3 Blokes In The Pub…Talk No Deal Brexit

Yves here. I listened to 90% and plan to finish. This chat is full of trade geekery yet is lively and accessible. There is a bizarre error (one bloke says Norway is landlocked) but that seems to be an isolated case. The mess of a crash-out Brexit has more layers than most of you imagined (and I know you have active imaginations).

Send to all your Brexit booster friends if you dare.

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101 comments

  1. Francis Grimer

    We survived in 1940.

    We will survive in 2019.

    Freedom is worth a little suffering.

    At least this time I won’t be being attacked by Nazi bombs, doodlebugs and V2 rockets. :-)

    1. ambrit

      Both my parents went through the Blitz. Both were permanently scarred by it. They survived, but not as paragons of neoliberal virtues. Back then, America was England’s main support and ‘friend.’ America actively tried to help Britain out during the war. Food aid, fuel oil, munitions, financial ‘deals’ that at least kicked the war spending ‘can’ down the road, until the crisis passed, all helped England eke out a bare survival. My Mom tells of whole city blocks of London still roped off and just piles of rubble well on into the Fifties. Recovery from the War really never ended. The Empire period for the UK ended with the Second War. I will suggest that this ‘Brexit’ affair will do similar damage to the physical and psychic components of the ‘soul’ of England. An entire generation is being thrown into the ‘brazen belly’ of the Idol of Moloch. What good is ‘freedom’ to a lost generation?
      Americans should talk to any survivors of the Great Depression who are still around, and find out what ‘hard times’ are like. They are coming for us all. We will all have to relearn the adaptations that got people through the ‘Hard Times.’
      Brexit is just the opening bout on the Card: “The Collapse of the Neoliberal World Order.”

      1. Richard Kline

        Agreed. ‘Survive’ and ‘thrive’ rhyme, but they are at polar ends of the lexicon. Will Britain post-crashout (if that comes) look like 1946 Austria or 2018 Yemen with millions displaced, tens of thousands dead, and preventable disease rampant? No. More like Poland in 1960. Ask them how fun THAT was. And it won’t really end until *ta-da* England sans Union rejoins federal Europe to get back on the economic inside.

        Sawing your own face off with a steak knife to spite the other side of the dinner table and prove a point can be done, but no one will think it’s a good time, and it will leave a body permanently scarred . . . .

    2. Clive

      How dare you. My grandmother was in the blast radius of an air-dropped ordinance detonation (I never did find out if it was an off-course V1 or a bomb discarded by the aircrew to save weight before crossing the Channel again) and was out cold for about 5 minutes with concussion. This happened while she was working in the grounds of Chichester Cathedral. She was lucky, the shockwave picked her up and threw her against a wall. Her best friend whom she was working with and was 20 ft. away took the direct hit. She was killed instantly, they had to gather up what few bits of her they could find.

      And you go about glorifying continental warfare in that kind of blasé way?

      I voted Brexit and I’m no fan of the EU. But if I ever have to hear another Brexit Ultra waffling on in Dad’s Army terms about how we’ll just have to take it on the chin again in my lifetime, it’ll be too soon.

      Conflict, needless animosity, finger-pointing without seeing others’ perspectives and wishing away problems are dumb. Dumb people don’t make good strategy setters. Or good commenters.

      1. ambrit

        Your Grandmom was very lucky. It must have been a smaller dropped munition. The blast radius of the warhead of a V-1, which was a payload of 1000 kilos of either Amatol of Trialen, was 400 to 600 yards. That sort of warhead took down rows of houses. I hope she is doing well. That generation went through a lot. It is a shame that as soon as the generations that suffer through the effects of previous bloody minded periods lose their advisory status, we end up playing the same old stupid games over again. No wonder our ‘new’ neoliberal paradise is falling into the Slough of Despond. Short termerism makes for stupid decision making.

        1. The Rev Kev

          I dug this link out of my files and it shows bomb hits during the blitz. Zoom out to get a feeling of the sheer numbers-

          That great American reporter Edward R. Murrow was in London during the Blitz and ended his segments with the phrase “Good night, and good luck” because that was what Londoners were telling each other in the evening. You never knew if you would still be alive in the morning or your friends and family either for that matter.

    3. Wyoming

      Freedom is worth a little suffering.

      Come back to us in a few years and tell me how that freedom thing worked out. My bet is your ledger is going to be well onto the wrong side of positive. The suffering account…well that should pay real dividends.

      1. Expat

        1. Collapsing economy which will lead to tidy attics and homes as Brits burn furniture to stay warm.
        2. No more weird foreign accents in every coffee bar in London. All replaced by weird local accents.
        3. Being able to blame the EU for how bad Brexit is because the EU forced them to leave!

        1. fajensen

          No 2 Reminds me that I should go long Chicory Coffee makers –

          Ersatz Coffee never really went away; my grandparents always diluted the genuine coffee with the Ersatz because they got used to the taste during the war. My parents kept some around for when older folks visited. One can still buy it! There could be a revival in that market.

          A tiny example of the kind of “scar tissue” that a real downturn will put onto people.

    4. The Rev Kev

      I don’t think that you realize how bad it could get. Did you know that during WW2 allied countries were sending food parcels to the UK which still continued even after the war was well and truly over? There may be a return to this if it gets bad enough. Food parcels came from such countries as

      the US –

      Canada –

      Australia –

      Go down to your supermarket today and check out how much of the stuff on the shelves is imported to get an idea of the scope of the problem. If you are depending on the UK government to take care of things and get things right I have some news for you and it is all bad.

      1. Francis Grimer

        My family never received any food parcels and I did not hear of anyone in my school who did either.
        In spite of all the ships being sunk I had perfectly good wholesome meals and never went hungry which is more than you can say for many people in Europe united under the German jackboot.

        Most of the stuff I see in the local supermarket is totally superfluous to requirements and I’m sure people will be perfectly happy without them. We get a lot of food from Eire and if they don’t sell it to us who else is going to buy it. People don’t cut off their noses to spite their faces.

        I can assure you Britain will do just fine.

        1. flora

          I am in sympathy for your point of view, and, indeed, with your comment. However, I think the “jackboot” to which you refer in reference to Brexit is more owed to the UK neoliberal govts under both Blair and Cameron and May than to any EU malfeasance (and I am no fan of the EU). Shorter: it’s important to correctly identify the source of the problem.

          I hope you are right in your confidence. Truly, I hope you are right.

          1. ambrit

            flora;
            This thread about ‘aid’ might be an artifact of class distinctions in England during and after the War. My Mom vividly remembers the American oranges during the War. One per child per week during the hostilities. this was for the child’s nutrition. Diseases like scurvy and rickets, both vitamin deficiency diseases, had been known before the War. Both had been related to poverty and associated poor diets. The oranges were to build up the child’s physical condition. This was part and parcel of general rationing during, and quite a while after the War.
            Read:
            As for the Sir or Madame Grimer’s assertion that “people do not cut off their noses to spite their faces,” I beg to differ. the Meoliberal Movement that you cite, is run like a cult. Magical thinking is an essential part of it’s self identity. As has been demonstrated many times throughout history, say, the Jonestown Massacre, or the Third Reich of recent memory, noses are indeed cut off of faces, often other peoples noses off of other peoples’ faces, just to spite ‘Face.’
            I’m going to quote Pink Floyd, generally an excellent reference point for exploring the psyche of England and the English of the last century:
            “Hanging on in quiet desperation is the English way.”

          2. JTMcPhee

            Please don’t omit the jackbooted Margaret Thatcher from your list of people to thank. Though of course she is one of those who get to do such damage to so many others, live very comfortably, get the best of care all through her rule, and then die being cared for by the best, going into the night with the knowledge that they have escaped all consequences of their deeds and omissions — IBG-YBG, “Apres moi le deluge,” bwahahahaha.

        2. Yves Smith Post author

          You are out of your mind. Executives of grocers are warning a crash out would be a train wreck of epic proportions and you know better?

          If you had bothered watching the video (and commenting without reading/listening to a post is a violation of our written site Policies), you’d have gotten a dim appreciation of the fact that ing the UK is a task of considerable logistical complexity and that all border logistics (as in getting stuff in) will become a nightmare. Even if transit times at the border go merely from 2 minutes to 4 minutes (and it is highly unlikely things will go that well) the result is a seize up.

          See the comment further down where I quote Richard Kline: http://cfdtrade.info/2018/08/3-blokes-pub-talk-no-deal-brexit.html#comment-3008235

          1. JTMcPhee

            One has to appreciate how inventively us humans have built massive vulnerabilities into the simple provision of the necessities of life. And waste, and fraud, and corruption. “What a wonder we are, in the eyes of the Lord!”

        3. RepubAnon

          A friend of mine grew up in post-war Britain and Germany – he wouldn’t eat peas, because he had been forced to eat “ersatz” peas made by grinding up pea pods and shaping them into small spheres. He said those were the only vegetables available most days.

          “Fine” is a relative term: my expectation is that privation will result in an authoritarian, one-party government. It won’t matter whether it’s the Putin version or the Maduro version – for the average folks, it doesn’t matter whether the jackboot crushing them is worn on the right foot, or the left foot… they’re still being crushed. However, they’ll all think they’re “doing fine” because they won’t have anything better for comparison purposes – and anyone saying otherwise will have been put into the camps.

    5. paul

      ‘We survived’ but an awful lot didn’t.
      Past performance is no guide to future returns.

    6. Expat

      “I’ll show these nasty French and Germans that I won’t run around with them anymore!” *Hacks off right foot with an axe* “There! Now I am free to lie on the ground bleeding and try to crawl home after a while.”

      I think that Brexit will give you lots of Freedom. You can set up a display of that Brexit Freedom next to Change No One Believed In and MAGA in the Hall of Stupid Ideas.

    7. flora

      It wasn’t the EU that forced austerity onto the UK public (at the same time it was giving tax cuts to the very wealthy interests), it was the UK govt. Blaming the EU was a handy excuse for the UK govt to deflect blame away from themselves. After the vote, it wasn’t the EU that triggered Article 50, it was the UK govt. Since March 2017 it hasn’t been the EU sitting idly, it’s been the UK govt doing apparently nothing more than hand waving to prepare.

      I’m in sympathy for the people who voted for Brexit. The austerity was needless; blaming the EU and foreigners was a govt political ploy to deflect responsibility for the austerity. The UK govt misled the voting public, imo.

      The US had our own version of austerity for most and rich tax cuts for a few that resulted in Trump’s election. Politicians here are still trying to blame foreigners for this – their own failures.

      1. False Solace

        Actually the EU did force austerity on EU countries, which is the whole reason the nationalist right has taken over government after government in Europe. The UK had fewer constraints since it never joined the Euro, but don’t go pretending the EU is spotless and somehow an opponent of austerity. The EU and ECB were full throttle off the cliff the whole way.

        1. Yves Smith Post author

          This is bogus.

          The EU did not inflict austerity on the UK. In fact, the Thatcher and Reagan governments were the top proponents of neoliberalism, which led to austerity policies. The Maastrict Treaty was well after the Thacher era. You could just as easily argue that the UK is responsible for the EU’s austerity policies.

          And more narrowly, your argument is specious. The UK’s recent austerity binge dates from when the Tories came back into power. The EU has squat to do with it.

    8. Harry

      Not exactly the marketing that was used in the referendum.

      “No worse than the Blitz”.

      Oh, good!

    9. Mirdif

      From sunlit uplands to survival. Interesting transition.

      As for the rest of this drivel, what you really mean is you expect others to suffer. If you are of the age you say, old enough to remember being fed in the war, this would make you late 70s to early 80s. This is the exact demographic that will be hit really hard, firstly by lacking the ability to source the needs of day-to-day living in the event of a crash out and then having your pensions + savings wiped out by the ensuing crash in the pound and the rise in prices for ordinary goods.

      I expect the next government will target your demographic with punitive taxation as you will possess assets in the form of property and the government will be looking for all the tax it can lay its hands on. It won’t be a little suffering; we will very unfortunately see some of the poorest and weakest pensioners going through bins just for food. These types of things happened in the aftermath of the collapse of the Soviet Union in Russia. Which conveniently leads to how some of the personalities who profited the most from that “little suffering” are also hoping to profit from your “little suffering”.

      The timescale for Brexit should be 20-40 years at least. This lurch is going to lead to a lot more than “little suffering” and is not the way to go about things.

    10. WTT

      You may want to just survive. I, for one, want to do far better than that. If complete freedom is what you want, go to live in Antarctica.

    11. ScottS

      “‘Freedom’s just another word for ‘nothing left to lose’”

      Speaking of the same thing by a different name, when does the UK get renamed “Animal Farm”?

      I read a copy illustrated by Ralph Steadman recently. Funny thing — it’s not about Communism. It’s about how revolutions are always hijacked by grasping thugs for their own benefit.

    12. Ape

      Let us remember that millions of Indians starved so that the UK wouldn’t during WWII.

      An Indian may ask, can the UK find others now to suffer for their freedom?

  2. Quanka

    Haha, “freedom” – if that’s what you call it. You need to add a superlative to that, like “Tremendous Freedom” to pull the analogy square.

    And how do you define “little” in terms of suffering? Is it worth a lot of suffering?

    1. nonsense factory

      The analogy that springs to mind after watching this video is:
      Cuba after the Fall of the Soviet Union

      Lots of suffering, no access to many imported goods, a severe reduction in average caloric intake, an emphasis on developing local agriculture was needed to cut off the threat of mass starvation. . .

      Hmm. . . Could Brexit be a Communist Plot? Think about it. . . Severe economic contraction, displaying the failure of capitalism, ushuring in the proletariat rule. . . Sounds like Marx’s “Trajectory of History” to me. Boris Johnson. . . Another member of the Cambridge Red Ring, could it be? Time to go reread “Spycatcher” by Peter Wright. . .

      Putin strikes again! Red Scare, anyone?

  3. Newton Finn

    Simple, direct question: Why can’t the UK just pass a law (under its own sovereign power) that it will continue to operate its economy according to all EU rules and regulations. This would reclaim the UK’s political sovereignty while allowing continued participation in the EU’s ECONOMIC system. If the EU rejected this compromise, it would reveal a political sovereignty-sucking agenda that, if it indeed exists as Greece seems to indicate, MUST be revealed and repudiated, whatever the short-term cost. All who are aware of the dark side of global neoliberal capitalism should be behind the essential political principle of sovereignty expressed in the Brexit movement. As Mitchell and Fazi point out in “Reclaiming the State,” the ONLY force remaining in the modern world with the power to stand up to the neoliberal world order is the nation state. If it is brought to its knees, then we all are.

    1. IguanaBowtie

      But EU economic rules and regulations tend to bleed out into other legal spheres, such as in the case of immigration and safety/production regulations. And, uh, isn’t a sovereign power adopting a law pegging its laws to those of an outside force pretty much the definition of giving up (at least partially) that sovereignty?

      1. Newton Finn

        Get you on the immigration issue only. A sovereign decision to adopt an international or model set of rules and regs, as many governments on all levels often do, is an exercise of sovereign political power, IMHO, not a subversion of it.

        1. flora

          Yes, however a sovereign decision to adopt is not the same as a sovereign country concluded a bilateral or multilateral trade agreement; it is only the first step.

          I sometimes wonder if the neoliberal-libertarian seasteading fantasists have got control of govt and don’t know what they’re doing.

      2. JTMcPhee

        That’s how the ISDS structure is designed to work. Sovereign power, using the mechanisms of political but faux legitimacy, to place all the people of the political economy of which the rulers are playing along with the globalist game plan, under the “law” of a “thing” that is the Congress of Supranational Corporations. No problem, let;s fast-track it! Pelosi and Feinstein are on the train! And they are Power Women in Poliltics!

    2. pat b

      “This would reclaim the UK’s political sovereignty while allowing continued participation in the EU’s ECONOMIC system.”

      Economics and politics are inseparable…

      if you participate in the EU Economic system, you place yourself into their political system.

      it’s possible to trade with Europe, but you either agree to mirror all their internal trade regs which won’t create local advantage or you create your own tariffs, to create local advantage then the EU creates tariffs to match that.

      1. Clive

        I would agree broadly with this, but would add a nuance.

        Which is: while it’s easy to think that governments or politicians cause trade between different nations, this is putting it backwards. Yes, these actors can very easily impede trade flows (through use of tariffs or non tariff barriers, for example). But they cannot usually cause inter-nation trade in a capitalist system to suddenly happen when private enterprise doesn’t want or need it to happen — business see no advantage to trading outside their home markets, in other words.

        And while a business in country A can try to sell its wares in country B, there has to (outside a non-market mechanism being in place) be some reason why a consumer in country B would buy the business in country A’s products or services. Can the business sell its products or services cheaper? If so, how does it achieve this and why would this be a long term competitive advantage that a business in country B can’t match?

        Usually, this is due to something like a patent protection, a legal framework, location-specific factors such as a time zone, climate, manufacturing expertise, language, infrastructure and so on.

        Outside the EU, UK trade will be forced to justify why anyone in the EU should buy what it offers (which is an influence today, but Brexit will amplify this due to additional barriers imposed on trading with the EU as a third country). The same will also apply to EU businesses selling to the UK. Some products or services with slight to no competitive advance will find their respective markets wiped out. Some which rely on some specific and difficult to replicate factor (such as from the above paragraph) and cannot easily (if at all) be substituted will simply have to be continually traded regardless of price differentials or non-tariff barriers to trade.

        Politicians everywhere should heed this inconvenient truth. They can throw sand in the gears of international trade easily enough. But they can’t make it happen “just like that”.

        So when I read, as I do all the time, that any “future trading relationship” (or lack thereof) will either boost or reduce or even maintain trade flows, I want to know what goods or services and why. I don’t usually get given that data.

        Or, shorter and simpler — why, in this era of virtually unlimited globalisation is anything in particular still being “done” (goods made, services supplied from) anywhere in particular? Should not everything be coming out of China, Mexico, the Philippines, Bangladesh (and similar)?

        1. JTMcPhee

          One might observe that this is maybe “talking one’s book?”

          International trade, all that comparative advantage and mercantile stuff, might be seen by some folks as a kind of disease. Yes, it gets consumer in country “A” a wide variety of stuff “cheaper,” maybe discounting a whole bunch of externalities and knock-on problems and “costs,” like climate collapse and wars of conquest for more stuff and all that. But hey, those of us who are starting our “death cleans,” get shut of all the stuff from China and Mexico and Bangladesh and the Philippines and Vietnam ,have had the pleasure of purchase and enjoyment of each and every item of all that stuff, and the additional pleasure of paying in many cases for lockers in which to store it, pending further use…

          But maybe I am missing some ironic cast to the question, why should ANYTHING be done anywhere in particular? Autarky is anathema to corporate gllobalism, after all, and look how much progress all that trade has brought us!

          All those ships and planes and trains and trucks, going to and fro, like the good servile trains and engines and buses and helicopters even, like good old Thomas the Tank Engine, on the Island of Sodor, doing their darndest to earn the approbation of Sir Topham Hat, paragon of capitalist vigor and wisdom, taking people and their stuff from here to there and back again, being good luck little consumers. English consumers, of course. No hint of where the wealth came from that built and supported that nice industrialized yet beautiful countryside place.

          I of course happily acknowledge my ignorance of all the manifold complex details of how it all works, and apparently has to work. I have no answers myself, to another question: Could we humans organize ourselves based on some other principle?

    3. Mirdif

      It wouldn’t allow participation at all. Have you not been listening to the EU’s red lines? HMG can do whatever it likes but the EU does not have to accept it.

      I must say this is just yet another bit of English exceptionalism with an utter inability to even see things from the EU side.

    4. Yves Smith Post author

      This is simply incorrect.

      It is not sufficient for the UK to mirror EU rules. The UK would also have to accept the jurisdiction of the EU enforcement apparatus, its inspections, for instance, and most important, submitting to the jurisdiction of the ECJ. The EU has said this repeatedly in the context of the UK’s pleas for “mutual recognition”.

      Otherwise the EU would be giving the UK, a “third country,” better treatment than any EU member state. Na ga happen.

    5. Procopius

      One of the reasons they can’t do that is that the EU, as they have said many times, are not going to accept any conflict resolution method other than the European Court of Justice. UK has said many times this is central, they will under no circumstances accept this.

  4. Dave

    Why can’t the UK just pass a law (under its own sovereign power) that it will continue to operate its economy according to all EU rules and regulations. This would reclaim the UK’s political sovereignty while allowing continued participation in the EU’s ECONOMIC system.

    (1) It wouldn’t do the former. At the moment, we have as much say as anybody else as to the direction the 28 countries go in. In certain areas such as aviation rights and aerospace, we tend to be the ones to set the tone of discussion as we are bigger fish in those fields. If we were to pass a law saying that whatever happens we’re not going to deviate from whatever the other 27 decide without our input, then we’re not reclaiming sovereignty, we’re flushing it away.

    (2) It also wouldn’t do the latter. The system works because everybody has the same rules and if they don’t follow them there is the same sanction. Let’s say Algeria decided that they were going to unilaterally adopt every EU standard and regulation and expect to be treated the same as a member state, then it wouldn’t wash just as it wouldn’t if the UK were to do it. At the moment, it’s a level playing field between members. Currently if a British farmer decides that he is going to use banned pesticide XYZ on his crops because he feels that it’s a cheap way of getting a bigger yield and is caught – the other farmers who are playing by the rules have the legal structure in place to see that it is dealt with within the overall marketplace.

    The UK farmer who chooses to do the same under your suggestion – without the supranational body to act, those other farmers don’t have that legal structure to support them.

    The bit that is missing from your model is jurisdiction. If the UK is happy to sign up to that as well, then it all works fine. But if the UK is happy to sign up for that, then they are basically in the EU.

    1. Newton Finn

      The police power (what you call jurisdiction) has historically resided in the state. It has been the state that enforces laws, rules, and regs, even if they are the provisions of an adopted international or model code. Few states have voluntarily given away their inherent police power, which also includes prosecutorial discretion. Perhaps the slowly unraveling EU arrangement is now showing us why this has been the default position since nation states arose.

      1. Anonymous2

        What do you mean by nation? The UK has been a state which amalgamates a number of nations – England, Scotland, Wales (I do not know how you categorise Northern Ireland) for over three hundred years.

        It is appealing to confuse a nation and a nation state, but misleading.

      2. Ape

        Obviously you have no experience with federal legal systems with split sovereignty.

        In fact, historically unified sovereignty is a modern innovation.

  5. Clive

    On a lighter note, (for U.K. readers only unfortunately, unless you can bypass iPlayer’s international lock-out).

    Otherwise, the characters are all too !

    1. Shorty

      I think you need to install a VPN on your phone or tablet. Tell the VPN its in London and off you go.

  6. JEHR

    I am beginning to understand why Greece was so adamant about not leaving the EU no matter what terms the Troika demanded for repayment of a debt acquired through predatory bank loans. It seems the EU technocrats have developed thoroughly punishing rules that will eventually ruin a departing country’s economy. It matches the fate of countries who suffered under the colonialism of these same EU countries.

    The US too is trying to impose “free” tariffs on its neighbours in an attempt to create areas that the vast economy of the US can exploit to its benefit and to the detriment of said neighbours. It seems to me the whole neoliberal world has gone bonkers and those who will eventually suffer are those who are not located in the huge economic regions of either the EU or the US. Welcome to the bi-polar new global economic imperialism! This is where globalization leads and how a country suffers if it seeks to control its own economy.

    1. Anonymous2

      The reason that the UK is having such difficulty leaving the EU, apart from general incompetence and a dishonest political culture , is that it derives significant benefits from its membership which it is reluctant to give up. Hence all the efforts to have its cake and eat it.

      1. Epistophy

        Benefits indeed. The money trough will become considerably shallower for Britain’s political class after Brexit.

        Case in point: Neil Kinnock, his wife and others of his immediate and extended family, such as his son Stephen, who have been at the EU trough as MEPs/employed by MEPs for some years.

        Lord and Lady Kinnock, reportedly earning £10 million as MEPs:

        No wonder the political class is finding so hard to leave the EU.

      2. Epistophy

        Benefits indeed. The money trough will become considerably shallower for Britain’s political class after Brexit.

        Case in point: Neil Kinnock, his wife and others of his immediate and extended family, such as his son Stephen, who have been at the EU trough as MEPs/employed by MEPs for some years.

        No wonder the political class is finding so hard to leave the EU.

    2. Shane Mage

      “Greece” is no more the same as The Greeks than “China” is the same as The Chinese. The name of a country is either a geographical expression or a euphemism for a local ruling class and its tame politicians (a la Tsipras, Obama, Xi, Putin, et. al.) In neither case does it denote a real entity exercising agency. In the present instance this usage is substantially a lie. ‘Greece” was not “adamant” about accepting whatever terms Schauble @ co. imposed. Precisely the opposite. The *Greeks* voted decisively to reject those terms, before being betrayed by the “Eurocommunist” Tsipras.

      1. Yves Smith Post author

        You are incorrect. We followed the 2015 Greece-Troika negotiations in detail.

        Greeks polled as being in favor of staying in the Eurozone in June 2015. It was only after the 2015 Memorandum was implemented that they started polling against it.

        And as we also discussed, the referendum was a stunt. It was to ask the Greek public on July 5 to approve a bailout that had expired on June 30.

        http://cfdtrade.info/2015/06/tsipras-bailout-referendum-sham.html

        It also procedurally violated legal requirements for how referendums were to be conducted. Like the Brexit vote, the question was very poorly formulated and Tsipras, like Cameron, didn’t want to win it:

        http://cfdtrade.info/2015/07/ambrose-evans-pritchard-tsipras-never-wanted-to-win-referendum-is-trapped-and-depressed-syriza-in-turmoil.html

      1. Carla

        Perhaps certain wealthy Greeks would have been worse off with Grexit. Aren’t they the only ones who count, after all?

      2. Yves Smith Post author

        *Sigh*

        We’ve covered this at length.

        Did you see what happened when the ECB largely shut down the Greek banks in July 2015? Greece capitulated in less than three weeks. Food shortages were starting, tourists were staying away, and businesses were failing.

        If Greece were to leave the Eurozone, it would have to create a new currency. It would take the better part of a year to introduce a physical currency (it’s not just a matter of printing; retooling the ATMs and getting it in circulation is non-trivial).

        But the bigger issue is getting anyone to accept it. Banks and payment processors have to code their systems to accept the new currency. And this isn’t a priority for them. And on top of that most big IT projects are fuckups.

        Our banking system IT types estimated that it would take a bare minimum of three years to get all the coding done and tested, which means more like five years. And that also means the Greek banks themselves. They’d have to go from processing just Euros to being able to process the new currency Euros.

        Five years of the Greek economy being in the state in was in July 2015 means no economy.

        Shorter: no matter how bad you think things are, they can be worse.

        1. Ape

          I don’t understand this. Aren’t banking codes currency neutral? Hard-coding a currency would be crazily incompetent (but agile…)

          1. Yves Smith Post author

            Honestly, I don’t even comprehend your question, and I doubt anyone who is involved either in IT or currency trading would either.

            Banks have codes for specific currencies. They need to be able to account for and run positions for those currencies. If you create a new one, you need to create a code for that, routines for how to translate that into your base currency for risk management purposes. I could go on (paging Clive or Brooklyn Bridge…)

            That’s the big reason it took eight years of planning and three years of transition to introduce the Euro smoothly. And there was a hell of a lot less legacy bank code to contend with back then.

            1. Clive

              Yes, how many more times do we have to go through this one?

              Of course currency codes, which describe the currency unit which the accounting system is denominated in are almost always hard coded. They have to be because the only other option in software development is to define the currency as reference data (data which you know isn’t likely to be static and the system which needs to know what value to use can look it up on-the-fly from a reference data table; if you want to change the value you only need to do it once, where the data is stored in your systems referenc data repository).

              But this approach isn’t suitable for data which needs to pervade the system because the performance hit from, every time (as in this discussion) your system needs to display the currency code in scope it has to stop and say “Oh, what currency shall I put here? I don’t know as it’s not in my local code or in a shared library of compiled code so I’ll have to go off and do a database lookup to find out if I should have a “$”, “£”, “€”, “¥” or whatever here”. Each and every time.

              Only in specific ForEx systems do you store the currency code as a look-up value. Sometimes on a multi currency EPoS terminal, for instance, you might deliberately not hard-code the currency because it will, as a design goal, need to be dynamically selectable, “on the fly”. That’s one of the few real-world examples I’ve ever seen where this approach has been used in software design — obviously serving a very specific purpose which justifies the coding complexity and the performance hit.

              Otherwise, let’s say you’re sending a “we’re charging you our £20 junk fee today because of our usual made-up-on-the-spot hidden gotcha you’ve fallen foul of” letter or printing off a loan agreement, you Just hard-code the currency in the template.

              Hopefully our friend Ape above can follow the reasoning here. But it really is a case of, if you can’t understand the answer, you’re better off not asking the question.

              1. vlade

                Errr. No?

                A counter example – SWIFT. The largest payment service in the world, the currency is a field. Of course, you have to use _known_, predetermined value from the list, but it still works, as long as the bank on the other side has ability to settle the currency, it’s ok. Even UK’s BACS accepts different currencies as a field – but IIRC does not require ccy as the field, in which case it assumes sterling.

                Literally none of the bank systems I worked on – and that includes IB for retail systems, wholesale payments systems, a number of wholesale trading, middle and back office systems had currency hardcoded. I have seen CB payment systems that have currency hard-coded as a field, but talking to some of those people, the field tends to be there “for historical reasons” and is pretty much ignored as the system cannot settle into anything but domestic accounts of the banks.

                The problem with adding a currency is usually NOT in the system. I have been party to adding a currency PUA (product usage authority), where the currency (spot FX, forwards and NDF) was system-ready on the day (well, really on the second) where the PUA was approved.

                The problem is the process around it. To set the risk limits, to arrange/agree the nostros, to source the market data if necessary (which you need even for retail/commercial banking, as it has to be for risk purposes converted to domestic currency), to do all the non-IT paperwork.

                The large bank that’s my current client regularly sets up new currency codes in their (wholesale) systems, usually to fit some product in (like a precious metal, or differentiate non-deliverable and deliverable currency) etc.

                The largest differentiator where I saw it was in that retail IB – domestic accounts had a specific (CB prescribed) format, while non-dom ccy accounts could have any format the bank liked, as long as it could fit in the beneficiary SWIFT field. But even then, the domestic currency was silently assumed, and not hard-coded.

                Yes, your pound symbol in a mortgage doc may (or may not, I don’t know, I never did this) hardcoded – but there’s literally no technical reason to do so (The cost of the lookup is trivial compared to other parts of generating the confo).

                1. Clive

                  I’ve just looked over every system I can get my hands on the source code for in reasonable timeframes (half a dozen) and every single one has little “£” characters in it somewhere. Keep in mind, a lot of this stuff is 20 or 30 years old.

                  No, there’s no technical reason why this has to be so. And if you were designing it from scratch you’d probably want to future-proof it so that changes to the default currency code — or even entirely new currency codes which hadn’t been invented yet — could be accommodated. But unless you profile the code and run performance and capacity testing (a big job) on legacy systems you cannot airily claim there’s not the risk of a performance hit and the hardware can cope with those sorts of major design changes and subsequent rewrites.

                  Sadly, there’s not the time, the money or the risk appetite to go back now and re-do it all “properly”. So there all those little Alt+156’s sit, lurking in the million lines of half-forgotten code.

                  1. ape

                    That’s where the incompetence lies — it would be cheaper and more robust to rewrite the system and simplify it, instead of being tracked by the legacy of incompetents 30 years back.

                    Kinda like the legal system. It’s a crazed risk aversion by people who don’t understand the systemics.

                    1. Clive

                      “cheaper and more robust to rewrite the system” ?

                      Er, have you been unaware of how that all worked out for ?

                      Taking the “cheaper” aspect first, for a start you’ve not only got the cost of developing your new greenfield system, but you’ve got your ongoing support and maintenance costs of keeping your legacy system going. And bank IT isn’t some static leave-it-to-whither-on-the-vine thing that you don’t need to make continual enhancements on. For a start, you’ve got to keep it as a minimum patched up to deal with emerged security threats and vulnerabilities which get uncovered. Then there’s ongoing regulatory drivers which are must-do’s. Do you think that any bank IT system can just ignore something like FATCA or Brexit? Or say oh, you know those anti-money laundering checklists, well, the system is fated so we’ll just tell the New York Fed we’re not going to bother keeping those current for a couple of years. Did it escape your notice that even our supine regulators take this incredibly seriously and hit even industry Golden Children with ?

                      Normally you can write the costs off of keeping systems updated over many years via depreciating the capex you have to allocate, but if your system has a declared short shelf life, you have to pay that out immediately. That hits the bottom line instantly — career death to a bank CEO.

                      And as for the “more robust”, yes, your new system might be more resilient but the process of cutting over to it is fraught with risk. You can try to do it “Big Bang” like TSB, but then there’s no way back if things go wrong, you’ve just got to try to fix forward. If it isn’t easy — and it rarely is — you’re just bleeding out cash in terms of regulatory fines and customer redress. TSB has wracked up to close on £200m in costs already and is now threatening the health of already flaky parent .

                      Ask them how they feel about their risk appetites now. And ask any bank board — or the regulatory bodies they must get their schemes approved by — what their opinion is of tinkering with bank IT and subjecting it to, shall we say, “adventurous” upgrades and replatformings.

              2. ape

                Yes if done badly it’s equivalent of the Python units problem.

                I can follow the reasoning (it’s a field I’ve worked in for many years at a high-level), but the argument seems to come down to a false dichotomy between:
                a) hard-coding units everywhere
                b) soft-coding units at the level of single memory references

                Besides, even if you were incompetent and decided to go with “we’ll write it in Python using units”, given that the underlying model can not have changed since the 70s (it’s a database for God’s sake! With very simple relations for updating! It’s just a damn billing system!), even then, you should be able to handle the performance problems given the improvement in computing capacity.

                The performance bottleneck when scaled up to current capacity can not be the normal field computations, but must be issues with locking, coherency, transaction safety and so on.

                And of course, a real solution is to handle data in large tagged hunks.

                From reading so many comments that “Big IT is hard”, and with the claim that it’s somehow functionally hard — well, as someone involved in the field, it’s really a scam and incompetence.

                It’s not complex. It’s not where the performance bottleneck is. And by hard-coding, you reduce systemic robustness.

                I don’t think this is really that hard to grasp — or to put it another way, the collective understanding in the field of what is possible and necessary is just BS. A bunch of hacks thrown on top of each other inevitably failing to be either general or robust, and then excused by “it’s too hard” rather than “we’re really bad at this”. Paging medical IT systems… Paging inventory tracking systems… and on and on.

                Really, hand-coding unit conversions for risk-management purposes? That’s perfectly generalizable.

  7. ambrit

    I’m sitting here reading the labeling on the box of cheap macaroni and cheese ‘food like substance’ that I’m getting now to stretch our funds. It could come to this being the only ‘sustenance’ many people can get, no matter the price. One of the ‘blokes’ did mention government plans for rationing. It suddenly came to me that there is an understandably unmentioned ‘career opportunity’ thrown up by Brexit: Smuggling.
    I remember an older black and white English comedy, with whiskey being smuggled from Scotland to England. Indeed, smuggling can be considered a ‘cottage industry’ all over Europe, especially across the Channel. How intensely will the parties to the ‘divorce’ police the new borders? It might be time to go long on Coast Guard Cutters.

  8. Tomonthebeach

    Hard Brexit only makse sense of you appoint the master deal maker, Donald Trump, as Prime Minister…. Puleeze!

    Brexiters seem to overlook that they will have to renegotiate more deals in a very brief time than we achieved over decades. What could go wrong?

    This story reminds me of the fat lady in the PBS NewsHour story on tariff fallout. “Yes, the tariffs might mean I lose my job, but it’s worth it?” Really?

  9. flora

    Thanks for this.
    Does anyone in UK govt and higher reaches of the remaining civil service know how the economy on-th-ground works? people’? The cavalier UK govt’s austerity measures followed by blaming the EU, then breezily suggesting leaving the EU in response to voters’ anger would solve the problem makes me wonder if any of them think farther ahead than the next election.

    1. Anonymous2

      The short answer is no. Many of them think even less far ahead. The next step in furthering their career is as far as they think ahead.

  10. Susan the other

    Thank you for this podcast. Those 3 guys were interesting. The thing that struck me is the way globalization has been configured to be just-in-time. For efficiency. But just-in-time is 6s because what it makes up in timing it loses in fuel and transportation costs. The same for discouraging home manufacturing for cheaper overseas goods. Global trade could be trimmed back considerably and it would improve the environment. So how much are trade treaties dictated by the overriding theme that neoliberal efficiencies (which ignore the environment) are imperatilve? Just-in-time tyranny. The catch-22 about insurance was almost funny. If the government isn’t pretending to be ignorant and really does not have a feasible plan for the future then this is pure malfeasance – certainly not an Oh Gosh! incompetence. And that’s what I find peculiar, knowing just how planful and shrewd the Brits are, they must be setting up for economic survival. Otherwise We might be looking at opening the immigration floodgates.

  11. orange cats

    These guys were great, but no Brexiteer is going to come to his senses and reverse course based on the threat of an apocalypse. Doomsday scenarios bolster their stance and imbue them with bravado. What Brexiteers and Trump voters needed were reassurances and actual improvement in their lives. Too late for that now.

  12. QuarterBack

    My theory is that the demand for importing and exporting goods to UK will be too great for the unprepared customs and border infrastructures of all parties. A triage program of selective enforcement will become the near term norm for virtually all countries involved, and this selective enforcement will be chaotic and shift like the wind. This will have the effect of forcing enormous numbers of ground level trading partners to basically become ‘smugglers’ overnight.

    Here’s the thing… once large swaths of trade counterparties start operating (by necessity) outside governmental authority, it will be very difficult to put the toothpaste back into the tube. Fortunes will be made by the ‘guy who knows a guy’ smuggler types that will have arranged methods to push through the chaos. The incidence of bribery will sky rocket, and it also be much easier to smuggle high contraband goods because many lawless and semi-lawless routes will emerge.

    Needless to say, it will be interesting.

  13. Greensachs

    Sustainable communities, putting sovereign issuers accountable to people and planet should a distinct consideration of bilateral trade… quite different than propping the established order (read: Petro junkies, elite financial technocrats, ceaseless war FOR terror profiteers).

  14. rtah100

    Please explain in words of one syllable why post-Brexit the *importation* of any essential good will be hampered and why there should be a shortage of anything (ignoring balance of trade / currency issues, which play out over decades for rich countries – Hi, Argentina – rather than the time scales of the food riots that are conjured up).

    Exports, yes, these will be affected; imports, we can let what we like through the ports, whether or not we care to inspect it. So on what basis will the supermarket shelves (as opposed to the distribution lorries returning to the Continent) be empty?

    1. Yves Smith Post author

      First, you forget you have a domestic food industry that exports. No exports means those farms and producers fail in months, making the food shortages more acute after a period of surfeit of lamb, sausages, cheese, etc, as they dump inventory planned for export before they fail. Richard North has been sounding alarms about this for months.

      There’s limited storage for the final dumping before those producers die. The retail grocery industry has made clear they have very limited storage. Tell me how much fridge and freezer space you have. Probably only enough for a month or two of consumption, max, correct? Most of what the domestic producers make is animal products, which means they need to be eaten right away, refrigerated, or frozen

      Second, you really don’t get that customs will be gridlocked. Oh, and much of the same lorries that are used for imports are used for exports. So tying that up in parking lots at Dover seizes up the entire system.

      Third, your comment makes clear that you didn’t digest the post before commenting, which is a violation of our written site Policies. Trucker bloke in the video went over the issues in #2 above at length.

      Also read this comment: http://cfdtrade.info/2018/08/3-blokes-pub-talk-no-deal-brexit.html#comment-3008243

      1. JTMcPhee

        How quickly can “the system” generate megatons of salt, to preserve all that just-in-time-to-fuel-globalized-trade “sur” that isn’t anything of the sort, if one looks askance at it? The wonders of the internet — it coughs up great bits of advice on how to preserve from the past, like this: “Medieval Food Preservation
        Keeping Food Edible for Months or Years during the Middle Ages,”

        Maybe the Brits can shave off the warts and outgrowths of 800 years of mercantile and industrialized and now neoliberalized and dead-Empire-ized history, go back to more rustic ways? A lot of people are going to die earlier than they would have if only the globalized status could have been maintained in that “growth state” forever, on some magically ever-renewing, unlimited-extractables, filtered-atmosphere, heat-shedding, toxin-tolerant planet…

        Could be a model for us all: “Keep calm and carry on!”

    2. Tony F

      ‘we can let what we like through the ports, whether or not we care to inspect it.’

      Doing this would actually grind your imports to a halt. The video mentions ADR, which is based on UN requirements for international trade. Another is the Wasenaar agreement. These expect that countries will take steps to scrutinize imports and ensure there is no diversion within the country to a denied party or some other entity not stated on the shipping documentation. Customs plays a pivotal role in that, inspecting both cargo and paperwork to deter and detect potential deception.

      If the UK were to just say, “who cares” and throw open its boarders, then the rest of the world including the US would be required to put greater scrutiny on shipments both to the UK and out of the UK. For example the US, might put a license requirement on exports to the UK, or require greater end use validation. All this would make exporting shipments shipments to the UK more costly and time consuming, on top of all the logistical issues that have been mentioned.

  15. rtah100

    (to the tune of There’s a Hole in My Bucket) Buy stuff with money, dear Korual, dear Korual.

    The pound has dropped against other currencies a little. Even if it devalued properly, fell by half say, and exports seize up completely, there is still plenty of accrued wealth in the UK to buy things with on the timescale of the predicted food shortages. The ready money is there – why will the shelves be empty? Other than “Because Brexit”?

    1. Yves Smith Post author

      This sort of thinking epitomizes why a crash out Brexit may occur: complete lack of comprehension regarding real world realities as to how food gets to grocery store shelves. The UK is only ~60% self sufficient in food, and at best 76% if residents were to shift consumption to domestic-only items.

      This isn’t a problem of money, it’s a problem of borders and logistics. The fact that you don’t appreciate that suggests you didn’t listen to the video. Commenting on posts without reading or listening to them is a violation of our written site Policies.

      Food industry executives have warned food cannot be stockpiled given their just-in-time delivery systems. And if the Powers That Be cut or get rid of tariffs on food, that will rapidly lead to the collapse of the domestic farming industry, making the need to import even greater.

      See this comment from Richard Kline:

      The intrinsic problem which Britain will face regarding food supply in the event of crash out is not the ‘food’ term but the ‘supply’ term. That is, there will be sufficient food and the funds to purchase it, but the supply chains are due for a systemic failure over a duration of months. ALL such supply is now done in a just-in-time basis, while after crash out Britain will default to a full-time+stoppage-time functioning of the supply chain. The UK’s arrangements in moving food internationally are leveraged on its status as an EU Member State. Britain will not have separate agreements in place with most supplier countries. This will add an enormous amount of delay and negotiation just to do deals until bilateral agreements are brought on line. It will remain logistically possible to move just as much food but from the regulatory standpoint even if Britain were to wave import inspection an exporting nation might worry about, for instance, legally binding mechanisms for getting paid and determining liability. These are nontrivial issues. More to the point, they are absolutely sand in the crankcase for just-in-time, impediments individually small but collectively just gritty enough to seize up normal commerce.

      Trucks sitting in Dover is a misperception: containers sitting in Canada and Brazil is more like it. The result can be extreme disruptions in the movement of products. A ship that doesn’t move in one place means another ship has to be lined up to take away what it would have. A truck stuck in inspection is one that doesn’t show up to haul a container to a small city depot or retailer the following day. The negative ripple effects can be large—and there is no fall back system for just-in-time so everything in the supply system will have to be put on a different footing. We are looking at bankruptcies in delivery firms; and who takes their place, then? Cost typically jumps enormously in such situations: who is going to be absorbing that? When one has a system which has to work with near perfect efficiency to work at all being impacted by major inefficiency, it is more likely to work not at all than to work less well.

      1. QuarterBack

        I once heard P.J. O’Rouke say that virtually every famine that has occurred in modern history was not result of nature, but was instead, man made; meaning they came from supply chain failures caused by policies and war. The longer I live, the more I find this to be true. The three blokes lay out a myriad of supply chain failures destined to occur. As many as they referenced, they may likely be the tip of iceberg of the man made catastrophe that is destined to occur. For those tracking the wheels coming off the carts that lead to Grexit, Brexit, MAGA, et al, I would urge you to read the book Reinventing Collapse by Dmitry Orlov, which provides a three blokes style accounting of the fall of the USSR. The bottom line of the book is that when the supply chains for food, medicine, and fuel collapse, society gets realpolitik real fast. This history is very apropos in Brexit, and like the transition from USSR to Russia, the masses will be saved more by gangsters than by politicians – with all the terrible ramifications of that fact.

        1. blennylips

          > virtually every famine that has occurred in modern history was not result of nature, but was instead, man made

          What better way to show this than the suggestively titled book:

          Examining a series of El Niño-induced droughts and the famines that they spawned around the globe in the last third of the 19th century, Mike Davis discloses the intimate, baleful relationship between imperial arrogance and natural incident that combined to produce some of the worst tragedies in human history.

          Late Victorian Holocausts focuses on three zones of drought and subsequent famine: India,Northern China; and Northeastern Brazil. All were affected by the same global climatic factors that caused massive crop failures, and all experienced brutal famines that decimated local populations. But the effects of drought were magnified in each case because of singularly destructive policies promulgated by different ruling elites.

          Davis argues that the seeds of underdevelopment in what later became known as the Third World were sown in this era of High Imperialism, as the price for capitalist modernization was paid in the currency of millions of peasants’ lives.

          Great Game indeed!

          1. QuarterBack

            Excellent reference! I am ordering it today. My fear is that the seemingly inevitable supply chain crashes becomes intentionally exasperated by powerful factions impeding mitigation of mass tragedy in the name of ‘showing them a lesson’ or ensuring some kind of monopoly position. It would be foolish and evil for any world leaders to see this potential tragedy as a manageable leverage point. Failure to have quick resolution could easily spark a hot war in Europe i.e. WW III.

        2. vidimi

          i think you may have found the nearest analogy to brexit: the fall of the USSR.

          for those who don’t remember, when the USSR fell apart, it was the greatest peacetime destruction of wealth in human history. Russia’s GDP fell around 20%, salaries were paid in vodka if at all, supermarkets were bare, and life expectancies plummeted. Brexit may achieve something similar.

          as an aside, russia’s public sector was carved out and sold off to insiders. i wonder if british oligarchs are betting on something similar occurring post brexit.

  16. RBHoughton

    There should be a law against national self-harm. No wonder the EU is keeping the door open until the last possible moment.

  17. The Rev Kev

    Would I be correct in thinking that when the clock ticks over and Brexit kicks in, that no non-UK ship will want to be in port because of the technicalities involving insurance and paperwork? If so, that would imply the docks of the UK taking on a deserted appearance in the final week or two before Brexit starts.
    After it all kicks in, they may end up having to update and translate that famous French Revolution song “Ça Ira” () to reflect the new reality-

    Ah! It’ll be fine, It’ll be fine, It’ll be fine
    aristocrats to the cctv-post

  18. Epistrophy

    Have those on this board, including the Three Remainers, I mean Three Blokes, forgotten how the EU, in just the last 10 years, has destroyed the economies of Greece, Spain and Portugal to save the banks of Germany and France? Have we forgotten that Greek women, mothers, professionals, have had to prostitute themselves just to get food to eat? That EU puppets were installed against the will of these nations? Have we not been observing the population replacement programme, I mean borderless migration, that is being foisted upon EU members by Brussels? Can anyone deny that this is the true face of the EU, revealed for all to see?

    Has anyone stopped to consider the country that has captured the trade other members of the EU via the Euro? Does Germany come to mind? Look at Germany’s trade figures before and after the introduction of the Euro. The prior had about 15 to 20 years of year on year decline, the later has year on year growth. Cui Bono? German and French banks lending to the captive consumers of the poorer nations to buy German and French products, then stripping those countries and their people bare when they cannot pay it back?

    Does anyone seriously believe that the UK will be incapable of successfully negotiating it’s own bilateral trade agreements post Brexit? Does anyone seriously believe that the German and French Auto Industry or Dutch Agriculture Industry are going to stand by and watch one their larger export markets, in certain cases the largest, evaporate overnight?

    Everyone seems to be focused on the day Brexit happens. But, Brexit is about the long term, not one day, one week or one year. Sure there will be some short-term problems, but these pale in comparison the the long term threat posed to Britain (and some other EU members) by Brussels.

    Fortunately, the people of Italy and the UK have awoken to these facts. Project fear is alive and well, it seems.

    1. orange cats

      That’s the irony..Britain had the best deal with the EU while the EU eviscerates southern Europe– but those austerity-tortured countries are still in.

        1. Anonymous2

          @Epistrophy

          ‘Can anyone deny that this is the true face of the EU, revealed for all to see?’

          One could deny a great deal of what you say but I have not the time

    2. Yves Smith Post author

      Puhleeze. We are a US site and I hate to toot our horn, but we have a second-to-none track record on calling events like this since 2006, meaning including the crisis. And your dismissal is an ad hominem attack, a violation of our written site Policies because it is a logically invalid form of argument.

      The UK isn’t at all in a similar position to Greece and Portugal and Spain and you know it. And oh BTW Portugal is actually doing pretty well these days despite the tender ministrations of the Troika.

      The UK has its own currency.

      The UK also has managed to get more of its way in EU policies than any other country save Germany.

      Non-EU migration into the UK is greater than EU migration.

      Lending to periphery countries is to fund their trade deficits. The US also has internal trade deficits (California runs a huge sur with the rest of the US) but no one much minds because we have enough fiscal transfers to equalize growth rates. The sin isn’t the internal deficits, it’s the lack of what amounts to Federal spending in the Eurozone. And that had nada to do with the UK per above, since the UK isn’t in the Eurozone.

    3. d

      We know the UK can negotiate those deals, all 50 or 100 or more of them, it will just a few years or decades to do that, and depending on how the trading partners feel open to doing so, maybe a much worse deal that what you have now

  19. Bee

    It is obscene that the EU are attempting to negotiate a conclusion to Brexit which gives better terms to Turkey (an authoritarian dictatorship) and Ukraine (dubiously demographic) than that which they offer the UK, who have been a democratic bulwalk and significant contributor to the EC and EU in both financial, diplomatic and defence terms.
    Both Turkey and Ukraine have free trade with the EU under Association Agreements.

    1. Epistrophy

      It’s not about what is right or just, it’s about re-population. The EU simply wants the youth of Turkey and Ukraine:

    2. Yves Smith Post author

      Quite honestly, you are spewing disinformation. This isn’t even worth spending the energy to debunk. The EU has very clearly described what sorts of deals the UK has ruled out with the red lines it has set. You are blaming the EU for unrealistic UK demands.

      One more like this and you will be blacklisted. Agnotology is a violation of our written site Policies.

    3. Dave

      If we were looking for the same terms as Turkey or Ukraine then we’d be offered them in a heartbeat.

      Unfortunately both breach the spurious red lines that May and her SpAds decided upon. If we want to revise what our red lines are (which is inevitable), then we will be offered considerably better terms than either Turkey or Ukraine.

  20. Irrational

    Thanks for this post – I thought I was well read up on Brexit, but I learned something. Looking forward to more podcasts though I agree with Orange Cats above that it is unlikely to change much. UK will crash out hard in all likelihood, sadly.

  21. JohnnyGL

    One understated risk that didn’t get mentioned in the discussion was the potential for crime.

    The guys floated the idea of importing and storing things before the crash out in March. Assuming the storage space can be found (a big assumption), there’s huge risk that those facilities become big targets for organized crime.

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