@iGlinavos makes #Brexit news

If there is one thing you can say about Brexit is that it has kept us busy.

Here is a summary of my “media engagement” as the University likes to call it, since Britain voted for “glorious independence”.

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I wrote a piece for The Conversation on the consequences of Brexit on the TTIP negotiations that you can access here.

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I appeared on ΣΚΑΙ radio, invited by Nikos Andritsos to speak about the consequences of the Brexit vote. You can listen to the audio (in Greek) here.

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An interview I gave on the future of EU trade negotiations appeared on German Focus magazine. Read here (in German).

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Finally, Raconteur magazine ran a piece on Brexit based in large part to an interview I had with them. See here for the full article.

@iGlinavos

 

How Brexit became Brelimbo

There have been plentiful analyses on why navigating Brexit will be a nightmare, the latest one is a great piece on Vanity Fair. Brexit is such a spectacular own goal that even discussing its “merits” is an exercise in futility that prevented Remainers actually explaining what a stupid idea this is to the people stupid enough not to undestand it straight away. Yet, here we are in the post-referendum era trying to make sense of it all.

The con artists who pulled off this feat of populist self destruction and are now in power are finding things a tad difficult. They have no idea what they are doing, had no plan, have no plans and most crucially seem unable to rise to the task of organising what they convinced 17 million “natives” to vote for. 

The Times is telling us now that May is considering pushing back the invocation of Art.50 to the latter half of 2017 with the excuse that there are elections in France and Germany. The real reason is we are told administrative inability to commence the Brexit horsetrading.

I think this is a carefully constructed diversion by May to catch the opposition sleeping with a snap election. I have explained already that the reasons for an early general election are compelling. There is no way May can put off Brexit that long if she actually wants to do it. 

It has been suggested that indefinitely delaying Brexit may be a way to actually remain, but I don’t think this is a great idea. Holding on to invoking Art.50 past January 17 leaves Britain in perpetual Brelimbo. Not a state the economy or the political class can survive for long.

@iGlinavos 

Revealed: May’s secret plan for a spring election

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Got sick of the uncertainty that has plagued the economy, society, our lives since the infamous Leave vote on the Brexit referendum on the 23rd of June?

Fear no more. I have looked into my crystal ball and here is a point for point explanation of what will happen from now on.

  1. The brand new Brexit government will finalise its ‘plan’ for Brexit by the end of the year. The negotiating lines and aims will be revealed with much fanfare in January when the government will formally notify the EU of its intention to leave the Union under Art. 50. This will be done as an exercise of the Royal Prerogative without a vote in Parliament (the Court hearing a case on this is likely to consider a vote is necessary at the point of actual exit, not at the point of asking for it).

What will the Brexit plan consist of?

“The government will give effect to the democratically expressed will of the people to leave the European Union as expressed in the referendum on 23rd June 2016.

The government will negotiate a deal with the EU that protects British interests, the economy and the rights of citizens.

The government will make Brexit a success by opening up a new chapter in British history, expanding its relations with the world as an independent power”.

Applause all around. What this means is that the UK will no longer be an EU member state in January 2019. Also, this means that the ‘good of the nation’ and the ‘interests’ are left undefined. The government will seek a soft-Brexit and remain part of the internal market. It will not insist on an end to free-movement of people. It will say that the mandate of the referendum was to leave the EU, on which it has delivered. Everything else is determined in the national interest, and immigration does not trump economic considerations.

You doubt that this will happen? The City has boycotted a hard Brexit, and for all the talk of industrial plans, equality, state-directed-development, digging up Mitterand and making him Chancellor etc etc, Britain does not do what the City does not want. Also (and this is important) there is no factual basis to the immigration obsession. EU migration has been a net benefit to the UK economy and as regards stress on the ‘social fabric’, those areas most in favour of Remain were the places where most migrants live. May is clever to play the hard-as-nails defender of the natives, but can tell the difference between what is actually beneficial to the country and the ‘concerns’ of old ladies in the Midlands who once saw a brown person.

How will May pull off a soft-Brexit? How can she declare success in delivering what the right has been after for 30 years and slay the immigration dragon at the same time? For this see point 2.

  1. Fresh from the ‘success’ of delivering on the public demand of Brexit, May will call an early election for the spring of 2017. She will do this for the following reasons: The country in its majority either wants Brexit of some form, or has made its peace with it. The Tories will not split and the anti-Brexit forces may boost a bit the LibDems, but not in a way that makes any real difference. The important thing is the implosion of Labour. Labour is dead and there will never be a better chance for the Tories to clean up than an early election as soon as possible in 2017. And May is the only one who can technically call an early election (see here for details).

May will win big time (see here for latest polls). She will use this win as a mandate for a soft-Brexit and in the new cabinet she will do away with the Brexit band of fools of Boris-Fox-Davis. She has nothing to fear from the far-right, as UKIP has in all effect disbanded and it will not emerge from its farcical leader elections as a living political force. I repeat: May will clean up.

You don’t think this is plausible? Come back and read this next summer and if things did not play out according to my text, I will smash my crystal ball on YouTube.

Is there anything the remaining Remainers amongst us should or could do about it?

Propping up the Labour corpse with Corbyn in charge is not an option, nor would it do anything to change the above anyway. Propping up the Labour corpse with anyone else in charge is equally pointless. Voting Green sounds nice and cuddly, but in the post-Brexit era the Greens seem to be going all Varoufakis; ditto pointless to support them.

We should do whatever we can to transform the LibDems into a single-issue party dedicated to being the European voice in the UK while we go through the divorce interlude. A party to protect the rights of migrants in the UK and to oppose the Thatcherite Armageddon planned by May.

A shitty menu of options I agree, but one has to play the hand one is dealt.

crystal ball

@iGlinavos

Waging war on the people

What would you think of a government that purposely pursues policies against the public interest?

How would you characterise a populist leader who seeks to take back control from foreign elites, who uses vague exprestions of the popular will to carry out whole scale reforms?

How would you feel if you were part of a minority held to ransom in an attempt to force foreign governments to wield concessions?

You must imagine that I am talking about Turkey and Erdogan’s attempt to crush Turkish dissent after the failed coup. I am not. I am talking about Theresa May and her brand new Brexit government.

Brexit is against the public interest. It will have unaccountable economic consequences. It is based on lies and false dichotomies (EU vs the world). It is fed by misconceptions, populism and racism.

May is using the advisory, narrowly won Brexit referendum as an excuse to rain down fire on the nation. The Tories have chosen to elevate this destructive farce to a democratic imperative. They made the choice.

The minority I am talking about are not Kurds or Christians in Turkey, they are Europeans in Britain.

It is aparent now that the right wing establishment wanted Brexit not because it could care less about Europe,  but because it wanted the chance to remake the country without any opposition. Do not be fooled by proclamations of May’s supposed interest for those left behind. Wolves may offer speeches on vegetarianism, but they do not intend to change their diet.

The Brexit Tories with their business friends and far right supporting lackies are out to demolish Britain as we know it. The sleeping leftists of Corbyn are not interested as they hope to man the barricades of symbolic resistance as the place burns down. They are not interested in preventing catastrophe, they wait for the historic inevitability of socialism as all their apocalypse loving fanatical mates across the Channel.

All this should be obvious to the 17 million who voted for their own destruction. Seeing as they refuse to accept it, one could take the view that they deserve to suffer the consequences of their choice.

What do you think?


@iGlinavos 

US politicians finally agree on something (that no-one saw coming)

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Many things are happening in the new populist phase of American politics. Some are less expected than others. For instance, the GOP joining forces with the left of the Democrats in asking for the restoration of Glass-Steagall was not something many saw coming. The new Republican Party platform calls for restoring the law that separated commercial-banking and securities activities at Wall Street firms, a regulatory change advocated by both Elizabeth Warren and Bernie Sanders. The following offers some background on this law and how it is linked to the regulation of financial markets in the US.

 

Glass-Steagall is the offspring of crisis and a totemic legislation of the New Deal. Crisis can be (and many argue, indeed, it should be) a catalyst in developments in policy that can at times lead to rapid and wholesale reversals of policy directions. One such reversal was the expansion of regulation in the United States after the 1929 crash and the initiation of the New Deal by the Roosevelt administration. As a product of pressure from various sources, the New Deal was grounded in no single coherent or systemic theory. Perhaps the most prominent unifying theme was the popular conviction that an unregulated free market guided solely by the invisible hand of private interest could lead only to the dispossession associated with the depression. The Roosevelt administration responded to this popular perception (in sync with Keynes’ ideas) by offering the countervailing power of government, administered by disinterested expert regulators, in order to discipline the market and stabilise an economy that laissez-faire had all but destroyed. The result was a stunning expansion of administrative authority both within and independent of the executive branch. What is particularly interesting is that the state sought to set in place a regulatory framework that would prevent the re-emergence of circumstances that could lead to another bubble and subsequent catastrophic crash.

 

One of the most important legislative responses to the failures of the Depression (particularly in the banking sector) was the work of Senator Carter Glass, Representative Henry Steagall and other proponents of the Banking Act of 1933, known as the Glass Steagall Act. The Act’s backers were convinced that the banks had played a significant role in promoting unsustainable booms in the real estate and securities markets during the 1920s. As a solution to this problem it was suggested that commercial banks should restrict their operations to the acceptance of demand deposits and the extension of short-term, self-liquidating loans to finance the production and sale of goods by businesses. Banks therefore should be prevented from making unsound loans and investments that encouraged an overbuilt real estate market and an immense overexpansion of real estate values. The banks should also be discouraged from making investments in securities that undermined their solvency during stock market downturns and they should be restricted in making loans to finance the purchase of securities. Liberalisation that removes the above restrictions has since been shown to produce a banking system that is more vulnerable to systemic risk. Admittedly, deregulated financial markets generally promote faster growth rates by providing more extensive financing to consumers and businesses during economic expansions. However, by encouraging greater reliance on external funding, deregulation creates a higher risk that consumers and firms will become overextended and end up insolvent if external funding sources shut down during economic contractions. An example of this happening was the credit crunch of 2008. As Amato and Fantacci explain in their book The End of Finance, the reliance of the economy on ever-increasing availability of funding (known as liquidity) propels what is a market economy to its turbo-charged, crisis-prone financialised version, something the aforementioned authors equate with modern capitalism.

 

The financialisation that came to characterise US (and global) capitalism before the crash of 2008 was the product of protracted deregulation. While deregulation has been a dominant trend in the US since the mid- 1980s, it came properly into its stride in the latter part of the 1990s. By 1998 regulators and the courts in the United States had allowed banks to make substantial inroads into the securities and insurance sectors by exploiting loopholes in the Glass Steagall Act and the Bank Holding Company Act of 1956, both enacted with the memories of the Great Depression present in people’s minds and considered strong legal barriers to bank entry into the securities and insurance fields. The model of finance to emerge after the repeal of the Glass Steagall Act was based on securitisation and became known as the ‘originate and distribute’ model. A securitisation is a financial transaction in which assets are pooled together and securities representing interests in the pool are issued (see here for an explanation). Under the originate and distribute model, financial institutions would create assets (such as loans) then repackage these and sell them to investors. The resulting funds would be used to originate more assets which in turn would be re-repackaged and sold, recommencing the cycle. This model of banking recreated in a way the institutional framework that had led to the crash of 1929. By allowing the banks to lend not on the basis of deposits but on the strength of the money markets, the way was opened for the financial sector to depart from the fundamentals of the real economy, creating fictional wealth.

 

In confirming the return of universal banking powers to the financial holding companies, allowing the combination of commercial with investment banking, the Gramm-Leach-Bliley Financial Modernization Act repealed several Depression era safeguards in 1999. Unlike the system of finance established in the United States in the 1930s, the new model of finance allowed competition between commercial banks and investment banks for securities business. As a result, opportunities for profit increased dramatically, encouraging investment banks to engage in ever more risky proprietary trading – speculating with their own capital to increase returns. A key boost to the trade of derivative financial products via the process of securitisation we just described was given by another major step in deregulation in the form of the Commodity Futures Modernization Act of 2000. The new legal framework was not merely reflecting innovations in financial markets, but changes in the law spawned the so-called innovations. In other words, it was not changes to the markets that brought about the conditions that created the credit crisis but, crucially, changes in the law. The Commodity Futures Act suddenly and totally removed century-old legal constraints on speculative trading in over-the-counter (OTC) derivative financial products. It is useful to remember that derivatives were not always seen as a clever way to speculate but rather as a risk limitation technique. Derivatives were considered in US jurisprudence to be valid methods of dealing with risks of future events, and while hedging was legal, speculation in OTC derivatives was not and courts would not allow enforcement of financial bets whose sole purpose was speculation (as opposed to risk diversification). One way that the pre-2000 system dealt with speculative derivative trading was by moving it to clearing houses which assumed the risks associated with such transactions and kept the volume of trading low in order to minimise the exposures of the clearing houses themselves. This system operated fairly consistently on the basis of the common law (eventually codified by the Commodity Exchange Act of 1936), which retained the prohibition of speculative trading outside regulated exchanges. The Commodity Futures Act of 2000 represented the final blow to this system of controlled derivative trading. After the Act, speculative trading in derivatives was in effect legalised in the US with the result that a massive market in OTC products grew with-out anyone being able to assess the systemic risk effects of ever expanding volumes of trading.

 

The response, post credit crunch, at least in the US, has been to try and reverse the tide by restoring legal limits to derivatives trading outside clearing houses in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Will reinstating 1930s era regulation deal with the risks of further crises stemming from financial markets? It is correct that on its own this initiative cannot be a cure-all. On the other hand a more controlled, smaller financial sector has lessened capacity to destroy the real economy during one of its cyclical, self-generated disasters.

 

More on the issue of regulation and debates on reform post-financial crisis can be found in my book which can be obtained here and here.

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@iGlinavos

Should Remainers make the best of Brexit?

A Militant Remainer’s Response to Prof Hix

The British media has done a great job infantilising resistance to the craziness of Brexit with stories along the lines of Remainers suffering bereavement, and having to work through their emotions. It seems that the creation of a brand new Brexit government headed by the anti-immigrant 21st century version of Thatcher has allowed everyone to accept the inevitable and fall in line. What was unthinkable only a few weeks ago, what was derided as suicidaly stupid by almost all experts, is now a matter for the civil service to organise, an issue for finding the correct negotiators to send to Brussels so we can “make Brexit a success”.

There is a lot here to unpick, but this is not why I am writing this post. I am writing this post as a response to the LSE Blog contribution of Simon Hix. In this blog post the author urges ‘militant’ Remainers to accept the inevitability of Brexit and try to work something out that will minimise the impacts. There is discussion about different models for Brexit and the way in which an EEA deal may safeguard to some extent the 4 freedoms (people, goods, services and capital), and why various approaches may take us closer or further from the status quo of full EU membership. There is a debate, to which Prof Hix contributes with his article, on structuring a pro-Europe Brexit, something that Remainers can put forward to forestall the most extreme dreams of Ukipers.

I actually thought this was an interesting idea and started investigating different models of not quite full EU membership in trying to see whether one would be appropriate for the UK, considering the Brexit mandate just received.

Then I stopped.

The answer to the Professor’s proposal is no. There will be no “pro-European” version of Brexit.

Leavers made this mess and they will be the ones to try and work out the impossible. Mr Davis, with his stunning ignorance of law and international trade relations will need to explain to us how he can work out individual bilateral agreements with EU members, when the EU has exclusive competence to discuss trade.

Liam Fox, with his background of doing the right thing by his friends will need to tell us how he intends to achieve splicing up the 4 freedoms to keep what he likes best.

Mr Johnson, will need to explain how his rhetoric of keeping close relations with Europe, keeping Britain at the heart of Europe etc will be achieved after just smacking the door in Europe’s face in an attempt to ‘take back control’.

Mrs May will need to explain to us (primarily) and Europe (secondly) how a career built on scaremongering about immigrants, hatred of human rights and due process, disrespect for British values and Thatcherite dreams will translate into a fight for greater equality and opportunities for those ‘left behind’ by the very policies she espoused all her life.

The best relationship Britain can have with Europe is to be a member of the EU. Everything else is unsatisfactory. Everything else is a bad deal. Everything else leaves us worse off. Everything else will be a disappointment not only to Remainers, but crucially to the 17 million who voted for Brexit.

And you know what? We Remainers should not help May’s Brexit government achieve a ‘good’ or ‘acceptable’ deal. We Remainers should come out for what is right and true. We Remainers should make the case for Europe, for cooperation, for immigration. We Remainers should make a progressive case for Europe that contains the UK as part of the EU and strive to make the EU better from within. We Remainers should let the Brexit government and the Leaver crowds sleep in the bed they made.

And you know what? Even if we were to imagine, craft and propose a deal that can satisfy Leavers, something like EEA-minus, why on earth would Mrs May accept it? The truth dear reader is that we do not have the slightest idea what the Brexit government wants to do, intends to do, or is capable of doing.

Following the suggestion of Prof. Hix and proposing anything that is accommodating to Leavers means that we abandon the higher ground and we become complicit to the destruction of this country.

No collaboration, no compromise, no help to those who seek to destroy this country.

Let them explain to their mob the mistakes that they made. The country will emerge better off once they have failed.

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@iGlinavos

The limits of choice 

Recent events, the Brexit referendum, Trump’s rhetoric, the Turkish coup have led to intense discussions about democracy, popular choice and the limits of consultation.

The referendum specifically has been a lot about letting people choose and respecting their choices. In fact these debates are nothing novel, there are centuries of reflection behind them, from Plato onwards. I too have contributed to library shelves on democracy and choice.

A bite-sized summary of this literature is that there are limits to the ability to choose and on the content of that choice. I had argued for instance when reflecting on Greece’s crisis that the Greeks should be given a choice between the horrors of austerity and the tragedy of Grexit. I had argued that they would suffer anyway, but the democratically selected pain was better than the other option.

Yet, I fought against Tsipras Greferendum, why? The reason is that choice with incomplete information amidst lies and populist propaganda is not democratic, it is the semblance of choice. It serves not the people, if anything it makes marginalisation worse.

The same criticism can be brought against the Brexit referendum. Was it choice? What does Brexit mean?  Was it a vote against migration and damn the consequences? Was it a vote in favour of more democracy? No one knows. What everyone knows is that it empowered a section of the establishment to do something. What this something is, we are all in the dark.

Was the Turkish coup an assault against democracy or the last attempt of the Kemalist establishment to resist the islamification of Turkey under a modern day Sultan?

Are there and should there be limits to democracy? Absolutely. Human rights and the rule of law are limits on democracy, and necessary ones.

Democracy does not mean mob-rule. It does not mean shouting slogans and then having the civil service figure out a corresponding policy response.

Tsipras Greferendum, the Brexit referendum, Erdogan’s win over the putchists mean something, but they do not necessarily mean democracy.

@iGlinavos