Briefing: #Article50 and #BlackWednesday

Today Theresa May pulls the Brexit trigger. Read all about what this means for markets following the links below.

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Articles

  1. Grexit, Brexit και τα παραμύθια (23.3.17) The Huffington Post in Greek
  2. No-Deal Brexit And Fear (17.3.17) The Huffington Post
  3. The City of London is preparing for a hard Brexit (19.1.17) Newsweek
  4. How Eastern Europe is best placed to hit the ground running after a hard Brexit (15.12.16) The Conversation UK
  5. #Marmitegate: what the tumbling pound means for our favourite products (13.10.16) The Conversation UK
  6. Why TTIP will live on, but not for the EU (30.6.16) The Conversation UK

Media

  1. 10.16 Guest on BBC Radio 4 Today Programme, speaking about Brexit (listen here
  2. 06.16 Guest on ΣΚΑΙ radio, speaking about Brexit -in Greek- (listen here).
  3. Horror Show: Brexit unleashes a political nightmare (1.7.2016) Raconteur Magazine,

@iGlinavos

#Article50 and the end of the beginning

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Theresa May is finally ready to cross her Rubicon by notifying the EU of Britain’s intention to leave the Union, using the famous Article 50 process. Brexit minister David Davis told us last week that the possibility of a no-deal Brexit is not as frightening as some people think. Think about it this way, currently one can go online and order a fancy desk lamp from a French company and pay the price plus postage. If the lamp was coming from the USA however, customs duties will need to be paid by the customer (5.7%) once the goods have arrived in the UK but before they are delivered. She will also be charged import VAT at 20% and there will be a £8 handling fee to pay. The consequence is that buyers may well seek a domestically manufactured lamp instead. Wouldn’t this be a great thing for local manufacturers? It might, but it is likely that the domestic lamp manufacturer would incur similar charges when importing components to make their lamps. Further, they will find it more expensive to sell their lamps in Europe. Selling on WTO rules necessitates having appropriate licences and making export declarations to customs and following transport procedures. Increased demand from local customers will be probably offset by increasing costs of manufacture and a loss of market share in Europe. Mr Davis may not scare as easy as the consumers and businesses who will suffer the consequences. Brexit is happening regardless.

To summarise, we can say the following: Theresa May has selected two avenues for achieving Brexit. One is a so-called hard-Brexit (exit from the Single Market and the Customs Union) while the other is a presumed ‘no-deal’ Brexit (trade with Europe thereafter will be governed by WTO rules). Both options raise a series of significant dangers for the British economy, and crucially present a formidable challenge to the Treasury. The City has indicated that continuing business in London will require significant tax cuts as compensation for the loss of ‘passporting rights’ in the case of a hard-Brexit. Alternatively, a ‘no-deal’ fall back on WTO rules will cause significant upheaval to manufacturers, necessitating state aid to a number of industries. How will the Treasury fund either (or both) remains a burning question.

Good luck to all of us.

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@iGlinavos

 

 

 

IMF and Greece, the breakup

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The IMF has been on its way out of the Greek Rescue programme for a while now.

The band-of-bandits of Mr Tsipras is getting ready to celebrate ousting the IMF. Before you join in the dance in Syntagma Square, listen to my podcast on what the IMF is, what it does and what it did (and did not do) in Greece.

This is a February 2017 lecture on what the IMF is and what it does. The discussion on the role of the IMF in Greece is from 44’30” onwards.

Enjoy and feel free to comment using the discussion options in this post.

@iGlinavos

Who stands to win from #Trump and #Brexit?

One would say that both Trump and Brexit are the result of populism, complacency and … to be frank stupidity. But they have more things in common. They both benefit the financial industry. See my two recent articles on Newsweek exploring what this new order means for our banker friends.

What does a hard Brexit mean for the City of London? (read here)

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What does Trump deregulation herald for Wall Street? (read here)

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@iGlinavos

A message of hope for 2017 from Greece

Did you enjoy 2016?

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Pretty much everyone I met who is not Greek and does not visit Greece regularly has had the same question for me in 2016: “So, how are things in Greece, its quiet now, no? Better?”.

This post answers this question (if you were minded to ask) but also unexpectedly carries a message of hope in these dark times, a little indication of how 2017 might be the beginning of a recovery for Europe (at least) despite the annus horribilis 2016.

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How are things in Greece? I think the closest parallel is drowning in quicksand. So long as you don’t move, nothing gets better. If you try and move, you sink a little deeper.

Syriza’s government has been a circus of horrors, whichever way you look at it. Since they took power in 2015 (as has been well documented in this blog) they have lurched from one disaster to another, from one conflict to another, from one (endless) ‘negotiation’ to another. They have achieved a series of ‘political solutions’ which is code for defeat and capitulation. They have interpreted the demands of Greece’s creditors in the most destructive and senseless manner, to the degree that even the IMF thinks the country is dying, stuck in a mire of growth chocking measures.

Most of the time Syriza has done nothing to improve the situation in the country (staying put in the quicksand). Some of the time (usually after botching another round of ‘negotiations’) they have legislated a new raft of fiscal measures (wiggling in the quicksand and sinking a little deeper).

Nothing has improved in Greece and nothing is changing for the better. My answer to my earnest enquirers is that Greece continues to sink as people slowly eat away any left over cash saved before the crisis. This is not to say that some have not benefited. Syriza friends and family are finding jobs in new PM’s offices. Syriza journalists are being hired at resurrected ERT. The party goes on for the few, for a little while longer. Far-right lunatics (forming the junior coalition partners) continue to bless fighter jets, while police cars cannot move for the lack of fuel. There is ample comedy, within the tragedy.

No, things are not improving in Greece.

So where is the message of hope for 2017 the headline to this post advertises?

Greece has been one of the first places where the wave of populist lies and ‘anti’ propaganda led a band of bandits to power. Greece pioneered the escape to fantasy in 2015, proudly followed by the British people electing to torch their economy through Brexit and the Americans electing to have a stab at torching the world by voting for Trump.

As the first piece of this puzzle of a (often farcical) rerun of the 1930s, Greece may be a good place to speculate on possible futures.

I had argued in 2014, mistakenly believing that those who speak nonsense and act crazy are putting on a show to excite the mentally handicapped sections of the electorate (I was wrong, they are stupid, devious and crazy), that a failure for Syriza would leave the political system in such a sorry state, the electorate would lurch further to the extremes after having witnessed the failure of both establishment parties and their populist antagonists. Who would benefit? Golden Dawn, the Greek neo-nazi (but fat and hairy) variant was first in line.

Alas, this does not seem to be happening. The failure of Syriza to drag Greece out of the quicksand is shifting support to traditional parties, like New Democracy (under its new centrist leader Mitsotakis). Syriza’s antics have served to demystify the idea of the ‘left’ as morally superior. Tsipras has laid bare for all to see how what he leads is not ‘the left’ but a group of opportunist, amoral, ignorant and incompetent power-hungry populist have-beens. Even a population as jaded as the Greeks, after 6 years of crisis, realise that the ability to govern and a broad plan (even a Euro-friendly one) is better than banditry and chaos lorded over by power-mad buffoons.

And here is the message of hope for 2017. After the populist experiment has failed, people can come back from the populist abyss. Perhaps the explosion of discontent that brings the sewer to power dissipates after the experience of governance via populists. Perhaps even the attempt to blame ‘others’ for failure won’t convince people who suffer the consequences of bad decisions.

I admit that things look bad at the moment for Europe and the world. There is a chance however that in 2017, Germans will trust Angela Merkel with another term, ensuring continuity for the European project. The French could return a mainstream president (anyone but Le Pen), thus ensuring the stability of the Euro, The Italians could keep at bay the populist buffoonery of Beppe Grillo.

Britain may ameliorate its Brexit experiment in self-harm.

Unfortunately, the Americans cannot help us here, as Trump is entitled to run a world-wide, real-life version of the Apprentice for 4 years. If the world doesn’t end on his account, we may look back at 2017 as the year that things came back from the brink.

They might. Considering the alternative, they must.

Cheer up and enjoy your mince pies.

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@iGlinavos

Richmond Park by-election, an insider’s view

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I am writing this for my neighbours in Richmond Park. Tomorrow this constituency has the chance to do something important, to send a strong message to the Brexit theocracy that has usurped power that there can be -and will be- resistance to their incompetent tumble towards a hard Brexit.

I urge all of you not to miss this chance. To go out and vote.

By-elections do not greatly matter usually, they are symbolic affairs where the parties try to get a feel of what the public thinks, or local affairs, decided on local issues. Indeed it is a local issue that sparked this election (Heathrow expansion), but as all candidates are anti-Heathrow, this is not the defining factor at the ballot box.

Still, why does all this matter on a national and European level you may ask.

If Zac (the incumbent MP) is re-elected, it will verify Tory dominance in the face of a defunct opposition and a nascent LibDem revolt. A Zac win will make little in the way of news and will not bother Theresa May in the slightest. He is a Tory, will vote with the Tories, will vote for Article 50. He is supported by UKIP. He ran a disgraceful racist campaign for mayor. He will achieve nothing in preventing a Heathrow expansion. Do you really want to reward his stunt and allow him back into the Commons?

A win for Sarah Olney however (the Liberal Democrat candidate) will make national headlines and international news. It will be a strong message to Theresa May that her shambolic, devious and incompetent administration will face resistance in Westminster and the ballot box. She will be one more MP to vote against Article 50.

Do not miss your chance to send this message.

The Greens and progressives in the borough support Sarah. Labour has betrayed its supporters, offers unconditional support to Brexit and does not represent the constituency’s interests. A vote for the Labour candidate is a wasted vote, a vote of support -at worst- or acquiescence -at least- to the plans of the Brexiteers in No.10.

Resist, take your chance, say no to the disaster of a hard-Brexit.

Vote LibDem tomorrow.

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@iGlinavos