Wise old saying: “Be careful what you ask for, you might just get it.”
Perhaps someone should have reminded the British of this before they voted, or even began the referendum process. The result was a surprise to the pollsters, the leader of the “Leave” campaign, and many of those who voted to exit.Its not clear what happens next or what the repercussions will be. Britain’s economy is so closely tied to the EU that its impossible to say what will happen if they try to disentangle it. Similarly, the legal implications are too complex to predict at this point in time. It is also possible that Article 50 will not be implemented. The vote, after all, was not binding, only advisory.
Below is a sampling from list of the possible economic consequences to the BREXIT vote published by the Globe and Mail:
- Britain’s economy would grow more slowly outside the EU than if it stayed in, according to a raft of projections made in the run-up to the referendum by the government, the Bank of England, think tanks, international organizations and hundreds of academics.
- The fall in sterling, which on Friday hit its lowest level against the dollar since 1985, could help exporters – although demand in many countries around the world remains weak.
- The OECD and the IMF have said a Brexit will hurt the rest of the EU and affect other countries further afield. The OECD has said output in the EU, not including Britain, will be around 1 per cent weaker by 2020 than otherwise if Britain left bloc, a palpable hit for a region which is growing only weakly.
- The OECD has said there could be deeper economic fallout if a Brexit undermines confidence in the future of the EU, a scenario not included in its forecasts.
- BoE Governor Mark Carney responded to the vote quickly, saying the central bank was ready to provide 250 billion pounds of additional funds to support markets. He also said the Bank will consider additional policy responses in the coming weeks.
- Before the vote, Carney said it was too simple to assume the Bank will cut interest rates from what is already a record low of 0.5 per cent to cushion the economy after a Brexit vote. The BoE says it would have to weigh up slower growth against higher inflation caused by a weakening of the pound.
- Britain racked up its biggest current account deficit on record last year, equivalent to 5.2 per cent of economic output. The shortfall reflected higher flows of dividends and debt payments to foreign investors than similar flows into the country, as well as its wide trade deficit. Mr. Carney has said a Brexit could test the “kindness of strangers” who fund the balance of payments deficit.
- Mr. Osborne said during campaigning for the referendum that he would have to raise taxes and cut spending if Britain voted to leave the EU to prevent the slowdown in growth from hurting his push to bring down Britain’s still large budget deficit. After Mr. Cameron’s resignation, it was not clear if that plan would be maintained.
Sterling and gilts
- Sterling plunged to a 31-year low on Friday, its biggest fall in history. George Soros, the billionaire who earned fame by betting against the pound in 1992, said it could go as low as $1.15. On Friday, it was trading at around $1.39.
- Most forecasters have said Britain’s unemployment rate – now at a 10-year low of 5.0 percent – would rise after leaving the EU, although after the financial crisis Britain managed to avoid job losses on the scale seen in other countries.
- As seen after the crisis, wages will probably bear the brunt of any post-Brexit slowdown, according to the IMF. Britain’s National Institute of Economic and Social Research think tank estimated real consumer wages will be between 2.2 per cent and 7.0 per cent lower in real terms by 2030 than if Britain had stayed in the EU.
- World leaders from the United States, Japan, Germany and France have warned Britain that leaving the EU would hurt its standing as a global trading power.
- U.S. President Barack Obama said Britain would join “the back of the queue” for talks with the United States. This week, French President Francois Hollande said leaving the EU would put at risk Britain’s access to the single market.
For the full list see: http://www.theglobeandmail.com/report-on-business/international-business/european-business/what-brexit-could-mean-for-the-uk-economy/article30614021/
This article suggests that Turkey’s Syria policy is changing, driven by two factors. The first is Iran and Russia’s commitment to supporting Assad, which makes Turkey’s policy of regime change unrealistic. The second is the Assad regime’s opposition to an independent Kurdish entity on the border with Turkey, something which gives the two common ground. The change in Turkey’s Syria policy would also be part of a larger regional adjustment, which includes improving relations with Israel. It is an interesting argument, but it is still in the realm of speculation.
- “….a complete reversal of Turkish policy is hard to imagine, and neither side has given any public signal of having revised its views. Turkish officials continue to demand Assad’s resignation, while the Syrian president recently slammed “Erdogan’s fascist regime” and vowed to make Aleppo “the graveyard in which, by the grace of God, the hopes and dreams of this butcher will be buried.”
- Of course, even if contact has in fact be re-established via Algeria, that does not mean that Ankara and Damascus are any closer politically. Conflict diplomacy is full of secret back channels, track-two talks, and other under-the-table maneuvers, but most never actually lead anywhere.
- Perhaps the new Turkish attitude was best summed up by an anonymous senior official from Erdogan’s Justice and Development Party (AKP) in remarks to Tulay Karadeniz of Reuters: “Assad is, at the end of the day, a killer. He is torturing his own people. We’re not going to change our stance on that,” the official said. “But he does not support Kurdish autonomy. We may not like each other, but on that we’re backing the same policy.”
Since this was published, Turkey has indeed signed a deal to normalize relations with Israel.
And, Turkey has apologized to Moscow for downing a Russian jet over the Syrian-Turkish border last year.
The Assad government, however, will be more difficult…..
The Orlando night-club shooting has been taken by some as evidence that Islam is intolerant and incompatible with North American morality and social values. This article looks at survey research on attitudes toward Homosexuality, specifically same sex marriage. The key result is:
- “45 percent of American Muslims approve of homosexuality, and 42 percent of Muslims support same-sex marriage recognition. In both cases, a greater number disapprove of acceptance than approve. But then, so do Evangelical Christians in numbers greater than American Muslims. Only 36 percent of Evangelical Christians approve of homosexuality and only 28 percent of Evangelical Christians support same-sex marriage recognition.”
The surveys used in the article also suggest that there is a great deal of intolerance towards homosexuality in Muslim majority countries. However, given the responses by American Muslims, this suggests that social/moral attitudes are the product of a broader social context and cannot simply be reduced to Islam.
For more background on the history of Islam in the United States, see:
The PKK was once animated by a misture of nationalism and Marxist/Leninism. However, PKK leader Abdullah Öcalan adopted a form anarchism while in prison, Murray Bookchin’s libertarian municipalism. This article provides a detailed discussion and analysis of this ideology and how it fits with the PKK’s agenda:
“That day (minus the pacifism) might not be far off. The PKK/KCK appear to be following Bookchin’s social ecology to the book, with almost everything up to and including their contradictory participation in the state apparatus through elections, just as prescribed in the literature.
As Joost Jongerden and Ahmed Akkaya write, “Bookchin’s work differentiates between two ideas of politics, the Hellenic model and the Roman,” that is, direct and representative democracy. Bookchin sees his form of neo-anarchism as a practical revival of the ancient Athenian revolution. The “Athens model exists as a counter- and under-ground current, finding expression in the Paris Commune of 1871, the councils (soviets) in the spring-time of the revolution in Russia in 1917, and the Spanish Revolution in 1936.”
Bookchin’s communalism contains a five-step approach:
- Empowering existing municipalities through law in an attempt to localize decision-making power.
- Democratize those municipalities through grassroots assemblies.
- Unite municipalities “in regional networks and wider confederations … working to gradually replace nation-states with municipal confederations”, whilst insuring that “’higher’ levels of confederation have mainly coordinative and administrative functions.”
- “Unite progressive social movements” to strengthen civil society and establish “a common focal point for all citizens’ initiatives and movements”: the assemblies. This cooperation is “not [perused] because we expect to see always a harmonious consensus, but — on the contrary — because we believe in disagreement and deliberation. Society develops through debate and conflict.” In addition, the assemblies are to be secular, “fight[ing] against religious influences on politics and government,” and an “arena for class struggle.”
- In order to achieve their vision of a “classless society, based on collective political control over the socially important means of production,” the “municipalization of the economy,” and a “confederal allocation of resources to ensure balance between regions” is called for. In layman’s terms, this equates to a combination of worker self-management and participatory planning to meet social needs: classical anarchist economics.”
The BBC has published an article detailing direct secret talks between the US, under the Carter administration, and representatives of Ayatollah Khomeini as the Shah’s regime was crumbling. Neither the US or the Iranian government wanted the meetings public, and the Iranian government is dismissing the article as a fabrication.
The talks were initiated by the US in order to establish contacts between the Shah’s military and Khomeini’s representatives so that some sort of transition could be arranged and a full blown civil war avoided.
- “Secretary Vance informed the French government that Washington urgently needed to be in direct contact with Khomeini’s group. The reason: to obtain Khomeini’s support for secret talks in Tehran between Beheshti, and the Shah’s military and intelligence chiefs.”
The meetings are interesting in and of themselves. However, perhaps more interesting is the perspective the article gives us on how revolutions unfold and the circumstances under which strategic choices are made by key actors. The US was operating with little information and had to make a choice between allies who no longer appeared politically viable, and an opposition they did not understand or trust. This is not just a history lesson. The Shah fell in 1979, but the same type of scenarios played themselves out during the Arab Spring and the same type of calculations had to be made.
For more details see: http://www.bbc.com/news/world-us-canada-36431160
A recent article published by the IMF, “Neoliberalism: Oversold?” suggests a long overdue ideological reappraisal is taking place. The article challenges standard neo-liberal beliefs about austerity, capital controls, economic inequality and the one-size-fits-all approach to economic planning. Below are links and a few highlights from the article and a discussion published at Salon.com, “Wrong all along: Neoliberal IMF admits neoliberalism fuels inequality and hurts growth”.
- “The world’s largest evangelist of neoliberalism, the International Monetary Fund, has admitted that it’s not all it’s cracked up to be.
- Neoliberalism refers to capitalism in its purest form. It is an economic philosophy espoused by libertarians — and repeated endlessly by many mainstream economists — one that insists that privatization, deregulation, the opening up of domestic markets to foreign competition, the cutting of government spending, the shrinking of the state and the “freeing of the market” are the keys to a healthy and flourishing economy.
- Yet now top researchers at the International Monetary Fund, or IMF, the economic institution that has proselytized — and often forcefully imposed — neoliberal policies for decades, have conceded that the “benefits of some policies that are an important part of the neoliberal agenda appear to have been somewhat overplayed….”
- “In analyzing two of neoliberalism’s most fundamental policies, austerity and the removing of restrictions on the movement of capital, the IMF researchers say they reached “three disquieting conclusions.”
- One, neoliberal policies result in “little benefit in growth.”
- Two, neoliberal policies increase inequality, which produces further economic harms in a “trade-off” between growth and inequality.
- And three, this “increased inequality in turn hurts the level and sustainability of growth.”
- The top researchers conclude noting that the “evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are…”
For more from the Salon article, see: http://www.salon.com/2016/05/31/wrong_all_along_neoliberal_imf_admits_neoliberalism_fuels_inequality_and_hurts_growth/
From the IMF:
- “Moreover, since both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth..”
It will be interesting to see if this critique has an impact on IMF policy. It is after all a research paper. There will doubtless be bureaucratic and political push-back from within the IMF and from some of the donar countries.
For the IMF article, see: http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm