Brexit Countdown Clock.
Brexit Quote of the Day.
“People might cite David Cameron as proof that you can be
totally impervious to the effects of an Eton and Oxford education.”
With apologies to Senator Barney Frank.
Despite
a plethora of Brexit scare stories by European vested interests and the
disgraceful unprosecuted perverts at the BBC, the sun will stop shining in
Britain if we leave the EUSSR, Germany will refuse to sell us Mercs and
Beamers, Spain won’t allow in British tourists, France will ban Champagne sales,
and on and on, Brexit is looking better and better and picking up unlikely
converts, and all because of Cameron’s total failure to negotiate anything
meaningful with the EUSSR. But first this news of irrelevance at the G-20.
Brexit and Refugees Join G-20 Worry List in Draft Communique
February
27, 2016 — 1:53 AM GMT Updated on February 27, 2016 — 5:32 AM GMT
The Group of 20 added a potential Brexit and an escalating refugee crisis to
its long worry list, even as it argued recent market volatility didn’t reflect
global growth momentum.In a draft of the communique obtained by Bloomberg News, the G-20 members agreed to use monetary, fiscal and structural tools to boost growth and "calibrate and clearly communicate" their policies.
Underscoring concerns over the limitations of central bank-led stimulus, "monetary policy alone cannot lead to balanced growth," the document said.
Finance chiefs from the G-20 nations agreed to "consult closely" on foreign exchange markets, warning that excessive volatility can hurt financial and economic stability. The group promised to improve their monitoring of capital flows in an effort to identify potential risks sooner and reiterated past pledges to refrain from competitive devaluations.
"It doesn’t seem the meeting offers concrete, deliverable or coherent solutions to boost growth," said Raymond Yeung, senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. "I doubt whether it will have a meaningful impact on the market in the near term."
Steep losses on global stock markets and volatility in currencies this year fueled calls for G-20 members to do more to stoke economic growth and bolster stability. The International Monetary Fund last month trimmed its global growth projections and said 2016 would be a "year of great challenges."
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Now
back to Brexit. The Prime Minister’s campaign to Europe set out with very low
expectations and triumphantly managed to exceed them. The EU doomsters equate the EU with Europe.
After Brexit Great Britain will still be in Europe, just thankfully not in the
geriatric, wealth and jobs destroying, EUSSR. Unlike Europe’s youth generation , Britain’s
youth will at least have a chance at a job, and some wealth creation.
Below
the latest Brexit developments.
Worse than the Japanese, at least worse looking, are the
Germans, especially at pool-side. The larger the German body, the smaller the
German bathing suit and the louder the German voice issuing German demands and
German orders to everybody who doesn’t speak German….[But] this is nothing
compared to the French on a tropical shore. A middle-aged, heterosexual,
college-educated male wearing a Mickey Mouse t-shirt and a string-bikini bottom
and carrying a purse — what else could it be but a vacationing Frenchman?
P.J. O’Rourke. Holidays From Hell.
If the arch-Europhile Lord Owen wants out of the EU, it should make us all stop and think
David Owen has weighed his own ideals against the lessons of history – and come to a stark conclusion
Many of those clamouring for Britain to leave the
European Union have always loathed it. Not so David Owen. All of his political
life, he has been a proud European – and has been prepared to stake his career
on it. He resigned from Labour’s front bench in protest against its lack of
commitment to the EU, then became foreign secretary when this was remedied.
Later, after his party turned against the EU once again, he resigned to help
set up the Social Democratic Party. He has always been a forceful critic of
what he calls the “chauvinistic and unrealistic” idea that Britain can, or
should, act alone.
So when he declares, now, that it’s time to leave the European Union,
then his reasons are worth listening to. This is not the war cry of a Little
Englander or a starry-eyed attempt to draw the sword of British sovereignty
from the stone of Brussels. Lord Owen has carefully weighed his own
pro-European ideals against the hard lessons of recent history: contrasting
what the EU says with what it does. Just because it aims to promote unity, it’s
hard to ignore that its policies have brought sado-austerity, scandalously high
unemployment and the rise of the far-Right. So Lord Owen has become part of a
group that may well decide this referendum: Europhiles for Brexit.
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Michael Howard: David Cameron's reform bid has failed – it’s time to go
Exclusive: The man who helped Cameron become Conservative leader explains why, with a heavy heart, he must now oppose his former protegé
By
Michael Howard 10:00PM GMT 25 Feb 2016
In 1975 I campaigned for the UK to remain in the
European Economic Community. I had high hopes that it would benefit Britain and
the other members. Ever since, and even today, my preference has been for the
UK to remain a member of a genuinely and fundamentally reformed EU. That reform
is necessary because the EEC has morphed into a European Union that is flawed
and failing.
The EU’s fundamental flaw is its misconceived attempt to impose rigid uniformity on countries as different as Finland and Greece, Portugal and Germany. The project would have a much greater prospect of sustainable success if it introduced greater flexibility – if it gave its member states room to breathe.
I had hoped that when the Prime Minister announced his intention to commence negotiations for a new UK-EU relationship he might be able to achieve fundamental reform along these lines. When he spoke of the need for fundamental reform, I believe he may have had something of this kind in mind.
It is not his fault that those efforts met with failure. It is the fault of those EU leaders so mesmerised by their outdated ambition to create a country called Europe that they cannot contemplate any loosening of the ties which bind member states.
So the questions I have asked myself are these: has the prospect of fundamental reform finally been extinguished or is there still some way in which that can be achieved? And if there is to be no fundamental reform, is the UK better in or out?
There is only one thing that just might shake Europe’s leaders out of their complacency: the shock of a vote by the British people to leave.
The very facts that make it certain that the UK could thrive as an independent country – we are the fifth largest economy in the world, the most important military power in Europe and the country with by far the most stable and deep-rooted institutions – make us very valuable members of the EU. We would be sorely missed.
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The EU is like the Titanic, and we need to jump off before it sinks
Gerard
Lyons25
February 2016 • 6:00pm
The European
Union is like the Titanic. Imagine being in Southampton harbour the day the
Titanic set sail. Its size gave the impression of invincibility: safe and
secure. It wasn’t. Despite receiving warnings of impending danger it didn’t
change course, hit trouble and sank.Because it is huge, some in the UK feel we would be safer and economically stronger in the EU. This is wrong. We now have the opportunity to jump ship to safety. An opportunity we are never likely to have again. Not a leap into the dark, but for those able to look ahead, a move to safety.
Brexit allows the UK to address directly the areas that the EU has rendered us rudderless in. These include returning sovereignty and having a meaningful immigration target that can be met. We can focus attention on what is needed for small firms and for ordinary workers across the whole country. Outside the EU we can position the UK to be outward looking.
The world economy is changing as never before.
Globalisation, technological change and urbanisation mean countries need to
adapt, be flexible and control their own destiny. In the modern era, talk
of marriage and divorce is wide of the mark. It may not be a conscious
uncoupling or an amicable split but we would strive in our post-Brexit
negotiation to have an open relationship with the EU while having a polyamorous
one with other countries across the world. The choice is between a global
Britain and an inward-looking, insular EU.
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And time may be about to run out on the
EUSSR this year, whether John Bull stays or goes.
Man Who Called Emerging-Market Rout Has a Warning for the Bulls
February
25, 2016 — 5:05 PM GMT Updated on February 26, 2016 — 2:33 AM GMT
If John-Paul Smith is right, some of the world’s biggest investors are
setting themselves up for a major disappointment.The London-based strategist, one of few to anticipate the slump in emerging markets that began in 2011, sees no sign of a turnaround and says the current environment resembles that of the late 1990s, when crises in Southeast Asia and Russia roiled the entire asset class. His stance clashes with bullish pronouncements from money managers including BlackRock Inc., Franklin Templeton and Research Affiliates LLC -- an adviser to Pacific Investment Management Co. that predicts developing-nation assets could become the next “trade of a decade.”
While Smith lacks BlackRock’s trillions under management and Franklin Templeton’s global footprint, the founder of research firm Ecstrat Ltd. has a track record for getting it right on emerging markets. His consistently pessimistic outlook since late 2010 foreshadowed losses of more than 30 percent in the MSCI Emerging Markets Index, while he gave early warning of Russia’s 1998 stock-market crash as a strategist at Morgan Stanley in Moscow.
“If there is a historical analogy for emerging markets at the present time, it’s with the 1997-98 period,” Smith said in an e-mailed response to questions on Thursday.
He sees
two major reasons for pessimism. The first is a lack of progress in reducing
the state’s grip on developing-nation economies, a key part of his bearish
thesis five years ago. Smith cites Brazil’s inability to move on from “state
capitalism,” a model that’s helped plunge the economy into its worst recession
in a century. He also worries about Russia, Turkey and Poland, where he says
policy makers are moving in a more “authoritarian” direction.
Smith’s
other big concern is China, where he predicts a financial crisis will strike as
soon as this year. Nonperforming loans are poised to surge as borrowers pile on
debt to repay their existing loans, he says, while companies face “big” asset
writedowns as the economy slows and commodity prices sink.
“There is a significant possibility that China and
Brazil, in particular, will have to undergo some form of economic or financial
crises,” he said.
More
The worst kind of upward GDP revision — built on more inventories, less imports
Published: Feb 26, 2016 10:14 a.m. ET
WASHINGTON
(MarketWatch) — The annual pace of U.S. economic growth in the fourth quarter
was marked up slightly to 1%, but that was mainly because of a bigger
stockpiling of inventories that could weigh on the economy in early 2016.
The
latest snapshot of the economy’s fourth-quarter performance still reflects a
slowdown in growth that set in during the waning months of 2015. The government
last month initially reported that gross domestic product — the value of
everything a nation produces — has expanded at 0.7% rate.
The
“bottom line is that fourth-quarter GDP growth was still pretty modest,” said
Paul Ashworth, chief U.S. economist at Capital Economics
The
economy has also started out 2016 on a softer note — and the high level of
inventories in the fourth quarter probably doesn’t help. Firms might have to
cut back on production to get inventories back in line.
More
Oil crash: Halliburton slashes another 5,000 jobs
February 25, 2016: 5:11 PM ET
Halliburton (HAL)
is cutting 8% of its workforce, or roughly 5,000 positions, the Houston energy
company told CNNMoney on Thursday. The new wave of job cuts will take place across the globe over the next several weeks.
It's the latest evidence of the crisis confronting the U.S. oil industry as crude prices have crashed to seven-year lows.
"Our industry has turned down faster than anyone ever expected," Halliburton CEO Dave Lesar and President Jeff Miller said in a memo to employees obtained by CNNMoney. The execs said it's now clear that business opportunities will be "much worse than anticipated" coming into the year.
The latest pink slips bring Halliburton's job cut tally to between 26,000 to 27,000 since employee headcount peaked in 2014, the company said.
Halliburton
has also attempted to cope with cheap oil by consolidating facilities in 20
countries and closing down operations altogether in another two countries.
The oil
downturn has sent Halliburton's profits plunging. Its stock price has lost more
than half its value since mid-2014 when crude prices peaked.
More
Brexit Thought of the
Week.
"Should you find yourself in a chronically leaking boat,
energy devoted to changing vessels is likely to be a more productive than
energy devoted to patching leaks."
Warren Buffett.
We
close for the weekend with some interesting thoughts from Harvard on China.
Urbanization with Chinese Characteristics? China’s Gamble for Modernization
by Kristen Looney and Meg
Rithmire 18 Feb 2016
Harvard Business School Working Paper
Urban China’s latest man-made disaster struck Shenzhen, a city of over
20 million people and one of the country’s major economic hubs, on December 20,
2015. A massive hillside pile of construction debris, illegally dumped with the
complicity of local officials, collapsed in the city’s Guangming New District,
burying 33 buildings and scores of people.2
After the spectacular explosion in
Tianjin in August and the seeming barrage of reports of urban infrastructure
failures throughout the country, one begins to wonder if China’s urbanization
demands are dramatically outpacing the country’s ability to expand urban areas.
On the other hand, reports of “ghost cities,” entire cities in the middle of
the desert or large suburban developments devoid of people, inspire fears that
China’s supply of urban areas and infrastructure is outpacing demand, fueled by
unsustainable debt and over-investment.3
Are Chinese cities the engines
of growth for the Chinese and global economy or are they ticking time bombs of
debt and over-investment? In a sense, they are both. Urbanization in China has
proceeded this far in spite of serious institutional barriers, but those
barriers have created significant problems, including urban sprawl, conflict
over land rights, local government debt, and substantial inequality. A proposed
set of reforms aims to catalyze rapid urbanization while eliminating the
negative economic, environmental, and social costs of the previous model.
The Chinese Communist Party (the CCP) sees this
“New-Style Urbanization” and the creation of a large and secure middle class as
critical to its shift from an investment and export-driven economy to one
sustained by domestic demand. Instead of relying on markets and voluntary
migration, the CCP aims to steer the process through its control of land,
labor, and capital. If it succeeds, China will urbanize hundreds of millions of
people in the next decades without experiencing the social dislocation and
political agitation that urbanization historically brings. If it fails, the
risks range from simple economic stagnation to political and social upheaval.
Although it has achieved
remarkable urbanization, China is still under-urbanized relative to its level
of industrialization. Unlike most countries that the World Bank classifies as
“upper middle income,” barely a majority of Chinese residents live in cities.
Yet at the same time, China’s industrial sector accounts for well over 40
percent of the country’s GDP.4 This “industrialization without urbanization” is a
unique product of institutions that limit the free movement of labor, land, and
capital. To understand these institutions—and how they fit together—is to
understand the past, present, and future of urbanization in China.
The most notorious of these institutions is the household
registration system, or hukou. Established in 1958, the hukou system
divides the population between rural and urban and attaches each person’s
citizenship to a specific locale. Traditionally, those with urban hukou have
been entitled to a suite of state-provided benefits denied to rural hukou holders,
including social insurance, housing, grain rations, and public services.
Following the introduction of market reforms in the late 1970s, urban labor
markets gradually opened up to rural residents, but the urban public goods
regime remained out of reach. Still, the lack of access to public goods has not
stopped rural residents from migrating to urban centers by the hundreds of
millions. Presently, about 17 percent of China’s population, or 230 million people,
belong to the “floating population” that lives in cities but does not possess a
local hukou.5 Despite frequent declarations that the CCP intends to
dismantle the system, reforms have proceeded around the edges of the
institution while preserving its basic form. By preventing the rural population
from settling permanently in the cities, the hukou system has created
what some scholars have called a rural-urban “apartheid.”6
More
But however you look at China, China now seems to be in deep trouble. The scripted numbers never made sense and now that they are all going haywire, the apparatchiks in Beijing seem to have panicked.
As China’s Economic Picture Turns Uglier, Beijing Applies Airbrush
by New York Times •
BEIJING — This month, Chinese banking officials
omitted currency data from closely watched economic reports.
Weeks earlier, Chinese regulators fined a journalist
$23,000 for reposting a message that said a big securities firm had told elite
clients to sell stock.
Before that,
officials pressed two companies to stop releasing early results from a survey
of Chinese factories that often moved markets.
Chinese
leaders are taking increasingly bold steps to stop
rising pessimism about turbulent markets and the slowing of the country’s growth.
As financial and economic troubles threaten to undermine confidence in the
Communist Party, Beijing is tightening the flow of economic information and
even criminalizing commentary that officials believe could hurt stocks or the
currency.
The government moved to bolster confidence on Saturday by ousting its top securities regulator, who had been widely accused of contributing to the stock market turmoil. Mr. Xi is also putting pressure on the Chinese media to focus on positive news that reflects well on the party.
But the tightly scripted story makes it ever more difficult to get information needed to gauge the extent of the country’s slowdown, analysts say. “Data disappears when it becomes negative,” said Anne Stevenson-Yang, co-founder of J Capital Research, which analyzes the Chinese economy.
The party’s attitude has raised further questions among executives and economists over whether Chinese policy makers know how to manage a quasi-market economy, the second-largest economy in the world, after that of the United States.
---- “We are going to continue to see crackdowns on people telling a different story than what Beijing wants to hear,” Mr. Miller said. “At the same time, Beijing appears to be conflicted on this issue, because it recognizes that without independent gauges, commercial relations and foreign direct investment will suffer, due to growing skepticism over official data.”
Last September, Markit
Economics, a British company, and Caixin Media, based in Beijing, stopped publishing
preliminary results from a monthly survey of purchasing managers at Chinese
factories.
The preliminary results, which came a few days before the two firms
and the government separately released complete numbers, often affected
markets. As a result, officials at China’s statistics bureau objected to the
early release, according to people with knowledge of the official order.
A
spokeswoman for Markit declined to comment, while Caixin representatives did
not respond to a request for comment.
“It’s a very
influential economic indicator, and it’s highly cited overseas,” said Mr. Yuan,
the researcher at Tsinghua. “Given the international worry over the Chinese
economy, I had a sense last August that the Caixin indicator wouldn’t really
last long, because its publishing in mainland China had touched high-tension
lines.”
In January data released last week, the Chinese central bank
omitted or hidone key number and altered the parameters of another that gave insightinto what the central and commercial banks were
doing to prop up the country’s currency.
More
"On the whole David Cameron wants to be good, but not too good on Europe, and not quite all the time.”
With apologies to George Orwell.
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