US stimulus talks dominated the headlines again on Wednesday after Steve Mnuchin injected himself into discussions that appeared to be losing momentum after a flurry of activity last week.
Mnuchin’s $916 billion plan (paid for in part by leftover money from the Paycheck Protection Program and funds clawed back from the Fed) includes both the liability protection for employers demanded by Republicans and aid for states sought by Democrats. Mitch McConnell suggested Tuesday that Congress should drop those contentious issues, pass a “skinny” deal, and revisit the sticking points in January. He apparently endorsed Mnuchin’s plan, which came as something of a surprise, considering both the higher price tag (McConnell hasn’t budged from $500 billion in September) and the funding for local governments.
But there are issues. The plan calls for $600 direct payments to individuals, but at the expense of federal unemployment assistance. Obviously, Democrats aren’t enamored with that, and economists likely won’t be either. “While it is progress that Leader McConnell has signed off on a $916 billion offer based on the bipartisan framework, the President’s proposal, which cuts unemployment insurance by $140 billion, is unacceptable,” Nancy Pelosi said.
Read more: Don’t Leave Town Without It
In any case, Congress passed a seven-day CR to buy time for more discussion and both parties intend to attach stimulus to a broader funding bill.
Believe it or not, the above is what counts as “progress” these days, although markets may take a wait-and-see approach before tacking on additional large gains.
Brexit came down to the wire, and the options market continued to reflect the palpable angst and uncertainty ahead of Boris Johnson’s meeting with Ursula von der Leyen.
As ever, there was little utility in speculating on the outcome. It seemed inconceivable that the UK would risk a crash-out scenario after all these years and amid the pandemic. But you never know, and some memes circulated on finance-focused social media suggested markets no longer fear a no-deal Brexit to the extent they did a few years back. I suppose a global depression catalyzed by a literal plague has desensitized folks. And yet, when global trade and commerce is trying to recover from the hit incurred over the course of the public health crisis, a no-deal Brexit wouldn’t help. Ultimately, talks were extended through Sunday — the can was kicked for another few days.
Meanwhile, Beijing may be poised to put the brakes on the yuan’s rally. CNH strengthened through 6.50 Wednesday, and then, just prior to the official close, CNY abruptly weakened. Several traders cited dollar-buying by large Chinese banks.
The stronger currency clearly hasn’t been an impediment to exports, which surged 21% in November. But officials may be loath to countenance much more in the way of appreciation in the near-term.
“A seasonal ramp-up in dollar purchases in mainland China could help keep the offshore yuan trading at a premium to the onshore counterpart,” Bloomberg’s Qizi Sun wrote, noting that “onshore companies’ dollar purchases have normally been the highest in December over the past five years, so when it comes to year-end, a weaker CNY versus CNH can be expected for quite a while.”
UK economy already way down from what it was pre-covid, so if they have to rebuild the economy anyway, why not do it independently and rebuild it the way they want to for the long term- with individual trade agreements with the countries of the world, as Switzerland has done.
Well, you may be about to find out why. Hopefully not, but possibly,
Take a look at a history of Google search results for the phrase “What is the EU?,” tweak the parameters to include only UK citizens, and capture the window AFTER the referendum. What you’ll discover is that quite a few people in the UK didn’t know what it was they voted to “leave.”
Brexit was just another manifestation of the 2015/2016 populist wave that swept western democracies. Almost nothing good came of it. Go back and look at the cast of characters that comprised the “arch-Brexiteer” contingent. They’re mostly cartoons.
The problem that western democracies are running into is that citizens are increasingly unwilling to educate themselves, and the issues are becoming increasingly complex.
There’s no easy answer to that, but the bottom line is that leaving the EU wasn’t something that should have been left to a referendum, when everyone knew that large swaths of the public simply didn’t have enough information to make an informed decision and weren’t likely to gather that information ahead of time.
The cost of acquiring information in monetary terms is very, very cheap. With Google, it’s basically free. The problem is that, when quantified in time spent, the cost is huge in a complex world. And people don’t have a lot of spare time, nor do many people possess the education necessary to make informed decisions even if they take the time to gather information.
So, this sets up a scenario where western democracies are vulnerable to populists offering “easy” solutions to highly complex problems. Trump is an example. The Brexit movement is an example. Matteo Salvini is an example. Marine Le Pen is an example. And so on, and so forth. One (of many) dangerous things about that scenario is that the people associated with these movements have autocratic tendencies or, at the least, they’re demagogues. The grievances they pander to are often couched in nationalist rhetoric. Brexit is a bit different because “Brexit” isn’t a person. But it’s a manifestation of the same dynamics.
Erudite you may be, but Brexit isn’t as simple as you make out. However it has been spun to you outside the UK (‘racist’, ‘populist’ etc) the reality on the ground is different. The Brits have been under the (essentially undemocratic) regime of the EU for enough time that even the dumbest Yorkshireman can figure out that Maastricht was a mistake, a betrayal even. Some things, such as democracy and sovereignty, are more important than money, so whatever intermediate economic pain Brexit causes is outweighed by the benefits. The bottom line (and I speak as someone who has lived in several EU countries for over a decade) is that culturally, there’s very little common ground. They literally do things differently there, and it’s not remotely analogous to the situation in the federated states where at least you have a language to share. Never mind the UK, there’s little common ground even among the remaining nations, as the world is about to find out now France and Germany don’t have the UK to be the ‘common enemy’. Financially it makes no sense either, and hasn’t since they tried to coax it into being more than a trading bloc (so 70s…). As the Germans will find out once they realise the trillion plus debts owed to them by other EU states aren’t getting paid back, and all that hard work was for nothing. Still, whatever. Maybe you yanks could form a ‘super state’ with Mexico, Paraguy, Venezuela etc. Give each country a voting power bearing little relation to anything objective, such as population, financial input etc. See how that works for you. There were some issues the average undereducated Brit bit on that were reported fairly accurately outside the UK. The dissatisfaction with health and benefit tourism into the UK from other UK states (cue Sangat). Ah, that British sense of ‘fair play’, completely absent in the other nations of Europe (and in fact, regarded as a childish weakness).
Overall, this is a great comment with one rather glaring exception: You’ve compared France, Germany, Italy, Spain, etc., to Mexico, Venezuela, and other Central and South American countries. That’s a bit of a stretch, methinks.
Also, you brought up a place called “Paraguy,” which, I’d gently note, exists only in your mind. Or, more likely, only on your device, where the spellcheck isn’t working properly.
Umm, no. That hardly qualifies as a great comment.
It is full of resentment, cynicism, and venom.
It does serve to highlight issues and challenges faced by the EU, but it does so through a lens of bigotry, prejudice and jaded negativity.
Since cynicism begets yet more cynicism I will paraphrase one of H. L. Mencken’s famous aphorisms:
‘Public referendums are based on the theory that the common people know what they want, and deserve to get it good and hard.’
The UK will be an abject example even as it is likely to become less united as Scotland moves toward independence (and entry into the EU).
Max Roguespierre – I read H’s ‘great comment’ as sarcasm…
Most material political change is driven largely by resentment, cynicism and venom.
No, it was pretty much racism. E.U. law was incorporated into BRITISH law enforced by BRITISH regulators. And while the European Union is a supranational organization, Britain maintained de jure veto power in several areas and de facto veto power over fields deemed strategic to Britain interests such as security and finance.
Considering the Conservative Party’s grouping with Far Right, xenophobic parties in the European Parliament instead of with center-right ones, the campaign’s overt disdain for the free movement of labor and immigrants, and the willingness of many Leave supporters to entertain a ‘soft Brexit’ that would leave most E.U. rules in place, the only conclusion is that racism drove the bus on Brexit.
It has a long history! Remember the anger about Polish Plumbers? And I am old enough to remember this:
“Starting in the late 1960s, and peaking in the 1970s and 1980s, violent gangs opposed to immigration took part in attacks known as “Paki-bashing”, which targeted and assaulted South Asians and businesses owned by them, and occasionally other ethnic minorities.”
But after the last two elections, what standing do we Americans have to lecture others on racism?
As a Brit on the ground, I would like to point out that everything you say is pure pro-Brexit opinion (I would use the word propaganda but that word upsets people). Those who voted the other way would no doubt disagree with almost everything you say. You conflate your opinions with facts. I could respond opinion by opinion but if I have learnt anything in the last 4+ years it is that strongly pro- and anti- Brexit people are both passionate, defensive and angry. None of which nurtures reasoned debate.
BTW for transparency I supported remain, but not passionately so… and Brexit has been good to me – I sold all my UK equity funds the day after the referendum and bought world ex-UK funds. A position that keeps on giving.
What I meant by “great comment” is that very much contrary to most commenters who take issue with my admittedly high-minded missives, this person at least put some effort into articulating an economic rationale for his/her views including referencing TARGET2 balances, which, while a mainstay of some “propaganda,” demonstrates a willingness to engage with structural issues.
Regular readers know I will remove comments that I consider to be out of bounds and I will remove them immediately. That said, I don’t just wake up in the morning and say “Hmmmm, let’s see who’s irritated me enough to have their comment removed.”
While I agree that the tone of that particular comment is a bit abrasive, the content is far from egregious, and I think I exhibited just enough pettiness in my reply to indicate my displeasure. That’s sufficient in this case, in my judgement.
As I recall one of the selling points prior to the vote for Brexit was more money for British National Health System. The day after the vote, the Brexit faction admitted this was a convenient lie. I also recall the leavers showing pictures of dark skinned potential immigrants suggesting that somehow being part of the EU was going to allow more immigration from “others”. The result of all this for Great Britain possibly is independence for Scotland and eventual reiunification of Ireland. It will also reduce British influence in world politics, damage its security relationships and probably lead to Britain obtaining less favorable trade deals with other trading blocks since they are no longer part of a large trading block. British youth can no longer easily work in the EU blcok going forward- that is less freedom and opportunity. To top it off, it probably reduces economic growth longer term due to more trade friction with its largest and geographically closest trading partners.
H- Maybe the people of western democracies have swung too far in the direction of not spending enough time and energy to truly educate themselves about issues and politicians, but this can be regained. I certainly believe that people, in general, possess enough intelligence to make such decisions and to correct any missteps. Life is rarely a straight line, for sure.
When the elected politicians/governments make enough mistakes and/or start to take more than is justified for themselves, citizens will start to pay more attention and get more involved.
The problem with solely relying on the government for guidance and LT decision making, and not involving the people individually, as Switzerland does, (almost everything is a referendum) is that the people would need to elect politicians who are intelligent enough without self- serving interests or unknown allegiance to donors to make such decisions. This is impossible without term limits, separate retirement and healthcare plans for Congress, donation limits, etc.
So whether the people need to educate themselves to elect the best leaders to make decisions or the people need to educate themselves on the issues- it is sort of the same thing.
Unfortunately, our education system does not embrace critical thinking and exposure to all sides of an issue, especially political. I have 3 kids (two out of college), I have had a front row seat to some of the craziness going on in our public education system.
I personally believe we have swung too far in thinking the government can solve all of our problems, hence my libertarian preference.
I was once in favor of term limits but after serving in several positions in local government I have completely changed my mind. With term limits, institution knowledge is lost and it is a give away to lobbyists. Many times an issue would come up and a member who had been there for a long time would note that this has been presented in the past and here is why we voted against it. This is an important pool of knowledge that would be lost with term limits especially when you are newly elected and are not up to speed on all the issues or know who to trust.
I have family and close friends in the UK, some of them favored leaving the bloc even though I would describe them as intelligent and progressive people. It never made sense to me but I do not live in there and I’ll admit I look forward to a unified Ireland and a free Scotland. Brexit will take away from the UK the best it has to offer, Scotch and good protestant Irish Whiskey, freedom can be a two way street, I wish we could free the Welsh too, but sadly I think they are stuck with the Queen and Boris.