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Friday, May 13, 2016

Ponters Pensées 13.5.16. Friday the 13th . . . .

You Couldn't Make It Up Department:
  • A priest ousted for sexual misconduct with a girl in his care is now in charge of a pregnant-teen agency. Details here.
  • A demonstration of Kim Jong-un's largesse in the aftermath of the Workers' Party congress has backfired after his citizens turned their noses up at his gifts of toothpaste and blueberry-flavoured spirits. The toothpaste, a toothbrush made in North Korea and a bottle of liquor supplied to every household were "trifling" and of poor quality. To add insult to injury, anyone who collected one of the gift sets was charged 1,500 won (£1). It could have been worse . . . In 2013, Mr Kim ordered that every member of his entourage receive a copy of Adolf Hitler's "Mein Kampf". And were presumably shot out of a cannon if they couldn't recite it backwards.
The EU Economy and a Brexit: Here's Ambrose!! The EU is holding our economy back – and Brexit could set it free. My view too. Always has been. Actually, it's not, Ambrose, I've just seen, but Howard Shore, the executive chairman of Shore Capital Group. And I've copied his column at the end of this post.

Russia's Endless Propaganda: This has been termed a 'fog of falsehood', at least in respect of Ukraine. You can download a relevant Finnish article here. Separately, more than two million people are said to have marched in more than 50 countries across the world in honour of the recent Victory Day, on top of 650,000 in Moscow. According to a Russian critic:- Putin has successfully tied the date to himself to the extent that if you are against Putin, you automatically, and even unwittingly, are against all the grandfathers who fought in the War." An increasing number of Russian critical voices are said to have expressed concerns about elements of fascism in these mass events and their ideology. One wonders why.

Brits in Spain: How many of us are there? No one knows. And the range of guesses is wide. Here's David Jackson on the subject:  The population figures used by the Spanish (and no one else) come from the National Institute of Statistics. According to them, there are 263,029[sic] Britons living in Spain. With the new tax law, the dreadful Modelo 720 - where one has to declare one’s worldwide assets – how many foreigners have simply thrown in the towel and left Spain for a more welcoming country like Portugal, or have returned in disgust to their country of origin? And, why own a property in Spain if you can no longer let it without enormous inconvenience?

Psychic Beliefs. Some of us would argue that gullibility is the essence of these. So it's not so surprising that the credulous are regularly fleeced. To the tune of 180 MILLION dollars here.

A Key Question: From the same site comes this comment on an important issue. Or a-tissue. Geddit?You will. Some more quickly than others.

Finally . . . A multi-purpose note. After a dear friend in Madrid and I had exchanged a few mock insults yesterday, she sent me this useful model apology . . .




The EU is holding our economy back – and Brexit could set it free

The Leave campaign shouldn’t feel the need to adopt a defensive position on the economic impact of leaving the European Union; there is a “British” option.

That is why the recent “Economists for Brexit” paper was such a welcome addition to the debate in that it offers a glimpse of the economic benefits voting to leave could bring, among them improvements to output, competitiveness, real disposable wages and employment.

Telling the British people that there will be instability in an exit scenario is likely to become self-fulfilling. Sterling’s weakness reflects the size of our trade deficit.

We imported £291bn of goods and services from the Continent last year alone. Far from weakening our negotiating position, this situation makes us strong as it is simply not in Europe’s interests to play chicken on a trade negotiation.

As Boris Johnson recently said: “Germany has the most to lose from a messy divorce.” Talk of a detrimental downward currency movement following a Leave vote ignores the reality that countries all around the world are engaged in competitive devaluation and trying to keep currencies low.
A significant short-term drop in sterling could well follow a vote to leave, but a devaluation, should sterling remain lower for longer, isn’t necessarily a bad thing.

The market generally anticipates short-term risks but in reality exchange rates over a five-to-10-year period will reflect our economic performance, regardless of post-exit swings. Over half of our exports are with non-EU countries thanks to our membership of the World Trade Organisation; and in a post-Brexit world all our trade would fall under WTO rules in the short term.  Our top export market is the US, accounting for £45bn of the £300bn total.

This is why President Obama’s recent intervention in the debate is not only unwelcome but is not credible, leaving aside his breaking a long-standing diplomatic convention of states not interfering with each other’s democratic processes. 

The range of US political voices backing a Remain vote certainly serves the interests of the US, but it does not necessarily serve Britain’s best interests. Regardless of the referendum’s outcome, relations between Britain and the US will remain of vital strategic importance and, given the relative trade balance between the two countries and the history of the relationship, it is in both parties’ interests to reach a constructive deal as soon as possible.

In any scenario where Britain is no longer a member of the EU, we would be able to focus any trade negotiations on the sectors that are of vital interest to the UK, rather than having to compromise with the general interests of 27 other nations.

Europe is economically stagnant and not where we will find long-term growth. Its economic performance unfavourably compares with other developed nations: it is inefficient, makes poor decisions and has repeatedly proven incapable of reform.

The World Bank’s “Doing Business” rankings make difficult reading for EU member states, demonstrating year after year the deleterious effects of over-regulation by unaccountable bureaucrats in Brussels. Open Europe’s recent research report on Government Impact Assessments shows that the 100 most burdensome EU regulations cost Britain £33.3bn each year.

It went on to say that post-exit £12.8bn could be saved annually by deregulating employment rights, health and safety, climate change and financial services. Even Germany recognises the problem. Its Better Regulation Council says that at least half of that country’s regulatory costs are derived from the EU. 

Smaller companies with little or no EU business face the full force of its regulation, preventing the majority of British employers from reaching their full economic potential. All this for a market that accounts for just 12pc of our exports as a proportion of GDP.

In opting out of the EU we shouldn’t assume that our only choices are the so-called “Norwegian”, “Swiss”, or “Canadian” options: we can negotiate a “British option” because, after Germany, we are the largest EU economy. We are in a different situation since we’re not trying to join the EU and therefore don’t face the same compromises to be allowed in. Put simply, we’re too big to receive a punishment beating for leaving. 

Fear is the currency of domestic and foreign voices backing the Remain campaign. Perhaps the greatest danger of a Brexit is that other nations might follow, deepening the wound to an already weak construct.

However, in reality this is far more complicated for eurozone members: the Brexit option is potentially only available to other non-eurozone countries.  Having voted to leave, we could use our EU membership fees as a bargaining chip so that our contribution tapers over time, rather than forcing the rest of the bloc to instantly fund the budgetary consequences of our withdrawal.

We can do better out of Europe because it creates a golden opportunity to deregulate the British economy; adopt a merit-based approach to controlling immigration; and pursue targeted economic policies that benefit our economy over the long term, for example incentives for venture capital that support our strengths, such as life sciences and pharmaceuticals. 

We need to institute a regulatory framework that supports an efficient and transparent private sector. Matt Brittin, Google’s EMEA president, has warned that the EU will fall behind the US and China if it keeps discouraging entrepreneurs with excessive red tape that stifles digital innovation.

Even Spotify, Sweden’s runaway technology success, is planning a move to the US if its regulatory environment doesn’t improve.  Isolated examples are just that, but they underpin a more general discontent among entrepreneurs in the UK and elsewhere in Europe that the EU simply isn’t working for them.

Our own research showed that, by two-to-one, SMEs felt the EU was a hindrance, rather than a help. The assumed lack of imagination and bargaining strength in the event of a Brexit ignores compelling economic realities.

We can be stronger out of the EU and should not be afraid to grasp this opportunity.

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