David Cameron has wheeled out the increased threat of a European war should the UK leave the EU in his campaign to Remain.
First of all let's address the assumptive use of 'could'. 'Could' covers every probability between won't and will, namely everything between 0 and 100%. We live our lives by juggling risks and without a valid input other than 'could' the term should be dismissed.
Even if we get to 'will' increase the risk of war, once again from what risk to what risk. This is a trick always employed by newspapers and politicians to shock their audience into reaction. Increasing a risk of cancer from 0.00000001% to 0.000001% is increasing the risk a thousand times. Panic horror! But in the real world, matters not a jot. So Mr Cameron, can we have some actual probability numbers to work on here?
Up until now we have been told that we have to listen to economists over the Brexit debate, which assumes that -
a) The whole debate should rest upon whether the UK is better off financially per household in or out. If this is the sole consideration we could sell our lawmaking process to, say, China. They may pay more than the EU.
b) Economists are right. Economists are rarely ever right. They are constantly changing their forecast of the future (never ever being brave enough to predict market prices). They can't even predict the now, with figures having to be revised later, and as for the past, well there is constant academic debate as to whether the past was good or bad anyway. Where economists are completely useless is in forecasting politics. They may be able to forecast a post Brexit world using today's inputs but the political inputs will change and you can bet that their 'revised reality' will be nothing like that currently predicted.
But we are on to Cameron warning us all of the possibility of war if a Brexit were to occur. One would have thought that if war is the alternative to agreeing a nice trade deal and a few strap-on extras with the UK, then perhaps the trade deal would be less onerous than mutual annihilation. But, hey ho, the EU is a funny beast.
Whilst Cameron may believe that leaving the EU would raise the risks of war, a survey carried out in January had the British people believing there was a greater risk of war should the UK stay IN the EU
With the threat of war upon us it must make fantastic financial news headline fodder and I have been trawling through market pricing today to see just how terrified the world is of Cameron's up coming war.
I have checked iron prices as we know that in times of war all the park railings are torn up and turned into tanks (or would be if they were the right type of iron) but Iron prices are down 7% over the weekend. I can only assume this is scrap metal traders flooding the market with their stock before national governments requisition it all.
Let's look at GBP as we face up to the prospect of WW3. Hmm its up a bit vs EUR. It's obvious why. Algorithmic trading models which dominate the market are mining historical data and are buying GBP on past outcomes of European wars.
Stock markets. Does war mean that the stock markets should take a drubbing? Nope, they are hanging on in there because though war may mean a chance of mutually assured destruction, that is only a chance. Whereas central banks maintaining an accommodative monetary policy is a sure fire thing during war so BUY.
Gas masks. Well, to check this out I popped in to the village shop and there were absolutely no gas masks to be had. I can only assume they must have sold out in the rush, the proprietor said there weren't going to be getting any in any time soon either. This must indicate a huge national shortage due to a demand spike.
Food shortages. Stock piling is in evidence at Waitrose where I couldn't find any Appenzeller Swiss cheese at £24/kilo. They had some last month.
Anderson Shelters. My local Wyevale garden centre had garden furniture and barbecues, potting plants and plastic ponds. But completely out of Anderson air raid shelter kits. The same at the B+Q DIY store. Worrying if they can't keep up with demand for the most basic of family wartime protection devices.
Gold - Everyone knows that war means gold's value goes through the roof as we all buy it to barter eggs and to sew it into the seams of our our clothes as we escape across European borders. But, ahh, it's down. Gold is down on this incredibly real threat of war because .. err.. I m struggling now, because.. err..the producers have ramped up supply in anticipation of gold demand going up because of the obvious, guaranteed, certain outcome of war should the UK vote to leave the EU.
There, proved it. Cameron must be right. The economics say so.
Finally, Cameron has proved Godwin's Law.
6 comments:
It's interesting this idea that the EU has helped preserve peace in Europe since its formation. A bit like having a McDonalds, it supposedly indicates that trade makes war unappealing. However, one or two points before we get too carried away with this idea:
1. Extended calm has the whiff of the Minsky about it. Systems that grow in size appear to be able to allow pressures to build for much greater periods but then blow with an almighty bang. In terms of fighting, there has historically been a progression since pre-history to larger tribes, then territories, states then empires and alliances. All the time they seem to maintain 'peace' as the history books would know it, but at the expense of greater conflagrations as they rub up against similar sized entities on their borders. It should also be noted that these larger groupings are very effectve at ruthlessly maintaining their integrity and tend only to collapse with blood or, if you are lucky, a lack of will.
2. To come back to your San Andreas fault analogy, in terms of earthquakes, we know the longer there is calm the greater pressures can build up. It is the same with imbalanced trade held together by the issuance of debt - both with special regard to China itself, but with knobs on internally within the Eurozone.
I believe there is a little known law coming into effect in 2 years time that will only allow exits if the other countries vote to allow it. That is a fundamental change and rather puts at risk the idea of peaceful separation should, say, a beaten down Eurozone member desire to do so in the future. (DYOR)
The thought of the lock in is interesting. Could it be inforced over Scotland leaving UK if UK is in EU as leaving UK technically takes them out of EU for a while until/if they are readmitted?
It's a pity that Cameron doesn't bring up the most important real argument in favor of remaining, which is the loss of passporting and most likely the EUR clearing, and huge job losses in the financial services sector, and a domino effect with all business that depends on them. And the reason he can't say it, is because of the pitchfork anti-wall street mentality of the average voter that makes free Remain camp think that this argument will backfire. So instead they have to find silly alternatives.
Yo are absolutely right Theta, passporting is huge for the City and yes the american banks will have to move their cash operations. But what would be the outcome if UK wass to remain in the EU? Paris and germany have been desperate to wrestle finaincial centre ower back from the UK for years and they won't stop just because UK decides to stay in.
The fact that Frankfurt hasnt got the infrastruture to support droves of american bankers means none of them personally want to go and if forced to many will play the ' Cant be arsed' card and retire before doing so. So more juniorification of inv bank jobs. Actually that includes a few Europeans in London I know who cant bear the thought of working in Paris or Frankfurt. french taxes for Investment bankers? I think not.
But you are right on why he can't raise the issue. But then he's made such an arse of himself over the war thingit's probably too late.I am still surprised at how nonchalant the markets are with regards to the possibility of an out vote. Probably teh binary american quarter who will probably wake up to it in a couplr of weeks and panic. I've gone long 1.4000 cable puts for sept., but IG index are still making 73/77 as the price to remain if you want a less complex price to hit.
Well, I'm more sanguine about the issue. I doubt very much if Cameron understands what goes on in the City, never mind people's attitudes to it.
I just think, well the Swiss are okay. Hong Kong was okay, even when China was out of bounds. Singapore is okay. It depends more on the policies they enforce.
Re the City, it has long been accused of creating our very own variant of the "Dutch Disease". This is the phenomenon whereby the discovery of large amounts of a commodity leads to the hollowing out of industry over a long period. In the UK's case we have had both North Sea oil AND Big Bang. Personally, I would rather be a Germany that understands that you can actually "make things" which most in the UK, particularly within the M25, thinks is impossible these days. I also take the view that if you don't "make things", you will eventually lose control of the services aspects too. Hence why the rest of the EU is in a position to wrest control should they wish so to do.
In fact, although a modicum of short term pain for some, over the long term you might actually get some of Osborne's much vaunted "re-balancing" and a much less risky overall profile of wealth creation.
More on the engine for peace meme:
https://notayesmanseconomics.wordpress.com/2016/05/09/6-years-later-the-shock-and-awe-is-at-the-ongoing-economic-depression-in-greece/
http://www.nakedcapitalism.com/2016/05/lynn-parramore-austerity-without-debt-relief-courts-new-unrest-in-greece.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
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