Eurozone Sovereign Debt Crisis part 2 - Ireland

[g0nz0]

That's like hardcore Brexiteers saying they fail to see why the UK can't easily extricate itself from the EU, other than inertia.

It's nonsense, showing a total lack of understanding of how international finance works.

Tally Ho! looks like I pushed your buttons again. Well, you're wrong. Again. Completely and utterly wrong. Again!

Its entirely within the EU's competence to determine where Eurozone clearing and passporting is carried out.

There are plain-to-see structural/logistical reasons (infrastructure, housing, transport, language and culture) why all the finance workers aren't going to want to move overnight. And all of them don't need to.

But as every informed article on the subject has pointed out, Eurozone functions will gravitate inside the Eurozone over time, especially if there is regulatory divergence that breaks equivalency.

 

[798686]

Tally Ho! looks like I pushed your buttons again. Well, you're wrong. Again. Completely and utterly wrong. Again!

Its entirely within the EU's competence to determine where Eurozone clearing and passporting is carried out.

There are plain-to-see structural/logistical reasons (infrastructure, housing, transport, language and culture) why all the finance workers aren't going to want to move overnight. And all of them don't need to.

But as every informed article on the subject has pointed out, Eurozone functions will gravitate inside the Eurozone over time, especially if there is regulatory divergence that breaks equivalency.

You’re talking shit again.

The article you linked mentioned a much lower figure than the one you so sensationally mentioned. Even if 50% of passport dependant business moves to the EU, that’s still only 32000 jobs - although you plumped for the highly improbable 232000 figure.

Your claim that Frankfurt could replace London is directly refuted by the article you quoted, here:

‘Over the past few months, rival financial centres in the EU have been actively pitching to UK-based firms to relocate some of their business. This has prompted lots of dismissive comments that while Paris is nice place for a romantic weekend, you wouldn’t want to work there; or that no financial centre in Europe has the capacity to dislodge London’s dominant position. No-one – least of all cities like Dublin, Paris or Frankfurt – has made that claim. The bigger risk is that different financial centres each pick off a few percent here and there in different sectors (particularly if national regulators in the EU put pressure on EU firms with big operations in the City to repatriate some of their business)’

So, it would seem that reality, in addition to inertia, would preclude Frankfurt from replacing London.

You’re also forgetting that a large amount of the capital raised by the EU is raised - out of necessity - in London. Conservative estimates state that it would take between 10 and 20 years to create the jobs, infrastructure and expertise needed for another European Centre to ‘replace London’ - one of the reasons being no other European city has more than a tenth of the trained banking professionals currently situated in London.

Interestingly, much of the capital required to create another centre with the heft to replace London, would need to be raised... in London.

There’s also the problem that much of the financing needed to support day to day running of the EU and national capitals, is also London-dependant.

Meanwhile, London will be busy seeking a larger role in the financing of emerging markets - while the EU is competing with not only London, but also the far more advanced centres of Tokyo and New York, which both have access to far bigger sources of work and revenue than ‘eurozone clearing’.

 

[Jason]

The UK position is surreal, with all sorts of media chatter about stopping Brexit. Just about anyone who says they have a plan to stop Brexit gets the media attention. However I'm now pretty much of the view that Brexit is unstoppable.

After Brexit everything changes. I think anyone who believes they know what the effect will be - on UK, EU, now on HK, on the USA, on the whole world - is deluding themselves.

 

[Adrian69702006]

From my blog today:

This week Mr Corbyn unveiled what can only be described as an audacious and risky plan for stopping a ‘no deal’ Brexit. Apparently, he intends to hold a vote of no confidence in the Government as soon as the summer recess is over, in the hope of bringing down the Government. Having achieved that end he proposes to offer himself to The Queen as leader of an alternative caretaker Government which would negotiate a still further extension to Article 50, presumably so that re-negotiation could take place, and then call a General Election at the earliest convenient opportunity.

There are a number of difficulties and dangers associated with this plan, which we think unlikely to succeed for a number of reasons.

Firstly, and fundamentally, can the nation’s secrets be safely entrusted to a man who cannot even keep his own powder dry? Gentle reader, you must judge for yourself but we think not.

Secondly, it is a three-phase plan. As such the successful prosecution of phases two and three is entirely contingent on the success of phase one. It is perfectly true that there are a handful of disgruntled Tories and ex Tories who would doubtless vote against the Government. It is also true, however, that there are a number of Labour MPs who are Brexiteers, believers in democratic process and, dislike Mr Corbyn sufficiently to not want him anywhere near Downing Street. This being the case, we have every confidence that they will risk their necks and vote with the Government. After all, known rebel Tories such as Dominic Grieve, Dame Caroline Spelman and Oliver Letwin, know that their cards are marked and there will be reprisals when it comes to the matter of selection – or rather deselection – ahead of the next election. Jo Swinson, the Liberal Democratic leader, who initially dismissed Mr Corbyn’s plan as ‘rubbish’ now appears to be singing a rather different tune. It is not only her though that Mr Corbyn has to convince and he knows it.

Even assuming Mr Corbyn managed do bring down the Government, it is by no means a given that he could drive up to Balmoral, see The Queen and demand to be made Prime Minister. Our understanding is that the only person from whom The Queen can take legally binding constitutional advice at any one time is the incumbent Prime Minister. If we take this to be the case, and it is the view of competent expert opinion, it is unthinkable that Mr Corbyn would be invited to form a Government without the incumbent Prime Minister having first been consulted as to the way forward.

If the unthinkable happened and Mr Corbyn did manage to form a Government, could he be relied upon to keep his word and seek democratic legitimacy by calling a General Election as soon as possible? Gentle reader, you must judge for yourself, but we think there is a very real danger that, having gained it, the temptation to cling to power for as long as possible would prove too much for Mr Corbyn.

As for the small matter of Brexit, our EU partners may or may not agree to a further extension of Article 50. Moreover, if Mr Barnier et all continue to insist that there is no prospect of reopening the Agreement with a Government which possesses democratic credentials, why should they change their position for one which has been installed without the consent of the people? What’s more, they know that whatever the official position of his party, Mr Corbyn is just as much a Brexiteer at heart as Mr Rees Mogg, despite being dragged kicking and screaming into the Remain campaign. As to whether he cares about whether or not we leave with a deal or not, one need only look at his voting record. Three times he had the opportunity to vote for an agreement which, though not perfect was workable, and three times voted against it. Fortunately, his planned coup - laid bare before the public - is unlikely to succeed. If it does, we will need the services someone who makes edible hats.

 

[g0nz0]

You’re talking shit again.

The article you linked mentioned a much lower figure than the one you so sensationally mentioned. Even if 50% of passport dependant business moves to the EU, that’s still only 32000 jobs - although you plumped for the highly improbable 232000 figure.

Hold on to your top hat here, this is a direct quote - no my words, from an article I linked to...

6. Clearing – the end of the world as we know it?

The nuclear scenario is that the European Central Bank will force the relocation of clearing of euro-denominated trading from London to inside the Eurozone (one report warned that this could lead to the loss of 232,000 jobs in the City).​

Source: Brexit and the City: a 10-point reality

Your claim that Frankfurt could replace London is directly refuted by the article you quoted, here:

‘Over the past few months, rival financial centres in the EU have been actively pitching to UK-based firms to relocate some of their business. This has prompted lots of dismissive comments that while Paris is nice place for a romantic weekend, you wouldn’t want to work there; or that no financial centre in Europe has the capacity to dislodge London’s dominant position. No-one – least of all cities like Dublin, Paris or Frankfurt – has made that claim. The bigger risk is that different financial centres each pick off a few percent here and there in different sectors (particularly if national regulators in the EU put pressure on EU firms with big operations in the City to repatriate some of their business)’

So far it seems about 7,000 jobs have moved, along with £1 Trillion in assets. I never said all jobs would move, but those related to Eurozone. Thats about 3% of the workforce, with the expectation of a soft Brexit up to now. If it really is a hard-Brexit, and there is regulatory divergence and a loss of equivalency, expect this to increase.

So, it would seem that reality, in addition to inertia, would preclude Frankfurt from replacing London.

You’re also forgetting that a large amount of the capital raised by the EU is raised - out of necessity - in London. Conservative estimates state that it would take between 10 and 20 years to create the jobs, infrastructure and expertise needed for another European Centre to ‘replace London’ - one of the reasons being no other European city has more than a tenth of the trained banking professionals currently situated in London.

Interestingly, much of the capital required to create another centre with the heft to replace London, would need to be raised... in London.

Yes, today lots of transactions are centered in London. The great thing about capital is that it flows. It moves from bad ideas to good. For proof, just look at Somerset Capital Management moving funds from London to Dublin post Brexit and the estimated £7m that Rees-Mogg made from that.

That's the amazing thing about the capital markets. Also, the capital isn't in London, it is brokered through London. London's position is most certainly not unassailable. But please do continue to think it is - nothing makes competition easier than unfounded hubris.

The European market is huge compared to the UK market, and so it has different capital requirements. Expecting London's role in this to remain unchanged in the event of a hard Brexit is very naive. But again, please continue to hold these views - hubris and naivety go together like Roast Beef with Yorkshire Puddings.

The city knows this - that's why they were looking for clarity from the UK government for almost 3 years. That's why London voted to remain.

Meanwhile, London will be busy seeking a larger role in the financing of emerging markets - while the EU is competing with not only London, but also the far more advanced centres of Tokyo and New York, which both have access to far bigger sources of work and revenue than ‘eurozone clearing’.

London will also have to continue to compete with Tokyo and New York, whilst losing market opportunities. Now it will also have to compete with growing financial services sectors in Dublin, Frankfurt, Milan, Paris to which it will continue to lose Eurozone transactions.

 

[g0nz0]

The UK position is surreal, with all sorts of media chatter about stopping Brexit. Just about anyone who says they have a plan to stop Brexit gets the media attention. However I'm now pretty much of the view that Brexit is unstoppable.

I would argue the UK position has been surreal for the past 2.5 years, and is not exactly inspiring confidence.

After Brexit everything changes. I think anyone who believes they know what the effect will be - on UK, EU, now on HK, on the USA, on the whole world - is deluding themselves.

To a degree, but there is also a significant deal of self-aggrandizing in this statement. It looks like the world economy is tipping towards recession, and Brexit might certainly be an exacerbating trigger... But it is not the tail that wags the dog.

Based on nominal 2019 GDP rankings, the UK is the 7th largest economy (9th if looking at PPP 2019 GDP rankings), and accounts for about 3% of world GDP. The 6 economies ahead of it account for about 60%. If you just take the UK, EU27, China and India, its probably closer to 80% of nominal world GDP.

 

[798686]

Hold on to your top hat here, this is a direct quote - no my words, from an article I linked to...

6. Clearing – the end of the world as we know it?

The nuclear scenario is that the European Central Bank will force the relocation of clearing of euro-denominated trading from London to inside the Eurozone (one report warned that this could lead to the loss of 232,000 jobs in the City).​

Source: Brexit and the City: a 10-point reality



So far it seems about 7,000 jobs have moved, along with £1 Trillion in assets. I never said all jobs would move, but those related to Eurozone. Thats about 3% of the workforce, with the expectation of a soft Brexit up to now. If it really is a hard-Brexit, and there is regulatory divergence and a loss of equivalency, expect this to increase.



Yes, today lots of transactions are centered in London. The great thing about capital is that it flows. It moves from bad ideas to good. For proof, just look at Somerset Capital Management moving funds from London to Dublin post Brexit and the estimated £7m that Rees-Mogg made from that.

That's the amazing thing about the capital markets. Also, the capital isn't in London, it is brokered through London. London's position is most certainly not unassailable. But please do continue to think it is - nothing makes competition easier than unfounded hubris.

The European market is huge compared to the UK market, and so it has different capital requirements. Expecting London's role in this to remain unchanged in the event of a hard Brexit is very naive. But again, please continue to hold these views - hubris and naivety go together like Roast Beef with Yorkshire Puddings.

The city knows this - that's why they were looking for clarity from the UK government for almost 3 years. That's why London voted to remain.



London will also have to continue to compete with Tokyo and New York, whilst losing market opportunities. Now it will also have to compete with growing financial services sectors in Dublin, Frankfurt, Milan, Paris to which it will continue to lose Eurozone transactions.

That's a lower-key, and more balanced post.

Although - it neatly side-steps the fact you stated there's no reason (other than inertia, of course) precluding Frankfurt from replacing London, despite this being directly contradicted in your link.

I'm aware of the '232,000' quote from the link - although the '32,000' prediction woulds seem the more realistic - and better argued. Wouldn't have as much posting impact, though, I imagine.

 

[g0nz0]

That's a lower-key, and more balanced post.

Although - it neatly side-steps the fact you stated there's no reason (other than inertia, of course) precluding Frankfurt from replacing London, despite this being directly contradicted in your link.

I'm aware of the '232,000' quote from the link - although the '32,000' prediction woulds seem the more realistic - and better argued. Wouldn't have as much posting impact, though, I imagine.

Perhaps you missed the lines i posted directly after that quote... Don't worry, could happen to a bishop. Perhaps you misplaced your spectacles.

"The nuclear scenario is that the European Central Bank will force the relocation of clearing of euro-denominated trading from London to inside the Eurozone (one report warned that this could lead to the loss of 232,000 jobs in the City)."

Source: Brexit and the City: a 10-point reality

I don't think all clearing will go, as it would be too drastic a move... What is going has gone already (in terms of functions, and also in jobs), in so far as it has been designed in by the City for current expectations of Brexit..

So, I said I don't even think all clearing related jobs will go, (let alone all jobs full stop), and that what has gone already (which is reckoned about 7,000-8,000 if you keep up with the news) is probably about it for the moment, unless something unexpected happens. I also didn't put a quote without context - I provided a link to the full article.

If you're going to insist on skim reading, you're inevitably just going to pick up the arse end of the stick. Then again, that explains a lot of Brexit to me, now that I think about it..

 

[Jason]

@Adrian69702006 I agree with much of your post.

I think there is an easy way to understand the present situation.

REMAINERS are nowhere near united. Some want to remain, Some want a soft Brexit, or Brexit in name only. Some want a seond referendum. Very many remainers are horrified at the prospect of Corbyn gaining power. Corbynites wouldn't accept a compromise candidate (Harman or Clarke). Many remainers realise the vote for leave was 52% and many of them have pledged to respect the result. Remainers are good at frustrating policies aimed at leaving (as the agreement May brought three times to the Commons) but they absolutely cannot unite around anything.

BREXITEERS just want Brexit 31st October. And they will do anything at all to make this happen. Call a General Election. Prorogue parliament. Work to ensure the EU leaders reject any possible extension. Make Brexit happen and sort legal and constitutional challenges afterwards.

 

[g0nz0]

@Adrian69702006 I agree with much of your post.

I think there is an easy way to understand the present situation.

REMAINERS are nowhere near united. Some want to remain, Some want a soft Brexit, or Brexit in name only. Some want a seond referendum. Very many remainers are horrified at the prospect of Corbyn gaining power. Corbynites wouldn't accept a compromise candidate (Harman or Clarke). Many remainers realise the vote for leave was 52% and many of them have pledged to respect the result. Remainers are good at frustrating policies aimed at leaving (as the agreement May brought three times to the Commons) but they absolutely cannot unite around anything.

BREXITEERS just want Brexit 31st October. And they will do anything at all to make this happen. Call a General Election. Prorogue parliament. Work to ensure the EU leaders reject any possible extension. Make Brexit happen and sort legal and constitutional challenges afterwards.

@Jason, I agree with much of your post here.. with one exception. You mention remainers as being "good at frustrating policies aimed at leaving (as the agreement May brought three times to the Commons) but they absolutely cannot unite around anything". I think this entire sentence is also utterly applicable to the Brexiteers

If Brexiteers has their act together, you'd be out by now. Hell of a way to run a country!

 

[dandelion]

@Adrian69702006REMAINERS are nowhere near united. Some want to remain, Some want a soft Brexit, or Brexit in name only.

No jason, you have this enirely backwards. remainers want to remain.

Leavers are the ones divided with some wanting a soft brexit and some hard. The conservative party MPs divided themsleves into two factions, soft leavers and hard leavers and each then set about trashing the other. Conservatives have sought to trash both possible forms of brexit in the name of leaving. Quite clever really, doing it like that because they dont want to leave at all but darent say so.

BREXITEERS just want Brexit 31st October.

Ah, you mean the ones funded by Russia, who simply want to destroy the UK. Destroy its world influence, destroy its wealth. Destroy it as a single united country.

Jason, face it: Brexit is destroying the UK. That was the aim of it.

 

[dandelion]

The European market is huge compared to the UK market, and so it has different capital requirements. Expecting London's role in this to remain unchanged in the event of a hard Brexit is very naive.

While the Uk is a member, the EUs role is to protect London as a financial centre, bcause it is the pre-eminent finance resource of the EU. But if we leave this reverses, and the task of the EU is to do eveything it can to run dwn London in favour of anywhere inside the EU.

People are not accepting that the growth of London in recent years, or its keeping its place, has been BECAUSE the Uk is inside the EU. If the Uk had never joined, the cty as we know it now would not exist and there would already be an alternative european financial capital. The US banks would never have opened offices in London, but somwhere else giving them access to Europe.

 

[798686]

Perhaps you missed the lines i posted directly after that quote... Don't worry, could happen to a bishop. Perhaps you misplaced your spectacles.

Maybe so, although I'm pretty sure I didn't miss the post where you claimed there was no reason Frankfurt couldn't replace London - which was my initial criticism, if you recall.

 

[g0nz0]

Maybe so, although I'm pretty sure I didn't miss the post where you claimed there was no reason Frankfurt couldn't replace London - which was my initial criticism, if you recall.

Sigh... Again, you're misrepresenting what I posted

Quote:

"The German economy is significantly bigger than that of the UK, so I fail to see a reason why Frankfurt cannot replace London, other than inertia. But, as I said, regulatory divergence and lack of passporting/clearing could easily accelerate this transition..."​

Inertia is what is stopping Frankfurt replacing London in the morning. I refer directly to this. But given time, and the accelerant of regulatory divergence, all informed commentary I have read on the matter suggests this will continue to change. See @dandelion's post earlier - a huge part of the reason for London's position in international financial circles at the moment is EU membership and access.

 

[798686]

Sigh... Again, you're misrepresenting what I posted

Quote:

"The German economy is significantly bigger than that of the UK, so I fail to see a reason why Frankfurt cannot replace London, other than inertia. But, as I said, regulatory divergence and lack of passporting/clearing could easily accelerate this transition..."​

Inertia is what is stopping Frankfurt replacing London in the morning. I refer directly to this. But given time, and the accelerant of regulatory divergence, all informed commentary I have read on the matter suggests this will continue to change. See @dandelion's post earlier - a huge part of the reason for London's position in international financial circles at the moment is EU membership and access.

It's a bit more than inertia, as I've already mentioned, but nevermind.

You're right in saying, as it stands, that EU-based functions would gradually leak to the EU from London, unless Brussels and London come to some kind of agreement, which seems unlikely at present.

What I disagree with is the popular assertion that the EU could replace London on a whim if it wished - which is clearly untrue. To be fair, this is what you were hinting at with the Frankfurt and 232,000 comments - but fair enough, you've countered it to a degree.

What happens next is interesting - and imo, hard to call. London and the EU could go in different directions - with London attempting to replace EU business with a focus more on emerging markets, and the EU seeking to build it's own financial centre. Whether that would be Dublin - or Frankfurt, with the advantage of having the ECB sited there, is hard to call.

Or... whether the EU feels it would be more efficient to make use of the structures already in place in London (obviously dependent on a deal precluding divergence), which would keep London more within the EU's orbit.

 

[dandelion]

What happens next is interesting - and imo, hard to call. London and the EU could go in different directions - with London attempting to replace EU business with a focus more on emerging markets, and the EU seeking to build it's own financial centre

The EU will build its own centre. Or centres. The US banks which came to london to be inside the EU dont have to move instantly, but they will go. I am very sceptical how much the UK could build its emerging market business. China is very keen on doing this and creating alternative financial structures, plus Chinese government pressure to make it happen. The US never wanted to help London except as a way in to the EU.

Hong Kong has a share of financial markets which might be about to shrink what with the unrest there. A big crackdown could destroy it, which is presumably why the chinese have been so restrained. Where that business goes....

An Irony that while HK citizens are appealing to the UK for political help, the UKs desperate interest might lie in HK collapsing into civil war.

Or... whether the EU feels it would be more efficient to make use of the structures already in place in London (obviously dependent on a deal precluding divergence), which would keep London more within the EU's orbit.

Ah, interesting question whether, even if the UK agrees to be closely aligned to EU (as a vassal state), the banking industry might still quit. Might bankers still see a plus in the Uk having some regulatory independence, or might they fear a repeat performance of Brexit and suddenly being stranded the wrong side of the fence. If the UK ceases to be a member, the EU will introduce laws disadvantaging London. We blocked them as a member. We would have to accept them as a non member or lose alignment. Its an example that the Uk has more power to determine its own future as a member than as a non member.

 

[seventiesdemon]

The EU will build its own centre. Or centres. The US banks which came to london to be inside the EU dont have to move instantly, but they will go. I am very sceptical how much the UK could build its emerging market business. China is very keen on doing this and creating alternative financial structures, plus Chinese government pressure to make it happen. The US never wanted to help London except as a way in to the EU.

Hong Kong has a share of financial markets which might be about to shrink what with the unrest there. A big crackdown could destroy it, which is presumably why the chinese have been so restrained. Where that business goes....

An Irony that while HK citizens are appealing to the UK for political help, the UKs desperate interest might lie in HK collapsing into civil war.

Ah, interesting question whether, even if the UK agrees to be closely aligned to EU (as a vassal state), the banking industry might still quit. Might bankers still see a plus in the Uk having some regulatory independence, or might they fear a repeat performance of Brexit and suddenly being stranded the wrong side of the fence. If the UK ceases to be a member, the EU will introduce laws disadvantaging London. We blocked them as a member. We would have to accept them as a non member or lose alignment. Its an example that the Uk has more power to determine its own future as a member than as a non member.

The Chinese government built airports in the middle of oceans within a year. With planning that would have taken decades. Where was the superior intelligence? Oh...the UK sends 1 aging battleship. Yay.

Has the 8 ball dropped over there yet that being decades behind, living in the land of fairytale, royalty and births......that China has bought some of the best "real" on ground companies, ports, access to the European markets.

China does not deal with virtual markets. It deals with land ownership, tangible assets, and cash. It may take you a little while to catch up to several thousands of years.

We have been dealing with this for years. Yet hey.....you guys are too busy navel gazing and what the Queen and her Corgi's have for breakfast...or the latest tax burden.......a new royal birth.

I say............send the bill to Donald............

 

[seventiesdemon]

Donald Trump math.

EU 510 million population
US 320 million population

US introduces tariffs which increases costs to US citizens, 200 million. China introduces tariffs to US goods to a population of a, Billion.

EU........no tariffs.

China only needs to introduce a tariff of 3% to match a tariff of 10% by the US given the consumer index.

Guess who pays?

 

[798686]

The Chinese government built airports in the middle of oceans within a year. With planning that would have taken decades. Where was the superior intelligence? Oh...the UK sends 1 aging battleship. Yay.

Has the 8 ball dropped over there yet that being decades behind, living in the land of fairytale, royalty and births......that China has bought some of the best "real" on ground companies, ports, access to the European markets.

China does not deal with virtual markets. It deals with land ownership, tangible assets, and cash. It may take you a little while to catch up to several thousands of years.

We have been dealing with this for years. Yet hey.....you guys are too busy navel gazing and what the Queen and her Corgi's have for breakfast...or the latest tax burden.......a new royal birth.

I say............send the bill to Donald............

It's only Aussies who are obsessed by the Queen's corgis.

It barely registers here.

 

[seventiesdemon]

It's only Aussies who are obsessed by the Queen's corgis.

It barely registers here.

Just as well we have a soft spot for those whom be less admired and cared for than the royal Corgi.

I agree Joll, many homeless Britons and Aussies whom worship the throne would love to dwell and be cared for like the royal dogs at Buckingham or one of the many other Royal kennels..