Project Fear’s Friday funnies

Nick Hubble

If you haven’t been reading Capital & Conflict for long, add some sugar to your coffee before you read it today. Or something stronger.

The newspapers are building their own Project Fear over a no-deal Brexit.

You might call it hysteria.

After doing my reading rounds, I’m worried a Lufthansa plane might drop out of the sky here in Japan, having been unable to land at Heathrow because the EU and UK didn’t reach a deal.

I do know Lufthansa fights are allowed to land here. I’ve even seen one do so. Which is odd because Japan isn’t in the EU yet.

Hmmm. I wonder how the Japanese do it…

Let’s look at what headlines have me cowering in my kimono.

Last night, the lead story on the Telegraph website warned of higher credit card fees in the event of a no deal…

Higher credit card fees… Yikes.

Bloomberg went one better: “A No-Deal Brexit Could Mean Higher Prices, More Red Tape and Less Sperm”.

Woe is me…

The Express warns that the ugly pictures we have on cigarette packs would need replacing “as the copyright for the existing picture library is owned by the European Commission.”

Smokers, this is an opportunity for you to make your mouth famous and profitable!

But wait, how can the European Commission own the pictures and then mandate using them by law? What sort of government is this? How can we elect them!?

Budget blowout and no banking

Things did at least get semi-serious in some of the newspapers when it comes to a no-deal Brexit.

The Guardian warns of £80 billion in extra government borrowing, burying that the figure is over the next ten years later in the article. We used to criticise it for using five-year calculations to make the numbers look bigger.

But why stop at ten? In my opinion, a 100-year calculation would’ve been better suited to its goals.

God only knows what else might happen in the next ten years though. Given we’re leaving the EU, why not take into account the inevitable war spending in the budget?

But hold your horses. The UK’s 2016 net contribution to the EU was £8.6 billion and rising fast. Over the next ten years, that’s… unimportant and not worth mentioning in the context of the budget under a hard Brexit. Nor is the so-called divorce bill.

Germany’s Der Spiegel warns Brits living in the EU could lose access to their UK bank account under a no-deal Brexit. This sounds odd after having done UK and German banking from Thailand, Australia, and Japan in the last two years.

It seems every nation around the world is more advanced than Britain when it comes to resolving these issues.

Countries all over the world, inside and outside the EU, allow trade, credit card transactions, flights and banking without issues. But the UK could not under a hard Brexit…


If remainer warnings rely on the world being frozen the day after Brexit actually happens, without any preparations made beforehand, many of their predictions might be correct. Although I doubt businesses would put compliance ahead of customers.

If they tried, they’d lose those customers to businesses which did not. Like my smuggling company, the Dunkirk Buyers Club.

But it’s unlikely time will stop. And we’d have worse problems than Brexit if it did.

The best reason to leave without a deal is that it would force politicians to solve these issues, problem by problem, in a way that minimises conflict, instead of maximising political posturing.

Or they could just get out of the way altogether and stop regulating trade and who can access their bank account from where…

In my opinion, the Brexit show is all about politicians trying to keep themselves relevant. If people realised that they do not need politicians in order to have access to their bank accounts from overseas, what would we question next? We don’t need them to approve flights?

Don’t think about that, it’s dangerous. Besides, we’re not finished with Friday funnies yet…

Brexit’s best ever headline

My all-time favourite Brexit headline is this one from Bloomberg, which highlights so much about the nature of the EU, financial markets and Brexit at the same time that I could write about it for months: “U.K. to End Zero Risk for EU Government Bonds on No-Deal Brexit”.

That’s right, if you’re inside the EU, your banks must assign a zero-risk weighting for EU government bonds.

EU sovereign bonds are risk free by law inside the EU!


Zero risk on EU government bonds is absolutely priceless. Then again, it will cost people who believe it a lot… which bankers inside the EU must, by law!

If ever there was a reason to leave the EU, this utter stupidity surely is it.

Bloomberg has the details of another wonderful display of EU nincompoopery:

The U.K. will stop classifying debt issued by countries in the European Union as “zero risk” if it leaves the bloc without a deal, raising the prospect that banks may have to raise additional capital.

The change would automatically require U.K. banks, and subsidiaries holding parts of their liquidity in government bonds, to commit additional capital against the securities, according to the Treasury, which outlined how it plans to address the future of financial services supervision after Brexit. Supervisors would look at the creditworthiness of the various governments when deciding on weightings, potentially hurting lenders who have significant bond holdings from weaker nations.

Can you imagine how terrifying it would be if British banks had to “look at the creditworthiness of the various [EU] governments when deciding on [risk] weightings” instead of relying on legislation that just declares them to be risk free…?

Supposedly they’d have to raise more capital to cover the new risks. Risks which, of course, only exist if you leave the EU………………

Yes, if we stay in the EU, the bonds are risk free. If we leave, they become so risky our banks have to raise money to protect themselves!

Or the banks could just sell the bonds, especially once they realise just how risky they really are.

The extent of EU delusion over finance and economics was always extraordinary. Enough economists warned about problems with the eurozone. The euro project failed at each attempt going back to 1865. The run-up to the euro itself failed constantly with nations leaving the currency snake and the European Exchange Rate Mechanism (ERM).

How anyone could believe it would work is beyond me.

But once you’re willing to overlook something so obvious as the doomed nature of the euro, you can overlook plenty of other things too. And declare that European sovereign debts are risk free.

I’ll never tire of saying that. European sovereign debts are risk free by law in the EU.

I absolutely cannot wait for EU politicians to blame the free market and greedy bankers for when things go wrong:

“How could you be dumb enough to own so much European sovereign debt?”

“Erm, your regulations required us to…”

“Yes, but it was obvious we couldn’t pay them back.”

“It was your budgets that led to the default!”

“We’re not going to bail you out this time!”

“You’re the ones who need bailing out…”

For now, all this is a laughing matter. But once you follow where it leads, your tears will turn to fear.

More on that next week.

Until next time,

Nick Hubble
Capital & Conflict

Category: Brexit

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