UK FTSE 100 finishes week up 2%(google.com)
google.com
UK FTSE 100 finishes week up 2%
http://www.google.com/finance?q=INDEXFTSE%3AUKX&ei=IN1tV4H8KsiwiQLZ3ZyoDg
7 comments
Europe as a whole has been on a similar track, Europe's economy is a hot mess. Really, you could argue that the UK was the healthiest economy in the EU (or at least, the most diverse.) Germany is a powerhouse, but really if the Euro were to strengthen it would crush their exports, which is really where they thrive. The Euro is the best thing that has happened to Germany. It artificially lowers their currency valuation because of poorer member states, and the EU itself gives Germany immense power over other member states because they have deeper pockets. Then to top it off, Germany makes the ECB policy just tight enough (from being a stronger economy) to strangle off the economy of everyone else.
There's a reason many of the other countries want to leave, not having their own central bank that can loosen credit or even keep their interest rates at the market level is murdering their economies. There are other reasons, like dumb laws and regulations, but a struggling economy and a massive welfare state is a perfect combination for angst. Especially if you throw in an immigration crisis caused by external conflicts.
The UK not adopting the Euro imo is one of the best decisions they had ever made economically. I don't think Brexit is going to sting the UK as much as it's going to potentially sting Germany if other member states start to think about exiting.
There's a reason many of the other countries want to leave, not having their own central bank that can loosen credit or even keep their interest rates at the market level is murdering their economies. There are other reasons, like dumb laws and regulations, but a struggling economy and a massive welfare state is a perfect combination for angst. Especially if you throw in an immigration crisis caused by external conflicts.
The UK not adopting the Euro imo is one of the best decisions they had ever made economically. I don't think Brexit is going to sting the UK as much as it's going to potentially sting Germany if other member states start to think about exiting.
Without a central bank you can use inflation a means of shedding your debt burden. And the Germans (a nation of savers) hate inflation.
Getting out of crushing debt burden (if the debt is denominated in local currency) by inflation is not really a great solution. But in many cases it the best of bad solutions. Everybody locally suffers from inflation equally (proportionally).
... With the exception of foreign lenders who lent money in local currency suffer the most (wrong side of FX). But again that might be the least bad option. It's the same idea as high hotel and travel taxes (parking, car rentals, cabs from airport)... Because the best tax is the one you don't have to pay yourself, instead it's the tax that people who don't live here pay. And, that's because they don't vote here.
Also, I'm not talking about runaway inflation. But higer the the gold standard of ~ 2%.
if you look at Greece. They would probably be a good candidate for the servicing debt via inflation as the least bad option. Except they don't have that option anymore. Instead the lender countries are going to keep pretending for the next 10 years that they will see all their money back. And they'll do that but lending more money to Greece and making it poorer at the same time. You know, ze Germans.
Getting out of crushing debt burden (if the debt is denominated in local currency) by inflation is not really a great solution. But in many cases it the best of bad solutions. Everybody locally suffers from inflation equally (proportionally).
... With the exception of foreign lenders who lent money in local currency suffer the most (wrong side of FX). But again that might be the least bad option. It's the same idea as high hotel and travel taxes (parking, car rentals, cabs from airport)... Because the best tax is the one you don't have to pay yourself, instead it's the tax that people who don't live here pay. And, that's because they don't vote here.
Also, I'm not talking about runaway inflation. But higer the the gold standard of ~ 2%.
if you look at Greece. They would probably be a good candidate for the servicing debt via inflation as the least bad option. Except they don't have that option anymore. Instead the lender countries are going to keep pretending for the next 10 years that they will see all their money back. And they'll do that but lending more money to Greece and making it poorer at the same time. You know, ze Germans.
So, what's the difference here between Greece and, say, Hawaii? HI is a debt ridden state with no control over a central bank to help it address the problem.
It's fair to argue about the European economy being a mess and all the crazy fiscal policy issues (personally, I think the only sane choice for Greece last year would have been to leave the EU), but I think the UK has misjudged what a great deal it had (since they already had control of their own currency/fiscal policy while still getting all the other benefits from the EU).
I do think it's worth pointing out that while GBPUSD is down almost 14% over the 1yr https://goo.gl/TuqgEJ EURUSD is down only 2% https://goo.gl/xge4LR
The UK has a 46B USD trade deficit w/ Germany (9/10 of UK's trade deficits are w/ EU nations, only 1 of its surpluses is with an EU nation) [1] so I'm not sure if the UK is going to come out so well economically (not to mention that considering that Scotland and Northern Ireland were both strongly for remaining in the EU, it's not clear that the UK will come out at all).
[1] http://www.worldstopexports.com/united-kingdoms-top-import-p...
I do think it's worth pointing out that while GBPUSD is down almost 14% over the 1yr https://goo.gl/TuqgEJ EURUSD is down only 2% https://goo.gl/xge4LR
The UK has a 46B USD trade deficit w/ Germany (9/10 of UK's trade deficits are w/ EU nations, only 1 of its surpluses is with an EU nation) [1] so I'm not sure if the UK is going to come out so well economically (not to mention that considering that Scotland and Northern Ireland were both strongly for remaining in the EU, it's not clear that the UK will come out at all).
[1] http://www.worldstopexports.com/united-kingdoms-top-import-p...
How could Greece leave the EU if they owe 20 Billion to the European Bank and a couple of hundred Billion to individual European countries?
They are stuck there because of the debt, if they left the EU they would have gone bankrupt.
They are stuck there because of the debt, if they left the EU they would have gone bankrupt.
Considering their 8+ years of negative GDP growth, there's not a lot to point out that they won't go bankrupt or will be able to service their debt when they have to start paying again (2022) anyway. From the most recent IMF projections (May 2016 [1]), without debt restructuring: "Gross financing needs cross the 15 percent-of-GDP threshold already by 2024 and the 20 percent threshold by 2029, reaching around 30 percent by 2040 and close to 60 percent of GDP by 2060."
[1] https://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf
[1] https://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf
And for a sovereign state, bankruptcy means ... nothing. Yes they couldn't borrow for a while (judging by the Cyprus experience ... about 6 months), but they can't borrow right now either. A lot of banks would close off financial channels for a while, as a bargaining chip to get their own finances in order. This would be bad for rich Greek citizens, but would be fine for normal people who don't deal with non-Greek companies directly.
And of course, the ECB would have to write off a massive amount of debt (about 1.5% of Eurozone total debt), which would devalue the Euro. A lot of Euro banks that bought Greece's debt because it was backed by the Eurozone and still had high interest rates (in a sort of carry trade) would go bankrupt. Because that's the big secret, of course. A Greek bankruptcy would be far worse for other countries, especially Eurozone countries, then it would be for Greece [1].
As an American you should appreciate the situation Greece is in. Greece's economy is destroyed, because of externally imposed taxes that cannot possibly work. I am saying, maybe Greece should have a little Tea Party. I am scared to think of how badly Europe is currently being perceived in any of the PIIGS countries, but in Greece it's probably by far the worst.
[1] https://www.youtube.com/watch?v=mxXKDaIKkhk (worth watching, even if you don't care about the reference itself)
And of course, the ECB would have to write off a massive amount of debt (about 1.5% of Eurozone total debt), which would devalue the Euro. A lot of Euro banks that bought Greece's debt because it was backed by the Eurozone and still had high interest rates (in a sort of carry trade) would go bankrupt. Because that's the big secret, of course. A Greek bankruptcy would be far worse for other countries, especially Eurozone countries, then it would be for Greece [1].
As an American you should appreciate the situation Greece is in. Greece's economy is destroyed, because of externally imposed taxes that cannot possibly work. I am saying, maybe Greece should have a little Tea Party. I am scared to think of how badly Europe is currently being perceived in any of the PIIGS countries, but in Greece it's probably by far the worst.
[1] https://www.youtube.com/watch?v=mxXKDaIKkhk (worth watching, even if you don't care about the reference itself)
That is an interesting video, of course there are multiple sides to every story. It could very well be that the loans were designed to force Greece under the thumb of Germany, kind of like a hostile takeover. However the Greek government has also lived beyond its means for years.
For instance, they are a country of only 11 million yet they had multiple presidential jets. In most countries of a similar size the politicians either fly on airforce planes or fly commercial airlines.
I know bankruptcy means different things in different countries, when I worked in the US it appeared as though it was relatively common place. At least if you paid attention to the ads on the radio, here in NZ it's less common and has more of a stigma around it so there is obviously a cultural viewpoint on how acceptable bankruptcy would be.
The thing is that the German (and French, and Italian) people loaned Greece that money, these countries all have a high debt ratio and therefore any money they pay for the Greek debt would be added to their own. They are borrowing money to pay for other peoples loans. Now I know that it isn't as simple as that, a lot of debt for the bigger countries is domestic debt, they've borrowed from themselves to pay another country in order to pay back to themselves. But on the actual balance sheet its a net loss for the tax payer.
What I really want to know is how all of these countries have let themselves get into this state. Pretty much every country in the west is hovering around 100% debt to GDP or over. the only exceptions being Sweden, Norway, Switzerland, New Zealand, and Australia.
I just look at this map and wonder how anybodies lifestyle is sustainable: https://en.wikipedia.org/wiki/Debt-to-GDP_ratio#/media/File:...
For instance, they are a country of only 11 million yet they had multiple presidential jets. In most countries of a similar size the politicians either fly on airforce planes or fly commercial airlines.
I know bankruptcy means different things in different countries, when I worked in the US it appeared as though it was relatively common place. At least if you paid attention to the ads on the radio, here in NZ it's less common and has more of a stigma around it so there is obviously a cultural viewpoint on how acceptable bankruptcy would be.
The thing is that the German (and French, and Italian) people loaned Greece that money, these countries all have a high debt ratio and therefore any money they pay for the Greek debt would be added to their own. They are borrowing money to pay for other peoples loans. Now I know that it isn't as simple as that, a lot of debt for the bigger countries is domestic debt, they've borrowed from themselves to pay another country in order to pay back to themselves. But on the actual balance sheet its a net loss for the tax payer.
What I really want to know is how all of these countries have let themselves get into this state. Pretty much every country in the west is hovering around 100% debt to GDP or over. the only exceptions being Sweden, Norway, Switzerland, New Zealand, and Australia.
I just look at this map and wonder how anybodies lifestyle is sustainable: https://en.wikipedia.org/wiki/Debt-to-GDP_ratio#/media/File:...
The thing is, loans come with risk. That's why they pay interest. Loans to a sovereign entity come with the risk that they can simply choose not to repay their debt and call it a day. Countries have in fact done that, even in large batches. A country has a constitution that supercedes debt payments. So if a sovereign defaults, nothing happens.
The real issue that German banks were overleveraged before 2008, so normally the crisis would have destroyed them. Germany did not want inflation, so in order to fix their banks they removed the limits on leverage, and Deutsche Bank (not the German national bank, just a very big German bank). Greece defaulting would bring the banks to the very edge of bankruptcy, perhaps to the point where one big customer default would kill them. Then they forced QE (do you know that every European loans ~100 euro to banks and large companies every month ? That's what it currently seems to take to prevent German (and other) banks from falling over, and Draghi has already announced "a massive increase" to compensate for Brexit). Of course it was all for naught: the stock market performance of the last year or so has done that anyway.
So now they're in "double or nothing" mode. They're doubling down. Tripling down. Just to avoid default. Germany has done malinvestment on a huge scale, and now they're using their political and financial power to fix it. But they're long past the point where they won't get repaid. They're at the point where they're trying to avoid an immediate total crisis, and it certainly looks like they're losing the battle. I doubt this Brexit event helped.
Like many other countries, Germany has a vastly underfunded bank default insurance scheme. It might surprise you to learn that no country has ever paid out their default insurance for a big bank. So I'm being harder on Germany here than I should be : the US has taken crazy measures to prevent bank defaults as well.
As you say, Greece's debt until this German exploitation began was not that spectacular (comparable to Italy and Spain, and not that much worse than German debt even). So criticizing their spending habits delivers arguments that you can hold against almost every western country. Obama, for instance, has not been very concerned with getting into more debt. And a US territory (not sure what the difference is with a state) has gone bankrupt (Puerto Rico). This definitely cost the US treasury. At least the US still has enough financial sense and backing to allow for a default (because there'll be US states going bankrupt in the years to come)
The real issue that German banks were overleveraged before 2008, so normally the crisis would have destroyed them. Germany did not want inflation, so in order to fix their banks they removed the limits on leverage, and Deutsche Bank (not the German national bank, just a very big German bank). Greece defaulting would bring the banks to the very edge of bankruptcy, perhaps to the point where one big customer default would kill them. Then they forced QE (do you know that every European loans ~100 euro to banks and large companies every month ? That's what it currently seems to take to prevent German (and other) banks from falling over, and Draghi has already announced "a massive increase" to compensate for Brexit). Of course it was all for naught: the stock market performance of the last year or so has done that anyway.
So now they're in "double or nothing" mode. They're doubling down. Tripling down. Just to avoid default. Germany has done malinvestment on a huge scale, and now they're using their political and financial power to fix it. But they're long past the point where they won't get repaid. They're at the point where they're trying to avoid an immediate total crisis, and it certainly looks like they're losing the battle. I doubt this Brexit event helped.
Like many other countries, Germany has a vastly underfunded bank default insurance scheme. It might surprise you to learn that no country has ever paid out their default insurance for a big bank. So I'm being harder on Germany here than I should be : the US has taken crazy measures to prevent bank defaults as well.
As you say, Greece's debt until this German exploitation began was not that spectacular (comparable to Italy and Spain, and not that much worse than German debt even). So criticizing their spending habits delivers arguments that you can hold against almost every western country. Obama, for instance, has not been very concerned with getting into more debt. And a US territory (not sure what the difference is with a state) has gone bankrupt (Puerto Rico). This definitely cost the US treasury. At least the US still has enough financial sense and backing to allow for a default (because there'll be US states going bankrupt in the years to come)
All of which was hardly unpredictable: http://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all...
You don't need to share a currency in order to devalue it.
Germany could have done it with the deutschmark.
But I do agree with the overall point that the monetary policy is made for the whole, without fitting anyone particularly well.
Germany could have done it with the deutschmark.
But I do agree with the overall point that the monetary policy is made for the whole, without fitting anyone particularly well.
It can be difficult though - Japan has been trying hard to devalue but as a safe-haven they keep getting thwarted by criseses happening around them causing people to pour in more investment.
> Note: the GBPUSD hit a 31 year low today
Alternatively, it's approximately the same value today as it was in February this year. Yes, it briefly hit that low, but bounced back above it almost immediately.
The drop in the GBP also isn't as precipitous as some are making out when you realise that half of the value of the drop was added in the 10 days leading up the vote.
So yeah, it's not great, but it's nowhere near the levels of doom and gloom that some people are making it out to be.
Edit: and if you look at the FTSE 100 priced in USD over the last month, it paints a slightly saner story also. Much of the fall "caused by a vote to leave" was just correcting buildup that happened in the last 10 days or so.
Alternatively, it's approximately the same value today as it was in February this year. Yes, it briefly hit that low, but bounced back above it almost immediately.
The drop in the GBP also isn't as precipitous as some are making out when you realise that half of the value of the drop was added in the 10 days leading up the vote.
So yeah, it's not great, but it's nowhere near the levels of doom and gloom that some people are making it out to be.
Edit: and if you look at the FTSE 100 priced in USD over the last month, it paints a slightly saner story also. Much of the fall "caused by a vote to leave" was just correcting buildup that happened in the last 10 days or so.
Is the FTSE a good barometer? Many companies are EU owned.
It's amusing how the weakened pound is being hailed in the media as the End Times, and yet the weakened pound is the reason British stocks (minus financials) are actually doing fine -- it's very good for export industries.
If Greece could have just let their currency depreciate, they'd be in a far better spot than they are now, plausibly even competitive. But it was the tyranny of the Euro, driven by Germany that kept its currency strong.
If Greece could have just let their currency depreciate, they'd be in a far better spot than they are now, plausibly even competitive. But it was the tyranny of the Euro, driven by Germany that kept its currency strong.
"it's very good for export industries"
Unfortunately, the UK has the world's second largest trade deficit (their imports are 192 billion USD more than their exports)¹ therefore the GBP devaluation hurts them a lot more on imports than it helps them on exports.
¹ http://atlas.media.mit.edu/en/profile/country/gbr/
Unfortunately, the UK has the world's second largest trade deficit (their imports are 192 billion USD more than their exports)¹ therefore the GBP devaluation hurts them a lot more on imports than it helps them on exports.
¹ http://atlas.media.mit.edu/en/profile/country/gbr/
Well isn't that exactly a problem that might be remedied by a weaker pound?
Sure, in no time. It tool 40 years of painful integration to build the current net of trust, but thanks to finally freeing itself from the EU, the following will happen in no time:
- negotiate exit, in extremely good terms for the UK. Who cares what the EU's interests are, the ones from the UK will of course prevail
- negotiate trade deals with commercial areas all around the world. It took a good decade to negotiate the despised TTIP, which is now dead in the water, but the UK can do much better
- navigate finantial turmoils, ups and downs in the pound, and still be able to secure investment in UK soil
- and thanks to that massive investment, it will pass from the second biggest trade deficit to a trade surplus
- all while losing the license to operate the biggest EUR nominated finantial center, and fighting a desintegrating country
Piece of cake! So easy, that the prime minister who has led you to this paradise has decided to step down not willing to be bothered to sort out the mess.
Well done!
- negotiate exit, in extremely good terms for the UK. Who cares what the EU's interests are, the ones from the UK will of course prevail
- negotiate trade deals with commercial areas all around the world. It took a good decade to negotiate the despised TTIP, which is now dead in the water, but the UK can do much better
- navigate finantial turmoils, ups and downs in the pound, and still be able to secure investment in UK soil
- and thanks to that massive investment, it will pass from the second biggest trade deficit to a trade surplus
- all while losing the license to operate the biggest EUR nominated finantial center, and fighting a desintegrating country
Piece of cake! So easy, that the prime minister who has led you to this paradise has decided to step down not willing to be bothered to sort out the mess.
Well done!
No! It's like saying a vendor who loses money on an item (because the sale price is less than the manufacturing cost) might remedy the problem by reducing both the price and the cost by 10% each. It won't help.
If the pound loses 10% of its value, the UK would be able to export 10% more (so 47.2 billion USD more) to its trading partners (at the same real cost to them.) However it would cause its imports to cost an extra 66.3 billion USD. And 47.2 - 66.3 = -19.1 meaning the UK would lose (increase its trade deficit by) 19.1 billion USD per year.
If the pound loses 10% of its value, the UK would be able to export 10% more (so 47.2 billion USD more) to its trading partners (at the same real cost to them.) However it would cause its imports to cost an extra 66.3 billion USD. And 47.2 - 66.3 = -19.1 meaning the UK would lose (increase its trade deficit by) 19.1 billion USD per year.
No, this ignores the competitive advantage being 10% cheaper brings. Being cheaper than your competitor expands your market.
I don't ignore it. My argument assumes that a 10% cheaper price expands the market by 10%.
(However I recognize this is a simplification. In the real world the market may expand by, say, 5 or 15%.)
(However I recognize this is a simplification. In the real world the market may expand by, say, 5 or 15%.)
What about citizen's buying power? What about foreign investment? What about the increased costs of doing business with the soon-to-be separate EU?
What's happening is complicated. It's not all bad, but there are lots of things to worry about.
What's happening is complicated. It's not all bad, but there are lots of things to worry about.
The drop is priced in also. Ftse steady with a falling gbp is a drop.
Unfortunately their economy is mostly imports. Even more importantly, they just shed every trade deal they have with the market responsible for 44% of their exports.
On the up side, the weakened currency will make it easier for the government to shore up all the EU subsidy programs that will pull out before Lisbon is even invoked.
On the up side, the weakened currency will make it easier for the government to shore up all the EU subsidy programs that will pull out before Lisbon is even invoked.
>It's amusing how the weakened pound is being hailed in the media as the End Times
Agree, but I kind of think its just media companies on behalf of their owners just trying to drum up support to recover their positions of paper wealth[0] :P
[0] https://www.bloomberg.com/news/articles/2016-06-24/world-s-4...
Agree, but I kind of think its just media companies on behalf of their owners just trying to drum up support to recover their positions of paper wealth[0] :P
[0] https://www.bloomberg.com/news/articles/2016-06-24/world-s-4...
The best way to understand the media is through the lens of tribalism.
Greece, for ideological reasons I can't understand (maybe the extremely socialistic/non-market economy?), is viewed as being part of their tribe. So when people push Greece around or refuse to lend them money, it's bad. When Greece displays independence, it's good.
In contrast, British #leave folks are viewed as a bunch of racist nationalists. These are definitively NOT part of the same tribe as the media. For the media the most important thing is that whatever happens confirms their narrative. Since in this case it's a weakened British pound, that must of course be evidence that those evil people from a different tribe just did something horrible.
http://www.bloomberg.com/view/articles/2016-06-24/-citizens-...
Reality is more complicated. UKX just took a 3-5% dive, roughly the same as SPY. IAS (European index) took an 8% dive. Does this mean that Britain is screwed?
(Personally, I'm buying a bunch of UKX when markets open. I think all the apocalyptic projections by Remain supporters are bunk, and I'm happy to buy UKX at a 5% discount. A bit more bearish on Europe, though)
Greece, for ideological reasons I can't understand (maybe the extremely socialistic/non-market economy?), is viewed as being part of their tribe. So when people push Greece around or refuse to lend them money, it's bad. When Greece displays independence, it's good.
In contrast, British #leave folks are viewed as a bunch of racist nationalists. These are definitively NOT part of the same tribe as the media. For the media the most important thing is that whatever happens confirms their narrative. Since in this case it's a weakened British pound, that must of course be evidence that those evil people from a different tribe just did something horrible.
http://www.bloomberg.com/view/articles/2016-06-24/-citizens-...
Reality is more complicated. UKX just took a 3-5% dive, roughly the same as SPY. IAS (European index) took an 8% dive. Does this mean that Britain is screwed?
(Personally, I'm buying a bunch of UKX when markets open. I think all the apocalyptic projections by Remain supporters are bunk, and I'm happy to buy UKX at a 5% discount. A bit more bearish on Europe, though)
There is a huge difference between the UK both in terms of relative bargaining power and in terms of currency control. The reaction towards Greece by some is that they dug a hole and should suffer (and they have suffered a lot). Others view Greece as a willing victim of German and French banks pumping money into Greece in the form of cheap money.
Whatever ones perspective is on Greece one thing is clear. It's not all like the situation with the UK. Leave in the UK has the most xenophobic constituency. The corresponding movement in Greece was not about xenophobia. It was about the ECB.
Whatever ones perspective is on Greece one thing is clear. It's not all like the situation with the UK. Leave in the UK has the most xenophobic constituency. The corresponding movement in Greece was not about xenophobia. It was about the ECB.
I don't dispute there are big differences - among other things, the UK is well governed and can survive on their own. Greece, in contrast, cannot.
But yes, the media does portray Leave supporters as racist. That's the ultimate indication the media thinks of them as the outgroup (and weak evidence of actual racism).
But yes, the media does portray Leave supporters as racist. That's the ultimate indication the media thinks of them as the outgroup (and weak evidence of actual racism).
That's kind of a simplistic explanation, though, because it does not account for WHY there is this sudden rise in xenophobia in the UK.
The fact is that economic inequality in the UK has been rising for a long time. I would argue that is the root cause. People don't generally gravitate to demagoguery and scapegoating unless they are already having a bad time economically.
The fact is that economic inequality in the UK has been rising for a long time. I would argue that is the root cause. People don't generally gravitate to demagoguery and scapegoating unless they are already having a bad time economically.
Look at the spread of In/Out. In England/Wales it's between the haves (IN) and have-nots (out).
When you've seen your communities crumble, despite whichever party sits in Westminster, and you're given an opportunity to reject a constant political force that has presided over the timespan of that crumbling, then that opportunity may as well be taken.
OUT's message could have been "nothing to lose but your chains".
When you've seen your communities crumble, despite whichever party sits in Westminster, and you're given an opportunity to reject a constant political force that has presided over the timespan of that crumbling, then that opportunity may as well be taken.
OUT's message could have been "nothing to lose but your chains".
> That's kind of a simplistic explanation, though, because it does not account for WHY there is this sudden rise in xenophobia in the UK.
I can account for that, if you're able to stomach hearing about it.
I lived in the UK for a while. There isn't a generalized rise in xenophobia beyond the norm, it is highly specific.
There is no serious xenophobia towards Sikh, Hindu populations. The same goes for the blacks, the Russians, the Polish. 99% of all animus is directed at Muslims. The strongest openly expressed dislike is from other immigrants. Blacks and Hindus especially, they openly loathe them.
The honest truth is that British Muslims are... well, let me explain by painting a picture. In my university halls they would regularly watch videos of women being stoned to death in the rec room. I think that was the most bizarre thing I'd ever seen in my life. I am also confident that a huge number of them are funding terrorist organizations because they just do their fund raising in the streets and campuses. In my neighborhood a guy from it sliced off a woman's head in a different English city. Some first generation Muslims I know from Pakistan had to leave British Muslim neighborhoods because they found it too intolerant and extreme. These are some of the mildest things that could be said.
What you should really be worried about is the kind of people who use the phrase 'Little Englanders'. This class of white people is uniformly seen as primarily responsible by the working class for the observations I just mentioned. I think that is the primary fault line right now.
For those who take umbridge, consider that I haven't passed a value judgment on an entire category of people. It sounds BAD because sometimes it IS bad.
> The fact is that economic inequality in the UK has been rising for a long time. I would argue that is the root cause. People don't generally gravitate to demagoguery and scapegoating unless they are already having a bad time economically.
In my view it is not so much as that a rich - poor gap as stagnant wages. If you subtract property values and the rise in price of rival goods such as education then I think you'll find almost everybody has stagnant income. Inflated asset prices cannot be realized into cash without crashing and that distorts the truth which is that Western economies have been stalled for some time now. Notice how a drop in oil prices has not led to an exciting economic rebound for all. It's what we don't see that counts!
I also believe if lots of new niches in society were opening up (often associated with GDP rise) it would help. I think people shorn of purpose are much more likely to become violent. It's an evolutionary principal at work, if you can't find a niche, you could displace somebody from theirs. I don't think exclaiming 'racist' at a rather elemental survival strategy works out very well when those same people are 'classist', because it just redirects people's wrath to their nearest competitors. I see the same thing in America with Donald Trump vs Muslims as I do here. Racism is being used as a proxy for classism and class conflict which is a much bigger systemic problem than a specific minority conflict because it involves the whole of society. Seen this way, scapegoating is a real and rational policy for all factions to use. I don't know how you solve that without creating a bigger mess but suspect René Girard might know.
It is probable that in the past external enemies are used to alleviate internal tensions but that doesn't work very well in a age of nuclear weapons, which suggests that WMDs could lead in game theory to a higher probably for internal civil conflict. I expect this is well trod ground by strategists but this already sounds depressing.
I agree that if your circumstances are improving it alleviates the kind of tensions I mentioned. However the issue with Islam is an extraordinary one that would cause tension under any circumstances. The same things are going on in France but at a higher pitch. I reiterate that there isn't a generalized rise in xenophobia. There is a rise in xenophobia directed at Muslims and then connected class warfare between the working and middle classes.
I can account for that, if you're able to stomach hearing about it.
I lived in the UK for a while. There isn't a generalized rise in xenophobia beyond the norm, it is highly specific.
There is no serious xenophobia towards Sikh, Hindu populations. The same goes for the blacks, the Russians, the Polish. 99% of all animus is directed at Muslims. The strongest openly expressed dislike is from other immigrants. Blacks and Hindus especially, they openly loathe them.
The honest truth is that British Muslims are... well, let me explain by painting a picture. In my university halls they would regularly watch videos of women being stoned to death in the rec room. I think that was the most bizarre thing I'd ever seen in my life. I am also confident that a huge number of them are funding terrorist organizations because they just do their fund raising in the streets and campuses. In my neighborhood a guy from it sliced off a woman's head in a different English city. Some first generation Muslims I know from Pakistan had to leave British Muslim neighborhoods because they found it too intolerant and extreme. These are some of the mildest things that could be said.
What you should really be worried about is the kind of people who use the phrase 'Little Englanders'. This class of white people is uniformly seen as primarily responsible by the working class for the observations I just mentioned. I think that is the primary fault line right now.
For those who take umbridge, consider that I haven't passed a value judgment on an entire category of people. It sounds BAD because sometimes it IS bad.
> The fact is that economic inequality in the UK has been rising for a long time. I would argue that is the root cause. People don't generally gravitate to demagoguery and scapegoating unless they are already having a bad time economically.
In my view it is not so much as that a rich - poor gap as stagnant wages. If you subtract property values and the rise in price of rival goods such as education then I think you'll find almost everybody has stagnant income. Inflated asset prices cannot be realized into cash without crashing and that distorts the truth which is that Western economies have been stalled for some time now. Notice how a drop in oil prices has not led to an exciting economic rebound for all. It's what we don't see that counts!
I also believe if lots of new niches in society were opening up (often associated with GDP rise) it would help. I think people shorn of purpose are much more likely to become violent. It's an evolutionary principal at work, if you can't find a niche, you could displace somebody from theirs. I don't think exclaiming 'racist' at a rather elemental survival strategy works out very well when those same people are 'classist', because it just redirects people's wrath to their nearest competitors. I see the same thing in America with Donald Trump vs Muslims as I do here. Racism is being used as a proxy for classism and class conflict which is a much bigger systemic problem than a specific minority conflict because it involves the whole of society. Seen this way, scapegoating is a real and rational policy for all factions to use. I don't know how you solve that without creating a bigger mess but suspect René Girard might know.
It is probable that in the past external enemies are used to alleviate internal tensions but that doesn't work very well in a age of nuclear weapons, which suggests that WMDs could lead in game theory to a higher probably for internal civil conflict. I expect this is well trod ground by strategists but this already sounds depressing.
I agree that if your circumstances are improving it alleviates the kind of tensions I mentioned. However the issue with Islam is an extraordinary one that would cause tension under any circumstances. The same things are going on in France but at a higher pitch. I reiterate that there isn't a generalized rise in xenophobia. There is a rise in xenophobia directed at Muslims and then connected class warfare between the working and middle classes.
It certainly doesn't help that the Brahmin class (Moldbug's term for the folks who say 'Little Englanders') is also actively denying and suppressing information. In the UK, think of Rotherham, where hundreds of girls being raped by Mulsims was suppressed.
Or in the US, think of the redacted transcripts of Omar Mateen's 911 call:
OM: I pledge allegiance to [omitted] may God protect him [Arabic], on behalf of [omitted]...God Akbhar
(The omitted bits are Abu Bakr al-Baghdadi of the Islamic State, and "God" got in there via s/Allah/God/g.)
Then Obama got on TV and talked about guns.
The Brahmin class has no solution to the problem that radical Islam poses. Because of this they need to suppress discussion of it and demonize as a racist anyone who dares bring up the issue. I wonder if Brexit will cause them to rethink this.
Or in the US, think of the redacted transcripts of Omar Mateen's 911 call:
OM: I pledge allegiance to [omitted] may God protect him [Arabic], on behalf of [omitted]...God Akbhar
(The omitted bits are Abu Bakr al-Baghdadi of the Islamic State, and "God" got in there via s/Allah/God/g.)
Then Obama got on TV and talked about guns.
The Brahmin class has no solution to the problem that radical Islam poses. Because of this they need to suppress discussion of it and demonize as a racist anyone who dares bring up the issue. I wonder if Brexit will cause them to rethink this.
My opinion is that the Brahmin class is much more vulnerable than it thinks and it unconsciously knows this. They're like a small dog with a big voice taking shit to the other dogs.
Most Europeans don't believe Muslims belong in Europe at all. Only the young and the media believe that. This simple fact elides quite a few people. This is not a new era. This is another era. This recent period of globalization? It didn't even match the first golden one.
We don't care about this talk of diversity from America. Europe has plenty of diversity. Notice how each group is clearly delineated into specific geographical areas. That's what diversity looks like after a while. The same will be ultimately true of America, it just takes time. Californians and Texans see each other as separate species already! Tell me I'm wrong!
Most Europeans don't believe Muslims belong in Europe at all. Only the young and the media believe that. This simple fact elides quite a few people. This is not a new era. This is another era. This recent period of globalization? It didn't even match the first golden one.
We don't care about this talk of diversity from America. Europe has plenty of diversity. Notice how each group is clearly delineated into specific geographical areas. That's what diversity looks like after a while. The same will be ultimately true of America, it just takes time. Californians and Texans see each other as separate species already! Tell me I'm wrong!
The difference in the drop between UKX and IAS is due to fx. Namely, if you were a British investor that bought an european index ETF before the move, you would have lost on the drop, but would have made some of the money back on the fact that the ETF is denominated in euros, and the euro appreciated against the pound.
GBP/EUR dropped by ~5% [1], and a quick calculation assuming a drop of 3% on UKX gives us a loss of
[1] http://finance.yahoo.com/echarts?s=GBPEUR%3DX+Interactive#{%...
GBP/EUR dropped by ~5% [1], and a quick calculation assuming a drop of 3% on UKX gives us a loss of
0.97 * 0.95 = 0.9215
[1] http://finance.yahoo.com/echarts?s=GBPEUR%3DX+Interactive#{%...
That's fine until you realize long term, that common market won't be around for the UK to export to -- at least nowhere near as open and free as it is today.
Good for the countries of the Commonwealth who, despite being part of the same organisation and historical empire, and even all having the same head of state (the Queen), have been locked out of trade deals with the UK because of the EU.
What's the bet the UK falls back onto the "empire" that it has so long ignored.
What's the bet the UK falls back onto the "empire" that it has so long ignored.
Most commonwealth member states don't have the queen as their head of state. Only 16 of the 53. With the exception of Australia, NZ, Papua New Guinea and Canada these 16 are almost all small (in many case island) countries. You can very be sure that Pakistan, India, South Africa and Nigeria along with 33 other countries don't regard Queen Elizabeth II as their head of state.
I should have said Commonwealth Realm then.
> that common market won't be around for the UK to export to
Yet somehow the UK still manages to sell just over 50% of its exports outside the EU.
Under WTO rules the EU cannot apply any tariffs to the UK that are more punitive that those applied to any other non-EU country.
Yet somehow the UK still manages to sell just over 50% of its exports outside the EU.
Under WTO rules the EU cannot apply any tariffs to the UK that are more punitive that those applied to any other non-EU country.
Which is considerably worse than what they have today.
I'm certainly not arguing that leaving the EU is good for the economy net. But what the newspapers (or at least the headlines I see) are focused on is IMO the absolute least-bad fallout.
The FTSE 250, which is more representative of domestic companies instead of large multinationals[1] is still down more than 7%. https://www.google.com/finance?q=INDEXFTSE:MCX
[1]: http://moneyweek.com/ftse-100-v-ftse-250-why-have-they-diver...
[1]: http://moneyweek.com/ftse-100-v-ftse-250-why-have-they-diver...
Not in terms of any currency except the massively devalued GBP
The pound sterling falling helps British exports by lowering their cost to international markets.
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...but there's big uncertainty about terms of trade, so don't expect any investment in export capacity.
I wonder how long it will take to switch from being a net importer
https://www.uktradeinfo.com/Statistics/OverseasTradeStatisti...
https://www.uktradeinfo.com/Statistics/OverseasTradeStatisti...
No time, really. This can be achieved practically overnight, thanks to now being free from the EU hegemon. Now the UK will hapily ssil to its glorious and deserved destiny!
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Which would be great if the UK were Japan. But it's not.
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But only because of a huge fall at the start of the week. It's down 1.3% on the month.
1.3% on the month! It's the apocalypse.
GBP/USD is down 7% on the month. We'll round up because we're being apocalyptic... according to outside investors, the UK economy lost 10% of it's value overnight.
As a point of reference, 7% of UK GDP (2.678T USD in 2013 [1]) is roughly 187B USD. UK M3 might be a better measure, about 2.44T GBP [2]. By that calculation, a 7% haircut comes out to about 236B USD if I did my conversions correctly.
[1] http://data.worldbank.org/indicator/NY.GDP.MKTP.CD [2] http://www.tradingeconomics.com/united-kingdom/money-supply-...
[1] http://data.worldbank.org/indicator/NY.GDP.MKTP.CD [2] http://www.tradingeconomics.com/united-kingdom/money-supply-...
It is -10.92% this week, and -22.26% for the year. You can add in a comparison to the FTSE 100 in GBP.
Note: the GBPUSD hit a 31 year low today. The GBPUSD is down about 13% for the year: http://markets.ft.com/research/Markets/Tearsheets/Summary?s=...