No one wins trade wars. And it makes no sense to try. At long last someone has figured that out, most likely because a trade collapse has already started.
Please consider Sweden Holds Out Olive Branch to Brexit Britain.
Sweden has warned that it would be a serious mistake to chastise Britain for voting to leave the EU, appealing instead for an amicable settlement to minimise damage for both sides.
“The softer the Brexit, the better. We’re an open country and we are in favour of free trade, and we want to see a solution that is as beneficial as possible for everybody,” said Magdalena Andersson, the Swedish finance minister.
The olive branch from Stockholm reflects the shared view of the Nordic bloc that there is nothing to be gained from a fractious divorce between Britain and the EU.
The comments came as Swedish companies start to feel the chilling effect of the referendum campaign in Britain and the sharp fall in sterling. Data released this week show that Swedish exports to Britain are in free-fall, with a drop of 19pc over the period from January to July compared to the same period a year ago.
Pharmaceuticals fell 38pc, chemicals 23pc, and paper goods 15pc. “It’s amazing. If this persists, it will lead to fewer jobs in Sweden,” said Andres Hatzigeorgiou form the Stockholm Chamber of Commerce, speaking to Dagens Industri.
There are over 1,000 Swedish companies operating in Britain, employing 100,000 people, from Saab, Scania, and Electrolux, to Skype and Ericsson, to Ikea and H&M. “They’re worried about potential trade barriers and tariffs, and about the Swedish personnel,” said Ms Andersson.
Mrs Andersson hinted that there may be some leeway for creative statecraft once Article 50 is triggered and the picture becomes clearer. “We have to know what the British government wants, what is their idea of a new relationship with the EU, and then we can start discussing from there. This is all part of the negotiations,” she said.
“I can imagine there might be some cherry-picking within that. We should definitely not underestimate the complexity of the issue, and also the consequences,” she said.
British Pound vs. Swedish Krona
Export Pain
There’s nothing like a bit of export pain to get the head thinking clearly. No doubt German exporters are aware of the issue as well.
Will Merkel remain a stubborn goat, insistent on punishing the UK at a far greater expense to Germany?
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Mike “Mish” Shedlock
Sensible approach.
(As a side note, I sometimes comment just to read the follow-up comments from readers. WOnder why can’t order them clicking a box or something. WordPress could do something about it.)
I’m seeing some similarities between Brexit and O’Henry’s short story “12 Angry Jurors”. One party opposed the majority and now anther is shifting to the minority view.
The idea to punish UK in order to scare others not to leave EU is total stupidity.
Who wants to belong to a club where you are a hostage?
The best bet would be to let UK have free trade with EU but with no free movement of people.
The idea that people should be free to move to collect welfare is as stupid as can be imagined. The welfare should be made for citizens only in every european country and free movement would only be to get a job with no benefits. This should be the model for EU.
For UK the deal should be that the current visa-free travel and holidays and vacations continue but UK keeps up their border checks they currently have since not being part of Schengen and turns away those who tell that their reason to come to UK is to move there to work IF UK decides that the “working” of a romanian gypsy who intends to sell the Big Issue homeless magazine and collect generous UK welfare for her and her family is not needed.
UK has many unemployed youths of their own in english blokes both white and black and the minorities who have already settled in UK like jamaicans, indians, pakistanis etc. also have unemployed youths so UK really does not need MORE romanians, bulgarians or poles etc. in addition to the hundreds of thousands who already have come.
The crash of pound is good news for uk exports to elsewhere in the world and will make UK firms more competitive against imports from Sweden and Euro area countries like Germany, France, Netherlands, Finland, Italy etc..
Swedish krona is floating freely but it usually follows euro on the markets.
So far the value of the pound has made the situation such that even if EU imposed punitive tariffs on UK (which they can’t really do because of WTO agreements) STILL Brexit would have been positive for UK because the pound has fallen more than the tariffs could be even in the nightmare scenario warned about by EU bureaucrats (which again has little to no basis because of WTO).
UK industry is currently very competitive and the crash of swedish imports to UK is a symptom of this.
Who wants to belong to a club where you are a hostage?
Socialist countries build walls to keep people IN.
Capitalist countries build walls to keep people out.
That’s what you think. I’m going to say that capitalist countries ARE socialist, and in name build walls to keep people out. Very quickly, those walls are keeping people in.
WTF?
Its easy, they build walls where people don’t go so they don’t go there, and where people go that they don’t want them to they take walls away so they don’t go there either. Walls are natural gathering places you see, if you put a wall across a street then you will end up with people queuing for miles in their cars just to get there.
Please witness the pure discrimination and yet civilizing effect even natural barriers bring.
http://www.shadowsofafrica.com/media/wysiwyg/pages/wildebeest-migration-safari.jpg
It is possible the ability to claim benefits across EU is designed to create a call for fiscal and budgetary alignment as well as mutualized debt to fund a common basis of welfare available across the whole continent.
Once the rest of the EU countries see Britian thrive after Brexit, pressure will build for others to leave. However Britian is a special case since they already had an established currency. I look for Italy to be the next to leave since they have been a politically fragmented and fickle populace throughout history.
you honestly think its that simple, EU loses the most if Brexit thrives so they will do everything in their power to ensure life is made extremely difficult for the UK and try to make sure it is seen to collapse as an example to the others. The punishment for desertion is ruin. UK would have been better in the EU as the proverbial fly in the EU ointment.
“Trump Destroyed Trump”
Since Mish made that post, he has pretty much stayed off the election topic.
When will he address the 800 pound gorilla*?
…
*the polls are a tightening
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Thought he was a tad early in his call that Race Over (though still uphill for DT)
Found this gem via Drudge
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election night 1980 –
BRINKLEY: I’d like to ask a question of you folks. We have here what I think reasonably could be called a landslide or certainly something approaching a landslide. Where did it come from? Nobody anticipated it. No polls predicted it. No one saw it coming. How did that happen? I don’t want to knock the polls, because I believe in them, and they generally do very good work. One thing I wondered. Have a lot of people — did a lot of people decide to vote for Reagan, but didn’t want to say so?
BROKAW: Well, that’s always been a factor. He’s an actor, after all. A lot of people have made fun of him, and maybe I ought not be publicly in favor of him.
BRINKLEY: Again, don’t want to pick on the polls, but there was none of this insight.
http://www.rushlimbaugh.com/daily/2016/10/25/nbc_s_1980_election_night_coverage_shock_dismay_and_faulty_polling
Very much so, and in addition, people now can be fired for supporting Trump, so why would they answer a poll?
The Mo is on DT’s side.
And for the reason I suspected a couple of months ago – households in October would find out what their 2017 health care premiums would be.
Trump – wants to REPEAL ACA
Clinton – wants to EXPAND ACA
“No one wins trade wars. And it makes no sense to try. At long last someone has figured that out, most likely because a trade collapse has already started.”
It was known in 1999 why Glass-Steagall was created. Yet it was dismantled anyway. Same with bank leverage limits. The big investment banks got leverage waivers, anyway. All of them crashed, just as would have been expected. Yet they got waivers.
Doesn’t matter that no one wins trade wars. Millions have lost jobs to globalism. When the pendulum pushes too far to one end, push comes to shove in the opposite direction. Action begets reaction. Newton’s law.
The torches and pitchforks don’t come out during the boom, they come out during the bust- after the damage the boom caused, becomes very apparent. Those creating the boom, know well in advance, that pitchfork days will come, yet they create the boom, anyway.
Phases of a boom, phases of a bust. Beggar they neighbor, is one. Currency wars.
When I was child and we visited Sweden, mid-90s, many times as I have relatives there, it was always around SEK10 to GBP1. Nice and easy, just took off a 0 to get the equivalent GBP price. Back to where we were now.
I don’t understand why everyone is so worried about a “hard” Brexit? What’s so bad about Britain trading with the EU on WTO terms? Lots of countries do just fine with WTO. Singapore and Australia do just swell with WTO. In fact, maybe losing things like financial “passports” for banking would be a good thing for the UK and lead to a more balanced economy.
Financial services will most likely collapse, UK has no deal with WTO so far and WTO said that it will have to negotiate one, new IT systems will be needed. At this rate, with so competent leaders, I would not by surprised, if 1 pound would buy only 25 cents.
Actually, they are technically still members of the EEC, which is a mechanism TPTB have basically been ignoring. This gives them the same access as Norway, and they would have to be voted out should they choose this route. If my understanding is correct this was the route IN to the EU, so it should also be a way out with minimal disruption.
Perhaps Fish could weigh in, and correct any misconceptions on my part.
You might try these for an idea
https://www.google.pt/url?sa=t&rct=j&q=&esrc=s&source=web&cd=30&cad=rja&uact=8&ved=0ahUKEwi-i9ibrvnPAhXKwBQKHWvTAXk4FBAWCFcwCQ&url=http:%2F%2Fiea.org.uk%2Fsites%2Fdefault%2Ffiles%2Fpublications%2Ffiles%2FClement%2520BREXIT%2520entry_for%2520web_0.pdf&usg=AFQjCNFsVG6cGLU9J7cjbVk6Du_W4SDSBg&bvm=bv.136593572,d.d2s
http://democracy.blogactiv.eu/2016/06/16/euratom-after-brexit-votes-uk-will-remain-a-community-member-for-nuclear-non-proliferation/
have the europeans ever learnt from history for that matter has anyone?, Europe has to the chance to avoid a Versailles treaty which “feels” good in the moment but ends up being the catalyst that causes alot of havoc years down the line.
But then again this all assumes people learn from history.
Mish I bet u r working on the flash PMI service number of 54.8 awfully strong right before the election but that’s just a coincidence!
So Mish GDP on Friday est. 2.5 someone predicted 1.5 now I just wonder if the number will surprise on the upside so what do u think?
I expect about .2 to .4 PP lower than current estimates
Mish – the only reason this is out of Sweden was the weekend threat by the UK to lower Corp tax to 10%.
This was floated 24/6 and wound back when Swedes and Schauble bitched. It was rolled back into play last week after the EU meeting as a ‘card’ the UK will use if need be. It was broadcast load and clear.
UK has few cards compared to EU but some they do have could very very disruptive. Tax is just one of them. Swedes have already expressed their sensitivity to competitive tax rates saying ‘they need to be able to educate their kids’.
There are a few EU corporates able to relocate to an English speaking UK offering low Corp Tax rate, competitive exchange rate and outward looking perspective beyond the EU.