stake - I've made plain my view that Brexit is dangerously flawed, hugely risky and almost certainly not in the average Britons self-interest. If the EU were to collapse, Britain would almost certainly be drawn into it's vortex - certainly not the brave new world promised by the Leavers. For this reason alone and for everyone's self-interest we will have to cooperate with the EU and vice-versa.

 

It's worth saying too, that the hyperbole surrounding the consequences for the UK of Brexit is indeed over-egged - but so too for the supposed toppling of the EU.

Edited July 30, 2016 by piglinbland

[China]

The one thing this thread has taught me is that the original poll with the majority in favour of remain shows that the posters on here are more intelligent than the average Oldhamer so I think congratulations are in order.

[mikejh45]

Piginbland

 

References to the IMF report from myself were made to highlight their complicity in Greece's financial meltdown. The report states there was undue pressure from the EU on the IMF to provide assistance before all necessary checks had taken place and if these checks had taken place, a different outcome may have been a real possibility.

 

My point was that the EU misled and pressured the IMF into wrongly providing assistance knowing full well Greece would be unable to meet its obligations and yet you stated in previous posts that because the EU and the IMF (in particular Lagarde) says "Brexit is wrong", we should take notice.

 

You stated, on more than one occasion, that Brexit is flawed yet you fail to acknowledge the parlous financial state of the EU as a whole and of the dire position of individual countries (Germany excepted). You give the impression that the EU left to its own devices, everything will be alright but offer no explanation of how it can turn things around. This is no more than blind faith, akin to head in the sand. I have far more confidence in Britain negotiating solely on behalf of itself to make this nation successful than the EU trying to satisfy the economies of 28 disparate states who all argue that their needs are more important than the other 27.

 

I am resolute in my opinion that the EU is slowly killing itself because it is an unsustainable financial model, continually spending more than it brings in. Made worse now, because the IMF will now scrutinise it's relationship with the EU ever more closely.

[24hoursfromtulsehill]

Are you lot not :censored:ing bored of this???

I was bored before the referendum but it's become interesting since...mainly because the thing that was supposed to have been decided hasn't been decided at all.

 

May has already made her mind up and won't leave unless she absolutely has to, which she doesn't. If she wins a general election this year or next year, which of the Brexit clowns will stand against her? It's far more likely that they'll be forced to say publicly that the process (of leaving, of signing trade deals, of bringing about a recession) isn't quite as straightforward as they'd promised. Meanwhile, May has applied certain conditions to leaving that are nowhere near achievable in the short term.

[LeylandLatic]

parlous financial state of the EU as a whole and of the dire position of individual countries (Germany excepted).

This is a common misconception. Germany are in real trouble. DeutscheBank is insolvent. The enforced refinancing of Greece's debts and the desperation to add more 'debt partners' to the union is a function of their precarious position in the house of cards. Their share price has gone down 60% in a year ffs!

[piglinbland]

Piginbland

 

References to the IMF report from myself were made to highlight their complicity in Greece's financial meltdown. The report states there was undue pressure from the EU on the IMF to provide assistance before all necessary checks had taken place and if these checks had taken place, a different outcome may have been a real possibility.

 

My point was that the EU misled and pressured the IMF into wrongly providing assistance knowing full well Greece would be unable to meet its obligations and yet you stated in previous posts that because the EU and the IMF (in particular Lagarde) says "Brexit is wrong", we should take notice.

 

You stated, on more than one occasion, that Brexit is flawed yet you fail to acknowledge the parlous financial state of the EU as a whole and of the dire position of individual countries (Germany excepted). You give the impression that the EU left to its own devices, everything will be alright but offer no explanation of how it can turn things around. This is no more than blind faith, akin to head in the sand. I have far more confidence in Britain negotiating solely on behalf of itself to make this nation successful than the EU trying to satisfy the economies of 28 disparate states who all argue that their needs are more important than the other 27.

 

I am resolute in my opinion that the EU is slowly killing itself because it is an unsustainable financial model, continually spending more than it brings in. Made worse now, because the IMF will now scrutinise it's relationship with the EU ever more closely.

 

mikejh45 - apologies for my late reply!

 

I have in fact acknowledged the poor economic state of the EU and it's individual member states on more than one occasion.

 

I have never, to my knowledge stated that "because the EU and the IMF (in particular Lagarde) says "Brexit is wrong", we should take notice". I'm a certainly not a champion of this particular politician and my view of the EU is at best ambivalent. I occasionally post apposite articles of a theme that I generally agree with, nothing more.

 

I don't proclaim to be an expert on economics and can offer no solution to the EU woes.

 

However, I am and will remain vocally opposed to Brexit for the following reasons -

 

1/ The colossal financial cost of leaving the EU and setting up independent trade deals - within an uncertain timescale. A huge risk to take for at best, limited returns.

A shaky global economy, changing climate and massive over-population are causing geo-political shifts that require cohesion to counter.

Whatever one thinks of the EU, even in weakened form, it has the potential -vastness, richness and diversity to enable an effective pooling of resources.

 

2/ Britain. I believe we have a governing elite which is hell-bent on looking after it's own interests. This is true the world over but our own serves up a particularly nasty dish of lies and propaganda,

through an establishment backed media. I have no doubt that once out of the EU we would see increasingly abusive employment laws, human rights abuse and a further widening of the rich - poor divide.

This constant self-interest has been a crucial factor in our decline as an industrial power.

 

3/ The unquantifiable but nonetheless real intellectual decline that will follow in the wake of Brexit.

Edited August 1, 2016 by piglinbland

[frizzell54]

 

 

mikejh45 - apologies for my late reply!

 

I have in fact acknowledged the poor economic state of the EU and it's individual member states on more than one occasion.

 

I have never, to my knowledge stated that "because the EU and the IMF (in particular Lagarde) says "Brexit is wrong", we should take notice". I'm a certainly not a champion of this particular politician and my view of the EU is at best ambivalent. I occasionally post apposite articles of a theme that I generally agree with, nothing more.

 

I don't proclaim to be an expert on economics and can offer no solution to the EU woes.

 

However, I am and will remain vocally opposed to Brexit for the following reasons -

 

1/

Whatever one thinks of the EU, even in weakened form, it has the potential -vastness, richness and diversity to enable an effective pooling of resources. The EU does not have the leaders to do this and there is little evidence that that is about to change.

 

2/ I believe we have a governing elite which is hell-bent on looking after it's own interests. A very good description of the EU elite

 

This is true the world over but our own serves up a particularly nasty dish of lies and propaganda,

through an establishment backed media. I have no doubt that once out of the EU we would see increasingly abusive employment laws, human rights abuse and a further widening of the rich - poor divide. Ther is no evidence for this. Why does big business favour membership? - To drive down costs by use of cheap labour.

 

This constant self-interest has been a crucial factor in our decline as an industrial power. The decline was is caused by poor management, greedy unions and a lack of vision.

 

3/ The unquantifiable but nonetheless real intellectual decline that will follow in the wake of Brexit. How so?

[mikejh45]

 

mikejh45 - apologies for my late reply!

 

I have in fact acknowledged the poor economic state of the EU and it's individual member states on more than one occasion.

 

I have never, to my knowledge stated that "because the EU and the IMF (in particular Lagarde) says "Brexit is wrong", we should take notice". I'm a certainly not a champion of this particular politician and my view of the EU is at best ambivalent. I occasionally post apposite articles of a theme that I generally agree with, nothing more.

 

I don't proclaim to be an expert on economics and can offer no solution to the EU woes.

 

However, I am and will remain vocally opposed to Brexit for the following reasons -

 

1/ The colossal financial cost of leaving the EU and setting up independent trade deals - within an uncertain timescale. A huge risk to take for at best, limited returns.

A shaky global economy, changing climate and massive over-population are causing geo-political shifts that require cohesion to counter.

Whatever one thinks of the EU, even in weakened form, it has the potential -vastness, richness and diversity to enable an effective pooling of resources.

 

2/ Britain. I believe we have a governing elite which is hell-bent on looking after it's own interests. This is true the world over but our own serves up a particularly nasty dish of lies and propaganda,

through an establishment backed media. I have no doubt that once out of the EU we would see increasingly abusive employment laws, human rights abuse and a further widening of the rich - poor divide.

This constant self-interest has been a crucial factor in our decline as an industrial power.

 

3/ The unquantifiable but nonetheless real intellectual decline that will follow in the wake of Brexit.

 

 

 

Piginbland

 

Responses to your points:

1) The EU in the global economy league is in the relegation zone and is getting worse so why would we/ should we allow ourselves to be dragged down when there are healthier economies around the world that we can set up trade agreements with much more quickly than the EU who have 27 disparate states to satisfy. If the EU has this abundance of potential you refer to, how come it's in such a :censored: state? I'm not sure what climate change has got to do with this point but I'm sure you have your reasons.

2) I think frizzell54 answered that point perfectly. The EU's problems could, arguably, be laid at the feet of their commissioners' feet who have this Utopian dream that all the members' problems would disappear by closer integration. In reality, all that has been created is a massive financial burden that certain states could not carry such as Greece and in the near future Portugal, Ireland, Italy and Spain. The EU's answer to Greece threatening to default on repayments is to increase their debt in return for further austerity cuts...............not exactly a ringing endorsement for EU co-operation.

Again frizzell54 has correctly asserted the problems of why we are where we are about our manufacturing capability. But in an increasingly industrialised world, there is no way we would ever be able to compete producing low cost, high labour products..........those industries of the 70's would have died anyway as their very survival depended on massive state subsidies.

3) Can you define "real" in this statement?

 

Theo Paphitis, a few weeks before the referendum on Question Time, said neither leave or remain gave any solid facts to support their case only opinions and that anybody voting one way or the other did so on the basis of gut feeling. You have stated that nobody could give you a concrete argument for leaving but that argument, turned on its head, also applies and still does to your position......ie: no facts just your opinion.

[24hoursfromtulsehill]

No point re-running the referendum. As is now universally acknowledged, it wasn't a memorable dialogue, with racist dreams on one side and dead-headed conservatism on the other. But surely everyone can see there's a growing consensus to stay anyway - starting with an absolute Prime Ministerial commitment not to leave until this, that or the other unlikely condition is met. In other words, everyone is sobering up.

 

On the flip side, if remain had won, I wonder whether there'd be a growing realisation that leaving might not be such a bad thing after all. We might be renegotiating all over again, with one eye on curbing immigration but staying in the single market, and another eye on obtaining a right to make bilateral trade deals etc.

[GlossopLatic]

No point re-running the referendum. As is now universally acknowledged, it wasn't a memorable dialogue, with racist dreams on one side and dead-headed conservatism on the other. But surely everyone can see there's a growing consensus to stay anyway - starting with an absolute Prime Ministerial commitment not to leave until this, that or the other unlikely condition is met. In other words, everyone is sobering up.

 

On the flip side, if remain had won, I wonder whether there'd be a growing realisation that leaving might not be such a bad thing after all. We might be renegotiating all over again, with one eye on curbing immigration but staying in the single market, and another eye on obtaining a right to make bilateral trade deals etc.

If it had gone the other way UKIP wouldn't have just disappeared like the SNP they would have gone back regrouped waited for their moment before pushing for another referendum.

 

With business confidence taking a hit abd the city looking nervously over its shoulder activating article 50 would be economic suicide right now.

 

It was never going to be as simple as the EU saying "Here is your £350 million a week back (did people not think to question that big statement on Boris's bus) and you can control your borders, and trade with us freely" if it was that simple I would have voted for it.

 

I still think we will leave but we just want to do it in a way that doesn't completely cut us off from Europe doesn't cut off the 1.3million UK citizens living in the EU and doesnt send us into recession. In fact I could see it being a very similar world outside the EU as it would be inside it.

Edited August 1, 2016 by GlossopLatic

[piglinbland]

Anyway, now we're back in the driving seat it's good to see 'mother'Theresa scuppering Hinckley point and the French/Chinese connection.

Presumably we'll be now using British technology and British investment?

[mikejh45]

Agree with that.......had some doubts about the financial health of EDF and could imagine the Chinese building a Nuclear power station being akin to Ikea self-build bedroom furniture ......"I've got a bag of bolts and some brackets left over, any clues because the manual is in Chinese? Do you think they're important?".

Anyway, have the Chinese got a track record in Nuclear power plants because for the last 10 years they've gone for coal? Or are they financing.....sort of P.F.I.-ish?

[piglinbland]

"Hi friend,

Sincerely appreciate for your purchased 100 x uranium rods from our store, dear friend, i just checked the record, find that we do shipped your parcel out after you paid, Can you help us to go to your post office to check your parcel ? really need your kind understand and enough patience,will be sincerely appreciated.

 

Dear friend, do not worried much, as a good seller, we always responsible for every customer. We promise, any problem will be solved out by our good communication , yes ？

Best regards of you and your families," Edited August 1, 2016 by piglinbland

[Crusoe]

From yesterday's FT, highlighting some of the difficulties a Brexit government will need to face (worth noting that the author is on the record as saying he is not anti-Brexit, and would not have voted the UK in in the first place):

 

In the days after the Brexit vote, a favourite taunt of Leavers was to tell those who were warning of the difficulties of Brexit that such critics were “in denial” and were indulging in “wishful thinking”. Brexit meant Brexit and it was now inevitable. But it is now evident that it is the Brexiteers who are denying the challenges of reality and wishfully thinking away the problems they now face.

The Canadian diplomat Jeremy Kinsman has a scathing phrase for the predicament of the pro-Brexit UK government. The Brexiteers, the former high commissioner to the UK and ambassador to the EU, observed, “are the dog that caught the bus: they hadn’t thought what to do next”.

The UK government does not know what to do about Brexit. This is not a rhetorical exaggeration, it is a statement of fact. As the foreign affairs parliamentary select committee reported recently (paragraph 19):

“The previous Government’s considered view not to instruct key Departments including the [Foreign and Commonwealth Office] to plan for the possibility that the electorate would vote to leave the EU amounted to gross negligence. It has exacerbated post-referendum uncertainty both within the UK and amongst key international partners, and made the task now facing the new Government substantially more difficult.”

(The committee, at paragraph 17, also generously adopted the view of this blog that it is not so much that the UK government does not have a plan for Brexit — it does not even know what is to go into a plan.)

The scale of the Brexit task ahead is becoming plain, even if there is still shapelessness in policy. Many would say the job is impossible, at least in the short to medium term.

Take for example the need for an exit agreement with the EU. In the memorable example of Gus O’Donnell, former cabinet secretary and head of the civil service: Greenland, population less than Croydon, one issue — fish, and it still took three years for it to leave what was then the EEC. There is no sensible reason to believe that the UK could extract itself from the EU (a more complex entity than the EEC) in the two years envisaged by Article 50.

This is no surprise: Article 50 was never intended to be a practical provision. It was there just for decoration. It was an ornament, not an instrument. According to Reuters, the former Italian prime minister Giuliano Amato is quoted as saying:

“I wrote Article 50, so I know it well,” Amato told a conference in Rome, saying he had inserted it specifically to prevent the British from complaining that there was no clear cut, official way for them to bail out of the Union.

“My intention was that it should be a classic safety valve that was there, but never used. It is like having a fire extinguisher that should never have to be used. Instead, the fire happened.”

Another person claiming credit for Article 50 (you would think no one would want to admit to authoring the provision) is the British diplomat Lord Kerr. He explains that it was inserted into the Lisbon treaty as a sop to the Eurosceptic media.

Regardless of who wrote the provision, no one can say that it provides a feasible process: the departing member state may have the immense advantage of setting the timing of the notification; but then the see-saw reverses dramatically, giving the remaining member states a near-absolute advantage in negotiating position. Any extension of the two-year period cannot be taken for granted, and so unless an agreement can be reached in less than two years, the member state is ejected. It would be a weird and unworkable way to deal with a complex negotiation of the nature required. Article 50 may have “worked” as a work-around negotiation ploy for Amato and Kerr but it does not work as a legal framework.

This is why any Brexit may perhaps be by a new treaty rather than by the unfit-for-purpose Article 50. But this would create new problems. Most notably, it could require a fresh referendum in the UK. It would also need unanimity by the remaining member states.

Then there are the international trade agreements that the Brexiteers say the UK should enter with the rest of the world. There are many difficulties here. The UK has no trade negotiators; the rest of the world will want to see what the UK-EU arrangement is before committing to a trade deal; and Britain has a weak and needy negotiating position. Such negotiation is as hard-headed an exercise as one can imagine, and the inexperienced UK ministers and officials will be lambs wandering into a slaughterhouse.

The competency of the British government to negotiate high-value complex commercial agreements on important matters at speed and under media pressure against unsentimental counter-parties can be summed up in three letters: PFI. The deals are disasters waiting to happen.

It cannot even be taken for granted that the UK will have an easy ride becoming a World Trade Organisation member in its own right. As former WTO staffer Peter Ungphakorn points out, there is nothing simple about the UK gaining WTO status post-Brexit.

In the face of these stark problems, what has marked the first month since the referendum result is a certain lack of seriousness by the Brexit government. The new international trade secretary, Liam Fox, is reduced to boasting of the opening of three one-person trade kiosks in the US, while his remarks about the UK leaving a customs union had to be “clarified” by the prime minister. Neither the US nor the Canadians are in any hurry to commence negotiations before they can see what Brexit looks like. There is confusion in Whitehall about the remits of the three Brexit departments. There are desperate (and possibly unlawful) demands that trade deals be tied to overseas aid. In an important post, Charles Grant has detailed the six deals the UK government has to do. Serious issues such as the status of EU nationals in the UK and what will happen to “acquired rights” on Brexit have still not been addressed.

No one in government has a clue. Pro-Brexit supporters demand a sudden Brexit without any regard to these problems: see this Bernard Jenkin piece in the FT, and the comments beneath are perhaps the most brutal you will see on this website.

In the meantime, the hurdles to Brexit are accumulating. Theresa May, the new prime minister, has spoken of there being a need for a UK-wide approach, and she now also wants to consult British dependencies. Politicians in Scotland and Northern Ireland (majorities in both of which voted to remain in the EU) are alert and agile in turning the fall-out from Brexit to their benefit. As with the (now seemingly abandoned) British Bill of Rights, the devolution settlements and the Good Friday Agreement are not mere after-thoughts for Westminster politicians, but things that shape what can and cannot be done easily by the supposedly sovereign parliament.

None of this is to say Brexit is impossible. It can be conceivably brought about if there is sufficient political skill and will-power. In its rewriting of domestic law and policy and its refiguration of foreign and trade policy, Brexit will be the single biggest exercise by any UK government in peace time — and all this on top of governing a country in a period of austerity with limited public spending and a small majority. And it is for an objective that few in Westminster and Whitehall genuinely want.

The 52 per cent vote for Leave in a non-binding referendum will increasingly seem flimsy against the sheer magnitude of the task ahead. If Leave politicians were candid and realistic about the years, sweat and tears ahead, you could believe they were up to it. But they maintain it is easy, and unless their attitude changes, it is this complacency that will defeat them. Denialism and wishful thinking are not enough.

Edited August 2, 2016 by Crusoe

[frizzell54]

From Crusoe's post.

"Theresa May, the new prime minister, has spoken of there being a need for a UK-wide approach, and she now also wants to consult British dependencies."

May is first and foremost a politician as her cabinet decisions have demonstrated. Gove kicked out, clever sincere, but not liked by anyone - no threat. Boris, the naughty boy sits at the front of the class where the teacher can keep an eye on him. He will either surprise everyone and do a brilliant job, but I think she is waiting for the (almost inevitable) cock-up so he can be binned for good. Andrea Leadsom was a difficult one as she had strong support, has actually had real jobs in the real world and (god forbid) is probably competent, two aspects that are feared and hated by the political establishment. However, she seems politically nieve, why else drop out of the race? I imagine she was promised a bigger job (Chancellor) but was betrayed. Environment wins no friends - she will be hated by the warmers or the sceptics no matter what she does. Hunt is the puzzle, a proven incompetent and not popular with his colleagues, but he does have very powerful family connections.

As for May herself, I think she will do what she has done for the past 5 years - keep her job by 'talking the talk' (remember - strong on crime, strong on immigration, strong on hate preachers etc) but do little and achieve even less.

[24hoursfromtulsehill]

^That. I think I've mentioned all those barriers to leaving elsewhere on this thread. Where I disagree is that no one in the Government or Whitehall has a clue. May and Hammond have a clue. The civil service at large have a clue. We ain't leaving is their resolute standpoint.

[Crusoe]

Yes, agree with both of the above.

[mikejh45]

Now I've splinters in my arse from sitting on the fence and a headache from falling on to the exit side.

But I'm still of the opinion Brexit will happen. May has made several soundbites to make the remainees all warm and comfortable. But she has given Davis the resources to bring in 150(?) skilled negotiators, who are supposedly coming from Australia, NZ and Canada at considerable expense. The other 50 are already in the Brexit dept or so I've read. It seems an awful lot of expense for a smokescreen.

Edited August 2, 2016 by mikejh45