Friday, June 24, 2016

Evans-Pritchard: "The sky has not fallen after Brexit but we face years of hard labour"

There is no guarantee that the referendum leads to an exit so a lot of the commentary is speculative.

That said, there is a greater-than-trivial chance that "the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new dark age made more sinister, and perhaps more protracted, by the lights of perverted science."

Oh wait...*

From The Telegraph:
The City is already changing its tune, insisting 
that it can prosper outside the EU after all 
It is time for Project Grit. We warned over the final weeks of the campaign that a vote to leave the EU would be traumatic, and that is what the country now faces as markets shudder and Westminster is thrown into turmoil.

The stunning upset last night marks a point of rupture for the post-war European order. It will be a Herculean task to extract Britain from the EU after 43 years enmeshed in a far-reaching legal and constitutional structure. Scotland and Northern Ireland will now be ejected from the EU against their will, a ghastly state of affairs that could all too easily lead to the internal fragmentation of the Kingdom unless handled with extreme care.

The rating agencies are already pricing in a different British destiny. Standard & Poor’s declared that Brexit “spells the end” of the UK’s AAA status. The only question is whether the downgrade is one notch or two, and that hangs on Holyrood. Moody’s has cocked the trigger too.

Just how traumatic Brexit will be depends on whether Parliament can rise to the challenge and fashion a credible trade policy – so far glaringly absent – to safeguard access to European markets and ensure the viability of the City, and it depends exactly how Brussels, Berlin, Paris, Rome, Madrid, and Warsaw react once the dust settles. Both sides are handling nitroglycerin.

Angry reproaches are flying in all directions, but let us not forget that the root cause of this unhappy divorce is the conduct of the EU elites themselves. It is they who have pushed Utopian ventures, and mismanaged the consequences disastrously. It is they who have laid siege to the historic nation states, and who fatally crossed the line of democratic legitimacy with the Lisbon Treaty. This was bound to come to a head, and now it has.

The wild moves in stocks, bonds, and currencies this morning were unavoidable, given the positioning of major players in the market, and given that the Treasury, the International Monetary Fund, and the Davos brotherhood have been deliberately – in some cases recklessly – stirring up a mood of generalized fear.

But let us separate the noise from what matters. This is not a ‘Lehman moment’. The sterling rout has not been as bad as some feared.  You could almost say that we have had a miraculous reprieve, at least for now.

The pound has fallen by 6pc to €1.23 against the euro, slightly below where it was in April. This is a far cry from warnings of parity, never credible since the eurozone itself faces an existential risk if Brexit is bungled.

The slide against the US dollar has been steeper, but at $1.37 ‘cable’ is only down 4pc from its trading range over the last four months. The apparent violence of the drop was amplified by the upward spike hours earlier.

The FTSE 100 is down just 3.15pc, cushioned of course by the effects of devaluation on repatriated earnings. The broader FTSE 250 index has fallen 7pc. There are horror stories: house-builders Persimmon and Taylor Wimpey have crashed by more than 25pc; Barclays is off 17.7pc.

It is unpleasant but it is not a systemic financial crisis, and it is not global. The S&P 500 index of Wall Street stocks opened down 2.6pc, a bad day but not a drama. The warnings of inter-galactic destruction already look like a campaign hoax.

The yield on 10-year Gilts has dropped almost 29 basis points to an historic low of 1.08pc, the result of flight to safety, recession fears, and hopes of more quantitative easing. These collapsing borrowing costs expose the fallacy behind George Osborne’s ‘punishment Budget’.

There was never any chance that Parliament would enacted his demented plan to crash the economy with a violent fiscal squeeze when macro-economic logic called for the exact opposite. His credibility is shattered. He must go immediately....MUCH MORE
*That's Churchill in his "Finest Hour" speech.
I was actually thinking of a line in the paragraph immediately preceding the snippet quoted above:
...However matters may go in France or with the French Government, or other French Governments, we in this Island and in the British Empire will never lose our sense of comradeship with the French people....
Those final two paragraphs constitute the peroration of the speech and pretty much cemented C-dog's reputation as a guy who talked good English.

We didn't do anything with Ambrose's widely linked Brexit pieces as we weren't posting on anything  Brexit, (except David Keohane's 'Brexit the drinking game' tweet) but if interested here they are:

June 13
Brexit: It is with a heavy heart that I will be voting Leave
June 22
UK and Europe face Mutual Assured Destruction if they botch Brexit