Is Brexit actually going to happen?

[littlebabyjesus]

Whether the UK could have got away with just guaranteeing UK investor deposits and wipeing out shareholders and external investors is a v. good question (and not one I am able to answer).

Yes, they could. The alternative at the time was what? For said shareholders/investors to be liable for the debt themselves? They were in no position to say or do anything - they didn't have the money. Nobody did - that's fractional reserve lending for you. They were standing there cap in hand. Private banks take risks and profit when those risks pay off. As we have seen in the last 10 years, they also profit when the risks fail because the government bails them out.

Quantitative Easing made sense at the time as a way to stop the money supply from shrinking and plunging the economy into a recession. But what made absolutely no sense whatsoever was to give that money to the very cunts who caused the problem in the first place. They should - and could - have been hounded out of town, after having every last asset stripped from them.

I can't quite work out whether Gordon Brown is an idiot or a cunt over his handling of this. Probably a bit of both.

 

[Wolveryeti]

Eight years of austerity, rising homelessness, poverty, food banks. Do the ends justify the means? A statistical recovery and a human recession.

Poorest dying nearly 10 years younger than rich in 'deeply worrying' trend, study shows
November 22, 2018

Unacceptable rises in child poverty as more working parents left unable to make ends meet
04/12/18

The bank bailouts didn't cause austerity though - they were just cynically used as (partial) cover for it.

 

[littlebabyjesus]

The bank bailouts didn't cause austerity though - they were just cynically used as (partial) cover for it.

Partly true. But we have had this vicious austerity at a time when house prices have not only returned to their previous bubble level but in many parts of the country surpassed it, in London way surpassed it. That tells you everything about the priorities of those managing finance and where that bailout money went. Banker bonuses are sweet once more.

 

[Raheem]

Yeah, they do it so well they needed rescuing to the tune of £500bn.

If you get the £500bn, that's doing it well.

 

[brogdale]

How is this different to the pooled sovereignty we have in the UK involving sending your constituency MP to Parliament - which can enact laws that are binding in your constituency?

Because, as I asserted, the 'contract' is at one remove from the 'sovereign' people of the nation state. In political philosophy, social contract theory emphasises the relationship between voter and executive and the ultimate ability of the sovereign people to overturn the executive. Most people recognise that the structural democratic deficit of the EU hinges on the failure to effect that ultimate censure.

 

[brogdale]

No, not necessarily. But I think Europe will become more federal, like the US, and pressure will grow for a common social contract to head off a risk of a 'race to the bottom' - style competition between states based on who can be the stingiest.

The US/EU comparison was not a point about the inevitability of converging on one currency standard, but more about how very differing views on optimal policy within a confederation in its infancy should not necessarily be taken as a sign that greater integration is doomed...

OK, so going back to the question asked then...perhaps "they" rather than "we"?

 

[mauvais]

No it's not. They allowed the banks to default on their liabilities, something the UK government got very nasty about for a little while there because the UK govt bizarrely opted to pay out on them, expecting Iceland to give them the money. They didn't, and quite right too. There is a difference of scale between what Iceland did and what the UK might have done, but the UK absolutely could have treated the crisis very differently and allowed failing banks to fail. The fundamental point of difference here is that Iceland treated private banks as private businesses. The UK most emphatically did not, and yet here they are today, raking in the billions as private businesses once more, hoovering up other people's wealth. It was a missed opportunity to change that dynamic, redirect banking back towards doing social good - the banks were in no position to say no.

And all the stuff that yield points out has been done as a consequence of a decision to protect the assets and wealth of the rich first and foremost. Obscene is the only word for it.

I'm no economist but it's not merely scale. Iceland's economy is made up of real things. Fish, energy and aluminium IIRC. Not based on a load of possibly fictional financial services. Therefore there's a world of difference between allowing your banks to fail and going about the fundamentals as usual, and letting your banks fail only to discover that, whoops, they were the fundamentals.

 

[alex_]

£50bn bid to save UK banks
8 Oct 2008


Banks profit as mortgage gap hits historic high
10 Nov 2008

It wasn't just the loan guarantees and the explicit promise to nationalise any bank in trouble they also cut interest rates to nearly zero.

Anything to restore confidence. Like when Mario Draghi said "the ECB is ready to do whatever it takes" in 2012

Eight years of austerity, rising homelessness, poverty, food banks. Do the ends justify the means? A statistical recovery and a human recession.

Poorest dying nearly 10 years younger than rich in 'deeply worrying' trend, study shows
November 22, 2018

Unacceptable rises in child poverty as more working parents left unable to make ends meet
04/12/18

Pocket sciences point was that we spent 500 billion on the banks, but could have spent it on something else more useful than banking.

The facts as pointed out by me and Wolveryeti ( quoting the same source ) are that the cost was nowhere near that, and are possibly even nothing.

This is a key fallacy of lexit, we don’t need the revenue from the city of London’s taxation because we spent 500 bn on them. We didn’t.

Alex

 

[alex_]

If you get the £500bn, that's doing it well.

No one got 500bn

 

[brogdale]

Pocket sciences point was that we spent 500 billion on the banks, but could have spent it on something else more useful than banking.

The facts as pointed out by me and Wolveryeti ( quoting the same source ) are that the cost was nowhere near that, and are possibly even nothing.

This is a key fallacy of lexit, we don’t need the revenue from the city of London’s taxation because we spent 500 bn on them. We didn’t.

Alex

It's just as much of a fallacy to suggest that the costs of taxpayer support for UK banks are (were) possibly "even nothing".
At peak state support stood at £1.162tn and currently (as of end last financial year) is £46bn.
The provision of such support clearly had (has) costs.
Source

 

[yield]

Pocket sciences point was that we spent 500 billion on the banks, but could have spent it on something else more useful than banking.

The facts as pointed out by me and Wolveryeti ( quoting the same source ) are that the cost was nowhere near that, and are possibly even nothing.

This is a key fallacy of lexit, we don’t need the revenue from the city of London’s taxation because we spent 500 bn on them. We didn’t.

Alex

The finance curse: how the outsized power of the City of London makes Britain poorer
Nicholas Shaxson. 05/10/18

Of course, the City proudly trumpets its contribution to Britain’s economy: 360,000 banking jobs, £31bn in direct tax revenues last year and a £60bn financial services trade surplus to boot. Official data in 2017 showed that the average Londoner paid £3,070 more in tax than they received in public spending, while in the country’s poorer hinterlands, it was the other way around. In fact, if London was a nation state, explained Chris Giles in the Financial Times, it would have a budget surplus of 7% of gross domestic product, better than Norway. “London is the UK’s cash cow,” he said. “Endanger its economy and it damages UK public finances.”

To argue that the City hurts Britain’s economy might seem crazy. But research increasingly shows that all the money swirling around our oversized financial sector may actually be making us collectively poorer.

A growing body of economic research confirms that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. The most obvious source of damage comes in the form of financial crises – including the one we are still recovering from a decade after the fact. But the problem is in fact older, and bigger. Long ago, our oversized financial sector began turning away from supporting the creation of wealth, and towards extracting it from other parts of the economy. To achieve this, it shapes laws, rules, thinktanks and even our culture so that they support it. The outcomes include lower economic growth, steeper inequality, distorted markets, spreading crime, deeper corruption, the hollowing-out of alternative economic sectors and more.

Newly published research makes a first attempt to assess the scale of the damage to Britain. According to a new paper by Andrew Baker of the University of Sheffield, Gerald Epstein of the University of Massachusetts Amherst and Juan Montecino of Columbia University, an oversized City of London has inflicted a cumulative £4.5tn hit on the British economy from 1995-2015. That is worth around two-and-a-half years’ economic output, or £170,000 per British household. The City’s claims of jobs and tax benefits are washed away by much, much bigger harms.

This estimate is the sum of two figures. First, £1.8tn in lost economic output caused by the global financial crisis since 2007 (a figure quite compatible with a range suggested by the Bank of England’s Andrew Haldane a few years ago). And second, £2.7tn in “misallocation costs” – what happens when a powerful finance sector is diverted away from useful roles (such as converting our savings into business investment) toward activities that distort the rest of the economy and siphon wealth from it. The calculation of these costs is based on established international research showing that a typical finance sector tends to reach its optimal size when credit to the private sector is equivalent to 90-100% of gross domestic product, then starts to curb growth as finance grows. Britain passed its optimal point long ago, averaging around 160% on the relevant measure of credit to GDP from 1995-2016.

This £2.7tn is added to the £1.8tn, checking carefully for overlap or double-counting, to make £4.5tn. This is a first rough approximation for how much additional GDP Britons might have enjoyed if the City had been smaller, and serving its traditional useful roles. (A third, £700bn category of “excess profits” and “excess remuneration” accruing to financial players has been excluded, to be conservative.)

 

[redsquirrel]

Pocket sciences point was that we spent 500 billion on the banks, but could have spent it on something else more useful than banking.
...
This is a key fallacy of lexit, we don’t need the revenue from the city of London’s taxation because we spent 500 bn on them. We didn’t.

We're all in it together!

Because that stuff takes time. You don't easily go from states committing atrocities against each other to pooled welfare systems.

The US had massive rows between frontier and coastal states over monetary policy in a way which mirrors the euro periphery vs Germany. They got there in the end. I think we will too.

I'm not sure whether this is incredibly naive, utterly dishonest or a combination of them both.

The whole idea of the EU is that it assists and enables neo-liberalism, it is designed to increase the exploitation of labour. Minor concessions may be forced on it, but it is designed and organised for the benefit of capital and states.
Moreover, there is no desire, popular or governmental, for a United States of Europe. It is a dream of a few free-market pricks.


The above post(er)s exemplify why the EU needs to opposed (even if you believde that a remain vote was a better option)

 

[Wolveryeti]

Because, as I asserted, the 'contract' is at one remove from the 'sovereign' people of the nation state. In political philosophy, social contract theory emphasises the relationship between voter and executive and the ultimate ability of the sovereign people to overturn the executive. Most people recognise that the structural democratic deficit of the EU hinges on the failure to effect that ultimate censure.

I still don't clearly see the difference. The European Council is elected heads of state, laws are ratified by elected MEPs. If laws being passed that there isn't a majority for at country level amounts to a democratic deficit then the same thing happens in the UK. Also, doesnt the fact that we are leaving show that the UK Parliament is in fact sovereign?

 

[brogdale]

I still don't clearly see the difference. The European Council is elected heads of state, laws are ratified by elected MEPs. If laws being passed that there isn't a majority for at country level amounts to a democratic deficit then the same thing happens in the UK. Also, doesnt the fact that we are leaving show that the UK Parliament is in fact sovereign?

The 'fact' that we are leaving demonstrates that the 'sovereign' people decided to end the shared sovereignty, in part due to the obvious democratic deficit of the EU.

 

[Wolveryeti]

The whole idea of the EU is that it assists and enables neo-liberalism, it is designed to increase the exploitation of labour.

That's just your opinion- it isn't obvious to me at all. The EU is for instance responsible for regulations that are clearly negative to owners of capital - two examples off the top of my head are compensation for flight delays and clamping down on mobile roaming charges.

Or look at state aid restrictions, which have massively reduced the ability of big corporates to play states off against each other for a nice wedge of taxpayer cash (as you see in the US all the time).

 

[TopCat]

Bigger cages! Longer chains!

 

[Wolveryeti]

The 'fact' that we are leaving demonstrates that the 'sovereign' people decided to end the shared sovereignty, in part due to the obvious democratic deficit of the EU.

The irony of course being that we will in an important sense have even less sovereignty, becoming passive rule takers on trans-European matters (like trade with Europe). At some point in replicating existing trade deals it will also be discovered that provisions restricting autonomy/ sovereignty are rather common. Or maybe we will just make everything we need ourselves?

 

[brogdale]

The irony of course being that we will in an important sense have even less sovereignty, becoming passive rule takers on trans-European matters (like trade with Europe).

"We" are rule-takers whether or not we are formally part of the political union; that's how neoliberalism works.

 

[Wolveryeti]

"We" are rule-takers whether or not we are formally part of the political union; that's how neoliberalism works.

But we get to influence those rules if we have a seat at the table...

 

[brogdale]

But we get to influence those rules if we have a seat at the table...

Sounds as though you genuinely believe there is such a thing as 'the national interest'.

 

[Chz]

I'm no economist but it's not merely scale. Iceland's economy is made up of real things. Fish, energy and aluminium IIRC. Not based on a load of possibly fictional financial services. Therefore there's a world of difference between allowing your banks to fail and going about the fundamentals as usual, and letting your banks fail only to discover that, whoops, they were the fundamentals.

Also missing out that Landsbankinn's problems were 90% foreign money. The Iceland-only portion of the bank had no problems at all. That's not the same case as in the UK.

The "oh we don't need the banks" stuff is intellectual wanking. It's not going to happen. Corbyn won't make it happen. A hypothetical Prime Minister Michael Foot wouldn't have made it happen. A sensible government would do well to invest in other sectors of the economy to prevent a "Oh shit, all our eggs are in that one basket" thing happening again, but that requires a sensible government. Which also isn't going to happen.

 

[philosophical]

More of less the same ruling class, or the establishment if you like, has been in charge throughout my 65 years.
'Sovereignty' will probably mean such a situation will remain for evermore if they (the drone controlling establishment) can get away with it.
A certain dilution of this horror due to being in the EU, although far from perfect has offered some hope, the PR system for electing Euro MP's is one example.
In my view one democratic deficit is leaving the arguably more democratic EU, and reverting to the less democratic national system of the UK.

 

[brogdale]

More of less the same ruling class, or the establishment if you like, has been in charge throughout my 65 years.
'Sovereignty' will probably mean such a situation will remain for evermore if they (the drone controlling establishment) can get away with it.
A certain dilution of this horror due to being in the EU, although far from perfect has offered some hope, the PR system for electing Euro MP's is one example.
In my view one democratic deficit is leaving the arguably more democratic EU, and reverting to the less democratic national system of the UK.

I've yet to see a convincing argument that the EU is 'more democratic' than its member states.
This link offers a short, simple overview of some aspects of the democratic deficit inherent in the project:
Democratic deficit (EU) | tutor2u Politics
Though, of course, we are here restricting ourselves to the political democracy of the superstructure; whether in or out the base remains beyond our democratic control.

 

[DotCommunist]

just read this:
From Arse To Elbow: The Progressive Vote

on brexit and labour

 

[teuchter]

No it's not. They allowed the banks to default on their liabilities, something the UK government got very nasty about for a little while there because the UK govt bizarrely opted to pay out on them, expecting Iceland to give them the money. They didn't, and quite right too. There is a difference of scale between what Iceland did and what the UK might have done, but the UK absolutely could have treated the crisis very differently and allowed failing banks to fail. The fundamental point of difference here is that Iceland treated private banks as private businesses. The UK most emphatically did not, and yet here they are today, raking in the billions as private businesses once more, hoovering up other people's wealth. It was a missed opportunity to change that dynamic, redirect banking back towards doing social good - the banks were in no position to say no.

And all the stuff that yield points out has been done as a consequence of a decision to protect the assets and wealth of the rich first and foremost. Obscene is the only word for it.

I have to say I just get a bit lost trying to understand this kind of financial stuff. But I do recall reading a fair bit some time ago saying that Iceland's actions, and subsequent consequences, from the 2008 crash were not really quite as popularly presented...for a number of various complicated reasons.

Again, I struggle to get my head around exactly what it means, but there was an analysis of the public cost of the crisis that claimed that Iceland in fact sunk more public money into its recovery than any other country except Ireland. Maybe this information is now out of date, but it does seem that people throw around these figures for how much we 'bailed out' the banks here, but it turns out that quite a bit of that has subsequently been recovered, and that whatever the details of Iceland's strategy, it's not the case that it resulted in less public money being lost.



Iceland:- Economic Survey of Iceland 2011 - OECD

 

[andysays]

More of less the same ruling class, or the establishment if you like, has been in charge throughout my 65 years.
'Sovereignty' will probably mean such a situation will remain for evermore if they (the drone controlling establishment) can get away with it.
A certain dilution of this horror due to being in the EU, although far from perfect has offered some hope, the PR system for electing Euro MP's is one example.
In my view one democratic deficit is leaving the arguably more democratic EU, and reverting to the less democratic national system of the UK.

You seem to be assuming either that the ruling class or establishment is a uniquely British thing, or that the EU/European ruling class is somehow much nicer and fluffier and will treat us all much kinder and fairly than the British RC.

 

[andysays]

Bigger cages! Longer chains!

European cages and chains are so much more stylish than ugly British ones, dahling...

 

[William of Walworth]

just read this:
From Arse To Elbow: The Progressive Vote

on brexit and labour

I've just read this and I think it's a good, thoughtful article -- well worth a read.

 

[brogdale]

lol

 

[pocketscience]

Pocket sciences point was that we spent 500 billion on the banks, but could have spent it on something else more useful than banking.

The facts as pointed out by me and Wolveryeti ( quoting the same source ) are that the cost was nowhere near that, and are possibly even nothing.

This is a key fallacy of lexit, we don’t need the revenue from the city of London’s taxation because we spent 500 bn on them. We didn’t.

Alex

No it wasn't. I said they got bailed out. LBJ makes one of my points in that they shouldn't have been left to die. IMO the bail out funds should havehbeen diverted to something more tangible (or at least more reliable than an industry that has proben it cant be trusted).

Actually my initial point was about the impact that accomodating a huge banking sector has on London, due to all the scum that said sector brings with it.