Gove: "Post-Brexit talks: UK prepared to walk away in June if no progress"

[Miljea]

BBC News

Is this the Brexit you voted for, Leavers??

Seriously? Threatening the EU?

Text: "The UK has warned the EU it will walk away from trade talks in June unless there is a "broad outline" of a deal.

Michael Gove told MPs the UK wanted to strike a "comprehensive free trade agreement" in 10 months.

But the government would not accept any alignment with EU laws as the EU is demanding, with Mr Gove adding: "We will not trade away our sovereignty."

The EU has already set out its priorities ahead of the formal start of the talks on Monday."

One would almost think No Deal was precisely what we're heading for....

Maybe someone will come from the other side and tell us, in italics why this is great news.

Jasjas,

I worked in the City through the Big Bang and until the 2008 financial crisis and made plenty of money trading against economic predictions.To be honest, 2008 removed the last of any respect I had for economists being experts (except in the purely academic sense).

Eurobonds came about a long time before the Euro. Of course financial markets benefit from free flow of capital so the EU was good for the City.

London offers the World an existing centre of expertise with tons of momentum (a bit like Harley Street for private doctors), a favourable time zone between the US and Asia and the English language, which many Europeans, Japanese and Chinese (and of course, Americans) are comfortable to live in and do business in.

People made money trading against the housing market because no one in financial institutions wanted to read the signs about the bubble - I wouldn’t blame economists for that, I’d blame bankers with eyeball deep in what they thought were safe bets.

I’m not sure how that’s the fault of economists. I guess bankers don’t want to take responsibility for their gambling.

Iggly,

How about you read the economic predictions made about the housing markets by professional ECONOMISTS in 2007. I did. One in ten was bearish, tops.

You seem to think bankers and economists are separate sets of people. I would wager most of the top economists have worked for the banking sector at some point in their careers.

So, when you bash the bankers, their bets are very influenced by economists. They are symbiotic.

People bet on the housing market because they thought it was never going to go down.

Banks were irresponsible in lending to those who had poor credit ratings.

Banks were then irresponsible in carving up those mortgages into “safe bets”. Effectively treating them like individual cash flows and not linked to the ability to repay.

They never should have done that. Never. It was stupidity because they didn’t even know what they were trading.

So, sorry, bankers need to own their irresponsible actions.

They took a gamble and it didn’t pay off.

Not one economist says that they were telling the future, everyone knows it’s a forecast not a premonition.

The economy tanked in 2008 because the financial services sector had become incredibly bloated based on fairy tale bets.

Honestly. How is that the fault of economists?

If banks hadn’t made such incredibly stupid bets, then they wouldn’t have failed. Banks did it for the profit, plain and simple. Those bets were like a pyramid scheme.

Then they wouldn’t have needed bailing out to the tune of trillions.

Then we wouldn’t be in this mess ten years later down the line. Because if banks had been tighter regulated, if the flow of capital was more tightly restricted then their actions wouldn’t have been allowed to get so out of control.

I’m not having it that banks were the victims in this. Not at all.

It’s the equivalent of being angry at the met office because it rained when they said it wouldn’t.

Look out of the window and make a judgement by looking at the sky and take precautions with the weather.

Banks didn’t look out the window, nor did they make a judgement based on signs and neither did they take precautions.

The bets were predicated on economic forecasts both on outcomes and the standard deviation of outcomes. Why do you think the banks were so blasé? I used to get sent economic forecasts by bank economists weekly, complete with beautiful charts and wonderful explanations. all complete fantasy of course (and self serving).

The economic profession sold themselves to the investment banks to provide economic justification for whatever they were selling. Should they not take some responsibility for that?

Economists will justify whatever you pay them to. So, why would I trust them over Brexit?!

When an astronomer says Hailey’s comet will pass through our solar system on a certain date, there is probably a 99.99999% chance that it will. When an economist makes a prediction, it is no better than a monkey throwing darts.

What is the point of an economic prediction if it does not predict with any degree of reliability?

No they weren’t. The bets were made without a full appreciation of what they were betting on.

They assumed it was safe mortgages - incorrect, it wasn’t.

That assumption was about making shit loads of money.

The people that created these financial instruments, which were then carved out further and further and morphed into profits for bankers who took a simplistic view.

They didn’t know what they were betting on. It’s far too simplistic to paint it is “oh the economists didn’t tell us it was going to crash”.

It was irresponsible because of the amount of money riding on this.

That’s why the people who did realise that the market was overheated made a shit tonne of money, whilst the financial services sector collapsed and took the economy with it.

Larry The benefits you list for London are now, they will reduce post brexit, not least the ease of movement between countries.

Just as London went from 0 to 100 from 1987, other EU capitals can do the same, my fear is that it won't just be finance but across other sectors too.

The UK is going to have to reinvent itself pretty much overnight and given Johnsons lack of any sort of competence, i don't rate our chances, the world is a hugely different place than it was back in the 60s and 70s and we didn't do very well then did we.

There’s a reason why these financial instruments were banned (although they’ve been resurrected again), because they’re dangerous and are too removed from the underlying risks.

Financial institutions have a responsibility to play safe with the economy’s money. It isn’t infinite.

Also, and I feel quite passionate about this, economists don’t run banks.

Banks carry out their activities based on a range of factors - that’s why they have risk departments and financial analysis. Not just economists.

Everyone has some part to play in the 2008 crisis, but I lay most of the blame at the fault of those gambling and making millions for their own personal gain.

The bet we are making is being a lightly regulated tech economy.

How?

Besides which, I would like to see a Government planning, not gambling. So far, all I have seen is a Government which makes agreements with the EU and then their spokespeople come back and immediately start talking about reneging on those agreements. Whether this is posturing for a domestic market, or because they haven't a clue, I don't know.

Iggly,

The CDO structures did not help but, ultimately the net credit in the system was known, as were the underlying assets. The structures did not change these.

It is too easy to blame the structurers alone.

Some economists did understand the leverage and predicted the problems (the BOE actually warned quite aggressively in 2007). However, the vast majority took the devil’s coin and acted like the three blind mice.

Who bought the CDOs? Why did they trust them? Because they were wined and dined by bank salespeople who brought along their tame economists to explain why the housing lending was entirely sustainable.

“They didn’t help”

They were the reason for the absolute and utter scale of the problem.

It’s the scale that was the problem. The size of sub prime mortgages versus the size of the bailouts tell you enough.

Oh and I like how you slip this in Some economists did understand the leverage and predicted the problems (the BOE actually warned quite aggressively in 2007

So.... the bankers didn’t want to listen.

All of it illustrates why we need decent banking regulations.

And i think we can agree that sometimes economists do get it right 😂

Iggly,

I did not ‘slip it in’, I am maybe a little more honest than some here in actually being able to see two sides to a discussion.

Yes, economists do sometimes get it right, as do astrologers. The problem is that you have these massive correlation matrixes where the correlations are themselves stochastic. The Maths works but it just cannot take into account the number of interconnected variables.

Some economists are more honest about this than others. Things like Brexit, corona virus, they just cannot make good predictions.

@Peregrina

There’s never been anything stopping the EU finding new markets within its own countries. It is the EU which is jeopardising its own huge trade surplus with the UK. Having once been part of the EU is no reason to refuse a straightforward trade deal now (unless we’re talking about protecting the EU’s integration project).

The UK as one of the world’s larger trading nations has all the “clout” it needs. The Government doesn’t want to choke any trade off – it clearly wants a free trade deal with the EU. It is the EU which is making absurd demands as the price for free trade. It's not going to happen. It is not dealing with Theresa May now.

Trade with the EU as an EU member state comes with very heavy strings attached which we are better off without. Nothing remainers said during the referendum campaign convinced me otherwise and their arguments haven’t improved since.

The UK used to be one of the World's great trading nations. It isn't now, the Empire is gone.

@Iggly

I didn’t say anything puts the UK in the top spot, but is the EU is going to stop selling goods in the UK?

Why do you think it sells goods in the UK? Could it be because it profits from these sales? Is the EU going to turn UK money down? If 3m UK jobs depend on trade with the EU, how many EU jobs depend on trade with the EU? Think about that huge UK trade deficit …

We rely on EU goods? Is there much of anything the UK currently buys from the EU which is cannot source from elsewhere, and likely at a better price too once outside the EU’s tariff barriers?

Fresh food. We haven't been able to feed ourselves for more than 100 years.

@SonEtLumiere

Why would I ask Switzerland when I can see the EU has not demanded a level playing field, or free movement, with Japan, or Canada, or South Korea, all of which it has free trade deals with?

The EU can make as many demands as it likes as can the UK, but its supporters should not forget negotiations are a two-way street.

With all due respect to Switzerland, it is not the consumer of EU manufactured goods the UK is. And why hasn't Switzerland joined the EU if the EU's demands for a level playing field are so awful? The Swiss have twice turned down EU membership, haven't they?

You have three EU members; Ireland, Denmark and the Netherlands, who are very dependent on fresh food exports to the UK. You cannot send liquid milk very far, and East Asians are not keen on dairy generally because they develop lactose intolerance in adulthood.

@Peregrina

We import fresh food from all over the world, and do you seriously think the EU going to stop selling the UK fresh food anyway?