Brexit thread - what happens next

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scorza said:
I still don't see why the government can't print money ala QE, but instead of giving it to banks use it to fund infrastructure projects. We could use it to fund the £8bn hole in the Hickley C reactor now we've come to our senses on China.
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For good reasons, there needs to be a plausible way to reverse QE when inflation starts to set in again.

By buying government and corporate bonds, the BoE has a fairly liquid, fixed price asset, it can offload onto the open market at short notice to remove capital from the system. Forcing interest rates back up again and dampening inflation.

They could, in theory use printed money to pay for infrastructure projects e.g. Hinkley Point, the BoE would retain ownership of that infrastructure, and then sell it when the time comes. However, there are very few buyers for these sorts of capital project, normally only the government. The open market price is highly questionable, and they take a very long time to sell. Also, if the government is the only buyer, where do they get the money from? The total QE thus far is around £400bn and now rising again. That's more than half the total annual budget.

The only option would be to introduce a highly incestuous borrowing scheme, or sell to the private sector i.e. privatise it.

Having said that. The BoE already has a vast war-chest of assets on its books, and inflation is a distant memory now. I think a more direct scheme would be better than a repeat of the round of QE we had a few years ago.
 
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I know I keep mentioning the daily mail.... But it's scary how many people think like this.... I'm talking about hundreds sometimes thousands of comments along the lines of

"Remainers are making a recession happen so they can say they were right"
"We were heading for another recession anyway"
"We are fine... Were not heading for a recession... Business is booming and all these countries want to trade with us"

Why has critical thinking gone out the window for leavers. Don't get me wrong..... I knew that remaining will have both positive and negative impacts.

But every leave I spoke to was under the impression that no negative things will happen upon leaving the EU.

I understand this is not what ALL leavers are like. But I'm not going to deny that a large part of the leavers I know personally and a large part of leavers I have come across online really do think and act in this way.
 
dalehitchy1 said:
I know I keep mentioning the daily mail.... But it's scary how many people think like this.... I'm talking about hundreds sometimes thousands of comments along the lines of

"Remainers are making a recession happen so they can say they were right"
"We were heading for another recession anyway"
"We are fine... Were not heading for a recession... Business is booming and all these countries want to trade with us"

Why has critical thinking gone out the window for leavers. Don't get me wrong..... I knew that remaining will have both positive and negative impacts.

But every leave I spoke to was under the impression that no negative things will happen upon leaving the EU.

I understand this is not what ALL leavers are like. But I'm not going to deny that a large part of the leavers I know personally and a large part of leavers I have come across online really do think and act in this way.
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But the Remainers are talking the economy down and that probably is having some impact. No doubt there'd be problems anyway, but how much of that is systemic and how much is caused by the psychological impact of the doom and gloom claims? We cannot answer that easily.

Consider this: In the last few weeks the MSM has talked about "dramatic falls" in the value of Sterling when it has shifted by 0.5%. Before Brexit we'd not hear much about 0.5%, nevermind it described as something dramatic. Sterling has pretty much held around $1.3 since Brexit, so why the talk down?
 
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Reason, critical thinking and wisdom have been thrown out the window for this century.

Personally blame the education system for making everyone drones and relatively unmovable on opinions.

We have entered the era of everything being legitimate regardless of how correct/valid it may be.
 
Won't be long before the first bank starts charging accounts in credit ie you get charged for them looking after your money.
 
V F said:
Possibly 0 for December?
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With the EU now in financial scrutiny again as the IMF basically washes it's hand of the situation and China devaluing their currency against the dollar.

We all have issues at this point, Brexit is a minor blip that simply identifies a requirement for caution, so it is highly likely that we will be negative within a year.
 
dalehitchy1 said:
I know I keep mentioning the daily mail.... But it's scary how many people think like this.... I'm talking about hundreds sometimes thousands of comments along the lines of

"Remainers are making a recession happen so they can say they were right"
"We were heading for another recession anyway"
"We are fine... Were not heading for a recession... Business is booming and all these countries want to trade with us"
Click to expand...

You realise that the BoE isn't forecasting a recession at the moment? You'd be forgiven for thinking they had given the MSM's spin on recent events?

dalehitchy1 said:
Why has critical thinking gone out the window for leavers. Don't get me wrong..... I knew that remaining will have both positive and negative impacts.

But every leave I spoke to was under the impression that no negative things will happen upon leaving the EU.
Click to expand...

Were they? Or were they just not mentioning them because they were trying to win an argument? I'm not surprised by a drop in GDP growth caused by short term uncertainty, once this dies down I expect the weaker pound to start fuelling growth at a higher rate.
 
scorza said:
I still don't see why the government can't print money ala QE, but instead of giving it to banks use it to fund infrastructure projects. We could use it to fund the £8bn hole in the Hickley C reactor now we've come to our senses on China.
Click to expand...

This is called Helicopter money. Here is a relevant article that explains it better than me.

http://www.economist.com/news/finan...nds-radical-it-may-not-be-much-departure-next

The Economist said:
That difference might well cause helicopter money to be seen in a different light by the markets. The idea of financing government spending by printing money is regarded with horror by many bond investors because it is a drug to which governments would quickly become addicted. Why bother with the unpopularity of raising taxes or the need to placate bond markets when a friendly central bank can fund all your spending promises? The first government to try it might see considerable downward pressure on its currency. Mild depreciation would be welcome; a rapid plunge would not.

In the end, Mr Nangle comes out against helicopter money because it would be harder to reverse than QE. Instead of selling government bonds to the market, the central bank would have to push up short-term interest rates, perhaps by a lot, since this would probably be its main tool. The impact on small firms and mortgage-holders might be crippling.

But the debate isn’t going to go away. With short- and long-term rates close to historic lows, there isn’t a lot central banks can do on the rates front if more monetary stimulus is needed. Expect to see lots of sophisticated arguments in favour of helicopter money in order to quell the doubts of the markets.
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Thompson_NCL said:
But the Remainers are talking the economy down and that probably is having some impact. No doubt there'd be problems anyway, but how much of that is systemic and how much is caused by the psychological impact of the doom and gloom claims? We cannot answer that easily.
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It's not the "doom and gloom" news stories that have made the future uncertain, it's the uncertain future that has led to the doom discourse. Cart before the horse.

Also I think you underestimate the agents in the economy and their ability to make rational decisions. Any sensible person will be putting risky decisions off for obvious reasons.

Mr C said:
This is called Helicopter money. Here is a relevant article that explains it better than me.
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Nah, he's just talking about regular government borrowing for infrastructure. Something they should have been doing since 2010.
 
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Thompson_NCL said:
But the Remainers are talking the economy down and that probably is having some impact. No doubt there'd be problems anyway, but how much of that is systemic and how much is caused by the psychological impact of the doom and gloom claims? We cannot answer that easily.

Consider this: In the last few weeks the MSM has talked about "dramatic falls" in the value of Sterling when it has shifted by 0.5%. Before Brexit we'd not hear much about 0.5%, nevermind it described as something dramatic. Sterling has pretty much held around $1.3 since Brexit, so why the talk down?
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0.5%?
I've calculated that the pound has dropped in value from the eve of the vote to today by 11.87%. It actually dropped by 1.53% today alone.
23 June close 1.4903
4 August close 1.3126
I suppose it's what you mean by "last few weeks" but to be meaningful it has to relate to the date of the referendum vote.
Tell me if my maths are wrong or if I've misunderstood you.
http://www.tradingeconomics.com/united-kingdom/currency
http://www.x-rates.com/graph/?from=GBP&to=USD&amount=1
 
footman said:
0.5%?
I've calculated that the pound has dropped in value from the eve of the vote to today by 11.87%. It actually dropped by 1.53% today alone.
23 June close 1.4903
4 August close 1.3126
I suppose it's what you mean by "last few weeks" but to be meaningful it has to relate to the date of the referendum vote.
Tell me if my maths are wrong or if I've misunderstood you.
http://www.tradingeconomics.com/united-kingdom/currency
http://www.x-rates.com/graph/?from=GBP&to=USD&amount=1
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I meant in the weeks following Brexit.

Yes, it had a big drop immediately following Brexit, but since then it has been stable around the $1.30 mark.
 
Thompson_NCL said:
I meant in the weeks following Brexit.

Yes, it had a big drop immediately following Brexit, but since then it has been stable around the $1.30 mark.
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In other words, the Pound took a big drop immediately following the Brexit vote and has never recovered. Your spin on this seems to be that we should be happy it's not slid further and has stabilized at this low point (the lowest for 30 years).

If this whole "it's the fault of Remainers trash talking the economy" thing is true, then surely Leavers can counter this with their "it'll be alright, it's just a blip" mantra? After all, it's 52% who believe this, so the majority should be able to convince the minority that everything will be just fine and the markets will recover, right? See, it spins any way you wish to play it.
 
Cern said:
In other words, the Pound took a big drop immediately following the Brexit vote and has never recovered. Your spin on this seems to be that we should be happy it's not slid further and has stabilized at this low point (the lowest for 30 years).

If this whole "it's the fault of Remainers trash talking the economy" thing is true, then surely Leavers can counter this with their "it'll be alright, it's just a blip" mantra? After all, it's 52% who believe this, so the majority should be able to convince the minority that everything will be just fine and the markets will recover, right? See, it spins any way you wish to play it.
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Lol... I'd love a leaver to argue this point. No doubt "all the people in power are remainers and are fixing the economy to go bad so later they can say let's remain" or something like that.
 
Cern said:
In other words, the Pound took a big drop immediately following the Brexit vote and has never recovered. Your spin on this seems to be that we should be happy it's not slid further and has stabilized at this low point (the lowest for 30 years).
Click to expand...

He's saying that regardless of the drop immediately after Brexit, the media are now portraying a bigger reaction to even relatively small drops whereas before Brexit, it was hardly ever reported outside of financial news.
 
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