You may have missed this during the blizzard of balderdash that has emanated from the British Establishment and its Useful Idiot campfollowers during the last eighteen months, but there is one opinion that hasn’t changed since the Referendum, and it’s probably the only honest opinion on Brexit there is: “I don’t know”.
It stood at 12% then, and on 3rd July two weeks ago it still stood firm at 12%. This (and all previous posts here on this eternally and infernally dumbed-down subject) are aimed at the 12% who don’t know, and admit they don’t. I couldn’t really give a tinker’s curse for the other 88%, but I do know this: if people like me – that is, folks who do study the data, do know the eurozone inside-out and do support the ethico-moral and democratic arguments for leaving Brussels to flail about in its own soup – can persuade just half of those 12% that the scaremongers are serial liars, then there may just be a chance for some form of clean, no-cost Brexit to emerge….even if a Second Referendum is required.
We shall still, of course, be a nation split down the middle, but that has broader and deeper causes than Brexit….which remains a symptom, nothing more. And as I develop later in this column, the events careening down the road with nobody at the wheel will, within the next two years, put Brexit into a proper context.
And now, back to Project Fear.
This morning, there is another all out blast from the Office of Budget Responsibility (OBR) declaring that purely as a result of No Deal Brexit the UK will pass officially into recession during 2020.
We would all do well to ask what the effect will be on the EU we leave behind, because they will lose €60 billion in trade surplus, not to mention the roughly €110 billion we chip into fees, subs and projects every year. But let’s set that aside and look at the provenance of this “forecast”.
First up, most of the OBR data have been borrowed from the IMF, using assumptions – the responsibility for which lay with the new head of the European Central Bank (ECB), Christine Lagarde.
The IMF under Lagarde made 23 forecasts on the Greek economy between 2014 and 2018, 22 of which were wrong. It made 13 over the same period to do with the eurozone performance, and every one was wrong.
Additionally (and I do recognise that it is shameful of me to point this out) IMF Christine Lagarde had something of a conflict of interest in delivering this Gotterdammerung scenario to the OBR just before she set off to become ECB Christine Lagarde, scion of the Brexiteers and other similar infidels.
But perhaps I am not guilty of shame at all; for let’s face it, Lagarde has considerable form when it comes to anti-Brexit bias. Asked in October 2017 what she thought the impact would be of Britain falling back on World Trade Organisation rules, Lagarde said: “I just cannot imagine that that will happen, because for the people themselves, what does it mean? The Europeans who are based in the UK and the British who are residing in the EU, WTO does not provide for such eventualities….When I think of the airline industries, the landing rights in various European countries … There is so much that has been brought together between the continent and the UK that it requires a very specific approach which will reduce the uncertainty that is damaging potential.”
This gem is claptrap from start to finish. Where people reside in or outside the EU has absolutely no bearing on WTO rules, nor does that organisation have any jurisdiction on such matters. Two years on, we now know the aircraft landing rights issue was a figment of some spinning Mr Hyde somewhere. Today, Brussels itself asserts that is is “fully prepared for a No Deal Brexit”. It isn’t of course, any more than we are: but this is down to an unholy brew of incompetence, propaganda and deliberate sabotage: Whitehall, for example, has now stopped all administration relating to No Deal….while both the Tory leadership contenders say they will go that way if the EU sticks to its The Shall Not Pass drivel. Right. We’ll do that, then.
Two months later, Frufru was at it again. She told the Independent that “all our experts are now being proved right…the effect of Brexit on UK gdp is if anything even worse than we thought”. Well, she got that wrong too. But then, our Chrissie’s place in the firmament is In The Wrong: in 2007, Lagarde was the first woman to become Finance Minister of a G8 economy – that of France. In October of that year, she had this to say to the IMF’s financial committee:
“The central banks reacted swiftly to this summer’s turbulence on financial markets, thereby averting a liquidity crisis. It is still too early for a full assessment of the impact of the crisis, but in 2008 growth should gradually regain its full potential and world trade
should pick up.”
Three years later, when asked about stress tests on French banks, Lagarde said, “Well, there will be tests, and then you will see everything is perfectly alright”. They weren’t; but by then, the waters had closed over Dominic Strauss-Kahn at the IMF, and Chrissie walked on those waters and into a job for which she was completely unqualified. We have never been given a satisfactory explanation as to why US Fed Reserve nabobs were selling her candidacy to South American leaders before DSK’s sorry encounter with the CIA and bar of soap in New York. I doubt we ever will.
Last December, the OBR itself was forced to issue a grovelling apology for its earlier forecasts predicting a disastrous deterioration in the public finances following the EU referendum. Not only did this not materialise, the public purse was fatter at the end of the forecast period than it had been at the start. Indeed, it is in the nature of the truly disgusting Phillip Hammond that he backed the OBR report to the hilt in 2016, but then claimed credit for the unexpected bounce that followed. “There is a special place in Hell” etc etc.
Hilariously, the OBR (in its mea culpa memorandum) wrote that ‘the lessons learnt from the exercise were to expect shocks not necessarily to hit the economy as quickly as it previously thought’. Ah yes, mistakes were made, but lessons have been learned. Except that they clearly haven’t, and this latest badly sewn Frankenstein of a forecast proves it.
It’s important to point out these minor fallacies and weaknesses in the forecasting space, because people have very short memories, and both political spin merchants and paid security service agents capitalise on this species-wide Alzmeimer tendency at every opportunity. Suffice to say that, if you were looking for a post-Brexit forecast with even a semblance of credibility, the very last people you’d talk to are the OBR, Christine Lagarde and Phillip Hammond.
The reality, however, is that – come Deal or No Deal, Brexit or No Brexit – we are debating the exact size of a minnow here. We’ve all been persuaded over and over again that Brexit is a Great White shark….and if we just kill it, then it will be safe to get back in the water. Cue the theme from Jaws.
There is indeed a shark on the loose, but it isn’t the relatively harmless Great White. This is the lesser known and more deadly Squalus Globalis occultacost datafakus….in more plain English, the Globalist hidden-cost fake data Spinshark.
The Leftlib Establishment has in recent years established the myth of Fake News – aka Anything the Right Says – but as I have posted several times before, the real Alt State use of massaged, assumptive or just downright mendacious stats produces several forms of Squalus Globalis….any one of which could make a mockery of every forecast being so diligently but unthinkingly developed right now. Fake Data – and the false optimism it generates – is the most deadly predator the globalist neoliberal economic and banking system has.
If you go to the Home Page here and type ‘fake data’ into the Search engine, you can find everything I’ve written on the subject. Two definitive sources for the explanation of fake data are Shadowstats and Dr Tim Morgan’s blog. Suffice to say that fakery comes in several forms:
- Banking assumptions that mutual risks – for example, in the derivatives sector – have been almost entirely “squared off” to the point where they cancel each other out. This is spurious nonsense, and the inevitable collapse of Deutsche Bank will be the final proof of that.
- Government and media assumptions that the banks have been “reformed” and thus 2008 could not recur. It simply isn’t true: almost all the US legislation proposed in 2010 has been abandoned or watered down, and the gearings of major banks are as high (and the debts higher) versus the situation of Lehman Brothers in 2008. (In 2007 – in my previous existence as NotBornYesterday, I predicted the demise of Lehman, and repeated the assertion in an article for Market Leader magazine. Oh how they laughed). The liquidity crisis in the eurozone today is worse than it was then.
- The widely peddled belief that AI in the form of algorithms can ensure the end of investment market panics forever. On the contrary, algorithms can only adapt to circumstances of which they are already aware: when something hitherto unknown happens, they will simply carry on as if nothing was wrong. This wouldn’t be a good look.
- The assumption used by statisticians (currying favour with politicians) that when unemployment benefit periods come to an end, the recipient has found a job. This is akin to assuming that a centagenarian in 1990 hasn’t claimed his pension since then because he won the Lottery.
- The downward manipulation of inflation figures by careful and cunning choice of items to go in the ‘inflation basket’.
- The addition of QE to the calculations of gdp when arriving at the “conclusion” that there is “growth” in the economy. It takes a uniquely blinkered mind to see tax monies used to buy highly toxic debt up from banks (which then gets put into a write-off column called ‘future potential assets’) as economic activity. It is political theft and financial chicanery, but it certainly is not economic endeavour.
- The flooding of every consumer, investment and trade market with cheap debt being recorded as growth-related consumption. It is not anything of the kind: it is borrowing on an industrial scale because incomes are not high enough to pay on the nail. Debt at all levels is rising stratospherically; were even a fraction of this debt called in, everyone on the planet outside the 3% and the retired would be bankrupt. Buying on credit is not contemporary consumption…..it is bringing forward a purchase into this fiscal year, and counting that as evidence of growth.
- The quite deliberately depressed expression of real energy costs as we run out of accessible fossil fuels. As Tim Morgan rightly points out, the CO² Mob talking tripe about global warming causes is not the reason to look for greener, more sustainable energy sources: the economic reasons are the ones that count. Going forward, every one Dollar in gdp costs around $3.50 to generate the production energy required. This is not the stuff of accountancy exam distinctions.
In the face of fully quantified and cogently argued critiques from eminent professionals with no axe to grind (as opposed to conspiranoids, ideology-riddled MPs, spin doctors, EU pensioners, stock market Feelgooders and self-appointed “experts”) it is hard to avoid a couple of broad conclusions:
- While it is true that if we fail to cut the EU umbilical cord there will be dire consequences not for the real UK economy but most certainly for the National Debt, we really are worrying about Britain being nibbled by a sprat, when it is clear that the entire world is about to be slapped unconscious by an oily mackerel.
- Fractional Reserve Banking, accountancy, investment firm hype, economic forecasters, legislatures, neocon diplomats and academic theorists have two great advantages: they explain why the past happened, and they keep up confidence by insisting that the present oddities are nothing to worry about. But all these opinion groups have always been (with hugely honourable exceptions) bloody useless when it comes to having a common sense of realism about the future.
Alan Greenspan should have brought in strict credit controls in 2003. QE has dragged stock market valuations out of the body of economic activity in the manner of a Caesarian birth. Zirp has reduced the genuine spending power of Baby Boomers – the biggest single consumer group in the Western World. Texan oil interests have hidden the reality of what their illegally protected product does. And the US Fed is at last learning the hard (and pitifully slow) truth that, once you have created an abnormal Universe, it’s the Devil’s own job to normalise it. You have to blow it up and start again.
Lie back and enjoy whatever does or doesn’t come from Brexit. It is merely the overture. Think on the more important probability that, seven years from now, your house may be worth 20% of its current price. This is what happens when we let sociopathic number-jugglers create asset bubbles.
Apologies for the pescatarian nature of parallels and metaphors today. But on the whole, “fishy” is as good a description of the smell involved as you’d need.