• Checkmate comrades!

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    Above, a chart showing the reduction of Germany’s sovereign debt from just over 80% of GDP to just over 60%.

    Ever since Midsummer’s Day 2016 this organ has been asking one question to itself: “What the Hell is going on?”

    This is because when human beings are seen to be acting in an irrational manner an explanation is called for!
    This organ has since April 2016 insisted that the ONLY doable, practical Brexit strategy is contained in Flexcit (http://www.eureferendum.com/documents/flexcit.pdf), authored by Doctor Richard North and others.
    This was, is and will be the ONLY way the UK can leave the EU without damaging it’s economy.

    Given the constraints of geography, history and the international treaty that is “the Good Friday Agreement” in practice this would mean Great Britain leaving the EU, remaining in the EEA (aka Single Market, aka Internal Market) and rejoining EFTA but with Northern Ireland not only following suit but in addition remaining with the EU’s Customs Union.

    Now it is clearly the case that many members of the Brexit Party, the Conservative Party, the Labour Party, the DUP and UKIP do not like this prospect. But this is a classic situation of Hobson’s Choice!

    However, developments since 2016 have indicated that what is known as a “very soft Brexit” will NOT now take place!

    It appears that the UK is headed for a “hard Brexit”.

    Not necessarily!
    Yesterday, the Indy ran with the story (https://www.independent.co.uk/news/uk/politics/jeremy-corbyn-cab-queen-taking-over-labour-boris-johnson-no-confidence-vote-a9046266.html) that Comrade McDonnell would dispatch Comrade Corbyn to Buckingham Palace in a taxi to demand that HM, A: Sack Boris the Buffoon as PM and B: Appoint him instead.
    British Gazette comment: Oh Dear! Oh Dear! Oh Dear! These two elderly gentlemen have gone and walked straight into a trap!
    Let us examine just what Comrade McDonnell proposes and what would happen were this to take place.

    It would mean the sacking of a Prime Minister and the appointment of another WITHOUT a general election. This of course would mean that the numbers [of MPs] in the House of Commons would remain unchanged. This would mean that a de-facto minority Conservative government would be replaced by a de-jure minority Labour government. Such a government would clearly be a temporary contrivance!

    Comrade Corbyn would be unable to put through a Queen’s Speech containing anything that a combination of opposition MPs disagreed with. Which means his Clause Four Manifesto could not be enacted.
    The Queen Speech would actually be an extremely short speech for it would likely contain only one measure of any substance. In fact it may only be one sentence long and go down in Parliamentary history as the shortest Gracious speech on record!

    Herewith the likely content: “My government will introduce legislation for a second referendum on the country’s membership of the European Union.”

    That’s All Folks!

    Except:

    It MIGHT contain an additional sentence: “My government will introduce legislation to lower the voting age to sixteen….”

    And as a sop to the Tories: “and those British Citizens living overseas.”

    You see, with NO majority Labour will not be able to introduce much by way of contentious legislation. They will not be able to increase taxes so finance acts will effectively carry over from the Tory government. Comrade McDonnell will however be able to “max out” the national credit card if he wishes!

    Working on the basis that at least six months will be demanded by the UK Electoral Commission for organising the poll, expect the vote to take place on or around Thursday 30th April 2020.

    Expect Labour to campaign to remain in the EU but for Comrade Corbyn to look as happy during the campaign as Arlene Foster attending an Irish Gaelic festival!

    This of course will play into the Tories hands!

    This because the UK could well remain in the EU but the Tories will have “clean hands”!

    “It was Labour what done it!”

    Of course, there is an even worse fate awaiting the country IF the strategy that appears to have been adopted by a certain Dominic Cummings comes to fruition: “To bring about a “No Deal” Brexit.
    The danger of this foolish course of action was described in our post on Wednesday: http://www.british-gazette.co.uk/2019/08/07/brexit-betting-the-farm-3/
    The chart at the top of the post illustrates an aspect of German government policy that affects the other members of the Eurozone.
    There is a very interesting and informative post about major Germany’s banks and German policy over the sovereign debt.
    GOTO: https://blog.knowledgeleaderscapital.com/?p=16593
    Taken together with other research, it appears from reading the above post the German government may have a grand plan vis-à-vis the Eurozone, Germany’s role in it and the roles of the other Eurozone members. As the article explains, Germany is reducing her sovereign indebtedness relative to the levels of sovereign indebtedness of other Eurozone members. Combine this with Germany’s trade surplus in visible trade in the Eurozone generally and you have a situation which is favourable to the German economy but less so to the other economies. To a degree (and only to a degree) the way the Eurozone is functioning at the moment is somewhat analogous to a Ponzi scheme in the sense that the Eurozone members other than Germany incur excessive sovereign indebtedness (with German exporters deriving the benefit from the increased economic activity generated thereby) without the concomitant effects of having to service the debt and the domestically generated inflation. It could be described as a “beggar my neighbours policy”!

    Of course such a policy will impose excessive strains upon the economies of the other Eurozone members and eventually the limits of affordable borrowing will be reached. To stave this off the Germans appear to have to medium to long term objectives for the Eurozone.

    One is to get those EU members states who are not members of the Eurozone to become members of the Eurozone. Which is of course why Germany would be very keen to have a UK that had gone through a “hard Brexit” to rejoin the EU ASAP, as any state joining the EU now has to commit to joining the Eurozone!

    Having the UK and a Eurozone member would assist Germany and the EU members generally in achieving their medium to long term objective: establish the Euro as a reserve currency.

    IT cannot be emphasised enough how important an objective this is.

    You see, in many democracies governments suffer from a common problem – excessive sovereign debt. This is because democratically elected politicians across the world find that public spending is popular whereas taking money in the form of taxes is unpopular. These politicians look to their counterparts in the USA with envy. This is because the USA is able to sustain a level of sovereign indebtedness that would be completely impossible for any other country. Why? Because the US $ is the world’s reserve currency. It is a reasonably well known fact that crude oil is traded in US $. However most other commodities from coffee and copper through to gold and grain through to soya and silver are traded internationally in the US $. This means that traders have to hold US $. This is a colossal benefit to the US economy. It means that US politicians – for decades – have been able to pay the US sovereign debt with more sovereign debt! NO other country can do this!

    The politicians in the EU however wish the EU to be able to do just this!

    This is the reason why so many politicians are so enthusiastic about the EU!

    HOWEVER: It MUST be understood by these politicians – yes, Anna Soubry including you – that the USA (and Donald J. Trump in particular) are not going to stand by passively and allow the EU to replace the US $ with the Euro! You see, if the US $ ceased to become the reserve currency the US sovereign debt would become unsustainable overnight leading to a collapse of the US economy.