Freitag, 25. Januar 2019

What was not explicitly stated - report on the recent decisions of the Governing Council of the European Central Bank - by Thomas Seidel


Deutsche Version
Mario Draghi (center) accompanied by the Vice-President and
the communication director
(Source: Thomas Seidel)


The first ECB press conference in the new year 2019 does not initially promise to be very interesting. In terms of what was said, it was. What is exciting, however, is what has obviously or intentionally been told nothing about.

The ECB is certain that the current conditions, with a key interest rate of zero percent and a freeze on new acquisitions in the purchase program, will remain so until summer 2019 in order to achieve the target of core inflation of just below two percent.
What has not been said is, that it will remain so until the end of Mario Draghi's term as President of the ECB.

If there is talk of no more new purchases of government bonds, the portfolio of 25 percent of all government bonds in the euro zone will nevertheless remain at this level. What is not being said is, that maturing government bonds can be replaced by new issues at the ECB. At the end of the day, governments are not paying back anything and are not really reducing their debt.

Sometimes better say nothing
(Source: Thomas Seidel)
However, the politically driven changes in the economic framework conditions, such as the negative trade dispute between the USA and China, the Brexit, the weakening demand or positive developments in the labour market and rising wages, have not yet led to the achievement of the desired inflation target. On the whole, one comes to the conclusion that the tried and tested money market policy is being pursued because the economy needs this stimulus to achieve the declared inflation target after all. Which was not said: Does the economy have to focus exclusively on a single objective?

This is followed by a general and repeated appeal to political leaders. Structural reforms had to be undertaken, structural unemployment combated, fiscal buffers put in place, making the economy made more resilient and the capital market union completed. What has not been said: An out-of-control populist government in Italy is increasingly leading the country into the abyss. The reforms in France under President Macron, which have so far been timid anyway, are threatening to disappear completely in the angry protest of French citizens unwilling to reform. The nature and consequences of Brexit are becoming increasingly unpredictable.

That counts for the vice-president too
(Source: Thomas Seidel)
Asked where the Governing Council drew its seemingly certain economic conclusions from, Draghi explained, that it was the long-term continuity of some key data that was trusted. One continue to monitor developments. The decisive factor would be the situation that would emerge next March, which is not said: No one knows how things will develop around the UK's exit date at the end of March. But only then is it worth taking a closer look.

Will the ECB's zero-interest policy, which has now been pursued for a long time, not burden the banks' profitability too much? The high operating costs, inherited liabilities in the lending business and overbanking are more responsible for this. Not a word about the simmering rumours of a state-orchestrated association of Deutsche Bank and Commerzbank in Germany.

A prankster amoung the journalists seriously asked whether the ECB was dealing with the issue of a digital currency. Draghi refers to the results of studies, that all point to more disadvantages than advantages of a digital currency. What he doesn't say is, that if it doesn't even work in the city of Frankfurt with a digital ticket for public transportation, how will it work at the central banks?

Somethimes it's to talk about everything
(Source: Thomas Seidel)


What Mario Draghi definitely has nothing to say about, however, are questions about his successor as President of the European Central Bank. Nor are there any speculations about Sabine Lautenschläger, Vice-President of the European Banking Supervision. That is the task of other people.

Mittwoch, 23. Januar 2019

The fading of British identity -The causes of Brexit and its consequences- by Thomas Seidel-


Unless some kind of revolutionary movement is quickly given to political
establishment, the lights on the island will soon turn off.

(Source: Berliner Zeitung originator: dpa)
The Brexite has plunged many Britons into a national identity crisis. Especially the supporters of the leave hope for a real catharsis from the "pollution" by the European Union. They are prepared to take on heavy burdens and renunciations for years to come. But the national conflict is also based on very old feathers. Between the north and the south of England; between Anglicans and those who never want to be, and between generations.

Only a few are really aware, it is only the royal house which carries the crowns of England and Wales and Scotland in personal union as kings. Only this holds the so-called "Great Britain" as a state structure together at all. There are good reasons, why this Great Britain still has no modern constitution. This personal union would then probably have to be abandoned and with it the symbolic union of the crowns in one person. Ultimately, what we have perceived as the United Kingdom for about four hundred years is about to disintegrate. The English aversion to Welsh and Scots is already legendary and often enough the stuff of jokes. Hardly anyone realise, however, the centuries-long rift between the north and the south within England. But that's what finally led to Brexit.

Historical North-South conflict
The relationship between the north of England with places like York, Liverpool, Manchester and the south with its centre London has always been problematic in England. Without going too far back in history, the rebellion of the North in the "Pilgrimage of Grace" during the reign of King Henry VIII in the 1530s may be recalled. Perhaps because of Henry's separation from Catholicism, the rebellion against the king ends after some back and forth with a terrible revenge by Henry on the rebellious ones in the north. He finally had all the leaders of the rebellion executed in public.
König Heinrich VIII (1491-1547)
(Source: wikipedia, licence free,
Workshop Hans Holbein the Younger
Never again should the North of England, in the reputation of English society as a whole, come even close to the level of the South English. To this day, northern Englishmen, especially in the eyes of the Londoners, are regarded as backward, uncouth, awkward, narrow-minded and stubborn. They are defamed as uncouth people, capable neither of the fine language nor the fine customs of the noble Southern Englishmen. Later, in the beginning industrial age, which finally had its origin in England thanks to the steam engine, the North was mainly used as a supplier of coal and as a steel factory, without really being loved by the South. In the eyes of the South English, the North remains a region where one can only get dirty.
With the growing colonial empire in the 18th and 19th centuries, the British made the same fundamental mistakes as other European colonial powers. They exploited the colonies mercilessly and thus created a questionable wealth at home. However, it lacked completely the domestic economic substance. That, above all, is the difference to major continental powers such as the USA, Russia and, more recently, China. They have, at least theoretically, so many resources of people and material in their own country that they can try to live up to their ambitions on their own. The two world wars also contributed to the economic decline of the "Empire". They also sucked the last reserves out of Great Britain. Soon the motherland could no longer hold its colonies. Since the 1960s, Great Britain has been reduced to the economic power of a population of around 60 million people. Thus one finally arrived where one had never wanted to go in England since the 17th century, in Europe!

Modern Confrontation
After Britain had actually lost its global significance and had long since ceased to be called "Great", the country spun into two almost civil war-like conflicts: the war in Northern Ireland and the merciless struggle of the powerful trade unions with their base of workers, especially from the North. In this phase, Margaret Thatcher, a strictly patriotic conservative politician, came to power in London as prime minister. She is determined to resist the country's obvious decline. Meanwhile, the Americans, under the presidency of Ronald Reagan, are also preparing to withdraw London its important rank, as the financial and trading centre of the world. The country threatened to become even more of a peripheral phenomenon in Europe.
Margaret Thatcher (1925-2013)

(Source: wikipedia, originator: Chris Collins /
Margaret Thatcher Foundation / CC BY-SA 3.0)
Margarete Thatcher, whose hatred of ordinary workers and trade unions was indelible, actually managed to break the social neck of this class and its organizations once and for all. Once again, the proud class of workers from the north of the country was to be deprived of everything. Even today, the devastating condition of the Liverpool and Manchester areas testifies to this defeat. But Thatcher not only wanted a single victory, she wanted to prevent a renewed resistance from industrial workers forever. Her instrument was to be the targeted development of a strong service economy at the expense of a traditional industrial production economy. The starting signal for this would be the Big Bang. The complete liberalisation of the British financial sector in October 1986. Since then, an increasingly rapid economic divide has developed for a long time between the north and south of England. From year to year, the City of London made more and more fantastic profits in the trading of funds and securities. The tough boys and girls from the City of London became enormously inventive in their lax handling of laws, especially tax law. At the same time, many of them earned millions in bonuses year after year. As a result, property prices skyrocketed not only in London, but also in large parts of southern England. On the other hand, property values fell in the north. While salaries in the south skyrocketed to unprecedented levels, unemployment rose in the north. As if to mock the poor, the English Financial Times regularly published a glossy magazine with the meaningful name "How to spend it". This was addressed to a few nouveau riches. It served to answer the very difficult question of how they could most senselessly bring their million-dollar bonuses back to the people.

Problems of Class Society
But that alone is not the only rejection of English society on the islands. It has always been a class society. Old nobility and nouveau riches clearly distinguish themselves from the rest of the population but also from each other. Non-hereditary nobility titles only for lifetime are nothing more than elaborate orders of merit. Of course, the old nobility distinguishes itself from such upstarts. It is almost impossible to ascend socially to the highest circles via the way to school and even through personal talent. Overpriced private school institutions offer young Britons hardly any development opportunities, even if well-heeled parents are behind them and can buy their children a place in such schools. England, which prefers to train the offspring of rich foreigners, with whom these schools can earn a lot of good money, rather than systematically promote its own talents for cheap fares, has been suffering for decades from a secret brain drain that no government has so far been able to counter with anything. No bourgeois businessman, no matter how successful, can ever ascend to the innermost social circles of the long-established aristocracy. Rich businessmen from abroad certainly don't. The long-standing racism of a white, Anglican Protestant upper class and the rest of English society has not improved throughout the centuries. Foreigners, regardless of their origin, have always been tolerated only for time and only for economic reasons, but in the end have never really been accepted, or even integrated. Immigrants from the former colonies, today somewhat dressed up as the "Commonwealth of Nations", are easily preferred to other foreigners from "third" countries. But in the end they form a parallel society. At times this picture has changed in the country due to membership of the European Union. Union Europeans enjoyed a degree of freedom of movement that even Commonwealth members were unlikely to enjoy. They can enter and leave the country as they wish, work without special official controls and even buy what they want, without any customs. As long as the EU was dominated by Western countries, that did not matter much to the English. At the latest, however, since the eastward enlargement of the EU, many people view these new EU citizens with great distrust. Again, especially in the north of England, where Eastern Europeans compete with their native counterparts on the labour market because of their relative modesty.
Theresa May also allows herself to be influenced in her politics
by misjudge

(Source: wikipedia. open government licence,
Originator: https://www.gov.uk/governmenploads/system/
uploads/attachment_data/file/588948/
Controller of Her Majesty’s Stationery Office)
Misjudgements
In the meantime, economic ties with the European Union have become so tightly knit in such a way that a detachment will be painful for both parties, but could even be fatal for Britain. At best, the country still plays a role internationally in areas such as the chemical industry and pharmaceuticals. Recently, it has even been used to electronically sniff out alleged opponents of all kinds and origins. Separated from the EU, the British could not even feed themselves from domestic production in the foreseeable future. The mandatory import of food and daily necessities is likely to drive the prices of these goods to unexpected heights in the event of an unregulated Brexit. Such an increase in prices will not be matched by a corresponding increase in income for a long time to come. The enforced end of the heavy industry and the sell-out of entire industries by Margarete Thatcher, such as the automobile industry to various foreign owners, have made the country so dependent on important production opportunities in other countries that an interruption of this chain of goods will immediately lead to production stoppages.

The importance of England as a military power, which some like to praise, is simply an illusion. It may well be that the country has some nuclear toys. However, when you look at it in the light of things, all the effort that has been put into it has been of no use in effectively resisting any aggressive action by various countries, pirates or terrorist organisations. However, the maintenance of the strategic weapons causes immense costs for the already weakening economy. The country is already no longer in a position to build new nuclear submarines for itself, for example. It lacks the necessary shipyard capacities and the necessary know-how. For example, they are forced to order replacements for the outdated nuclear submarines in France and have them built there. The costs for this will then rise in future, probably by 25 percent customs surcharge. The company proudly refers to its own construction of two modern helicopter carriers near Aberdeen in Scotland. One is supposedly finished, the other is still under construction. Admittedly, for the time being the two are useless because they do not have the helicopters that are supposed to be the core deployment systems of the two costly carriers. These two prestige objects were not laid on keel for the own national defence anyway. Someone in London years ago came up with the clever idea of lending these weapon systems to other users for money. The main focus is on Singapore.
David Cameron

(Source: wikipedia, copyright notice,
Originator: Meet the PM (direct image link)
from the 10 Downing Street Website)
Gamblers
How did the victory of the Brexit supporters come about two years ago? Because a politically disinterested, slightly arrogant and blasé relatively young British population, based in the south of England, was too sad to be strongly committed to its own future at the decisive moment. On the other hand, the older people, who had always been disparaged and treated badly by London, were busy going to the ballot boxes, especially in the north, and forced a triumph in their eyes. Nothing that populist politicians like Nigel Farage or a Boris Johnson promised to the people two years ago will come close to what they promised. This may well dawn on the last citizen in the meantime. But it is to be feared that a majority of the English electorate is still more willing to shoulder heavy burdens and renunciations for years to come than to give up the dream of regaining full national sovereignty.

Some politicians in the European Union fear that Britain's resignation may become an example of ambition for other Member States. That is not to be feared! On the contrary, the inevitable, blatant decline of Great Britain will make it clear to many a national political muddlers that their small nations, which cannot survive on their own, will only be able to leave a little more of their national proud if they are embedded with a strengthened EU. Other than that, all what's left for those countries, is being just the destination of hundreds of thousands of Asian tourists in the future .