Straws in the Wind

The extreme Tory Brexiteers are not quite so thick that they all fail to realise that once the nation understands the extent of the damage that a 'hard Brexit' will do to the economy, the government will have to back away from that option. So their tactic has been to push as hard as possible for the government to adopt positions from which a complete retreat would be impossible.

As the government has started to publish slightly more precise position papers as a basis for negotiations with the extremely well-prepared team around M Barnier it is clear than common sense is still present in most of the arguments and suggestions that are appearing. And while this moderate position is developing, so the events in the economy - and the predictions to which they trend - show that the UK would be ruined to an incalculable extent if it withdrew from the European Free Trade Area. Mrs May has made sticking-points [or 'red lines'] on immigration and the the ECJ [the European Court of Justice]. The immigration issue has been somewhat clarified by the discovery that the number of international students remaining in the UK when their visas expire each year is certainly less than 20,000: not the hundred thousand of the May myth. Also, the largest flows of immigrants by country of origin are India, Poland and Pakistan: the immigration that has been unaffected by the European policy of freedom of movement - that has always been under British control - is massive; and it is that migration that is of most concern to many people. On the issue of the European Court it is evident that some compromise will be made, that allows the ECJ a role in Britain that is not 'above' the British courts.

Meanwhile, the economic data stack up against the idiotic assertion that the UK can survive as an economic power, and maintain the people's living standards, outside the cocoon of the European Economic Area. Britain's growth is lowest among the G8, productivity is not improving, the decline of the pound [now 18% against the euro, since the referendum] more than offsets any benefit that the UK gets from its exports seeming cheaper in other countries; and government policy continues to be hurtful to firms and their capacity to invest. Today the Chambers of Commerce point out that three policy initiatives that lie within Mrs May's concept of a caring society are laying a heavy toll on business and on employment. The living wage has been increased, while the productivity of labour generally is not increasing. Mandatory workplace pensions are part payable by employers, and employees who have their share of the contribution to pay are seeking wage increases to pay it, so it is a double-whammy for employers. And in addition, the introduction of the apprenticeship levy on firms [according to the number of people they employ] will better educate those who could well become unemployed in coming years, as technological change makes the skill that the apprentices acquire become redundant]. An economy that should be training the young in the mathematics and in the principles of engineering and coding that support IT and AI [artificial intelligence] is instead preparing young people for jobs whose obsolescence is virtually inevitable.

The economy's capability to employ the whole available population increasingly depends on investment, adaptation and the rising productiveness of industry and commerce, on which productivity improvements depend. Living standards are now falling, and people are feeling it. Real wages are still lower than before the crash of 2008; and although the USA has begun to rein in Quantitative Easing and raise interest rates, and the European Central Bank is expected to so the same soon [it may announce steps in that direction at Jackson Hole this weekend] there is no sign that the Bank of England under Mr Carney - who is to be absent from Jackson Hole - has the opportunity of the bottle to do similar things.

As the extreme fragility of the British economy becomes more apparent, the idiocy of the Cameron-Clegg-Osborne gang and of their 'project fear' becomes more obvious. One can have slender sympathy for Mrs May as the inheritor of the mess and the inheritor of Brexiteer bullying, but not very much. She is grown up, and should be able to recognise the weakness of her negotiating stance. If she does not act on that basis, she will attract odium even greater than that which has settled in the Cameron clique.

Greece, Time and Eternity

The Greek Prime Minister is running around Europe, ostensibly to seek an extension of the timescale against which, he asserts, the Greek state will be able to achieve the cost and debt reductions that were promised in return for a loan that has already been received from the euro area and the IMF. He knows, as everyone he talks to knows, that his mission is impossible. Greece has neither the will nor the means to meet the requirements; and it is most improbable that politicians from the relatively-strong 'northern' eurozone member countries will dare to agree to lend Greece any more money to burn, because of the opposition of their own electorates. The exit of Greece from the eurozone is inevitable; and it will happen as soon as the zone has been able to agree on terms that will keep Spain, Portugal, Italy and Ireland within the system.

For more than two decades the Greek people were the over-indulged victims of a gigantic con, pulled on them by their politicians and bureaucrats, and by their Economists, acting in close concert with the eurorats who assembled the eurozone on the basis of an untrue prospectus and egregiously fudged data from various member states; among whom Greece was conspiculously mendacious [and, almost certainly, self-deluding]. The political future for Greece is deeply uncertain as living standards for wasters and for savers alike plummet into dire poverty. The one massively viable business sector - tourim - depends on the visitors feeling safe: if there are street riots, muggings on a vast scale, embezzlement of tourist companies' cash floats, and closure of hotels while the visitors are still in them, that will cause hundreds of thousands of tourists to opt for 'anywhere but Greece'  for their annual over-exposure to solar energy.Greece faces anarchy - a Greek word - as the time for the resolution of the debt problem extends until an exhausted cohort of creditors agrees to a settlement of the debt at a monumental write-down; with everyone aware that the notional ultimate repayment will never happen.

The British peoples have similarly been deluded to the Greeks; and the present coalition government - like the Greek coalition - is trying desperately hard to achieve some sort of result that will vindicate its assertions that the austerity policy is 'succeeding'. But just as the Greeks are spending what they have most recently borrowed, within an economy that has declined significantly but which has not significantly been reconfigured; the British state is borrowing more than was projected and is doing massively less to stimulate growth that anyone believes necessary. The economy has shrunk for three successive three-month periods, with no sign that this trend will cease. The pound remains strong against the euro and the dollar simply because it is an alternative to those currencies as a short-term 'safe haven' for international investors, and among the assets denomiated in pounds that can still easily be sold are British government bonds. This is a precarious temporary solution to the conundrum of how to fund the excess of state spending [especially on benefits for the unproductive members of society]. George Osborne entered the government as the lead missioner for the doctrine of austerity, with full support from his colleagues: now he looks increasingly isolated. His former close ally, David Cameron, is less able to support Osborne as his own credibility has evaporated. Outside the national government, the Conservative Mayor of London has featured largely in the euphoric promotion of the Olympic Games by all the media; to an extent that begins to make him credible figure as a challenger for the Conservative Party leadership.The strong element of buffoonery in his persona is held to be an asset by many of the public, and probably makes him an ideal candidate to soften the members' pain as his party shrinks rapidly from the national political scene.

Greece has run out of plausible politicians: the current prime minister is a technocrat who was effectively appointed by the EU; though he then managed to gain a reluctant endorsement from the electorate.

The British Conservative and Liberal-Democrat parties are busily undermining any myth of their relevance or their competence. Despite the appalling legacy that the last Labour government left to the country, they probably need one more short stint in power finally to destroy their own credibility. Then - as in Greece - politics will be voided.