Brexit

[Script]

[...]The advantage of a referendum is that you are voting for one policy not a party. [...]

I absolutely agree.

- in other words voting about what the politicians have actually  done rather than their overall approach to governing the country.

Not sure I understand this part. Why is a referendum about what politicians 'have actually done'? A referendum should be about the future path not the past. And a referendum should most definitely not be like giving politicians 'grades' for their past actions/decisions (A: 'Look, haven't I done great for you?' B: 'Sure, darling. Cum 'ere, get y'r slap in the face...). That sounds a bit twisted to me. But maybe I got the whole idea of democracy wrong.

It is the only time the people get to express their feelings about the democratic process as a whole

I absolutely disagree.
(1) Feelings/emotions and politics really don't make a good pair.
(2) There are many other and much better ways to express (political) feelings and ideas -- general elections is only one and a rather basic/primitive one.
(3) Referendums are not meant to cast a vote about democratic processes as a whole or even democracy itself.

On a purely emotional level, I do follow the above argument. On an intellectual level, I don't. And on a democratic level I actually feel that the last part especially might be a bit misguided. I do agree though that for some people it might have been an easy -- cos a one-time, little-effort-to-invest and thus highly effective -- way to express at least something.

Personally, I think the entire referendum is and was a farce -- right from its announcement to the way it was campaigned and including the outcome. It was about nothing but feelings, sentiments and most probably even ressentments -- but not about reality-checked policies. It would have been interesting to see what people really 'feel' and 'think' about it all had the campaigning on both sides been more detailled, more fact-informed and speculatively future projective. The outcome might have been the same -- but the entire thing would stand on much firmer ground! Not being British myself, looking from the outside, the Brexit votum seems a purely sentiment-infused decision (much like: 'like potatoes' or 'don't like potatoes' -- no, actually it was more along the lines of 'tomatoes' than 'potatoes'). And that's why I think that it is most definitely not something that will be remembered as a 'highlight' in democracy or democratic processes.

 

[Script]

While you lot are politely discussing the merits and demerits of various forms of democracy, the Brexit referendum has delivered to my household here in France a 20% pay cut!!
[...]
Thank you very much to all the uneducated /misinformed/ or whatever you are, for spoiling my retirement after a lifetimes work and  responsible hard-won contributions to my pension pot.

Big ouch! I'm really sorry to hear that.

If the promises of the Leave campaigners come true, this is only an interim and it'll go up again and even higher. If it doesn't, then the Leave campaigners will most probably feel this plus other cuts too, but it won't be as immediate for them -- more like slowly creeping in through the back door (which hurts less).

Strangely enough I read that many countries/investment firms started buying into the pound -- mostly because they have to invest certain percentages into currencies including the pound. But if the pound was too hot an iron, they'd probably have dropped it altogether by now. Not sure this sounds consoling to you at all.

 

[JohnRoberts]

While you lot are politely discussing the merits and demerits of various forms of democracy, the Brexit referendum has delivered to my household here in France a 20% pay cut!!

The exchange rate was about 1.3 Euros to the pound, before the vote, it is now 1.1.  My pension is paid in pounds and has to be converted to Euros for our living expenses.

That sucks... You can hedge future exchange rates but that costs a few percent so few individuals use that. It doesn't work after the fact.

The pound weakening should be good for UK exporters but clearly not for expatriates.  We (old people) also suffer from low interest rates that disproportionately harm retirees.

Thank you very much to all the uneducated /misinformed/ or whatever you are, for spoiling my retirement after a lifetimes work and  responsible hard-won contributions to my pension pot.

You wanted to control your borders but have ended up screwing over the million Brits who live in Europe.  If we all have to come back home you will have the biggest housing crisis since the war.

As it is, we have now become bargaining chips against all the EU citizens residing in the UK, I don't think that is going to end well.

DaveP

Not to change the subject but as an outside observer the pre Brexit polling (even betting lines which are usually pretty accurate) seemed to miss the actual vote sentiment. I don't know how much of this was people saying one thing and doing another. Another factor is some didn't believe the vote to exit would succeed so voted as a protest not expecting success.

Another factor is how media speculate about outcomes. People may vote or not based on public expectations.

JR

 

[Matt Nolan]

Another factor is some didn't believe the vote to exit would succeed so voted as a protest not expecting success.

Add that to the people who didn't bother to go and vote because they didn't believe the vote to exit would succeed and there is the root of your 4% majority.

 

[Script]

---truly an aside---

You can hedge future exchange rates but that costs a few percent so few individuals use that. It doesn't work after the fact.

In general, that only makes sense (as a kind of insurance) for companies that have to move huge amounts (tens of thousand). The exchange rate you get is based on some sort of (stepped) moving average (peaks and dips leveled out ), so not ideal -- but better for companies as they have to make 'reliable' calculations for near-future business transactions. Doesn't make much sense for individuals.

You could 'bet' for/against the pound. But that's betting. Or turn to the stock market, which requires time, good nerves, dispensible money, and acceptance of loss. A target of 20% p.a. is very tough and only possible with high risk (read: mostly betting & possible loss to total loss). Target of 2% (conservative investment) is comparatively easy (better invest when markets are down: 'Armageddon-is-here' times). Higher returns require higher risks. A high risk investment equals high time investment (basically like a job). And, the higher the investment amount, the higher the investment in time for researching and observing markets.
---truly an aside---

 

[JohnRoberts]

---truly an aside---In general, that only makes sense (as a kind of insurance) for companies that have to move huge amounts (tens of thousand). The exchange rate you get is based on some sort of (stepped) moving average (peaks and dips leveled out ), so not ideal -- but better for companies as they have to make 'reliable' calculations for near-future business transactions. Doesn't make much sense for individuals.

Perhaps amusing anecdote, at my last real job we did enough business internationally to hedge currency in several major markets. The controller who put on the hedges got called to task one time because he "lost" money on the hedges when they weren't exercised and expired worthless.  This is probably too obscure to be funny and only amusing to me because I know the executive who complained to him. This controller was one of the more intelligent people in upper management but couldn't win for doing right.

You could 'bet' for/against the pound. But that's betting. Or turn to the stock market, which requires time, good nerves, dispensible money, and acceptance of loss. A target of 20% p.a. is very tough and only possible with high risk (read: mostly betting & possible loss to total loss). Target of 2% (conservative investment) is comparatively easy (better invest when markets are down: 'Armageddon-is-here' times). Higher returns require higher risks. A high risk investment equals high time investment (basically like a job). And, the higher the investment amount, the higher the investment in time for researching and observing markets.
---truly an aside---

Aside the aside George Soros famously made over $1B betting against the pound with a highly leveraged bet (borrowed money to increase the bet) in the 1990s.

Recently some currency traders got their clocks cleaned when the swiss franc decoupled from the euro and gapped suddenly.

JR

 

[sahib]

While you lot are politely discussing the merits and demerits of various forms of democracy, the Brexit referendum has delivered to my household here in France a 20% pay cut!!

The exchange rate was about 1.3 Euros to the pound, before the vote, it is now 1.1.  My pension is paid in pounds and has to be converted to Euros for our living expenses.

Thank you very much to all the uneducated /misinformed/ or whatever you are, for spoiling my retirement after a lifetimes work and  responsible hard-won contributions to my pension pot.

You wanted to control your borders but have ended up screwing over the million Brits who live in Europe.  If we all have to come back home you will have the biggest housing crisis since the war.

As it is, we have now become bargaining chips against all the EU citizens residing in the UK, I don't think that is going to end well.

DaveP

From that point of view I should also be saying "thank you Brexiters" because that helped my sales. 

Strong Pound is a killer for my business.  Currently 1.22 USD is 1.00GBP and I am on my knees, praying it stays that way.

.

 

[abbey road d enfer]

From that point of view I should also be saying "thank you Brexiters" because that helped my sales. 

Strong Pound is a killer for my business.  Currently 1.22 USD is 1.00GBP and I am on my knees, praying it stays that way.

.

The other side of the coin is you'll have to pay in USD/Euro/Huan for raw goods...

 

[Script]

The other side of the coin is you'll have to pay in USD/Euro/Huan for raw goods...

Similar situation in Japan with the massive weakening of the yen. Overall good for exporters (but exporters only) and overall bad for the vast majority of the population (i.e. all those who do not export anything).

 

[JohnRoberts]

Several consumer products businesses in UK are working on price increases to deal with the increased raw material costs. This is still early days so unclear where it all ends up.

JR 

 

[abbey road d enfer]

Similar situation in Japan with the massive weakening of the yen. Overall good for exporters (but exporters only) and overall bad for the vast majority of the population (i.e. all those who do not export anything).

A nation that has a positive export balance benefits from devaluation. Benefits to the nation result in benefits for the people, right? So, where's the catch?  8) :-\

 

[sahib]

The other side of the coin is you'll have to pay in USD/Euro/Huan for raw goods...

Indeed. But the calculation comes down to what percentage the raw materials make up the overall cost of the product.  In my case it is beneficial for me if the GBP is low.

This was worse in my former business because the material cost was generally no more than 10%, the rest being purely the labour and running costs. In fact in some cases I would not even include the material in the cost calculation because it was so insignificant. So the high GBP meant my clients could get the product done chepaer abroad.

I would certainly like to hear your views but in my experience the high GBP only benefits those who buy and sell with plenty of money. For a particularly small, exporting manufacturer like me high GBP is bad news.

There is a joke in Turkish which goes like this. A guy asks his dad that he wants to make money. His dad says "make and sell son". Guy goes away and comes back some years later and says " dad I want to be rich". Dad says "now son buy and sell".

 

[DaveP]

Yes, I am fully aware that the parity with the dollar has meant windfalls for some.

At the moment your fellow Brits in Europe are paying for that, but as time goes on you will be shouldering more of the cost as you find the cost of devaluation affects your cost of living too, starting with fuel prices.

The people of the east coast of England swung the vote as they were the ones most affected by immigration.  The trouble is, the law of unexpected consequences applies when stuff like this happens.

There was a prevailing feeling that all the warnings were empty scaremongering and were resented as such.  Now we all have to accept the fall-out, I hope all the brexiteers find it has been worth it in the long run.

I think that Theresa May was wise to prime the British public to accept a hard Brexit because that is what we will get.  The Eu has to show that leaving is worse than staying in for obvious reasons, the idea that we are going to get a good deal is illusory at best.

There may be a small concession because Germany, France and Italy sell more to the UK than we buy from them, but don't hold your breath.

The UK's only hope now is to court it's former colonies and other developing countries and China, no economist can calculate the success of that, least of all the good folk of the east of England who think they know best.

Watch carefully the price of oil.  The higher it goes, the more people in Scotland will be inclined to vote for independence and the break-up of the UK will commence.  The little Englanders will finally get what they want, little England.

Bon chance

DaveP

 

[Script]

A nation that has a positive export balance benefits from devaluation. Benefits to the nation result in benefits for the people, right? So, where's the catch?  8) :-\

That is/was one of the basic ideas behind Abenomics. However, it has turned out that the Japanese government can't force stronly export-oriented private companies and corporations to raise salaries (the third pillar).

Also, a drop of 30% in a currency's purchasing power is a lot when compared to an increase of what, 1,5% in a country's overall exports (mainly due to the massive several trillion yen state bill for fuels). Just because something becomes cheaper does not always mean that more people buy it.

 

[sahib]

At the moment your fellow Brits in Europe are paying for that....

I truly feel sorry for my retired British fellows but as it stands I have to think of my other British fellows who are working for me and whose wages are not coming from pension funds but directly from my sales. If my sales drop then they'll start to suffer. Also my retired British fellows  had the good fortune to retire on at least some private pension. I have a British fellow who is hitting 70 and can not afford to retire as he put all his money into his (engineering)  business and lost it all.

I do not mean to retaliate here but what I strongly object is to put the blame on Brexiters.  And more importantly to the superior attitude taken against them, that somehow  they are all uneducated dummies or ill informed at best. There are professors of economics and succesful international businessman who voted for out.

 

[DaveP]

I do not mean to retaliate here but what I strongly object is to put the blame on Brexiters.  And more importantly to the superior attitude taken against them, that somehow  they are all uneducated dummies or ill informed at best. There are professors of economics and successful international businessman who voted for out.

I don't take it as retaliation, I fully accept your responsibilities to your workforce and family, just as you do to mine.

There were businessmen and economists who voted out, but more who saw the logic of remaining in.  I also sympathise with the people who voted out because mass immigration has adversely impacted their lives in ways that UK politicians are insulated from.  The fault lies with the inflexibility of the EU which is moving towards a united states of Europe when we only wanted a trade organisation.  EU politicians are trying to do this in their life times to gain the credit/kudos when changes of this sort need multiple generations for assimilation.
DaveP

 

[JohnRoberts]

Indeed. But the calculation comes down to what percentage the raw materials make up the overall cost of the product.  In my case it is beneficial for me if the GBP is low.

This was worse in my former business because the material cost was generally no more than 10%, the rest being purely the labour and running costs. In fact in some cases I would not even include the material in the cost calculation because it was so insignificant. So the high GBP meant my clients could get the product done chepaer abroad.

I would certainly like to hear your views but in my experience the high GBP only benefits those who buy and sell with plenty of money. For a particularly small, exporting manufacturer like me high GBP is bad news.

There is a joke in Turkish which goes like this. A guy asks his dad that he wants to make money. His dad says "make and sell son". Guy goes away and comes back some years later and says " dad I want to be rich". Dad says "now son buy and sell".

I am repeating myself but consumer products companies in Britain who buy raw material in dollars are suffering. One is trying to get a 10% price increase but got pushback from the retail chain who pulled their product from shelves momentarily.  I don't know what they negotiated, probably not the full 10% but staples like mayonnaise(?) mentioned in the article, will go up.

Just math, but relative currencies are dynamic and will keep adjusting. 

JR

 

[abbey road d enfer]

There are professors of economics and succesful international businessman who voted for out.

Successful businessman are not necessarily smart, and may have an agenda that does not coincide with that of common people. Now, professors of economics have no excuse for not foreseeing the ensuing crisis; again, some of them may have hidden agendas...

 

[ruffrecords]

Successful businessman are not necessarily smart, and may have an agenda that does not coincide with that of common people. Now, professors of economics have no excuse for not foreseeing the ensuing crisis; again, some of them may have hidden agendas...

Crisis? What crisis?

Cheers

ian

 

[abbey road d enfer]

I also sympathise with the people who voted out because mass immigration has adversely impacted their lives in ways that UK politicians are insulated from.

It has been largely demonstrated that immigration has both positive and negative consequences, and that the balance is usually positive.  In France and Germany, for example, the influx of migrants ahs helped putting the national health's balance out of the red, which is a benefit to working classes of all origins.

The fault lies with the inflexibility of the EU which is moving towards a united states of Europe when we only wanted a trade organisation. 

You cannot call that a fault, it's aprerequisite for a European concept that is not only the "tradesmen's Europe", but a political Europe. Maybe you just wanted a trade organization, but it's not how it works. A good trade arrangement relies on unified social environment, as it was at the beginning, when there were only 6 or so countries. The actual relaxation of this rule, slyly introduced when the EC was extended to 15 and more, has just resulted in the "polish plumber syndrome".As much as I would want Europe to be a politically and socially unified federation, I don't want it to be the playground for corporations and merchants.
TAFTA is exactly that, a trade organization; it has been largely rejected by France, Belgium and Germany's people, because people have other expectations than just being consulmers; polls have shown that people expect an international treaty to include such components as protection against social dumping, freedom of circulation, increased control of pesticides and GMO and effective protection against protectionism.