Category Archives: EU

The Strange Death of Tory England

Nigel Farage, Brexiti PartyWell, not actually “Tory” but I wanted the headline to line up with George Dangerfield’s 1935 classic The Strange Death of Liberal EnglandDangerfield took a close look at the political chaos which engulfed England just prior to the beginning of WWI when, he argues, the spirit of progressivism was largely eliminated from English politics. Essentially, the gentry progressivism which had dominanted both the Liberal and Conservative parties since Victoria’s day was crushed between the class politics of the Labour Party, the intractable problem of Ireland (specifically Ulster) and the demands of the Suffragettes. The subsequent mass murder of the British Officer class in the trenches of France meant that there was very little left of the spirit of liberal progressivism by the end of the war.

In a few hours we will find out just how well Nigel Farage and the Brexit Party have done in the European elections. Given that the party was only launched six weeks ago, anything over 20% of the vote will be astonishing but the bookmakers and pollsters are seeing numbers north of 30%. Farange is being seen as the most significant English politician of his generation.

The resignation of Theresa May because of her failure to get a “Brexit deal” no matter how lame through the House of Commons has opened up the Prime Ministership and the leadership of the Conservative Party. The party itself is significantly split between Remain leaning, establishment MPs and Leave supporting Conservative Party members. It seems clear that were it left up to the Conservatives in Westminster there would be no Brexit at all. The country may have other ideas.

Across the aisle, the Labour Party is lurching off in all directions. It is pretty much impossible to get a straight answer from Corbyn as to what the Party’s position is on Brexit. I am reminded of MacKenzie King’s marvellous circumlocution, “Conscription if necessary, but not necessarily conscription.” Corbyn’s problem is that the more lumpen of his supporters, particularly outside London, are full-throated in their support of Brexit while gentry Labourites cannot imagine who let these dreadful people into the party. Corbyn’s position is further complicated by the rise of a Jacobian ultra faction in the form of Momentum demanding a clear “Remain” stance or, at the very worse, a Second Referendum.

The great Brexit wars in England are as much cultural as they are political. Elites, the media, the academy and some sections of the business community are fervent Remainers as much for social signalling reasons as for any political analysis of the Remain position. Supporting Remain is simply what “smart” people do and who does not want to be smart?

Brexit supporters are more about downmarket ideas like “votes matter” and “politicians should do what they promised to do”. They are immune to the elite argument that the Referendum voters had no idea that Brexit meant leaving Europe or that Brexit supporter’s votes should be discounted because they are all old, white, racists and other clever arguments which make sense in BBC studios if nowhere else.

“Liberal England” died because its political class, smug in its sense of moral and intellectual superiority, could not imagine that the Labour movement, much less the gels prattling on about “votes for women” were even slightly serious threats the liberal, progressive, established order. Within a decade that order was swept away by war and radical political reform.

“Tory England” by which I mean the upper levels of the Conservative Party, the media, the academy and much of the non-Momentum Labour Party is walking towards the same fate. The luvies were quite right to understand the Brexit Referendum vote as a vote against uncontrolled immigration, political correctness and political hypocrisy. But their reaction which was to dismiss Brexit voters as unworthy of the new, enlightened, modern England was a huge, strategic error. That error was compounded by the House of Commons being unwilling to actually reach agreement on a deal to leave the EU.

All of which has given Mr. Farage and the Brexit Party an unprecedented chance to remake the politics of England. First, by providing a measure of the anti-EU, anti-Westminster sentiment in England. A rock hard 20% would be destabilizing, but if the Brexit Party manages 30% or better, Farange becomes the effective kingmaker of the Conservative Party.

The Brexit Party currently does not have any seats in the House of Commons (though that may change). What it does have is a well oiled, motivated, mass organization. How that organization is deployed in the next General Election – which could be coming up very quickly as Labour has promised to welcome the incoming Conservative leader with a no-confidence vote – is very likely to determine which party attains government and which leader becomes Prime Minister.

There are, perhaps, fifty seats in England that the Brexit Party could win outright in a General Election. But there are several hundred more where Conservative or Labour Remain supporting MPs would be vunerable to defeat if the Brexit Party ran a candidate. And there are many seats where Brexit supporting MPs of both parties would be very grateful if the Brexit Party refrained from running.

The current Parliament has refused to implement the clear results of the Brexit Referendum despite have been elected in a General Election to do juist that. For Brexit supporters the tactical defeat of Remainers – either in straight up contests or by running or declining to run spoiler candidates – is Job #1. Farage understands this. The question is which of the Conservative leadership candidates is bright enough to realize that Farage and the Brexit Party are the key to the survival of the Tories in England?

Let’s first see how big a noise the Brexit Party and Farage make in a few hours.

UPDATE: Winner? Obviously Nigel Farage and the Brexit party with 31.7% of the vote and on track to take a minimum of 21 of the MEP positions. Second place to the Lib Dems who provided a refuge for all those decent people who were simply appalled at that dreadful Farage chap and worried about their ability to reach their summer homes in Tuscany. (Greens picked up 3 seats for much the same reason.)

Biggest loser? Right now the Conservatives are running at 9.2% of the vote for 2 MEP positions. Total disaster. But Labour did not do all that much better getting a mere 13.9% of the vote and going down to 7 MEP positions. Where Labour was really beaten up was in London where the metro elite defected in droves to the Lib Dems.

There will be more results coming in but at this point, it is safe to say that neither Labour nor the Tories have much to look forward to in British politics if they stay with the politics of flannel mouth on Brexit. There is much commentary about how the “Remain” vote Lib Dem+Labour+Green was larger than the Brexit vote but in the coming general election run on first past the post, those percentages will be uninteresting.

As I said, the question is whether or not the new Tory leader can cut a deal with Farage to ensure that Leave Conservatives have a clear run at their seats. Which means that leader has to be commited to real Brexit.

If the Conservatives elect another squish leader, the Brexit Party has nothing to lose running strong candidates in close-fought constituencies and hoping i) that rank and file Tory supporters will vote Brexit, ii) that the Lib-Dems, Labour and the Greens will hoplessly split the Remain vote.

A serious Tory leader will have already been on the phone to Farage who is, right now, and for the next few months, the most powerful person in British politics.

 

Advertisements
Tagged ,

French Police vs. Yellow Vests

This is interesting.

The Yellow Vests are, ostensibly, protesting Macron’s imposition of higher fuel taxes in the name of CO2 reductions and the Paris Accord. However, while there is a strand of the protest which is really just people who like throwing rocks and lighting fires – apparently from both sides of the political aisle with more than a few of France’s increasing immigrant population taking advantage of the chaos – the bulk of the protestors seem to be the French version of deplorables. Working and lower middle class people from the provinces and the outer suburbs who have been steadily falling behind economically.

Historically, the French have been very good at organizing strikes and protests and the French police have become very good at breaking up such demonstrations.

But what this video shows is the French police “standing down”. Taking off their helmets. The crowd applauds and breaks into La Marseillaise.

Will the Yellow Vests bring down Macron? While I devoutly hope they do they will not do it on their own. However, if the police down tools that would be a different situation altogether. Of course, there would still be the Army; but how reliable the Army would be is an open question.

The one thing which the Yellow Vests need to keep their effort going is continued large numbers of non-violent protestors. This weekend there were fewer than last weekend. Christmas is coming. The point about street protests is they succeed when they are massive, they fail when people stay at home.

Tagged ,

Political Junkie 2fer

I’ll write a bit about Comey below but, realistically, the only major stories seem to me to be a) that Comey leaked to the NYT, b) that Loretta Lynch directly interfered in an ongoing FBI investigation for political purposes. The Russia Trump collusion story is dead and the “hope” = order view of obstruction of justice is on life support and failing fast.

Meanwhile, the exits from the UK from Order-Order.com (the comments range from hilarious to hysterical.)

Tories – 314 (-17)

Labour – 266 (+34)

SNP – 34 (-22)

Lib Dems 14 (+6)

Plaid – 3

Green – 1

UKIP – 0

If those hold May does not have a majority. A Lab/SNP/Lib Dem coalition could govern with periodic support from the tiny parties.

Early days but this was not what the polls or the betting markets were predicting.

Update: I suspect this is going to be a long night for the Brits. Having an eight hour time advantage means I can go to bed knowing who won. If any one won.

Imagine the joy of these words: Prime Minister Corbyn…Oh shit.

Meanwhile the pound is down against the dollar and euro but not by a lot, a couple of cents.

Update #2: About the only thing obvious in the UK election is that UKIP appears to be collapsing. Which makes a lot of sense with Brexit in train. It will be a while before any other trend will be detected.

Thinking about Comey I get the sense that Trump, while not out of the woods, had a good day. While Comey called him a liar a few times – mainly about opinions rather than facts – he also said that he did indeed tell Trump he was not the subject of an investigation three times.

For the anti-Trumpists the collapse of the “Russians and Trump collaborated to defeat the sainted Hilly” story is going to be sad. They will keep hope alive with the “Trump fired Comey because Comey would not back off Flynn” story alive for a while but that is pretty thin gruel for an impeachment story, especially as Trump apparently encouraged Comey to look into the activities of his “satellites”.

Politically the loonier Democrats will try to keep the story and the investigations alive; but the danger to the Democrats lies in the fact those investigations are slowly turning to the behaviour of the Obama White House. Unmasking for political purposes is an actual, serious, crime. Telling the Director of the FBI to refer to the “Clinton matter” rather than the “Clinton investigation” is not obstruction in itself, but it illustrates how far Lynch was prepared to go to protect Hilly. I suspect even the loonier wing of the Congressional Democrats will be happy to let the entire thing die when summer recess rolls around.

Update #3: Time for a G&T. The constituencies reporting are all pretty safe Labour or Tory enclaves and 22 to 10 is not unexpected given the seats reporting. The collapse of the UKIP vote puts a lot of Northern and Midlands Leave ridings into play. right now it looks like Labour has a slight edge in picking up that vote. We’ll see.

I have to bet that absent a majority May is gone in a week. But the really interesting question is whether Corbyn will be able to hold on given that the Parliamentary Labour Party thinks he’s a loonie.

Update #4: Again, it is fairly early but Labour seems to be holding a 4-5% margin in the popular vote. Over at Guido’s the comments are even nastier than usual about May’s failings. Apparently, she simply did not connect with the British electorate. Which I can believe given how Boris Johnston was trotted out in the dying days of the campaign having been under wraps for the first month and a half. Now it could all switch over in the next couple of hours; but this election was called when May had a 20-25% advantage in the polls. It is a rare politician who can turn that sort of a lead into a squeaker. And it is not as if Corbyn suddenly became any saner. Nope, if the Conservatives lose or lose their majority Mrs. May needs to be gone by the weekend.

Update #5: Votes are coming in from the South and while Labour holds a 15 seat edge its lead in the popular vote has dropped to 2%.  In other news, odds on Boris Johnston becoming leader of the Tory party which had been 60:1 this morning are now at 5:1. Still 400 seats to go and a lot of those are in the south and the rural bits of England. But now Labout is 20 seats ahead.

Update #6: 492 seats declared. Lab 218, Cons 219, popular vote tied.  This is going to take a while. What is evident though is that Labour is picking up seats and May isn’t. (Although there are Tories in Scotland for the first time in years.) Regardless of how the night turns out I can’t imagine May retaining the leadership.

Update #7: 303 for the Conservatives, 42 to 40 in the popular vote. Does not look as though May will get a majority. She says she’ll stay.

The night was very reminiscent of Brexit where it took several hours for the Leave vote to roll in. The home counties came through. But what Parliament looks like when the dust clears is complicated. Annoyingly, the Lib Dems increased their seat count, though the awful Nick Clegg managed to lose to my great delight. This may have been a “change” election in disguise.

Corbyn looks safer in his seat than May does in hers. He ran his campaign his way and picked up 28 seats. He will have a rather good argument to take back to his caucus. He increased Labour’s share of the popular vote by 9%. The Parliamentary party may not like him but I can’t see him going anywhere soon.

Tagged , , , ,

Not the Right

It appears that political cipher Emmanuel Macron is on his way to beating Marine Le Pen. While a Le Pen victory would have been a useful poke in the eye to assorted French and Euro elites, that poke would have come at a price. Namely Le Pen’s 50’s style dirigiste economic policies and, frankly, the wrong sort of nationalism.

France faces the necessity of untangling fifty years of statist economics. It also faces having to deal with 5 to 10 million unassimilated Muslims who are largely outside French society. And it faces waves of “refugees” pushing in from the Middle East and Africa. M. Le Pen’s economic positions would have simply re-enforced the anti-competitive labour, tax and pension laws which have hollowed out the French economy. And, while she was willing to talk a tough game on terrorism, her brand was so toxic that actually dealing with the combined Muslim and refugee crisis would likely be stillborn in a bureaucracy terrified of being associated with that brand.

I don’t hold out much hope for Macron. He seems stuck in the rut of claiming that Islamic terrorism has nothing to do with Islam and the happy fantasy that people who have little to do with French society will, somehow, soak up enough terrior to leave North Africa behind and become “French”. While, at the same time, saying “French culture doesn’t exist in and of itself; there is no such thing as a single French culture. There is culture in France and it is diverse.” (link) (I use the full quote lest I be accused of taking Macron out of context.) This is multi-kulti at its best and is essentially meaningless as a defence of France as a European nation.

Unfortunately, that is about the best that can be expected at this stage of re-alignment in French politics. Macron, without a political party behind him, is likely to preside over a do nothing, status quo ante government. The French economy, France’s role in Europe, its position in the Euro, its “community” relations and its refugee problem are all likely to get worse. Systematic corruption, the extension of the “no-go zones” and “youth” riots will likely increase. Which, realistically, is pretty much the outcome I would have predicted if Le Pen had won.

People have a natural inclination towards the status quo until, somehow, that inclination collapses. That collapse can be triggered by a crisis or by the promise of something better. This French election occurred in the midst of a slow moving economic and social disaster but, realistically, there was no sharp “crisis”. And M. Le Pen offered nothing “better”; just something different. That was not enough.

France’s mainline parties were knocked out of the race as was the hard left: in a battle between the status quo and a ideologically incoherent, semi-charismatic, leader with the press and the elites strongly on the side of the status quo, it is not surprising that the French chose a President with very little ideological baggage.

Macron might surprise and turn out to be the right combination of flexible and tough. He might create a government of all talents and begin the task of rebuilding France. I certainly hope he turns out to be a good choice for France. But I am not optimistic.

For a nation to abruptly change course things sometimes have to get worse, much worse, before they get better. The status quo, (as Trump is finding out), is deeply resilient. Real change, change which actually looks to solve problems rather than manage them, comes when the status quo actually begins to collapse and real change is the only alternative. However, as Adam Smith observed, “Be assured young friend, that there is a great deal of ruin in a nation.”

Marine Le Pen wrapped herself in a populist mantle and suggested a return to pre-1968 France; that was not change, that was nostalgia. Le Pen was not of the Right, rather she seemed to want to substitute one status quo for another.

When and if France’s crisis comes nostalgia will not be a winning idea. Facing the future and deciding what that future means to France will require a radical, likely libertarian, re-allignment of French politics. Something which cannot be forced but will rather rise in answer to the challenge faced.

Tagged , ,

Italy: 60/40

The exit polls on the Italian Constitutional Referendum are showing the Yes side of PM Matteo Renzi losing bigly. 60% No, 40% Yes.

Popular anger at everything from the Euro to unfettered African and Middle Eastern migration on to the perpetually sketchy Italian economy all came into the mix. However, having followed the campaign a bit, my sense is that this is a purely populist reaction against the perceived globalist elite. Renzi was appointed – not elected – to office a couple of years ago. Whatever his politics he was seen as a tool of a technocratic, Europhile elite and, as such, when the people had the opportunity to voice their displeasure they took it.

This does not finish the EU. It will take the election of M. LePen to accomplish that; but it does signal a large scale rejection of the centralizing impulse which drives the EU. I expect there will be a fair dose of commentary linking Brexit, Trump and the defiance of the Italians. I doubt that there was much of a link other than the growing realization that the current situation of mass migration, unbalanced budgets and growing governmental interference with people’s lives is unsustainable.

The Italians are having to deal with a wave of African and Middle Eastern migration which they do not want and cannot afford. Their government seems hell bent on spending money it does not have to rescue, feed and house these migrants. Elites, imbued with an internationalist, multicultural orthodoxy, can’t imagine why their citizens are looking askance at migrants who are better treated than the Italians themselves. Unwanted migration is not the only reason for anger but it is the most visible.

The divergence between elite and popular opinion on the question of migration is the fulcrum of anger which is grinding away the pretensions of elite opinion. “Italy for the Italians!” can no longer be dismissed as irrelevant racist cant. Rather, it will begin to inform the actions of any government which hopes to rule Italy.

Today’s Italian vote may well signal the beginning of serious Italian nationalism.

As a general rule elites and Europhiles decry nationalism because they are convinced that that nationalism will set European state against European state a la WWI and II. I don’t think it will. Rather I think the nationalism will set the dominant European culture against the Muslim and/or African migrants/colonists flooding the borders. In the process that nationalism will start rooting out the now discredited ideology of multi-culturalism. In which case, today’s vote was a victory for Italy and the idea that Italian culture is worth defending.

The major loser in all of this is the EU. For the EU the idea of “Italian” was somehow to be submerged into the idea of “European”. The problem was that “European” was not very attractive as it gradually descended into unswerving support for unlimited migration, politically correct multi-culturalism and a deep belief that bureaucrats could make better decisions than Italians about how Italians lived and worked. 16 years of economic stagnation in the Euro strongly suggests that Brussels adds very little to the Italian mix.

Tagged , , ,

Do We Get Serious?

To repeat what I said a few days ago, I’m Islamed out. I’m tired of Islam 24/7, at Colorado colleges, Marseilles synagogues, Sydney coffee shops, day after day after day. The west cannot win this thing with a schizophrenic strategy of targeting things and people but not targeting the ideology, of intervening ineffectually overseas and not intervening at all when it comes to the remorseless Islamization and self-segregation of large segments of their own countries.

So I say again: What’s the happy ending here? Because if M Hollande isn’t prepared to end mass Muslim immigration to France and Europe, then his “pitiless war” isn’t serious. And, if they’re still willing to tolerate Mutti Merkel’s mad plan to reverse Germany’s demographic death spiral through fast-track Islamization, then Europeans aren’t serious. In the end, the decadence of Merkel, Hollande, Cameron and the rest of the fin de civilisation western leadership will cost you your world and everything you love.

So screw the candlelight vigil. mark steyn

I think the events in Paris bring us a bit closer to being serious. A bit closer to the recognition of the fundamental incompatibility of Islam with Western liberal democracy. We’ll see in the morning.

The way we will see is by paying close attention to our leader’s words and their actions. To allow a million Muslims to arrive in Europe in the guise of refugees is an obvious mistake and one which, with political will, can be corrected. (And, in the Canadian case, to invite 25,000 so called refugees in on a timetable which precludes serious vetting is an excellent test of Trudeau’s seriousness as a leader.) But will it be?

Will Hollande’s “pitiless” crusade against terror actually deploy troops to the “no-go zomes” of Paris for the house to house searches to find the weapons, the illegals and the intelligence? Will the rest of Europe cheer the French on or retreat behind the tut, tuts of multikulti delusion?

We are about to find out if this night in Paris has been enough. I would have thought Charlie Hebdo would have been enough. But I was wrong then. Everybody had a nice march and went home.

Will this be enough? I am afraid I doubt it. Mark is right in that the West simply will not confront the reality of political, imperial, Islam. We’re lazy and we’re nice and we simply can’t imagine the sorts of action which might stop the flow of illegal migrants or the terror in the streets of Paris. Because to imagine that is to treat people who are deeply different from us as alien, as “other”. We are too polite to recognize and treat the cancer which is Islam.

This is a war. It is a war which has been going on since the 7th Century. The other side has always, right from the time of the prophet, understood that this is a war. The West, most of the time, pretends it isn’t. Will Paris convince us to take the war seriously? I hope so but I doubt it.

I really think it will take a mass atrocity: biological, chemical or nuclear with 100,000 or a million deaths, to put a bit of fight in us. And, sad to say, when that happens the terrified left and muddled center will probably try to figure out how to negotiate.

No, really.

When asked Thursday by CBC about confronting ISIS, Sajjan said:

“We need to get better as an international coalition … better at looking at the threats early on, to making sure that we identify them early so they don’t balloon into these big threats,”

“They were smaller at one time, we need to get better at identifying the subtle indicators so we might be able to have dealt with it diplomatically.” the rebel

(Sad to see a Sikh warrior say something so craven about the traditional enemy of the Sikhs.)

Tagged , , ,

False Hope

migrants, europe, syrian“Why are they stopping us now? We came to Europe because we saw the Germans on TV telling us they wanted us to come to Europe, saying welcome, welcome,” said Mohammed, 28, who worked at a cellphone shop in Aleppo, Syria, and spent a night at the hotel in Zagreb. “And now there are all these problems and all this confusion.” washington post

There is a difference between giving respite to refugees from a war zone and offering economic opportunities to economically desperate people. Both are laudable but huge trouble can erupt when one is conflated with the other.

With refugees the objective is to get them out of harms way and to take care of them. This can be achieved pretty much anywhere that is not in danger of direct attack. So, for example, the displaced Syrians in Turkey, Jordan and Lebanon are all in relative safety. They need to be taken care of but that is a matter of money and logistics.

Taking on economic migrants is about what those migrants have to offer and what the host country needs. No country needs more welfare recipients. Most European countries could use young, well trained, workers as their populations are aging and their birth rates falling. But to get those workers these countries need to be selective.

The tragedy in Syria – where the civilian population is trapped in a multi-dimensional war zone – has created refugees and economic migrants. But the Europeans persist in the illusion that all the people heading north should be considered refugees.

There will be a bitter day of reckoning when this illusion is exposed. bitter for the Euros who were sucked in by their governing classes and bitter for the economic migrants who will discover that the skills they have, are not the skills which the German economic juggernaut can really use. The Euros, and especially the Germans, need to eliminate the sloppy thinking and loose language which are luring people like the poor Syrian quoted to a bleak future in countries which do not want or need them.

Tagged , ,

Migrants as if they matter

You can always count on the Church of England to provide a soft, squishy, Christian lite reponse to any tragedy. The Bishop of Dover has weighed in on the migrant crisis gripping Calais, England and Europe in general,

“We’ve become an increasingly harsh world, and when we become harsh with each other and forget our humanity then we end up in these standoff positions,” he said. “We need to rediscover what it is to be a human, and that every human being matters.” the guardian

Migrants are, indeed human beings and they do indeed matter. But the current situation of desperate people trying to crash into England is not humane and it is not sustainable. While his Grace would, no doubt, feel it his Christian duty to run a few trainloads through the Chunnel that would be the very worst thing to do in the circumstances.

A conversation about migration and refugees is desperately needed but it needs to begin with England regaining control of its borders and, as importantly, making itself much less attractive to illegal migrants. So long as there is a good chance of getting across the Channel to a hugely over generous welfare state and virtually no chance of being sent home once you get there, the attraction of the UK will remain.

Regaining control of the English borders may not be easy but it is essential. That may mean saying, for a period of weeks or even months, that no migrant will be admitted, period. Those who come anyway need to be taken back to where they came from if that is in the EU. Once that has been accomplished and made to stick, the revision of the eligibility for benefits needs to take place. As well, the casual labour market needs to be curbed.

With those measures in place, if the English believe they owe something to migrants they can set up an actual system. For example, a Syrian Christian is almost certainly in danger of his or her life if returned to Syria. A Syrian Muslim might be in danger as well, but not to the extent of being hunted down and killed. Making choices is important. But it cannot happen in chaos.

Carving out enclaves for Syrians and Iraqis and Libyans who have been displaced by the horrors of ISIS and its knock on effects, is not beyond the capacity of the UN or NATO. But these enclaves need to be in the nations from whence the migrants come. (And an enclave strategy could be effective in other troubled sources of migrants – simply taking over sections of the Sudan, Somalia and so on could create safe places for the poor citizens of those countries. Yes, this would smack of neo-colonialism; but it is quite clear that these are failed states and equally clear that their populations need help.)

Creating a serious migrant strategy will run up against the likes of His Grace and all manner of bleeding hearts who would just as soon solve an immediate problem with compassion when that compassion will simply create a vastly larger problem a year or two hence. Cameron no longer has to appease the awful squishes in the Liberal Democrats so he can actually undertake policy which has a hope of working.

Tagged , ,

Round and Round the Mulberry Bush…

il_340x270.480855993_30qp (1)Pop goes the Weasel.

In olden times those down on their luck would pawn their coats or their tools on Monday and hope to redeem their pawn by Sunday when they needed to turn up in church properly attired.

Richard Fernandez, writing at PJ Media, talks about the musical chairs of the Greek Crisis:

Eventually the physical world starts to change to reflect the payments that have to be made to the players. Trade begins to contract, stores start to close and desperate individuals start to riot. In the naive days of the 20th century, when faith in angels and demons began to wane, it was fashionable to regard matter as primary. Wars were fought by burning actual buildings, killing physical people. But today we know that information has physical force. Computer programs, genetic instructions, memes — and financial data — are to all intents and purposes actual things, rather than airy nonsense.

Unfortunately we still live in a world governed by ancient 19th century Marxian ideas, where politicians regard information as infinitely corruptible, in a world where lies are not only common, but the stuff of power, the very sinews or privilege.  A financial crisis occurs when information goes so far out of whack with the physical world the music has to stop, and those without a chair must be booted off. belmont club

Greece is not a big deal. 2% of the EU economy. The entire place could sink into the Aegean and the world would be little worse off.

China is a bigger place. The factory of the world and its stock markets are in the process of collapse. A lot of companies which we have never heard of have shed 2.5 trillion dollars in market cap in the last three months. Unlike the Greeks, the Chinese have lots of hard currency with which to intervene and there is every reason to believe that the possibility of a Chinese crash will be averted. For now.

Infinitesimal interest rates and overbought markets are, at the moment, haunting the US, the UK, Europe, Japan and China. Fernadez thinks that “the players” have figured it all out and have comfy armchairs waiting when the music stops.

I am not so sure. The players have always counted on governments to step in when there is a cash crunch. When the derivatives have been drawn against busted counter-parties, when the “too big to fail” surprise us by failing. To date, that assumption has been true. It has been true because the governments have had the means – usually the printing press – to literally paper over the flaws in the system. At the moment the Greeks do not but the EU does and I suspect will. At the moment, the Chinese market is in free fall but the Chinese government has the cash to bail them out. But cash, however abstracted, is a finite resource. If you print more than your economy can sustain your cash begins to lose its value against real assets, against food, against bills of lading which must be settled on arrival.

The music is still playing and only the smallest children have been denied seats; but now the scramble is on to secure a seat for the next round.

The one thing which the world seems incapable of doing right at the moment is making more chairs.

Tagged ,

Grexit

Apparently, today, Greece is to have an ultimatum, or is it a prenultimatum. No matter, the EU and the IMF and the Germans are really serious now and they are not prepared to put up with any more waffles. Or are they?

The biggest problem the Greeks and the Eurozone face is the fact that neither side is willing to really draw that line in the sand. The Greeks keep spinning and the EU types keep backing away from the possible calamity of Grexit.

The Greeks are counting on the theory that the Eurozone and the EU cannot withstand the possibility of Greece defaulting. Are the Greeks right? On the numbers almost certainly not. Greece is 2% of the overall Euro GDP. They owe something on the order of 150 billion Euros which sounds like a lot but much of that debt is hedged and much of it will be repaid. The European banking community has managed to transfer a lot of the Greek debt to the assorted government and quasi-governmental institutions. Sure, they will take a hit, but not a balance sheet busting one.

From the European perspective losing Greece would be sad but not quite on the order of losing Spain or Italy. The EU will continue, the Euro will survive.

In world terms, the Greek exit/default/bankruptcy is a buying opportunity. Mr. Cook has denied that Apple will buy Greece but that will not stop any number of hedge funds and sovereign wealth funds from stepping up and buying bits of it. And, if the Grexit results in a drachma worth pennies on the Euro it is a dandy bet that plenty of Germans, Brits and French people will be only too delighted to buy that Greek villa they were priced out of previously.

A fire sale is not likely to be politically popular in Greece, but there is not a lot which a government can do to prevent private transactions between consenting adults. Especially in a country where the law is breaking down.

From the world wide perspective, Greek default is unfortunate but a long way from tragic. From a Greek perspective, it is probably the only way out. The only people who are likely to suffer really nasty consequences are the Eurocrats whose mantra of “ever closer” will lie broken at the side of the road. I shall try to work up a tear, but I doubt I will succeed.

Tagged , , ,
Advertisements
%d bloggers like this: