The economic consequences of Brexit (Vol 2)
Discussion
Most of the UK government , including Boris, insulted Trump before he won.
Pretty dumb of them. How dare they interfere in foreign elections!!
Looks like UK government played a part in 'digging the dirt' on him.
Boris has done a fair bit of brown nosing since to get us at the top of the queue (his words) but I wonder if Trump will be as forgiving as our government hope..
Pretty dumb of them. How dare they interfere in foreign elections!!
Looks like UK government played a part in 'digging the dirt' on him.
Boris has done a fair bit of brown nosing since to get us at the top of the queue (his words) but I wonder if Trump will be as forgiving as our government hope..
Murph7355 said:
Mrr T said:
The problem with your idea is the passporting regulations are implemented by directive not regulation. So even if the EU agreed the relevant changes would need to be enacted into law in all 27 countries.
MIFID 2 offers a better option but that will never be ready by 2019.
Things can happen as quickly as people want them to. MIFID 2 offers a better option but that will never be ready by 2019.
Faced with funding drying up if lock stock movement of the City to the EU overnight does not happen overnight, I suspect people will start to move.
Regardless of the rhetoric I don't see either side causing catastrophic collapse for the sake of it. I've heard commentators note Brexit is lose:lose. There's no need for that at all and I cannot see anyone striving for that to prove a point to about a project in serious trouble anyway.
1. I am not sure the comment about things happening quickly applies to governments. Most (all) countries in the rEU have processes for legislation to be agreed. This takes time. Further most (all) rEU governments are collations. It’s easy for legislation to be delayed as the ruling party tries to get votes. During the 2 years of negations almost all (maybe all) the rEU countries will have elections. During those periods and typically for some time afterwards as collations are agreed no legislation is passed. Belgium may not have a government at all!! What ever happens the UK do not want to reach any agreement which requires domestic legislation in the rEU 27 or a treaty change.
2. You refer to the rEU needed the UK to access funding. Sorry that’s just total wrong. If you want to discuss passporting happy to do so.
Edited by Mrr T on Friday 13th January 15:54
stongle said:
Mrr T said:
Your right most FX execution is now via order execution systems. However, these systems are not trading systems they just match buyers and sellers. I am sure there are automated trading systems as well but a) the Volker rule means these will not be used by banks so it will only be hedge funds, b) this will limit capital because hedge funds do not have much capital.
I agree they will have more effect today than a few years ago because the Volker rule means there is less liquidity in the market.
The real movers in the FX market are those who are buying/selling curacy because of their underlying operations. The biggest of these are investors, and the biggest investors are the Sovereign wealth funds. The slide in GBP means it’s likely they are reducing holdings of gilts. That’s bad news for a country with a massive debt problem.
Wrong. Volcker doesn't apply for SPOT FX transactions, only SWAPS Options and Fwds.I agree they will have more effect today than a few years ago because the Volker rule means there is less liquidity in the market.
The real movers in the FX market are those who are buying/selling curacy because of their underlying operations. The biggest of these are investors, and the biggest investors are the Sovereign wealth funds. The slide in GBP means it’s likely they are reducing holdings of gilts. That’s bad news for a country with a massive debt problem.
Volcker has had an impact in Bond markets, particularly killing liquidity in Corporates and pulling slab means that HFs may well become Market Makers in certain products (Citadel already is I think).
SWFs are NOT particularly large holders of Govt debt, other govts generally are - followed by banks (post BASEL and the requirement of banks to support public sector debt bubbles). Largest holders of US Govt Debt
Japan
China
Ireland
Cayman Islands
Brazil
Switzerland
Luxembourg
UK
In the Eurozone the ECB (in its capacity as the world biggest Hedge Fund) has $4tr is assets from its QE program.
As far as investing goes, a falling £ makes investment in Equities more likely (and its visible). SWFs like Norges etc are overweight equities and this trend is expected to continue.
Most CB’s hold government reserves mostly in their own government debt.
As for the ECB unless I am wrong most of the bonds holding are financing transaction so they are not long term investors.
As for SWF not holding much government debt I suggest you are wrong.
Most hold a large amount as government debt. Most I would suggest at least 60%.
I agree the fund managed by Norges can now hold 60% equity but look at its size. If it just holds 40% as government debt that about $300bn of government debt. The last figure I saw the Chinese SWF’s hold about 30% of all US debt issuance.
B'stard Child said:
Mrr T said:
walm said:
Seriously I am baffled.
WTF is all this rUK and rEU??????
A typo. rUK should be replaced with rEU in any posts I have made today.WTF is all this rUK and rEU??????
I did a global replace of all "fusion"s for "fission".
He still blames me for the 2:2.
Mrr T said:
I know Volker does not apply to spot FX but is does I believe apply to all naked shorts. So banks will no longer run long term FX propriety trading books. If I am wrong happy to bow to superior knowledge.
Most CB’s hold government reserves mostly in their own government debt.
As for the ECB unless I am wrong most of the bonds holding are financing transaction so they are not long term investors.
As for SWF not holding much government debt I suggest you are wrong.
Most hold a large amount as government debt. Most I would suggest at least 60%.
I agree the fund managed by Norges can now hold 60% equity but look at its size. If it just holds 40% as government debt that about $300bn of government debt. The last figure I saw the Chinese SWF’s hold about 30% of all US debt issuance.
Ah, so Volcker does apply now… OK not what you said first time round – let’s call it brevity ;-) Most CB’s hold government reserves mostly in their own government debt.
As for the ECB unless I am wrong most of the bonds holding are financing transaction so they are not long term investors.
As for SWF not holding much government debt I suggest you are wrong.
Most hold a large amount as government debt. Most I would suggest at least 60%.
I agree the fund managed by Norges can now hold 60% equity but look at its size. If it just holds 40% as government debt that about $300bn of government debt. The last figure I saw the Chinese SWF’s hold about 30% of all US debt issuance.
Where do you think the ECB Bonds come from – Banks. BASEL accords require this, and potential the latest run of reforms to OTC trading require up to an additional $1tr+ of loss absorption
The amount of bonds held by SWFs is not large in the grand scheme of things. $300bn is chump change (and Norges don’t hold that much as they diversify into a lot of other classes). US outstanding debt is $20tr, Eurozone EUR12.5tr. Japan a lot etc. Using your proxy, you get to a trillion or 2 maybe (and that assumes SAMA, KIA and ADIA are sitting high %s). After those, they get small quick.
China in total holds 1tr of US debt, mainly @ CB level (not counting this as a SWF).
walm said:
B'stard Child said:
Mrr T said:
walm said:
Seriously I am baffled.
WTF is all this rUK and rEU??????
A typo. rUK should be replaced with rEU in any posts I have made today.WTF is all this rUK and rEU??????
I did a global replace of all "fusion"s for "fission".
He still blames me for the 2:2.
It seemed quite slow to do the change in fact I thought excel had locked up eventually it finished
The next message was horrifying
13,400,000 entries replaced............
the undo took a little while too.......
Mrr T said:
Digga said:
PurpleMoonlight said:
Sorry, but it's just a blog and, plainly, a fairly biased, left wing one at that, so I read the comment, but do not take too much of the opinion to heart.He is both right of centre and a committed brexiter.
stongle said:
Where do you think the ECB Bonds come from – Banks. BASEL accords require this, and potential the latest run of reforms to OTC trading require up to an additional $1tr+ of loss absorption
The amount of bonds held by SWFs is not large in the grand scheme of things. $300bn is chump change (and Norges don’t hold that much as they diversify into a lot of other classes). US outstanding debt is $20tr, Eurozone EUR12.5tr. Japan a lot etc. Using your proxy, you get to a trillion or 2 maybe (and that assumes SAMA, KIA and ADIA are sitting high %s). After those, they get small quick.
China in total holds 1tr of US debt, mainly @ CB level (not counting this as a SWF).
I think we maybe at cross purposes. My comments related to the FX markets.The amount of bonds held by SWFs is not large in the grand scheme of things. $300bn is chump change (and Norges don’t hold that much as they diversify into a lot of other classes). US outstanding debt is $20tr, Eurozone EUR12.5tr. Japan a lot etc. Using your proxy, you get to a trillion or 2 maybe (and that assumes SAMA, KIA and ADIA are sitting high %s). After those, they get small quick.
China in total holds 1tr of US debt, mainly @ CB level (not counting this as a SWF).
Now I agree a vast majority of government debt is held domestically. The holders may change the maturities but most will only ever hold domestic debt so no effect on the FX markets.
The SWF (I include both China funds) hold a lot (ok) of government debt and when they change position they, in my view are a major influence in GBP rates. Let’s assume the higher figure of $2tr. Not sure how much would be gilts, I will guess 10% so that’s $200bn. So if the funds decide to reduce holding by just 1% that’s a $2bn GBP FX sale.
don4l said:
Peter North strikes me as a bit odd. Christopher Booker seems to be in the same camp. Both of them have been campaigning for us to leave the EU for years. Now that we have actually voted to Leave, they both seem to be in a blind panic.
Like the sainted Corbyn, some people are only truly happy when they can be campaigning against stuff/'the system' in whatever form, even if it means they are campaigning against stuff they used to support before it became the mainstream. Hence the flipflopping.There's also the Cassandra bit - they seem to be happy to only ever warn against an ongoing problem or upcoming disaster. When it looked like more EU was the future that was the problem. With Brexit as the (possible) future that has become the problem.
Their material is interesting but I lost most of my respect when they shifted their views.
don4l said:
Mrr T said:
Digga said:
PurpleMoonlight said:
Sorry, but it's just a blog and, plainly, a fairly biased, left wing one at that, so I read the comment, but do not take too much of the opinion to heart.He is both right of centre and a committed brexiter.
Murph7355 said:
My original point on this specific piece was how well the German electorate would receive a party prepared to put the EU project ahead of their economy.
A politician stating that is their intent is a different kettle of fish to a prediction that the economy may or may not be harmed by an exit, loss of tariff free barriers etc.
Latterly I noted that where predictions are concerned, Germany's position ref the EU is very different to ours. So different markers apply.
Regardless my underlying point is that business will win out one way or another IMO. I do not believe German business (or their electorate) will allow stupidity from its government. There'll be much noise in the first few months of negotiations proper, but eventually something sensible will result.
But if they do, then so be it. We will cope. And no doubt they will too.
(I may, however, not be understanding what you're getting at?).
There is a wonderful irony here.A politician stating that is their intent is a different kettle of fish to a prediction that the economy may or may not be harmed by an exit, loss of tariff free barriers etc.
Latterly I noted that where predictions are concerned, Germany's position ref the EU is very different to ours. So different markers apply.
Regardless my underlying point is that business will win out one way or another IMO. I do not believe German business (or their electorate) will allow stupidity from its government. There'll be much noise in the first few months of negotiations proper, but eventually something sensible will result.
But if they do, then so be it. We will cope. And no doubt they will too.
(I may, however, not be understanding what you're getting at?).
Again and again we are told that the UK government will prioritise border control over any economic argument, and will ignore any business or expert who says we should stay in the single market or customs union - in other words we must allow any stupidity in the eyes of some from our government in pursuit of control! We must allow our economy to suffer due to the will of the people!
And yet the hope of the same brexiteers is that the german government will bow to its business and not follow its principles in support of the EU and its single market rules. As I feared before the referendum, in the same way we have opportunties from a hard brexit, the EU also has many things to gain from our loss, as does e.g. the US who have already talked about exploiting the threats we face to our cost.
Roll on Tuesday, though I don't expect much information. What the pound does will be interesting.
Digga said:
PurpleMoonlight said:
Sorry, but it's just a blog and, plainly, a fairly biased, left wing one at that, so I read the comment, but do not take too much of the opinion to heart.FiF said:
don4l said:
Mrr T said:
Digga said:
PurpleMoonlight said:
Sorry, but it's just a blog and, plainly, a fairly biased, left wing one at that, so I read the comment, but do not take too much of the opinion to heart.He is both right of centre and a committed brexiter.
I don't know where the phrase "orderly exit" comes from. It is language designed to imply that our exit could be "disorderly".
There would be nothing "disorderly" about trading with France under the same terms as we trade with the USA.
The North article worries that lorries could get diverted to Brest. I'd like to know what the hell he is smoking to come up with that idea.
Le Havre, I could understand, but Brest is plain stupid.
Are there ferries between Brest and the UK? I've done a quick Google and I cannot find anything.
Mrr T said:
The problem with your idea is the passporting regulations are implemented by directive not regulation. So even if the EU agreed the relevant changes would need to be enacted into law in all 27 countries.
MIFID 2 offers a better option but that will never be ready by 2019.
MIFID 2 is entirely within the EU's gift - our regulatory regime is fine the day before Brexit, so unless we change something on the day it would be fine the day after - perfect equivalence. If we don't have it on the day we leave it's entirely due to EU spite.MIFID 2 offers a better option but that will never be ready by 2019.
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