Britain: First, the Brexit. Now the United Kingdom is falling apart - by Ben Wellings

Britain: Playtime is over

Britain’s decision to leave the EU is a major moment in post-War European history. This is like the collapse of communism, but with the West on the losing side. It is the first defeat for the British Establishment for centuries.

It is hard to believe in the wash-up of the referendum campaign but this was meant to be cathartic. It was supposed to heal divisions within the Conservatives by giving the people of the United Kingdom a say on membership of the European Union. But it has only entrenched and exacerbated divisions rather than healed them.

Referendums are not compulsory in the UK. Any decision to hold one is essentially political. Usually, you only initiate referendums that you are certain to win; Brexit has altered the rulebook.

What was proposed as a catharsis has induced trauma: trauma that the process and politics of Brexit will do little to repair. The referendum campaign laid bare deep divisions within the United Kingdom.

Other divisions were evident: between young and old; city and country; men and women. The biggest division that this exposed was between the so-called ‘winners’ and ‘losers’ of globalization and European integration: those who have done well out of these political structures and those who have not.

The disbelief amongst the ‘winners’ that Brexit might have been a realistic and attractive prospect was matched amongst the ‘losers’ by anger directed at the prosperous and secure classes.

 Perhaps the most pernicious division was between politicians and people. The murder of Jo Cox was not only a horrific attack on an individual striving for what she saw as the good society. It was an attack on democracy. Her example showed that not all politicians are remote fat cats in thrall to big business. Politicians still hail from the deprived areas in which they grew up, lived and worked.

Of course, direct blame cannot be laid at the door of the Brexit campaign. But in adopting UKIP’s anti-immigration language, Vote Leave’s leaders subordinated some principled critiques of the EU’s failings to a xenophobic politics of fear.

The referendum campaign deepened existing divisions within the Conservatives, from which they may not recover for years. Cameron’s position is surely untenable. BoJo is waiting in the wings.

The Labour Party under Corbyn was missing in action during this campaign, hoping that the Conservatives would hang themselves whilst Labour’s own internal divisions were overlooked. Many former Labour voters opted to leave and the party must answer questions about how its successive leaderships became so divorced from grassroots opinion.

The main beneficiary of Breixt is UKIP. Its message dominated the last three weeks of the campaign and will shape discussion about national identity, inclusiveness and tolerance in England for years to come. There are calls for it to disband having achieved its central aim. But the wind is in the sails of HMS UKIP and we should expect it to change into an established right populist party, ironically making British politics look much more ‘European’ at the very moment when it left.

The term ‘England’ is used advisedly since this was in many ways an English revolt. Outside of London it was rural England and, admittedly, Wales that dragged the UK out. Whether Scotland will abide this remains to be seen. Northern Ireland’s situation is similarity unsure.

There will always be an England; whether there will always be a United Kingdom remains far from clear.

For the first time in history the process of European integration has been reversed. The idea that Brexit will represent ‘the end of western political civilization’ as Donald Tusk claimed may have been alarmist. But Brexit is part of a wider revolt against the established political order whereby the ‘losers’ in the globalized economy are given voice by rich tribunes, be they Old Etonians, City stockbrokers or New York property magnates. This is their first major victory.

Brexit is the product of a revolt against the way that people have been governed in the past thirty years. This was its sole unifying function. It united left and right against the political ‘elite’, ushering in the first defeat for the British Establishment since the loss of the American colonies.

It is hard to be optimistic about this referendum and the politics that it unleashed. The Scottish independence referendum in 2014 was seen as a laudable exercise in democracy. In contrast the Brexit referendum revealed an angry and ugly streak in political life, especially in England.

The United Kingdom is a divided country. It may have won its independence or have made a catastrophic error, depending on your point of view. The fact that it took a xenophobic campaign to achieve this result is nothing to be proud of.

This foundational moment will be tainted with shame for decades to come.

Read more: First, the Brexit. Now the United Kingdom is falling apart - The Globe and Mail

Britain: Bank of England: economy will be hit hard if Britain leaves EU

The Bank of Englandhas issued a fresh warning that a vote to leave the EU in next week’s referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy.

Against the backdrop of jittery financial markets, the Bank alsorevealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.

Announcing its decision to keep interest rates at their record low of 0.5%, the Bank said the referendum on 23 June was the biggest immediate risk to UK financial markets, and perhaps those overseas, and that the current uncertainty was already denting spending. The pound has weakened in the run-up to the vote as opinion polls have pointed to a lead forthe leave vote and the Bank warned in minutes to its latest
rate-setting meeting that it would fall further in the event of Brexit.

“The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets,” said the minutes. In addition: “On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EUsterling’s exchange rate would fall further, perhaps sharply.”

The minutes also noted recent comments on potential Brexit risks to global financial markets made by the US central bank as it left interest rates there on hold this week. The record of the Bank’s finalm rate-setting meeting before the referendum showed all nine members of the monetary policy committee (MPC) voted unanimously to keep interest rates at 0.5%. That was as expected by financial markets and economists,given the impending vote.

The minutes said the MPC had been briefed on contingency planning for the referendum, including on the “more intensive supervision by the Prudential Regulation Authority of major financial institutions to ensure they had sufficient liquidity”.

The Bank said in the minutes that it was “well placed to address liquidity needs and support the functioning of financial markets”. In the minutes, policymakers noted a pick-up in uncertainty ahead of the vote, which could knock economic growth.

“The main focus of the committee’s policy discussion this monthconcerned the difficulty in identifying the underlying momentum in the domestic economy, amidst the influence on activity of uncertaintyrelated to the EU referendum,” the minutes said.

“Measures of uncertainty had increased further over the past month, with the UK a clear outlier internationally. And there had been growing evidence that uncertainty about the outcome of the referendum was leading to delays to major economic decisions that were costly or difficult to reverse.”

There had been a “sharp decline” in the value of commercial real estate transactions and in merger and acquisition (M&A) activity and reports of delayed business investment, the Bank said, echoing some private sector reports of spending decisions being deferred. The Bank also noted some possible influence oconsumer spending.

Regarding households, both car purchases and residential housing activity had declined, although it was difficult to isolate the extent to which these effects related to the referendum or a more general underlying slowing,” the minutes said. But the Bank added retail sales had been stronger than expected in April and that confidence indicators, as a whole, “remained healthy”.

Interest rates have been on hold at a record low of 0.5% for more than seven yearsExpectations of when rates might start to rise back to more normal levels have been shifted back amid signs the economy may have slowed recently. Some policymakers and economists have even discussed the prospect of interest rates being cut further. In the near-term much will depend on the referendum and market reaction to the outcome.

Read more: Bank of England: economy will be hit hard if Britain leaves EU | Business | The Guardian

What's the greatest risk to Turkey's economy? - by Barın Kayaoğlu

Any one of the following problems would ring alarm bells  for an emerging market: a slowing economy,rising inflation,distrustful  citizens exchanging local currency deposits for dollars whenever possible, rising tide of violence scaring away foreign  tourists and hurting hard currency reserves and concerned foreign  investors eyeing the exit because of a bearish stock exchange and a possible hike in interest rates by the US Federal Reserve.

The Turkish currency, which had an average value of 1.90 to the dollar, is likely to decline further and surpass the three-lira threshold soon. “Never mind three, it could even be tr/dolar-3-lira to the dollar,”  wrote Mert Yildiz, a senior economist at the prestigious economic and  financial analysis firm Roubini Global Economics.

According to one  report, because the AKP has used dollar figures to boast of its role in  the “Turkish economic miracle,” the bleeding in the lira means Turkey could lose its place in the G-20, the group representing the world’s top 20 economies.

<a href="http://www.al-monitor.com/pulse/originals/2015/08/turkey-economy-political-uncertainties-greatest-risk.html">Read more: What's the greatest risk to Turkey's economy? - Al-Monitor: the Pulse of the Middle East</a></div>

Read more: What's the greatest risk to Turkey's economy? - Al-Monitor: the Pulse of the Middle East

Global Economy: US and Chinese Economies are in "lockstep" and this could spell major trouble for US

Let no one fool you - specially not the Wall Street "news makers.

Both the US and Chinese Economies are in lockstep and the US economy could get  in big trouble because of that.

The investment relationship that has blossomed between China and the U.S., even though it has benefited both countries, has also made both of their economies very dependent on each other, but the US more so than China.

Chinese companies have started  more companies or joint ventures in the U.S., thereby increasing the number of Americans working for Chinese firms.In a sense China has now also become a supplier of secondary capital to the USA, in addition to the regular  US debt they have been buying up..

Another alarming fact is that based on the present (June 2015 figures) US debt to China stands at $1.272 trillion,.

That's roughly one-fifth of the $6.175 trillion held by foreign countries. The rest of the $18 trillion debt is owned by either the American people, or by the U.S. government itself.

The United States has thus allowed China to become one of its biggest bankers, to provide the American people low consumer prices.

This selling of debt to China is mainly used by the US to help the US economy to grow by funding federal government programs. It has also kept  U.S. interests rates artificially low. However, what very people want to talk about, specially the financial world, is that China's increasing ownership of U.S. debt is shifting the economic balance of power in China's favor.

China's position as America's largest banker also gives it considerable political leverage. Consequently every now and then China threatens to sell part of its US debt holdings. It knows that, if it did so, U.S. interest rates would rise, which would slow U.S economic growth to a trickle.

As China grew economically stronger it has also been calling for a new global currency to replace the dollar, which is presently used in most international transactions. China usually makes this call whenever the U.S. lets the value of the US dollar drop, which makes the debt China holds less valuable.

China certainly is not so stupid to call in its US debt all at once. If it did so, the demand for the dollar would plummet like a rock. A dollar collapse would disrupt international markets worse than the 2008 financial crises and China's economy would suffer along with everyone else's.

It's more likely that China will slowly begin selling off its US Treasury holdings.

Bottom line the financial poker game between the two most powerful economic players in the world is certainly not over yet, but China is holding some very powerful cards in its hand.

The financial world better sit up and start smelling the roses.

EU-Digest

Stock Markets Warning: Stocks Will Plunge by 50% this year

t is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Unfortunately Spitznagel isn’t alone.

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

Faber doesn’t hesitate to put the blame squarely on President Obama’s big government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents — why should your parents be forced to speculate in stocks and in real estate and everything under the sun?”

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment.

So with an inevitable crash looming, what are Main Street investors to do?

One option is to sell all your stocks and stuff your money under the mattress, and another option is to risk everything and ride out the storm.

But according to Sean Hyman, founder of Absolute Profits, there is a third option.

“There are specific sectors of the market that are all but guaranteed to perform well during the next few months,” Hyman explains. “Getting out of stocks now could be costly.”

Read more: Warning: Stocks Will Collapse by 50