Tag Archives: markets

Continued Intransigence

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European Commission President Jean-Claude Juncker makes it clear.

Britain has still not proposed any workable alternatives to the Northern Ireland “backstop” within the Brexit withdrawal agreement, the EU said on Monday.

And

President Juncker underlined the commission’s continued willingness and openness to examine whether such proposals meet the objectives of the backstop. Such proposals have not yet been made[.]

Juncker knows full well that the “backstop” is not just a deal-breaker, it’s a non-starter for the British. It demands that a core feature of the Brexit vote three years ago was so that Great Britain gets control of its own borders back, yet the “backstop” requires Great Britain to surrender its Irish border to the EU.  That can only be taken as a first step to dismantling Great Britain.

What demonstrates the cynicism of the EU and of Juncker is that they, and he, have steadfastly refused even to offer their own “workable alternatives.”  It’s the EU’s backstop.  Full stop.

In place of counter-offers, Juncker is offering only vapid, uselessly rhetorical pretense and empty willingness to “discuss the next steps.”

He plainly wants Great Britain to drop its Brexit plans and meekly beg for forgiveness for its effrontery. Despicably, so do Labour and too many so-called Tories.

Oil Strikes and our Economy

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“Economists” cited by The Wall Street Journal say that the Iranian/Houthi strikes against a couple of major Saudi Arabian oil production facilities are unlikely to do much to our economy. Despite their anonymity, those…sources’…assessment is accurate.

Among other things, we’ve made ourselves essentially self-sufficient in oil and natural gas production, have become the world’s leading producer, and we’re a net exporter of oil and natural gas.  That last, especially, means we’ll easily be able fill any shortfall from the Saudis’ damage.  (Production cuts from that damage are likely to be short-lived in any event.)

In addition,

Today, energy accounts for about 2.5% of household consumption, down from around 8% in the 1970s

The Federal Reserve still has its misconception regarding the proper execution of its role, though:

The Saudi oil-field attack adds a new factor to consider for Federal Reserve officials, who have been weighing how a variety of geopolitical risks will influence the economic outlook, including the US-China trade war, unrest in Hong Kong, and Britain’s impending departure from the European Union.

Those things are irrelevant to the Fed’s task, which is to maintain stable pricing and full employment. The optimal way to achieve this is simply to set its benchmark interest rates at levels consistent with its inflation rate goal, and then—rather than chasing market responses to this or that “geopolitical risk,” or trying to anticipate and preempt them—sit down and be quiet.  The resulting sound economy will produce full employment.

The Fed’s inconstancy is a bigger problem for our economy than hits, even major ones, on another nation’s energy production capability.

On the other hand, the People’s Republic of China burns through three times the oil that it produces; it badly needs oil imports, much of which it got from Saudi Arabia.

Japan imports nearly all of the oil and natural gas that it consumes.  That’s a shortfall we easily can, and should, fill.

Regulatory Capture

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America’s automotive companies want ever stricter emissions standards.  Or so says Fred Krupp, President of the Environmental Defense Fund.

This, of course, is nonsense.

If car companies truly want stricter emission standards, they can do so without the cover of a government mandate.  Nothing is stopping them from setting and meeting their own stricter standards.  This is, after all, a (largely) free market economy, and it’s at the heart of a (largely) free nation.  Car companies can make their own decisions without Big Brother’s instruction.

Unless, of course, they have a different agenda.  Like, for instance, writing the regulations in a way to protect them from competition from upstart (as in impudent) companies that might have better products or better consumer appeal, or both. That’s classic regulatory capture.

Or, maybe it’s a path to writing the regulations in a way that beats the EDF climatista drum but that has little or nothing to do with producing quality, efficient, cost-effective cars that consumers actually want.

Surrendering to the Extorter

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This is what Europe is getting ready, meekly, to do.

European diplomats are getting behind a French initiative to provide Iran economic relief from US sanctions in return for its full compliance with a multinational nuclear accord….

The “initiative” centers on these articles of surrender:

preliminary agreement aimed at allowing Iran to be able to sell at least 700,000 barrels of oil a day—more than double its current exports.
It also envisions a credit line of some $15 billion so Iran could draw on hard currency….

What makes this timidity especially bad is that, even with Iran actually complying with the terms of the JCPOA, the nuclear weapons agreement expires—and then, by the terms of that same agreement, Iran will be entirely free to resume developing its nuclear weapons, with nary a peep allowed by the signatories.

And here’s an example of Iranian integrity and a demonstration of its willingness to honor the commitments it pretends to make, including its acceptance of those terms:

On Friday, an Iranian tanker was set to offload crude onto ships that would take it to Syria, breaching terms of its release following its seizure by Gibraltar….

These European diplomats, including the French ones, know all of that full well.

Tactically Sound?

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Perhaps, but perhaps strategically disastrous.  British Prime Minister Boris Johnson asked the queen to prorogue the current parliament, and the queen agreed, in order to block it from blocking him from taking Great Britain out of the European Union on schedule 31 October without a deal in the likely event that the EU continues its intransigence in negotiating.  Prorogation is the formal end of an existing session of Parliament, and normally it’s done just prior to the beginning of the next session, to clear the decks for that session.

The current prorogation would run until 14 October, at which point the Queen’s Speech, which would reconvene Parliament, would lay out her (the PM’s) agenda for the new session. Existing bills, including those currently planned to interfere with Brexit, cease to exist with the prorogation; although, they could be reintroduced—to take their turn in the queue in those two remaining weeks.

There are a couple of reasons why Johnson’s move might be tactically sound.  Parliamentary sessions normally last for one year; however, the current Parliament has sat [sic] since June 2017, more than two years.  It’s time for this feckless band to get out of the way, go home, and contemplate their navels.

That brings up the second reason: prorogation would prevent this Parliament from blocking Johnson’s effort to bring the nation out of the EU with no further delay and associated economic uncertainty—and that uncertainty’s follow-on deleterious effects on the British weal.

The longer question that arises is whether prorogation is a strategically sound move.  It’s very likely that prorogation will result in an on-time departure from the EU, with or without a deal governing the terms of the exit.  However, it’s entirely possible that the associated hue and cry will lead to new elections (possibly triggered by a successful no-confidence vote in November) and a new, non-Tory government installed.

That government is very likely to go, hat twisting in hand, to Brussels and beg for reentry into the EU.  What then?

What would be the result on British sovereignty; British economic and political welfare; indeed, British self-respect in such an eventuality?

Even if that new government doesn’t go begging (or even if it does), what else could happen? The alternative to a Johnson-led Tory, sort-of conservative, government is a Corbyn-led Labour government.  That means the prosperity of a limited (relatively, within the constraints of present British concepts) government that Margaret Thatcher made so much progress toward and that Johnson would seek to preserve and extend would be entirely undone by the destructively socialist government that Corbyn would install.

What then of British economic and political welfare; of British self-respect?

Still, Johnson’s move is worth the risk, for the sake of British sovereignty.