• The road to hell is paved with good intentions.


    The saying is thought to have originated with Saint Bernard of Clairvaux who wrote, “L’enfer est plein de bonnes volontés ou désirs” (hell is full of good wishes or desires). An earlier saying occurs in Virgil’s Aeneid: “facilis descensus Averno (the descent to hell is easy)”.

    IF Madam May, presumably with the assistance of “the colleagues”, is NOT taking part in some elaborate game of charades or coup de théâtre, and this blog’s assumptions about her behaviour and stance is correct, then one question is this:

    At what point will it dawn on Madam May and her colleagues that the so called “cliff edge” is approaching?

    After all, there will be warning signs. The most obvious of which will be a drop in the value of Sterling, and importantly a down grading of the UK’s credit rating. It is of course the latter which will have a severe negative effect as it will not only increase the cost of the UK government’s sovereign debt but the overall debt.

    For those readers NOT suffering from high blood pressure and are NOT recovering from cardiac surgery, the size of the total UK debt can be found here: http://www.nationaldebtclock.co.uk/
    Details of the recent history of the UK’s credit rating can be found here: http://www.tradingeconomics.com/united-kingdom/rating
    On a personal level, I did take part in the referendum campaign and actively campaign for the Leave side. People in the rural community I have moved to know this. Notwithstanding me subsequently voicing opinions along the lines of Messrs. Booker & North, I am now becoming a little concerned that IF the dire consequences [of a crash Brexit] the aforementioned gentlemen are warning us about come to pass, Yours Truly will be the butt of let us say, “negative feedback”!
    I really do hope that I and Messrs. Booker & North are completely wrong and that all will be well, but I don’t think there is a basis in logic for this hope.
    I am not only concerned about the economic consequences, but the political consequences also. I fear that many on the Leave side will put the blame for the chaos firmly with the EU and will accept no responsibility on their part for advancing a negotiating position that always was going to be completely untenable.
    I fear we are watching a tragedy unfold. Brexit is entirely and safely achievable in the manner I have previously mentioned. IF it does not it will be the UK’s fault. NOT the EU’s.
    My principal objection is that UK membership of the EU is unlawful and unconstitutional as it causes Privy Councillors to breach their oaths (to ensure that no foreign prince potentate or power shall have precedence in this land) and Her Majesty to be in breach of her Coronation Oath to govern us according to our laws and customs. NOT those of the EU!
    These I believe are good intentions. I fear that I will end up in a Hell I have helped create.
    In the meantime, I have been looking out for my own interests. I have made adjustments to my equity portfolio. I have increased the weighting in Shell due to the fact that it’s earnings are mostly outside the UK and are US $ denominated. Over the past year or so I have also increased my weighting in Lloyds Bank, due in part along the strategy of pound cost averaging but also to the paradoxical position Lloyds (and the other UK banks) will find themselves in should a crash Brexit occur. Many assume (with some logic) that since Lloyds has been a bell weather for the UK economy, a hard Brexit will be very bad news. To a very great extent that is correct. However, a crash Brexit will result in a dramatic and sudden decline in the UK’s credit rating – a degree of which will have taken place beforehand. A downgrade of sufficient size will cause interest rates to move quickly upwards. This will cause mortgage rates to rise – steeply. Lloyds Bank’s profits will increase, although defaults will also. These defaults however are covered by insurance – banks insure against this contingency.

    However I rather expect that this will NOT result in as generous a dividend as I might greedily hope. Probably because an angry set of politicians will impose a big windfall tax on those banks who have gained from the country’s predicament!

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