Monthly Archives: July 2016

‘Brexit’ . . . The Third Option

BREXIT photo

As the 24th June recedes into memory there is no doubt the establishment machinery has been working overtime to undermine the voice of the British majority decision to exit the EU, even suggesting many are having a change of heart.

The stock markets were beautifully manipulated to make small fortunes for those who already have large fortunes as they bounced back after the chaos of the vote. The IMF  reckon Britain will outstrip Germany, France and Italy’s growth forecasts and our own Bank of England report our economy has not slowed since the Brexit vote . . . So much for the end of the world!

Whilst the ‘presstitutes’ now focus on the triggering of Article 50, our new government is preparing for the supposed two years of negotiations to enable our extraction from Brussels influence.

The question nobody seems to be asking, in all of this hype and scaremongering, is the very real possibility that those negotiations won’t actually go the distance, because the EU has collapsed.

As time passes the problems for Brussels seem to be escalating, as the technocrats lurch from one regulated disaster to the next. With the benefit of hindsight, we should have read the warning signs of over regulation in the 70’s, with the famous beef and butter ‘mountains’ and wine ‘lakes’.

Then we saw the introduction of the disastrous single currency, designed to bring about financial control over the EU. Time has now shown that it is beyond possibility to try and manage the individual financial environments of many different countries in such a manner.

This one piece of mismanagement has led to building a toxic financial environment that is no longer sustainable without blatant subterfuge. Negative interest rates are not only killing the traditional business of banks but also crucifying pensions investment and the future incomes of hundreds of millions who have paid in with utmost good faith.

Moving from the financial to the political, we now have the political pantomime that has seen France, Germany and Italy declare a summit in Italy next month following the aftermath of the UK exit. We have G20 and G7, is this E3? I can only see it as another very expensive taxpayer funded ‘bun fight’, as I question the credibility that will give substance to these three getting together?

Let’s start with Germany, where Merkel is just about hanging on to power, with her country overrun with refugees she has invited in without reference to the other members and who are frightening off tourists as fast as the immigrants appear.

Her posturing and dictates also give no clue to the fact that her country is about to financially implode. Hers is the first Eurozone country to issue negative interest debt, something the ECB will not (currently) redeem in event of problems.

For over a year now the financial pundits have been saying the country’s largest bank by far, Deutsche Bank, is in serious trouble. Its share price has dropped 48% since last July, motivating finance minister Wolfgang Schauble to declare in February he has “no concerns about Deutsche Bank”, something finance ministers don’t say about ‘healthy’ banks!

The bank has been selling more of its shares and issuing ‘contingent convertible bonds’ to raise desperately needed capital, all of which have gone to further depressing it share price and credibility!

Such is global concern that Deutsche Bank will become the next Lehman Brothers that the IMF, no less, have publicly branded it the riskiest globally significant bank, at a time when its US businesses also failed a Federal Reserve stress test. If/when this bank collapses, the reverberations will make 2008 look like a walk in the park.

Then we have Italy, where the IMF have also declared the country’s banks, who have seen their share price plummet by more than 50% this year alone, pose a particular threat to the economic outlook. “Unless asset quality and profitability problems are addressed in a timely manner, lingering problems of weaker banks can eventually weigh on the rest of the system” came their warning.

Monte Dei Paschi is Italy’s third largest publicly traded bank and its particular distinction is that no bank in Europe has fallen so low so fast without completely crashing. Two years ago their shares were worth between €5 and €9 and today they are worth €0.33. What keeps it on life support is constant taxpayer bailouts, something a Merkel bullied Brussels has now pulled the carpet on.

Here lies the embarrassment for premier Renzi before his summit with France and Germany, rumour has it he is contemplating going head to head with Brussels and enacting a unilateral sovereign rescue of the Italian banking system.

How will he face Merkel, who insisted upon ‘bail ins’ over ‘bail outs’ and has gone on record as saying “We wrote the rules for the credit system, we cannot change them every two years”. If Merkel gives in it will make a mockery of her ‘bail in’ rules before they have been properly used, to say nothing of the political fallout if, once again, there is a raid upon taxpayer’s money to save a bankrupt financial system.

Whether she maintains her position or waivers, neither is an endorsement of her direction of EU policy, or the credibility of Brussels regulations.

What cannot also be overlooked is that Italy is the EU’s third largest economy, with €2.23 trillion of public debt, €400 billion of which is stagnating in Italian banks as bad loans, making them not only ‘too big to fail’ but also ‘too big to save’!

Finally, we have France’s contribution to the ‘toxic trio’ and their pompous little president, who is now traveling around the EU to secure unity in the face of these pending financial disasters, the Greek fiasco and Brexit and being publicly booed for his troubles. (Or perhaps it’s because of the $14,500 of taxpayer money he spends each month on haircuts!  Where is his credibility, when his popularity rating at home is now reported at below 10%?

As Philippe Le Corre noted in the Financial Times, opinion polls show that 61% of French people “hold unfavourable views of the EU”. Two-thirds feel that ”the EU has failed them economically”. By contrast to the UK, it’s the young who have been among the hardest hit, with massively high unemployment. “It is likely that they would vote for “Frexit” in a referendum”, says Le Corre.

This seems to be lost on Martin Schultz, President of the EU Parliament, who stated quite clearly: “It is not the EU philosophy that the crowd can decide its fate”. (So what is the point of the elected members of this parliament, or indeed this parliament?!!!) And this pearl of wisdom comes only weeks after the people of one of the EU’s largest contributors demanded a return of democracy following their Referendum on membership on 23rd June.

The European Commission’s attempts to drive through the trade deal with Canada (CETA) is pouring more petrol on the glowing embers of discontent, as it is now close to collapse after a German political party sued Brussels over its implementation. “it reveals once more the cavernous differences opening up between different member states which have effectively rendered the European project unworkable”, according to one recent report.

The only logic appears to be that this undemocratic move by Brussels creates a precedent for the equally undemocratic TTIP trade deal with the US, which is running in the face of huge public protest.

It will only take the effects of one of these trade deals, or the collapse of a bank, on top of the mounting problems of immigration, to trigger revolt in an already unstable union, which it is not that far off if Brussels pursues its present political stance.

Two years of exit negotiations . . . we shall see.

Until the next time.

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes

Trident . . . Hmmm

submarines photo

In memory of Alan

So, Trident is to go ahead at a cost of £31 billion (until we are told different) by an overwhelming Commons verdict of 472 in favour and 117 against. I have to admit to mixed reactions, caused by personal experience of having stayed at our nuclear submarine base at Faslane in Scotland on several occasions.

My cousin, who was my best man and my best mate worked in maintaining the power plant on the nuclear submarines and after 15 years of hard work it eventually killed him when he was exposed to a nuclear leak. He left behind a wonderful wife and two kids and I still miss him 30 years on.

He was content with the life he led because naval families are a close community on this and every other base, supporting each other in a way that didn’t seem to happen in civvie street, in his opinion and he had tried both.

Of course the work was dangerous but he took pride in knowing that British nuclear submarines were the best in the world on any and every NATO exercise. Silence is the critical thing with submarine warfare and we ran rings around the opposition.

There were embarrassments, like in the age before nuclear and when the navy still issued its daily tot of rum to sailors.

A diesel driven sub had just returned to its base in Devonport after exercises and had to be refuelled. The unlucky sailor who drew the short straw to stay and oversee the refuelling was compensated by the remainder of the crew donating their tot to him.

The trick to refuelling a diesel sub was to make sure the weight of fuel being pumped in at the rear was compensated for by releasing sea water from the ballast tanks at the front.

On this occasion the sailor was not up to the job and the rear half of the sub sank and had to be transferred to dry dock for a complete overhaul. The press received a government D notice not to publish the story.

The second story he told me was of two nuclear subs returning from NATO exercises and one commander challenged the other to a race around the Isle of Wight. The upshot was that one submarine took a shortcut and beached. A cub reporter from the local press got down to the scene and captured a picture of this monster, beached by a ‘No Waiting’ sign with a dog cocking his leg against it. That got a D notice as well!

Happy memories of a time in my life that I really enjoyed, now tempered by yesterday’s vote that again signifies how barbaric we remain as a species. Human ingenuity has created a monstrous weapon that hangs over us like the sword of Damocles. It’s terrifying power available to the call of human fallibility.

I look around an ever more unstable world and particularly the candidates now running for the White House, one of whom is lacking in any forms of diplomacy and the other who is openly labelled as a ‘warmonger’, with a hideous track record that lacks any integrity whatsoever.

As I see it we have a choice. On the one hand we should not allow these people anywhere near the ‘red button’ and on the other hand there is a certain reassurance in knowing we have the best deterrent force on the planet.

We left the EU to become masters of our own destiny and as long as there is leadership who pose any threat whatsoever to world peace and God knows the US is pushing Russia and China to the limit these days, I want to know that my country will not have to lay belly up and exposed without the ability to effectively defend itself.

It is not a satisfactory situation by any stretch of the imagination but until we have a new breed of global leadership, who are not in the pockets of financiers and corporations and who accept and admit to the mess we are in, from environmental disaster to religious manipulation and constant warfare, we must be able to stand our ground and Trident fits this bill.

Whilst global banking sprint from one form of financial abuse to another, wrecking the lives of millions in the process and without any form of remorse or change of direction, the same cannot be said of our submarine programme.

Apart from the amusing stories above and the tragic experience of my cousin, which illustrate mistakes and human error, our Trident force act with utmost integrity and without the slightest hint of abuse or threat to world peace.

With what is now unfolding in Turkey we should feel confident we live in a Society where the silent professionals have not distressed the innocent and certainly have not cost the taxpayer anywhere remotely near what the toxic banking system has and still is costing us.

We do not live in a perfect world but to act responsibly with this devastating capability is something Britain can hold its head up high to and pray we find new leadership who also reflects that level of integrity and will work to its eventual abolition.

Until the next time.

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes