Dec

19

I Suspect, from anonymous

December 19, 2018 |

 I suspect that a hard Brexit is likely for two reasons:

1. May's inability to get anyone completely on the same page as her;

2. German stubbornness. Brussels has become like Washington, where to paraphrase Kennedy "the efficiency of the French combines with the diplomatic skills and courtesy of the Germans." (For the record, my background is German)

It is not in Trumps best interest to have London fall out of bed from financial stress during this window of at least six months. Therefore, I expect serious back channel conversations between his team and the Fed to take the pressure off. That means focus on the front end curves for both countries.

If the Fed becomes tone deaf, look for back channels with the big banks and the ABA.

It's getting more pressing to do more than pause. It also gives May ammo to clean out MI5/MI6 of deadwood and clowns.

The U.K. needs to remember their place in the scheme of things.

anonymous writes: 

I subscribe to the following thought: There will be a trade deal–the mutual trade volumes are simply too big. A hard Brexit (an exit of the UK from the EU without a trade deal) will cause bilateral trade agreements, later. This would severely weaken the EU as a institution. This places UK in the stronger negotiation position today. The EU negotiates for its existence–the UK "only" negotiates for trade.

The British domestic debate dominates the news–because they have free exchange of thoughts. The media on the continent is brought into line–there is no Brexit debate. (How can a topic be so controversial within UK–and on other side of the channel–all are of the same opinion?)

For Germany the EU is very important–again this places the UK in the stronger position. As usual in Europe–the timing is the big question mark–most likely drawn out. It would be not unusual to first have a hard Brexit and later a UK-EU trade deal (again with the same power distribution) There is already an US-UK trade deal in the pipeline.


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1 Comment so far

  1. Bill Posters on December 19, 2018 6:07 pm

    We are in the last days of May. The delayed vote in the UK parliament on the negotiated withdrawal agreement is now due to take place some time in the week commencing 14th Jan 2019. It’s very difficult for the UK prime minister May to delay this vote further. If the withdrawal agreement is voted down in parliament other options will be considered. If no alternative option commands a majority in parliament the UK will leave the EU with no agreement on 29th March 2019 due to current default legislation.

    For May to survive the UK must leave the EU on the 29th March 2019. For two years May has been saying the UK will leave on this date with or without a deal. If something else happens then May will no longer be prime Minister.

    May’s fate could be determined by ten Democratic Unionist Party (DUP) MPs from Northern Ireland. (Scots Irish). The DUP have a confidence and supply agreement with the Conservative party which is keeping May’s minority conservative government in power.

    It’s possible that Brexit will force a UK general election which could bring Jeremy Corbyn’s Labour Party to power. Many would portray Corbyn as a left wing extremist. However, the policies of Corbyn’s Labour would be familar to 1970s social democrats such as Harold Wilson, Dennis Healey, Willy Brandt or Helmut Schmidt.

    The current chaotic state of UK politics just shows what a hopeless inefficient system of government representative parliamentary democracy is. Unfortunately all the other systems are much worse.

    Whatever happens the UK will stubbornly remain 21 miles from Continental Europe.

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