The absurdities of Brexit roll on.
Boris Johnson supposedly told Germans that Brexit is a mess. No doubt everyone can agree some aspect of the process is a shambles. So why the controversy?
Brexit negotiator David Davis found himself reassuring Europe that Britain would not tear up EU regulations, burn them on a bonfire, or leave them behind on a race to the bottom. After all, we don’t want to end up looking like the Mad Max dystopias of Singapore and Hong Kong. Let alone recreate the economic disaster of the Margaret Thatcher government after the prosperous 1970s.
Michael Gove came under fire from farmers because of a worker shortage. The lack of seasonal fruit and vegetable pickers from the EU is causing a real problem.
“Other countries get it; the Portuguese are hiring Thais, the Spanish are hiring Moroccans, even the Polish get it, they are hiring Ukrainians under their equivalent of seasonal agricultural schemes,” explained the chair of the National Farmers Union horticultural team.
Apparently the Home Office prevents foreigners from outside the EU working in the UK as seasonal agriculture workers. Which tells you how capable UK politicians are at actually fulfilling the policies that will deliver the Brexit of their claims. If they can’t sort out immigration now, how will they figure out trade when it’s their responsibility?
But what’s really mystifying here is that we haven’t left the EU yet. There has been no policy change. If farmers are experiencing a worker shortage, it’s got nothing to do with Brexit policies. After all, the workers are seasonal. Why are the farmers complaining to the government about a problem that it hasn’t created yet?
In a twist I did not see coming, cooperation on intelligence and policing entered the Brexit debate. Supposedly there’s a chance the likes of Europol and European intelligence agencies won’t work as closely with the UK under Brexit.
This shows that EU politicians are willing to risk the lives of their citizens for the sake of tainting Brexit. It’s quite clear that Theresa May should’ve told the world she fears for the sanity of the EU if it is not willing to cooperate on security.
A list of conservative MPs wrote a letter to May marked “Private and Confidential” which you can find here. It argues that the EU is vindictively preventing the UK from pursuing trade deals with other nations and we should therefore leave. In other words, being stuck in the negotiating process with the EU fails the cost benefit analysis. We have more to gain by leaving than we lose because the EU is making life so difficult.
On the matter of a UK-EU trade deal, the news was looking good. Until the threat of withholding the divorce payment made the news. Without a deal on trade, the UK wants to be able to withhold its owed financial contribution to the EU. So even what you’ve agreed to remains a bargaining chip.
But all this is a little academic. By the time Brexit is finalised, the UK and the EU will have changed so much. Especially if you throw in the transition phase.
Next year, Europe could feature all sorts of changes that completely change the face of Brexit too. If you want to anticipate the future of Brexit, anticipate the future of Europe first.
Who will Britain negotiate with in 2019?
In just a few months we could have a new Italian government negotiating the violation of the Maastricht Treaty while holding a gun to its own head. If the EU doesn’t agree to approve Italy’s vast deficits, it’ll leave the euro and default say leading Italian politicians. Some even want a restructuring of Italy’s debt approved by the EU. Deutsche Bank analysts claim this would obviously lead to a financial crisis.
In Germany, a new poll has the wacky upstart Alternative for Germany (AfD) party ahead of the previous stalwart of German politics, the Social Democrats (SPD). The SPD is also the traditional supporter of the EU and integration. With the AfD holding plenty of power as the opposition party, German politics will look completely different in the coming year.
With Brexit pencilled in for April 2019, you’ll never guess when the EU Parliament elections will be held. May 2019. What a coincidence.
If the national elections of Germany, Austria, Italy, France, Hungary, Czechia, and so on, are anything to go by, the EU Parliament will feature a huge amount of eurosceptics. If the EU Parliament has to become more moderate about the EU, it’ll soften its stance on Brexit dramatically too.
Even from the national government level, these movements are already causing trouble for the EU. Bulgaria has demanded the end of border controls inside the Schengen Area. Germany, Austria, Denmark, Sweden and Schengen participant Norway were singled out. I suspect people in those countries will not appreciate having EU law dictated to them by eastern European countries.
Meanwhile the EU’s Brexit rat will be sure to jump ship before the dust settles. Michel Barnier is set to quit his role as chief EU negotiator in March 2019, which is well before the end of the transition period during which the EU wants to negotiate the trade deal with the UK. Who will be the new negotiator?
Then there’s the unpredictable nature of UK politics. Who will be PM and in government in coming years? Will Brexit motivations hold out? Will the ploy of an election in 2017 avoid one until 2022?
The European Central Bank is winding up quantitative easing, ending its support for government bonds this year too. It might raise interest rates the next. Can southern Europe afford to fund itself? I doubt it. Italian debt is yielding less than American, an absurd state of affairs.
The point is that every conceivable factor which influences Brexit will change over the next few years. Many before the Brexit deadline and the rest before the end of the transition phase. Remember, the Brexit deadline can always be extended by unanimous agreement in the EU.
By the time the UK and EU come to an agreement the world will have changed completely. And so will Brexit.
Just another bitcoin correction
With bitcoin back over $10,000, it’s time to assess the damage. Is the correction a buying opportunity?
This chart from bitcoincharts.com uses a log scale. As you can see, the distance between $1 and $2 is the same as the distance between $10,000 and $20,000, as well as between $100 and $200. The aim of a log chart is to keep things in perspective. A doubling of the price shows up as the same sized rise in the chart.
The conclusion is that the recent drop in bitcoin’s price of over 60% wasn’t that big. The price fell more during corrections in 2016, 2014, 2013 and 2011.
What’s concerning about the correction is that it undermines the stability and usefulness of bitcoin once more. A 60% loss is hard to stomach, no matter who you are.
The recent run was far less parabolic and unsustainable than the media suggested. The log chart illustrates that nicely. The recent drop returns bitcoin to its long-term price trend.
And so now the upside is obvious. If the corrections is over and the price is in for another jump, the gains are as promising as ever.
But take a look at what happens after every correction. The price languishes. Usually for months, sometimes for years.
Of course, bitcoin’s version of languish still meant 100% gains in 2012 and 2015. But downtrends are possible. The one in 2014 lasted a year and a half.
If you want to make gains in cryptocurrencies, I suggest you leave bitcoin behind. There are far better opportunities in the crypto world. Innovations that could revolutionise industry and commerce the way bitcoin claimed it would.
Find out which cryptocurrencies to buy now here.
Until next time,
Capital & Conflict