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Kier Starmer: “The people have spoken and it is clear that we will not be rejoining the European Union.”

Reality check: Politics versus actuality. It’s pretty clear that the populace has changed its mind over Brexit – and it’s also pretty clear that that happened sometime ago. If a guy is standing in front of you, punching you in the face pretty hard, and you say, “Please stop. I don’t like this anymore.” Then, this is not considered generally to be an irrational response.

Politico’s being not especially the brightest bunch in the box, are somewhat slow to respond to the fundamental and elemental shift, back to a recognition that participation in Europe is economically, socially, politically – and hell, I’m on a roll, even spiritually, good for you! So no. Just to be very clear and for the avoidance of doubt, the UK will not be rejoining the EU.

However over the course of the next several years, and very likely before the end of the Parliament, through the UK, “Reset” series of negotiations with the EU, things are developing (today an announcement will be made that UK is rejoining the critically important Erasmus scheme). Erasmus is a cultural powerhouse, and always acknowledged as such, and was a particularly ignorant act of vandalism, self-inflicted by the Johnson Government. Students have been clamouring for the UK to rejoin ever since.

Similarly, under the reset negotiations, there is very likely to be enacted a Youth Mobility Scheme, allowing free movement of young people between the UK and EU countries. Note, for the avoidance of doubt, the Youth Mobility Scheme is NOT free movement. Reality check: it IS free movement. Limited for now; very likely to expand in scope.

Similarly the UK remains, pound for pound, the most powerful military nation within the European Union, and you may not have noticed, but there is a war going on. We need them and they need us. So whilst the European Defence Fund failed in agreeing an additional contribution of circa £6BN, from the UK, to allow British firms to participate in defence contracting, it is not beyond the whim of participating politico’s to resolve this. Note: this does not mean that we are rejoining the EU.

Politics being politics they’ve come up with a word for this – the “Iterative Process.” So by this process, within several years we are very likely, on current trajectory, to have reestablished most of what we relinquished in leaving the EU.

Don’t you dare say we are rejoining !

#EU #Erasmus #KierStarmer #Brexit #freemovement

I was going to write a scathing critique on Rachel reeves’s already stale budget, and in order to fortify me for such a dispiriting task I decided that a milkshake should prop me up. Except I was considering whether or not I needed to cash in part of my ISA, until it was Governmentally revealed to me I didn’t need to worry about building up my cash ISA, as it wasn’t going to be allowed…

So I headed out to the local supermarket to buy my sugar heavy, milk based product, only to find that William, the helpful student who was moonlighting at the supermarket to try and pay down his sizable student loan, (which he had complained incessantly to me about, as he actually had to sit on the stairway of the lecture theatre, so full were the classes now)… Anyway, today was William’s last day, as Michael the store owner couldn’t afford his 8.5% pay rise… Or the freezing of his NIC’s contributions..

Never mind Michael!! I’ll just import my milkshake from Belgium. “I wouldn’t if I were you,” said Michael… “Because customs clearance takes so long, the stock is past its best by the time it gets here!”

Sigh…

#no-growth #budget #taxthresholds #labourmarket #Chancellor

Peace is not peace if it is arrived at through a non-committal third party steadying the hand of your enemy who is pointing a pistol at you.

That is not peace; that is not even appeasement. It’s surrender. Which could easily lead to occupation.

Ukraine is very careful about declaring numbers of its dead and injured, and the general consensus is that Russia now is at more than 1 million dead and injured – again without specifying the breakdown. Russia is big enough and populous enough to have been able to mobilise “politically insignificant” (as they see them) conscripts from its further geographic reaches. Many of the educated professional middle classes fled across the border as soon as the war was declared. Putin has prevented serious political unrest by not conscripting greater numbers from the urban elite in the most populous and politically relevant cities. The Wagner Group ploughed through tens of thousands of prisoners, promising them amnesty from their crimes and a lump sum, if they stayed fighting for 6 months. The general belief is that roughly 50% of these prisoner conscripts died – as they were the least trained and the most expendable – and deployed to the sharp end of the front line. The current deal for prisoner recruits is “till the end of the war or death, whichever comes first.” Nice.

The simple point being, Russia simply doesn’t care who it kills, including a sizable portion of its own population.

Surely one of the most embarrassing agreements in modern history is the Budapest Memorandum. Signed by John Major for the UK, Bill Clinton, Boris Yeltsin and Leonid Kuchma, for Ukraine. In exchange for Ukraine surrendering its nuclear arsenal, the signatories provided security assurances that respected Ukraine’s territorial integrity and sovereignty. The realpolitik of this has proven too difficult. Why then, should Ukraine trust any peace treaty signed by Russia? Why? Apparently there is such disquiet on the streets of Kiev, amongst veterans of the Army, and soldiers on leave, that already a revolution is being spoken of. So, externally disastrous for its territorial integrity, surrendering cities not yet militarily seized – and internally disastrous, as the country’s own society rejects such a peace plan.

Zelenskyy has said with gravity that Ukraine faces losing either its dignity or its leading partner, in acceptance of such a deal. Yet beneath this sadness, I am sure a very real sense of betrayal exists. As one Ukrainian politician said, “on the one hand we lose US Patriot missiles, if we don’t accept, yet on the other hand, we lose our country if we do…”

I’m not sure this will go down too well for Trump with the Nobel committee…

#Ukraine #Appeasement #BudapestMemorandum #WagnerGroup #Zelensky

Today is a good illustration of the fundamental difference between Economics and Politics…

There is an important distinction to be made between being a chicken running around, and being a headless chicken. It is the fact that Rachel Reeves believes that actually there is a real chance of the Labour Administration being beheaded at the next election – and with the concerns over the current leadership of Starmer, it might not even last that long…

I wrote previously about the political danger from the country and backbench MPs, on the Chancellor going back on her manifesto commitments. The markets don’t see things this way; the markets see a fiscal problem and then the political intent to fix it. This is more of a mechanistic and arithmetic approach – which, is of course fine. It’s just that Politics doesn’t work like that. Just as Economics cannot ever, finally, rationalise the human, Politics doesn’t follow the arithmetic purity of fiscal balancing, if that balancing requires a very obvious breaking of a manifesto pledge. 

Running around like a chicken, in the Chancellor’s assessment, at least allows her to run around. As a headless chicken, this Labour Administration wouldn’t get to run for very long. 

So it’s not pretty to look at, but this move represents political street fighting by the fey middle class.

#Chancellor #Politics #Budget #Survival

In some ways Trump is the Economist’s perfect President: he is Stochastic. He’s also a geostrategic quandary…

Stochastic, not sarcastic 🤦🏻! For the non-economists amongst you, this means he has a random probability distribution in his actions that doesn’t lend itself to pre-action analysis.

I’m talking about Venezuela. He brings it up in the way James Joyce brings up the possibility of redemption in Catholic theology…i.e, it’s always there yet always uncertain. Trump has also made a great deal about being a stay-at-home President, avoiding forever wars, yet then of course he speaks about developing the Riviera in Gaza and the possibility of invading Venezuela..

In American terms Venezuela is symptomatic of a demand and supply problem. As somebody relatively abstinent in life, I happen to believe that it is the demand considerations that are the driving force. If US wealth and proclivity to drug taking weren’t so enormous, the rest of the world wouldn’t keep trying to sell them enormous quantities of drugs, therefore rendering themselves liable to possible invasion and complete societal breakdown post invasion. Much as I admired Ronald Reagan, I always found Nancy Reagan’s, “Just Say No”, to drugs, somewhat hectoring and naive. If anything, drugs have entirely surpassed all class barriers and are considered, if not completely normal in polite society, then certainly not unusual. And I am not speaking about fentanyl. 

The idea of a U.S. military invasion of Venezuela to disrupt drug exports is considered extremely unlikely, due to the immense costs and risks. If we analyse the geo-strategic considerations, this reveals the multifaceted nature of such a decision.

The core strategic dilemma is that a military invasion would address a significant transnational criminal threat but at the potential cost of triggering a regional humanitarian and political catastrophe, alienating key global partners, and tying the U.S. down in a prolonged, costly nation-building exercise. The perceived benefits are primarily tactical (disrupting drug flows), while the risks are overwhelmingly strategic (global reputation, regional stability, great power competition).

Any invasion would destabilize neighboring countries like Colombia and Brazil, fueling corruption and violence in the Caribbean and Central America. The existing refugee crisis from Venezuela’s collapse has already placed a massive strain on the region.

Trump’s has mused ousting Maduro’s regime, with, it seems no post regime plan in place.

Stochasticism is what makes Trump interesting, yet unpredictable. Unfortunately the ramifications of invading a state, and lacking the will or resource, or application, to implement and manage a post invasion plan, can all too easily be seen in Iraq and other states, and this alone should be sufficient to prevent it happening…

#stochastic #internationalrelations #Venezuela #Trump #economics

James Carville has now probably an immortal place in recent political history, being the original source of one very famous quote, and also a second slightly less famous and equally powerful one. Carville, whilst working for Bill Clinton, coined the phrase, “It’s the economy, stupid”… And we all know what that means…He then went on later in his career to say, when speaking about reincarnation, “now I want to come back as the bond market. You can intimidate everyone.”

Rachel Reeves has taken quite some time in getting there, and she has in a sense, been complacent about the generally positive relationship exhibited by the bond market towards her Chancellorship. More than in many countries, the intricate dynamics of politics and economics are quite fast moving in the UK: look at what happened with the rapid succession of Prime Minister’s during the last Government. My own bet is out as to whether or not Rachel Reeves will raise income tax, as being one of the three core taxes that she indeed vowed not to raise. 

However, it is a fairly large fiscal hole that she seeks to fill, circa £30Bn, and this will not be filled lightly. Equally given her series of notable political missteps (I have argued from the outset that she simply should have reversed Jeremy Hunt’s NIC personal reduction, given just months before last year’s general election – this, in one sweep, would fill roughly half of the fiscal hole); she has been on thin ice with Labour Party backbenchers. Her fortunes are inextricably linked with the Prime Minister, and backbench MPs would come looking for a scalp to feed their irate constituents, braying that the Government had backtracked on one of its key manifesto pledges. The Government itself would become vulnerable, just as Liz Truss’s Administration faulted, and she was defenestrated… Once a public gets a taste for taking heads, it’s usually quite hard to displace.

Brilliant rhetoric is never remembered, unless you’re Martin Luther King, Yet whether a family’s net income has gone up or down certainly is. Freezing tax bands, higher council taxes, capital gains exit taxes, higher gambling taxes and other measures can, if accumulated, get Reeves within a stone’s throw of her goal. The Timms Review has yet to report and may reveal achievable savings. Similarly there has been recent studies regarding empowering employers to reach out through their worries about their employee’s rights, to reclaim them back into their world of work, once a staff member is written off sick. Currently it is all too easy for this employee to simply disappear into the system, and slowly drift away from work itself. As a trained and valuable resource, organisations have the right to fight for their employees, even if at the time the employees don’t quite see it that way…

#tax #fiscalhole #politics #economics