News roundup

Windrush amnesty

The Tories have been distracted from the brexit trainwreck, by a scandal involving the Windrush generation. These were immigrants, most from the Caribbean, who were invited to come to the UK in the 1950’s. Unfortunately, many got caught up in the so-called hostile environment” set up by Theresa May (as Home Secretary at the time) to help appease the bigot brigade.

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And its not just the Windrush who’ve been effected. With box ticking officials chasing targets, people from other commonwealth countries (such as Canada) also suffered under this “hostile environment”, losing access to health care, their jobs, pensions, being unable to leave the country (for fear they’d be denied re-entry permission) or even deported. And its now feared that EU citizens too could face similar problems after the UK leaves the EU.

Naturally this has left the Tories in full back pedal mode. After first denying everything, they’ve now been forced to apologise. Amber Rudd, the embattled (former) Home Secretary had suggested she’ll grant UK citizenship to all of the Windrush and anyone else from Commonwealth countries whose been previously resident in the UK. Boris Johnson went further, suggesting a general immigration amnesty open to all.

This scandal is problematic for the Tories for various reasons. Amber Rudd for example, was a dead woman walking long before she resigned. Given that her’s is an extremely marginal seat (she only got in last election by a few hundred votes), I won’t be surprised if she doesn’t stand next election. The only reason she hung around was because she was being used as a meat shield by Theresa May. Boris Johnson’s reaction is not surprising, he’s in a London seat and given London’s ethnic diversity, this scandal could easily prove fatal to his political career as well. So its possible this scandal could claim a number of further scalps, one of which could be Theresa May, as she is now one degree of separation from this scandal.

However the trouble for the Tories is, they’re now suggesting they’re going to give tens of millions the right to settle in the UK, no questions asked. Rudd’s replacement (in between striking power poses) has suggested he will even roll back existing immigration controls. And the EU is either going to insist on similar conditions for EU citizens. Or by setting a legal precedence, EU citizens will be able to win such rights in court.

So explain to me how you plan to cut net migration down to the “tens of thousands” when half the planet has the right to come to the UK and bypass any checks you bring in post-brexit?

Immigration is not a side issue for the Tories. They can’t ignore it. There’s been various attempts at historical revisionism regarding the brexit vote. Liam Fox will have you believe its because people wanted the UK to become a free trading empire again. Which is at odds with the fact that it will lose access to many trade agreements upon brexit. Corbyn claims it was a vote for his socialist worker’s paradise. Well, no the number one reason for voting leave was immigration. Of the dozen or so I know who voted leave this was the case for all but two of them (who are both now reconsidering their decision, given that they’ve begun to realise the horrible implications of future immigration controls on, amongst other things, free trade).

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And recall, the whole reason why the right have long banged the drum against immigration and the EU, is that this is how they exert control. Scaring people witless with half truths and misrepresentations. They can hardly turn around now and say, bollix to that, if we stop immigration whose going to tarmac my drive? This is exactly the whole reason why the Tories can’t agree a coherent policy on brexit. Any sensible plan would be at odds with the fantasy they’ve sold their voters over the last few decades. And similarly their immigration plans will only work, as currently proposed, if they can stop the bigot brigade from reading any immigration statistics.

Which is why I would take these promises from the Tories with a pinch of salt. My guess is, once the news cycle has moved on, they’ll renege on these promises and the “hostile environment” against migrants will not only continue but be extended to other nationalities.

Where no brexiter’s have gone before

The problem with brexit is that the Tories won’t except reality. Every time a new obstacle or problem is highlighted they either ignore it, or concoct some fantasy solution that clearly won’t actually work.

Case in point, the EU has indicated that post-brexit the UK will be excluded from certain secure aspects of its flagship Galileo programme. This is the EU’s answer to the American and Russian GPS systems. Both are technically military projects, so in theory they could turn off the signal tomorrow if either superpower chose to do so.

However, the EU says its system will be predominantly a civilian system, which they will not turn off, save certain emergencies. Its these aspects of Galileo that the UK risks losing access too. For the UK military, reliance on American GPS signals has long been a bit of a sticking point. The UK nuclear deterrent depends on American GPS signals (and US build and serviced rockets), so in theory this give the US a defacto veto over the UK’s use of its deterrent.

And the Tories response to this? Oh, we’ll just set up our own GPS system. WTF! Firstly that would take the best part of a decade to do and cost a good few billion in development costs. And that’s just the costs of getting the satellites designed and built. There’s the small matter of how do you launch them. The UK has no launch vehicles and has not attempted to build such a thing since the 1970’s. The UK is literally decades behind North Korea when it comes to rocket technology.

Furthermore, the UK mainland is a poor location from which to launch a satellite. These are best launched from equatorial locations (hence why the EU operates out of French Guiana), ideally well away from any major population centres (almost any track out of the UK by a rocket will come dangerously close to major cities). So the UK would need to partner up with someone else, likely the Australians. However they might be reluctant to involve themselves in an ostensibly military project (thus risking retaliation in the event the UK is drawn into a conflict). And besides, they can just pay the EU an annual fee and get access to Galileo for a fraction of the cost.

Can’t the UK just ask that nice Mr Musk to launch them for him? Well A) An order for 30 satellite launches is a pretty tall order, it would take some time for him to be able to do that. B) he’s a business man and will quickly tire of the brexiters antics, likely he’ll demand a large pile of cash up front. And more importantly C) the US military has essentially a veto over any launches he undertakes which might have military implications. As noted the US won’t want to lose its defacto veto over the UK’s nuclear arsenal.

Keep in mind that if any country sees a Trident missile coming towards them they have no way of telling if its a UK or American launched missile. They will likely respond by retaliating against both countries. So the US has good reason to want to maintain this veto. As the UK might well soon learn, its special relationship might not be long for this world.

The Trump/Macron bromance

And speaking of which, Marcon, “the Trump whisperer”, spent last weekend schmoozing Trump. Trump even went so far as to suggest this was the start of a new special relationship, which will have had Whitehall officials spitting in their tea cups.

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Now granted, its possible Macron and Trump will have a falling out over something (likely because Macron got creme brulee and Trump didn’t). As he laid out in his speech he represents everything Trump is not. But the mere fact that he and Trump are on speaking terms, proves one of the points I’ve long made about brexit. The UK had, from the American point of view, one job and one job only. To be America’s ally within the EU. With the UK leaving, the US must cultivate a new ally and clearly France is one of the more likely candidates.

And if the UK thinks things are bad now, this is as good as it gets. Once Trump is out of the way, regardless of who is in charge, its likely to get a lot worse. Members of both parties have made it clear that any future trade deal will require the UK to make some significant concessions (as in get rid of Scotch whiskey, Cornish pasties, bans on GM foods, Chlorine washed chicken and opening up the NHS to competition). And that’s assuming they even give the UK the time of day.

Calm Canadian justice

One question that came out of the tragic events in Toronto last week is, how is the suspect still alive? How is it he didn’t die in a hail of bullets? In the US people have gotten shot for so much as talking to the police or touching a police car. I mean I know the Canadians are very polite, but I’m assuming that cop’s are allowed to shoot someone without using the word “please” first (in fact come to thing of it, the suspect asked to be shot but didn’t use the magic word).

Well as I mentioned in a prior post, cops in the US are a lot more on edge, largely because of the unregulated nature of gun ownership in the US. This is not to say that Canadians don’t have access to firearms. As this video from Vice news discusses it is certainly possible to buy guns in Canada. Its just they make sure you know what you are doing first and that you aren’t a raving nutter (or a criminal). Go into a Canadian gunstore and ask to buy their deadliest gun and they’ll likely throw you out (while in the US they’ll sell you whatever you want, no questions asked).

As a result, Canadian police aren’t at the same level of risk as American police, and are trained to approach such situations differently. The worst thing you can do with a suicide attacker is give him what he wants. That what we call “letting the terrorists win”.

Churchill’s buzzsaw

Speaking of guns, I mentioned before how some 2nd amendment types in the US are trying to use 3D printers to circumvent gun laws. Their logic is that if the gov’mint “comes for their guns” they’ll just defy the law and make their own ones.

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Well it was pointed out to me recently that they ought to read a history book (then again reading isn’t exactly a known strong point of gun nuts). Home made guns have long been used by criminals. And in 1940, still recovering from massive equipment losses at Dunkirk, the British even took it a stage further. The Sten gun, was designed to be simple to manufacture in lots of smaller workshops around the country, using just basic machine tools, thus freeing up the bulk of arms factories for other projects. And they were produced by the hundreds of thousands. The Sten was extensively used by insurgent groups, who maintained them in back alley workshops across occupied Europe.

So given that assault weapons were banned in 1994, why aren’t these NRA types running off and building Sten guns? Well possibly because they’ve googled the terms “Sten gun” and “reliability”. As with any improvised weapon, the Sten was notoriously unreliable (prone to jam at the wrong moment while also being prone to accidentally discharge!). Indeed, the very fact they were built in such large quantities should tell you just how desperate the UK was during this period. And of course 3D printed guns have also been shown to be very unreliable. So much so, you’d be as well off throwing the 3D printer at someone!

Also, trying to circumvent the current assault weapon’s ban is illegal, as it will be illegal to circumvent any future bans on, say, semi-automatic weapons, large capacity magazines or a gun register. The ATF can arrest you simply for trying to build such a weapon, nevermind actually getting one working. And your 2nd amendment rights ain’t going to protect you from a big guy called Bubba in the prison showers.

Hand it all back

Trump and his supporters want to end immigration and stop anyone else coming into the US. What they don’t seem to understand is that this represents a profound change in how the US works as a nation, which has serious knock on implications.

The first resident’s in the US were of course the native Americans. Should you be wondering why they don’t own all the land, its because of (racism) a historic series of rulings by the US supreme court in the 1830’s which essentially said you couldn’t call “dips” on US land by virtue of being here first. The US was an immigrant country it ruled, everyone has the right to come in and claim land. So by effectively changing America from a “immigrant” country to a native country, then those 1830’s era rulings are rendered null and void, meaning the land rights go back to the native Americans.

So maybe yes Trump is going to make America great again…..for the native Americans!

Anti-science in Iran

When Hassan Rouhani was elected Iranian president, many progressives hoped that this represented a shift in Iranian policy. He encouraged quite a number of scientists, who had fled persecution by past regimes, to come back to country, including a number of environmentalists.

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However, many of them are now leaving the country again, in the wake of mass arrests of environmental activists and the death in custody of an Iranian-Canadian environmentalist, Kavous Seyed-Emami.

While the president might be sympathetic, the trouble is that many members of the revolutionary guard, and others within the Iranian regime, see environmentalists as troublemakers asking awkward questions. And with Iran in the grip of a drought as well as numerous other environmental problems, this means that no action is being taken on these issues. Trump and the Iranians are perhaps closer to one another than they might think.

Stolen valor

If there’s one thing that seems to rub Americans up the wrong way, republicans in particular, its “stolen valor”, individuals either impersonating military officers, claiming to have awards they didn’t receive or making false claims about their military service record. They’ve even had laws passed forbidding it.

So its more than a little ironic when Republican nominee for the State Department, Mike Pompeo is caught out doing this. And keep in mind, Trump specifically highlighted his “military experience” “as a gulf war veteran” as reasons for his appointment. Will he be punished for this? You’re joking right? He’ll almost certainly be confirmed without a problem. Expect Gina Haspel, aka “the torturers apprentice” to be confirmed also. I mean what’s a little war crime between friends.

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And he’s hardly the first Republican, Trump, Bush, Romney, John Wayne and Rush Limbaugh all dodged the draft. Hell, you wonder why its not a key requirement for Republican nomination (we can’t vote Mc Cain, he actually fought in a war!).

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Not going out

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The great outdoors, Rannoch Moor Scotland, with the mountains of Glencoe in the background

You may, or may not, have heard the story that Penn State university has banned their outdoor recreation club, because its too dangerous for their students to be let out in public. Which from a PR point of view doesn’t exactly send out the right message. Come to Penn state and you’ll be so hopeless at everything you can’t be trusted to go outside.

Let’s be clear this has little to do with “elf & safety”. I cannot help but notice that the American football team, water sports (generally anything involving water carries a certain level of risk), skiing (who tend to be more at risk from avalanches than hikers) and boxing clubs aren’t being closed down, even though some of these would be much more risky. And any contact sports is where we’d expect to see the bulk of injuries to students. Instead this is more a case of “liability avoidance” or what I refer to as Save Ass Policy Schemes or SAPS for short.

Admittedly, being a mountaineer and a bit of an outdoorsy type myself, it has to be said that the risks involved with such activities are difficult to quantify, as is often the case with many adventure sports. A route that some would find suicidally dangerous (e.g. the Cullin ridge on Skye), experienced climbers will do while wearing boxing gloves and roller blades….or riding a bicycle. Similarly even the most experienced climber in the world would be putting himself at an unnecessary risk if he went up certain routes in the wrong kind of weather (the guides on Skye won’t go up the aforementioned Cullin ridge in bad weather, its just too dangerous).

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One person’s inaccessible pinnacle is another person’s Sunday morning bike ride

So context is very important. Indeed this is kind of an important life lesson mountaineering teaches you, how to manage risk. Which, can be a useful thing to put on one’s CV or cover letter. But clearly the SAPS in Penn State are too dumb (or scared) to understand that. I bet employers will be queuing around the block to hire these graduates after they hear of this!

I would note that said SAPS are probably reacting to parental pressure. US universities are increasingly having to deal with not so much “helicopter parents”, but what are referred too as “snow plough parents” who expect every possible obstacle to their little darling to be swept out of his or her way. I’ve seen several situations where students stuck with a course that they didn’t like simply because their parents insisted. And when he got caught cheating, it turned out that this was the parents idea. That is kind of what universities are having to deal with right now.

You could argue the most insulting thing you could say to a mountaineer is to call him “experienced”. Because often you learn from your mistakes (so when I say I’m an “experienced” mountaineer, that means I’ve “extended the trip” or “explored alternative routes” on a few occasions). The trick with student clubs is to create a safe environment for people to learn without putting them in danger.

In Scotland we have a pretty good system set up in which the university clubs and the various mountaineering organisations (the mountain rescue teams, guides & instructors, RAF/RN rescue, McOS, BMC, SMC, etc.) arrange various safety courses towards the beginning of term. There’s events in early autumn (just a few weeks into the 1st semester) focusing on general mountaineering safety with further courses run in January/February focusing on winter mountaineering skills (just about the same time the snow’s started to accumulate). This allows new recruits to clubs to pick up the necessary skills pretty early. The clubs also tend to ease people into it, taking them on easier routes first, so they can learn some sense…rather than taking them straight up Tower ridge on Freshers week.

And this is the thing, far from improving the safety of students by shutting down this club, instead Penn state is putting them at risk. The reason for all the courses in Scotland I mentioned earlier is a little statistically anomaly. University clubs rarely get into trouble (given all the precautions they take and the fact they tend to be pretty well equipped). However, students in general are involved in a very high proportion of mountaineering accidents.

So by removing this “safe space” in which students can learn good practice, Penn State is arguably putting its student’s at risk. I won’t be surprised if, irony of ironies, they are sued in a few years time after a student gets into difficulty after being denied access to safety equipment and denied the opportunity to learn safety skills by the university.

Of course I’m going to guess America being America there’s probably a gun club in Penn State and I’m going to assume that there’s no way they’ll get banned (as nobody in senior management would want to pick a fight with the NRA). And given that Pennsylvania is an open carry state, that they ain’t going to say a word about anyone carrying a gun on campus.

Well there’s the solution, change the name of the Outing club to the Outing Gun Club. They carry on as normal, just always carry guns around while doing it (you don’t have to shoot, or go hunting or anything, just carry guns while muttering about your 2nd amendment rights). In addition use NRA style language to get out of answering any pesky questions from uni admin e.g. “Where are we going this weekend? That sound’s like an attempt to run a background check. Deep state! Deep state!”. When in Rome, do as the Romans do!

But either way, this sends out all the wrong messages. It suggests the uni doesn’t trust its own students. In which case why should any employer consider hiring them? People accuse millennial of being “snowflakes”. Yet when they try to do anything remotely adventurous, they get told not to do it. If you don’t let people learn how to manage risks, they’ll either never try anything adventurous, or worse, go out and do something incredibly reckless and foolhardy. Which hardly sounds like the sort of life skills a university wants to encourage in its students.

The bursting of the London property bubble

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Property prices in the UK are now clearly on a downward trend, notably around London. Since the brexit vote, they’ve fallen by 15%. With Europeans being attacked on the London underground for daring to speak a foreign language, and even some of the windrush generation, who came to Britain over fifty years ago being told to go home by the government, its perhaps no surprise that this will have a knock effect on house prices. The expectation is that this is not a blip but we’ll see a slump in prices lasting at least five years.

At face value this would appear to be the one bit of good news you could draw from brexit. Property prices in London are massively inflated, largely because of investors (from home and abroad) who’ve been buying up London properties and using them as gambling chips in a casino. In some cases they don’t even bother renting the property out. And some of the money is almost certainly of questionable origins, the spoils of criminal enterprise, or money stolen from the state coffers in various countries around the world. Its one of the things that makes London the money laundering capital of the world.

However, prices would have to drop by rather a lot to make them affordable to first time buyers. To even have a chance of getting a mortgage in the UK you need to be able to put up a 10% deposit. So for the average UK house price of £200,000, or closer to £500,000 in London, it means you need to have between £20,000-50,000 in savings. This is well beyond what many first time buyers can afford. And furthermore, that is the MINIMUM amount that stops the mortgage broker laughing in your face (then having his goons roll you down the stairs), and actually given you a chance of getting a mortgage. To give yourself some leeway when buying and to get a good mortgage deal (plus leaving an overhead to allow for home improvements) you’d really want at least double this £40k – 100k or about $55k – $140k in cash.

And that’s assuming you can find a house where the broker is willing to wait around for you to go and get a mortgage. One of the problems with the UK property market, particularly around London, is that properties can go very quickly. I’ve seen ads for houses which state that those looking to pay with a mortgage need not apply, as the broker would rather just sell it quickly to an investor to use it as a gambling chip, rather than Mr Joe public to use as a home.

So while the crash has helped a little bit, for most first time buyers it hardly matters. And of course if you are selling your home for some reason, then this is all very bad news. For example, let suppose you bought a London flat at the peak of the boom, but now need to sell it (as you’re moving overseas for example). You put down a £75,000 deposit on say a £500,000 flat. Well that flat will now sell for closer to £425,000 meaning that once the bank’s been paid off you’ve lost all of your initial deposit, plus all the various fees on top that (and several months of mortgage payments, about £24,000 a year for a flat like this). So we’re talking fairly significant losses here, more than your original investment. And spare a thought for those with Grenfell tower style cladding, who’ve now been told homes they bought for hundreds of thousands of pounds are now worth a mere fraction of that.

While brexit is at least part of the trigger for popping the bubble, others argue that recent changes to stamp duty are also responsible. However, those changes were brought in to try and bring some sanity to the property market and get out of the scenario of them being kept empty and unused. And in that regard the plan does seem to have worked. Indeed a committee of MP’s recently even suggested the radical step of taking flats off rogue landlords.

And even if it were true, like all bubbles the UK property bubble was going to pop eventually. To draw an analogy we have a warehouse made of timber crammed with oil soaked rags and one night a mouse dislodges a bolt which causes a spark, which burns the place to the ground. This is the equivalent of blaming the mouse for causing the fire.

The immediate losers of this crisis are likely to be estate agents, the least liked and most distrusted profession in the UK (after politicians). The high turnover and high fees they are used to are now evaporating, so quite a few of them will be on the way down to the jobs centre. I suspect few tears will be shed.

The wealthy overseas property investors are unlikely to lose out immediately, as they bought some time ago, so prices would have to fall quite a bit to mean they hit their squeal point. And also the whole reason why they are investing in UK property is because if they cashed out and took the money home they’d get themselves arrested. So its not really their money that’s at risk in the first place. Either way, a property bear market is more likely than a sudden sharp correction. Meaning that we could be waiting sometime for any recovery.

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Abandoned building sites are starting to become a feature of some British cities

The exact scale of the problem is difficult to judge as we simply don’t know how much money was committed to UK property speculation and by whom. There are several high profile projects where construction has ground to a halt. Someone who works in the city told me about a pitch event she attended where they were selling London property bonds. Naturally, she fled the room pretty quickly (after helping herself to the free booze of course!) when she realised they were basically selling unhedged commodity speculation, which is generally illegal because its possible to lose more than your original investment (as the example I gave earlier illustrates). However, such funds did take in quite a bit of cash and its unclear where the blow back for this will emerge.

Keep in mind that last year China’s credit rating was downgraded when it became clear similar schemes existing in China and it was unclear how much money had been gambled and who was going to get to left without a chair when the music stopped. Of course, the real reason why China got downgraded is that they didn’t go to the right school, or know the secret handshake. So its unlikely the UK will be downgraded. But that just means that any crisis that emerges from this mess will be all the more sudden and damaging.

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The real reason for the housing crisis? The UK basically stopped building affordable homes in the Thatcher era

So it is difficult to see any positives out of this mess. If past events are anything to go by, we’ll see rents go down for a few years (until the expected rise of interest rates works its way through the system and pushes them back up again). But in the mean time home owners will struggle to sell. The main buyers will likely be corporations looking to build up a large portfolio of property to rent. With builders getting burned, there will be a halt to further construction of homes, which means that further down the line once the crash has run its course, there will be a shortage of housing. All in all the UK housing crisis will just get worse.

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What this crisis shows is that a laissez-faire approach to housing, relying on the magic of the market, isn’t going to work. The old policy of urban planning, possibly wedded to new ideas of how to design urban areas, needs to be pursued again.

The little sub that could

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saab-gotland-class-submarine Figure 1: Sweden’s Gotland Class submarine

I stumbled across this vlog post this week which talked about how back in 2006, during a wargame, a Swedish made diesel electric submarine of the Gotland class managed to “sink” a US aircraft carrier. Evading an entire carrier battle group in the process. Should you ask why the nuclear attack sub escort (US carrier battle groups often include a nuclear powered attack sub to deal with this very threat) didn’t go in there and kick Swedish butt. Well in another incident a Gotland class sub successfully out manoeuvred a Los Angeles class attack sub and also effectively “sunk” it.

Suffice to say this came as a bit of a shock to the Americans, who had long assumed that their fast moving carriers battle groups were immune to attack from diesel powered subs. Diesel powered subs are generally slower…

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Left wing Sadopopulism

I’ve had a go at Sadopopulism of the right before, but I think its also necessary to highlight the shortcomings of sadopopulism of the left as well, as it has its own brand of the same, which shares many of the same problems. Namely that such policies are basically unworkable and would do far more harm than good.

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The Horseshoe theory of politics puts the extreme’s of the left and right closer than most assume…

Firstly it has to be acknowledged that the far right and left are often closer than they would like to acknowledge. This is how you can end up with Trump enacting trade tariff’s, which some left wing anti-globalisation activists have been previously calling for. Or how Alex Jones can interview Noam Chomsky and it doesn’t descent into fisty cuffs. How neo-nazi’s can show up to an event organised by the nation of Islam. Or how some leftwingers will pour cold water on anything they hear from the mainstream media, yet much like Trump, they’ll swallow whole and verbatim anything coming out of RT or other pro-Putin propaganda mouthpieces.

However they all share something else in common, they are angry. And in that anger they’ve latched onto various new age myths and promote policies that are basically unworkable and generally non-starters from day one. And with the left wing populist of Five star and right wing populist of the Northern league a possible future government of Italy, we could well see such a horseshoe government forming sooner rather than later.

Both parties are anti-EU and would like to pull Italy out of the EU and the euro. Actually I suspect many in Berlin would see a silver lining to that. In truth they were reluctant to let Italy into the euro in the first place and events seem to have proven it was a big mistake letting them join (at least in terms of how the euro was initially set up and administered). If our horseshoe government were to follow through on this, the likely outcome would be national bankruptcy.

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The irony is that the Italian economy, while still a bit ropy, is starting to show signs of recovery

Italian banks are only open for business because they are propped up by the ECB. If that life line were to be cut off, then they’d be unable to service their debts, international lenders would cease to lend and call in loans pretty quickly, capital flight would start in earnest, forcing most of Italy’s banks into bankruptcy. Cash machines would soon thereafter stop issuing money, credit cards would be stopped and Italian companies would lose their line of credit, forcing even healthy businesses to close. Deprived of EU funds and with imploding tax revenue, the Italian state would be unable to pay its civil servants, prompting a massive downsizing of the Italian public sector overnight. They would also likely be forced to stop paying for things like social welfare. And once a new Italian currency was issued, it would lose value pretty quickly. So anyone with savings or a pension would see all of that wiped out.

There are some who argue that long term Italy would be better off going back to the Lira and their old pre-euro economic model. However, that was then, this is now. Back then Italy was basically Europe’s China, churning out lots of cheap plastic stuff, shoes and clothes, constantly devaluing their currency to make themselves competitive. That model won’t work any more because A) We have China. B) We also have Eastern Europe and C) both China and Eastern Europe realise that being nothing more than a low cost manufacturing base is economically unwise long term and are desperately trying to diversify their economies.

There are various alternative economic models Italy could adopt, after all its hardly in a unique position, there’s plenty of other Europe countries who’ve faced the very same problems recently. There’s the Irish model, the German one, the Scandinavian model and so on. However, regardless of what economic model Italy adopts, regardless of whether they stay in the EU or not, they’ll need to get their house in order and bring some level of stability to the economy. Which will mean undertaking certain unpopular decisions. And that’s pretty much what the technocrats who just got voted out of power were trying to do.

In short if you are Italian and you think things are bad now, leaving the euro would make things an order of magnitude worse. And we saw this happen before with Greece. The Greeks under Tsipras, went to the edge of the abyss, then with the abyss staring back at them, they bottled it (possibly because the Greek civil service managed to talk Tsipras down), crept back from the edge and ended up accepting terms worse than they’d rejected a few days earlier.

Now don’t get me wrong, I think the EU handled the Greek crisis very badly. It was too little too late and the EU (notably Merkel) need to take some share of the blame for this. However, the Greek’s also have to acknowledge that they also bore some responsibility. For Tsipras to then go and start dredging up the ghosts of world war II just to score a few points has to be one of the worst examples of Godwin’s law in action ever. That’s just plain bad manners. And for the leader of any nation, unprofessional.

I’ve come across conservatives using the term quite a bit of “doing a Greece”. By which they refer to their belief in the myth that Greece is in an economic mess because a socialist government mismanaged its economy, spent money they didn’t have and allowed the public sector to become massive bloated and inefficient. I’ve use the term myself, but I don’t mean what conservatives mean by “doing a Greek”.

In truth the problems for Greece (good myth buster here) were caused by a conservative neo-liberal government. Prior to 2015 Greece had never had a left wing government in its entire history. The conservative government in Greece took advantage of a boom to cut taxes, while encouraging businesses to spend and invest recklessly, often deregulating when any pesky laws got in the way. This caused the economy to overheat, which led to higher inflation. Which put pressure on the public finances. They also conspired with the likes of Goldman Sachs to help hide the scale of Greece’s debts (I mean you can always trust a banker, can’t you?). In many ways Greece made the very same mistakes that Japan made in the 80’s & 90’s and the same mistakes that the US and the UK are currently making. Its just that the scale of the Greek economy meant they could only keep it up for so long.

Either way, yes the EU screwed up but so too did the Greeks. But the populist policies of Syriza failed because they were unworkable from day one. They were wedded to the idea that Greece could give the two fingers to the rest of the world without suffering any blow back. Which of course it couldn’t.

Had the Greek’s actually jumped however, as the Italians might, Venezuela provides us with a vision of the likely results, where the economy is imploding as its government lurches towards dictatorship. Again many on the right point to the failure of the Maduro government as “proof” that socialism doesn’t work. That his reforms only worked because of the high oil prices at the time (and thus any country that doesn’t have vast oil reserves can’t afford such socialist policies).

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The bulk of Chavez’s reforms occurred in the period 1999 to 2003, when oil prices were on average lower than the current oil price

However, the bulk of Chavez’s reforms occurred immediately after he came to power, around the period of 1999 to 2003, at which point the international oil price was actually lower than its current price (it did gradually creep up, but it was much lower than the current price for most of his first term when the bulk of the reforms occurred). So those arguments don’t quite line up with the facts. And there was limited capital flight out of Venezuela until recently.

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Recent capital flight from Venezuela, slow until recently, then the rush for the exits!

In truth most of Chavez early reforms weren’t really “socialism” (then again to republicans “socialism” is everything to the left of John McCain) they were a combination of medicare/medicaid, social welfare and maybe getting the rich to pay a little bit of tax once in a while. Where things started to go wrong was in the wake of the US supported coup against Chavez. Since then the Bolivarian regime, under Chavez and later Maduro has been adopting a number of authoritarian populist policies, which is largely the reason for the current wave of capital flight. So really the failure of Venezuela is more a failure of authoritarian populism than socialism.

So the likely outcome of this attempt to crash the system that both the sadopopulists on the right and left favour, is likely to be resetting the economy back to zero and wiping out everyone’s life savings and income. Which hardly seems a policy any sane person would support. But many angry people on both sides do support this idea because they argue, well I’ll have it bad, but at least those nasty billionaires will get their comeuppance. We burn, they burn. In truth…..maybe, maybe not.

Even in the worst of times, someone turns a profit.Ferengi rules of Acquisition:163

Certainly yes, some of the wealthy, particularly those with lots of assets that are based on speculative wealth, or assets which can’t be sold off quickly, will be in trouble. Capital flight isn’t a simple matter of pushing a button and your money magically moves to Switzerland (hence why many of Chavez opponents held off for so long). Its not as if you can load a factory onto a truck and head for the border. Selling assets at a time when everyone else is selling will make for a buyers market and you won’t get top dollar. Even financial assets can be difficult to transfer. You’ll face exchange fees, currency price differences, legal fees, etc. And certain financial positions can be expensive to unwind at short notice.

So anyone engaging in capital flight is taking a financial hit by doing so, hence why they’ll only do so when they’ve no other choice. I bring this up because it debunks the argument that enacting progressive policies or putting up taxes will send the rich fleeing for the exits. As I pointed out before, if that were true, California would be a wasteland and Kansas would be the richest state in the union (and Somalia would be the richest country in the world). But that said, there’s a limit to what a government can get away with. Push the envelope too far and the elites (or anyone with a savings account!) are going to accept the financial hit as a price worth paying to keep the bulk of their money safe.

So in the event of such a lights out scenario a lot of the rich will simply move their money out of the country and try to ride out the storm. Certainly yes, some of them will get wiped out and they’ll all take some sort of temporary hit, but some could actually do rather well out of such a crisis. Once things hit rock bottom everything will be in the bargain bin and they’ll have the cash to buy. And even if a factory owner can’t operate his factory because he lacks a line of credit, he still owns the factory, which is an asset he can sell or use as collateral.

It worth noting that the bulk of the wealth of the elites in many countries is based around property. For example, during the slump in the 70’s in the UK (as a consequence largely of the oil crisis), quite a few of those with money to spare took to buying up property in places like Notting hill in London or the Moray estate in Edinburgh. Here they could buy a dilapidated townhouse, subdivide it and rent it out cheaply to migrants or as office space and make a tidy wee profit. Pretty soon many wealthy people from around the world started to get in on the act, some not even bothering to rent or maintain the property. Well now that town house in Notting hill or Edinburgh that was bought in the 70’s for a few thousand is worth tens of millions.

And more recently in the US the real winners of the financial crisis has proven to be wall street. Several wall street firms have gone around buying up foreclosed properties at a massively discounted price and created massive rental firms that own tens of millions of houses country wide. And, as one trader let slip in a brain fart on BBC, there is no better time to be a trader than in a falling market. As it provides numerous opportunities for profit. And between brexit and the US a rudderless ship for the next four years, this is something of a happy time for traders. If hedge fund managers had a motto right now it would be “we didn’t start the fire, but if the rest of you want to burn the house down, fine by us, we can make plenty of money looting the place as it burns…plus we took out fire insurance sometime ago”.

This is not too suggest that it is impossible to implement progressive policies. The NHS, equal pay act, civil rights act, the Paris climate accords, the minimum wage act, Germany’s Energiewende all show that such changes are possible. However the successful progressive polices require a long term commitment. And to get that it needs responsible politicians to drive the policy forward. It requires a commitment to compromise and negotiate with other parties and stakeholders in order to achieve buy-in to this policy, both from the public and the opposition. This reduces the chances that right wing parties will be able to simply repeal the policy when they get back into power. Obamacare for example might well be flawed (given that its a watered down version of Romneycare), but its succeeded in that even with republican control of congress, the senate, presidency and supreme court, its still on the books.

The thing that worries me about populism, be it the left wing or right wing variety, is what happens when it becomes clear that they can’t achieve what they promised? The danger is we’ll see a lurch towards authoritarianism, as we’ve seen in Russia and increasingly in the US. And left wing populists are just as like to do this.

Case in point, Corbyn is under pressure due to anti-Semitism within labour. Now I suspect the media (who are not exactly pro-Corbyn) are making a mountain out of a mole hill (to some degree). Its more than a little hypocritical, given how being a xenophobic nutjob is practically an essential requirement for membership of UKIP or the Tories. Or given all the racist stuff you’ll see on many right wing newspapers. But this is not to say that labour doesn’t have a problem here. And Corbyn’s response? Threaten those MP’s who speak out with de-selection or suspension.

With all the allegations swirling around that the EU referendum, suggesting that it was less than honest and thus might not be legal, some in labour (and labour party members overwhelmingly voted remain) most notably Owen Smith suggested the party should be prepared to have another referendum. In response Corbyn sacked him.

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Labour party members voted overwhelmingly remain, Corbyn and his allies represent just 9% of the party

And recall Corbyn lost the last election because he won’t do a deal with the lib dems, SNP and Greens. This meant some Tories got in by less than a hundred votes. So its been suggested he should do a deal with these other parties before the next election. His response? Why they should just join the labour party, after all we can’t have factionalism in the Union of Soviet socialis……sorry labour party.

This of course ignores the fact that some labour policy is simply a non-starter for some of the other left wing parties, e.g. the Greens and SNP are opposed to nuclear power while all of the other parties are in favour of another EU referendum. But such opinions are being shouted down by his red shirts in momentum. In short, labour under Corbyn is starting to resemble East Germany under the stasi. He seems more interested in winning some sort of ideological battle with others on the left than he is in beating the Tories.

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All in all, left wing sadopopulism is as flawed as the right wing variety. Both are little more than political vandalism. Lots of angry people using ballot boxes as urinals. Its entirely counter productive, with the likely outcome being chaos, political paralysis and potentially national bankruptcy. And far from bringing down the rich, it could leave them better off than they are now. Populism is not democracy in action, it is in fact substituting mob rule and authoritarianism for democracy.