Shared publicly  - 
The UK after the EU summit. by Chris Bertram on December 13, 2011. David Cameron's use of the veto in the recent EU summit opens an era of deep uncertainty (and possible catastrophe) for British a...
Alex Wickens's profile photoJames Waddington's profile photo
Austerity will fail to save the Euro, despite cutting deep and exacting a large toll of human suffering. It will then be said to have been "too little too late". No lesson will be learned and the damage will be irreversible.
I agree with Ed Milliband for the first time in my life in that calling what Cameron did a 'veto' is faintly ridiculous.

The basic problem is that whether we walk away from the Europe table or not, as it stands we are inextricably linked economically to mainland Europe. If the Euro ship goes down then it would hurt real bad either way.

In the long term though, I feel that the City doesn't actually need an awful lot of protection and getting concessions for manufacturing and getting our own version of mittelstand going should have been the key priority. The deal we've got at the moment is a relatively good one but how long the rest of Europe will be happy with us cherry picking what we're involved in, as (if the Euro manages to stay afloat) we would seem to be moving towards a federal Europe in the long term, is uncertain. There will come a point where it's all or nothing I feel and that could be a very difficult decision.
"Let's fiscally integrate Europe?"

"Nope!" flips table, goes home to cheers from backbenchers

and not a single fuck was given that day.
"My worst-case fantasy scenario" preludes the "swivel eyed xenophobes" part. Nothing in the final paragraph should be regarded as containing matters of fact. Yes, he seems to hate conservatives.

Pay for 80% of what exactly? Does anyone have a link for the wording of the actual agreement, I'm getting sick of secondary sources for all this. Also "exposing the City to further regulation under qualified majority voting" sounds like a bad deal if you care about the city, right? Again, I would like justification for this claim.

The "Alex" in the comments is not me. I have no opinion on the popularity of stuff, if his or your take on the matter is accurate, show me the (opinion poll) numbers.

Oh, and my previous comment was written before reading yours (Phil's), it's not supposed to be a glib reply to you.
Would a "0.1% on stock and bond trades and 0.01% on derivatives" tax really destroy the City? Seems like it might act as a slight disincentive to high volume high frequency trading, which is known to destabilise the markets.

Being paid by companies based in London is not really the same as being paid by London, is it? It seems as though those who caused the financial instability which is now rampant should be taxed to pay for cleaning it up. However, if they would leave if the tax was introduced, that clearly wouldn't work. How can we find out whether they would or wouldn't?

As an aside banks are not equal to the entire financial sector. According to the linked report, banks contribute more like 7%.

Edit: oops, here's the link:
It is not that the bankers were the only people who had a hand in the crash but that many of them saw the problems and chose consciously to make it worse while there was still something to be made from it.
Reading the Adam Smith link. I don't like it.

"...and more prone to violent lurches up and down." This seems to (wilfully?) misdefine volatility. Being slow to act on information will of course reduce volatility! Being less smooth is not the same as being more volatile (indeed, I can define arbitrarily volatile functions which are infinitely differentiable).

"It's not that bankers were the only people...". Depends how you define banker, but Savings & Loans underpins all of this. Easy credit inflated the housing bubble and indirectly all the other bubbles via house equity loans. What are the other multiple and deep-rooted causes?
Incidentally, the severity of the current slowdown is due to diminished aggregate demand, due to high personal debt and fear of the same driven precisely by the housing market crash.

I don't see much that requires further explanation, but if you've got something subtle I'd like to hear the details.
I have literally no idea what kind of Glen Beck style web you are trying to draw here. Details or silence.

1) Long work days in China is irrelevant to the discussion here as long as productivity per worker remains so much higher in the west.

2) The UK and US government borrows at negative real interest rates at the moment. What is happening right now is not about debt.

3) What is a cultural thing?

Economics is not a morality play in which the "lazy" west will get beaten by the east due to our welfare state and their love of good 'ol fashioned hard work.

I would prefer details to silence, naturally.
The City may be 11.2% of tax receipts but Europe is 40% of our trade, and that obviously includes finance. David Cameron is making some pretty big gambles at the moment, which may yet pay off, but he's clearly spurred on by the thought of being welcomed in to the bosom of his backbenchers in a way he hasn't been before.
I am very untrusting of all new ideas before they have been fully fleshed out for me. It's best to take an "everything is false" approach to the world until you are forced to submit to/call a ceasefire with ideas which don't seem easy to debunk.

The manufacturing sector in the UK was still growing last I heard, in fact it did better than expected last quarter, right?

I think you are missing key details here, like the fact that we can borrow at low rates is linked to the fact the wages are low in China. May as well enjoy it when in lasts, because when rates go up, so will the value of the Yuan and Chinese manufacturing will be much less attractive.
The manufacturing industry may have been spurred on by a weakening GBP against the Euro. It has started to creep back up again now though. This also highlights how manufacturing and the CIty are somewhat at odds. The City likes a strong GBP to keep inflation low, whereas manufacturing would prefer a weaker pound.

Comparing the manufacturing industry we would like to the manufacturing industry in China is a waste of time. We aren't looking to produce a lot of cheap shit as they currently do. China don't even want that. That's why they are investing obscene amounts of money in education. High-tech industry is currently the best plan for growth. This is why Germany is performing relatively well. We have lots of people going to uni and our universities are good but all the top talent gets swallowed by the City because they can offer the wages.
A better way to see the competition between manufacturing and the city is probably in their factor markets (labour, most notably) and differences of political agenda. Cameron's decision put the city first, and probably hurt manufacturing.
Ok, first off I'm gonna say I didn't particularly read that. So I wrote some stuff, THEN I read the article (that's what the cool kids do).

Not entirely convinced by the data. It's a one year change in currency value so straight off the bat I think we can ask what was going on that year and how does it affect the data? I'm not sure we'd even expect a particularly strong correlation over a one year period anyhow.

The trend is still for strong currency to have a negative effect on inflation. These guys should have pulled some better stats out the bag.

It is however, clear that there are a bunch of other factors affecting interest rates. This basic correlation doesn't allude to the potential difference between the possible P value for a regression and the magnitude of that regression. I think it is highly likely that we'd have a pretty good P value but with a relatively small effect. That still means that a stronger pound will decrease inflation, but of course there are other things to be considered. = good
I'm not sure there was a suggestion that the City was actively conspiring, just that it has different aims to the majority of manufacturers and that, at present, the aims of the City are seen as more important and this can cause negative externalities for industry.
That link was literally the first thing I found when I Googled "currency strength inflation" or something to that effect.
Bean says:
"As for inflation in the UK, a weaker £ means higher inflation, as companies have to pay their foreign suppliers more, margins are squeezed, and costs are passed on to consumers. The City cares a lot more for growth than low inflation. Stocks are sometimes used to hedge against inflation. I don't get the argument that what's good for UK Manufacturing is necessarily bad for UK Finance."

This was the type of answer I wanted, I don't get the same kind of understanding from regression analysis. Plus I don't know what a p-value is, unless it's the "p" referred to in scientific papers i.e. the probability of achieving a given outcome given the null hypothesis. Whenever someone says regression, I just think correlation. I have never done anything with data in my life.

Back to the details of Phil's suggestion. Shouldn't that mechanism only account for ongoing inflation when the currency continues to devalue? If a currency is weakens and stays (constantly) weak, it sounds as if this effect should stay the same, and thus once the currency stabilizes at it's new weak exchange rate, inflation should decrease back to normal (cetera paribus).
Haha! Doing the write first then read gives me mad satisfaction when the source agrees with me. (James is right about the cool kids).

" keep imported inflation low, the currency in question would need to appreciate perpetually. A stronger currency could only offset imported inflation temporarily."

Also, I did not understand the rest of the article at all. I understand the words and sentences individually, but no paragraph.
Add a comment...