Thursday, 2 June 2016

Why we should leave the EU, part 2. Trade deals (aka "the uncertainty issue")

a) There would have been no point in negotiating exit trade deals, as Germany and France especially would have made no realistic effort towards productive talks. As they don’t want the UK to leave (they need others to help pay the bills), it would be entirely in their interest to obstruct these negotiations in every way possible, thereby creating what would appear an exit path fraught with uncertainty.

b) Although 50+% of our exports go to the Eurozone, that is largely because those nations constitute our neighbours, and not implicitly because of the Eurozone itself. In fact, virtually all nations in the world trade mainly with countries in geographical proximity, with some notable particular exceptions such as China, who essentially act as a global manufacturing base.

c) As for the UK “being too small to cut trade deals”, that’s simply not true. The UK is a major global economy, and far smaller nations have cut their own trade deals - Canada being an example in this regard. A/NZ another.

d) Speaking of trade deals, the EU at present has free trade deals with many nations, including the likes of Kosovo, Lebanon, Mexico, and even Palestine - which isn't even a country. On this basis, why would they reject one with a neighbour, which also happens to be the fifth largest economy in the world?

e) Cutting trade altogether, or even introducing nuclear tariff systems, is two steps short of declaring outright war in today’s interconnected world. This is not something done lightly, in fact apart from sanctions introduced vs Russia, post-Crimea, we haven’t seen any examples of this in our part of the world for many years.

f) The EU, as noted above, already feels the pull from the spiralling drain. It wouldn’t take much to tip especially the South back into recession, creating significant systemic risk in the process, and the firepower simply isn’t there to fight yet another looming economic disaster. Were EU members wanting to ‘punish’ the UK for its decision by referendum, they would in effect be playing chicken with their own economies.

g) So in short, it is in everyone’s interest to cooperate. Sure, the EU could hypothetically impose nuclear tariffs, impose significant travel restrictions, and attempt to hurt the UK in any way possible, but the ensuing recoil on their own economies could equally devastate them.

h) Were the EU to ignore all sense and reason and drastically impose the above mentioned sanctions upon the UK in the event of an exit, they in essence confirm their status as a deeply undemocratic organisation which takes more interest in their own institutional survival, than acting on the behalf of their electorate. And I can think of no better reason to want out, because that’s a hallmark of any authoritarian governance.

Finally, yes, there will be a period of instability should we decide to leave. But this election is not about the short term. And in the long run, I personally think the UK will be better off out, especially given the systemic issues plaguing the South of Europe, which will eventually spring back to life.

Why we should leave the EU

a) The EU is fundamentally anti-democratic. They have a parliament in which members of which can not introduce laws, or have them repealed. All laws are penned and introduced by the commission. MEPs can vote on these, even suggest changes, but the commission is free to ignore all said communication.

b) The EU is essentially a basketcase, financially. The entire of Club Med still persists in dire straits, in desperate need of avoiding another recession. Public sector debt ratios are historically high, and it's obvious to everyone paying attention that these will never be repaid in an honest way. Greece are inching closer to 200% debt/GDP mark, Italy at around 135%, and Spain crossed the 100% recently - with a historic level of unemployment to boot.

c) Italy's private banking sector has 360bn Euro of non-performing loans on their balance sheets, with an additional 180bn in distress - amounting to roughly 25% of their GDP. There is simply insufficient capital to bail them out without extraordinary policy, and where is the political goodwill for another round of escalating bailouts to big banks? Politicians agreeing to this wouldn’t survive the next election.

d) Greece are months, even weeks away from needing another bailout, although obviously, it's won't be called that. Oh, and 45% of all private loans in Greece are non-performing, meaning a bank collapse would be upcoming were it not for continuous behind-the-scenes borderline corruption by the ECB and their various colleagues in European national banks. Did you know that is was illegal for the ECB to engage in QE programs until fairly recently? Well, it was, and then lawyers located a convenient loophole, and suddenly it was just A-OK.

e) Since 2008, the EU has seen anaemic growth (in the 1% range), and the entire zone depends on Germany, not entering a recession. The UK has done far better in this regard. In fact, of the entire developed world, only really Japan has done as poorly as the EU.

f) The above issues b-e will eventually be "solved" through full fiscal union. By then, per decree, the North will be forced to continuously pay for the South. And once that ball is in motion, there will be no reason for the South to even attempt to balance their budgets.

g) And then there's Merkel's audacity, and borderline dictatorial behaviour in dealing with immigration.

h) Finally, the EU actually want to ban "right wing extremism", by punishing nations electing these. Yes, Juncker actually said this (though obviously, the definition in this regard will be so vague it can be applied to practically anything). That's right. Your vote WILL be overruled by a bunch of unelected bureaucrats in the heart of Europe if or when they see fit, because they are your rulers and you better accept it. Because fuck you, that's why.

Oh, and btw - did anyone tell you that we're technically overdue a recession?