He just doesn’t get it, does he?

The UK cannot afford an uncontrolled currency dip: inflation alone might demand action to address this issue.

Interest rates cannot be raised: that would make things worse.

So capital controls will be on the agenda for post Brexit, I suspect.

We have a large trade deficit. By definition therefore we import capital. Capital controls will help us in this situation in what manner?

Sigh.

68 thoughts on “He just doesn’t get it, does he?”

  1. You are being dim, Tim. He means that we’ll control the capital of other countries by insisting it be transferred to us. We’ve got nukes and they have not.

  2. We all know Murphy is a moron, but can we not club together and buy him a GCSE textbook on economics? This is so appalling that he needs help. Or maybe we should just send the texts to his students so that they know when he is BSing them.

  3. When I were at uni one of the first things one of the lecturers pointed out was that they welcomed questions regarding the subject – and argument if could academically argue.
    A technique that was encouraged in essays.

    Have to wonder about RM’s ability to accept students pointing out how what he is saying disputes what xxx says in yyy book.
    Or worse – having RM involved with dissertations!

  4. If the government tried to prop up the pound at say the previous 1.5 dollars how long until they burnt through all the forex and it was fucked anyway? A week? Didn’t we learn this lesson in 1992?

  5. There is no point in trying to make economic points based on movements in spot FX prices. In my experience of spot FX dealers, they tend to trade on a gut reaction to the news, not on detailed analysis. They have the attention span of gadflys. Likely behaviour is too see the news about hard Brexit, think that sounds bad without working out that may be the best outcome for the UK and chucking a few hundred mill at the EUR/GBP trade to see what happens. In the long term the spot FX price will correct itself to a more rational view. Harold Wilson called them the Gnomes of Zurich. In my day they were barrow boys with braces driving bottom of the range Porsches. and now they are spotty geeks who haven’t worn a tie since they were sixteen.

  6. @Alex

    “They have the attention span of gadflys.”

    Something Murphy could work his way up to achieving one day, perhaps.

  7. Bloke in Germany in Colorado

    I guess he means outgoing capital controls. Back to the days when customs officers would check you were taking no more than 50 quid out of the country.

  8. Eur In Trouble Now

    Cable and EURGBP are two of the most heavily traded currency pairs on the planet, moves of this magnitude aren’t caused by a few barrow boys taking a punt. The pound is in free fall because after the festival of fools last week, it’s clear the EEA option is off the table and the true economic catastrophe of hard Brexit is starting to unfold. If you think the UK can prosper without access to the single market, financial passporting and EU labour in the domestic market, I’d really love to hear how…

  9. @ Eur in trouble now
    “If you think the UK can prosper without access to the single market, financial passporting and EU labour in the domestic market, I’d really love to hear how…”
    You might (but, in view of your prejudice, probably will not) like to compare UK GDP growth rate from 1951 to 1973 with that since 1973. Either absolutely in growth pa or relatively compared to the rest of the EU.

  10. Eur In Trouble Now

    It’s 2016. What relevance you think the postwar period has eludes me. (Also, prejudice? Wtf?)

  11. @ Eur in trouble now
    “If you think the UK can prosper without access to the single market, financial passporting and EU labour in the domestic market, I’d really love to hear how…”

    A bit above my pay grade to work that out but there are 168 countries NOT in the single market and 28 that are. So I guess the answer is out there somewhere.

  12. Even Carney seems prepared to accept that his war on UK pensioners has caused bad results. A rate rise must be on the cards soon

  13. Brexit can only fail if we have idiots in charge.

    I knew Carney is a retard, but unfortunately May and Hammond proved that the saying “better keep silent and being thought as a fool rather than opening it and prove it” applies to them.

    Pound down is just the consequence. Whether it justifies coming down from 1.43 in a year I think not but there we are.

  14. Seems like the no vote surprised the fx pundits, wouldn’t be surprised they are using the ‘chaos’ of a yes vote to try and recoup any losses they made from betting the wrong way.
    It’s amusing that there seems to be the assumption that losing one of its net contributors isn’t going to bother the EU.
    Reading a near future novel in a post schengen Europe (trigger was a flu virus to control borders) and the rump of the EU that’s left is a petty powerless organisation that throws tantrums at leaving nations/areas, maybe not so far fetched

  15. @ Eur in trouble now
    “Also, prejudice? Wtf?”
    “it’s clear the EEA option is off the table and the true economic catastrophe of hard Brexit is starting to unfold.”
    We (well those of us in the physical world that I inhabit) do not yet know whether there will *be* a “hard Brexit” or even what a “hard Brexit” will entail.
    Yet you claim to know that it will be a catastrophe. That is pre-judgement aka “prejudice”. Try reading the OED if you don’t accept my word for it. And although we are still in the EU and shall remain there for more than two years, you claim that the catastrophe that you believe will follow is starting to unfold *now*.
    I don’t normally use “WTF?”

  16. Brexit is a process rather than a destination. It’s tragic that Bremoaners are too retarded to understand this.

  17. @BniC

    Not just any net contributor to EU, Britain, France and Germany – account for two-thirds of the entire net income of the EU.

    @john77

    I prefer murky brexit vs clean brexit
    or
    fake brexit vs true brexit

    I’m more concerned about May’s support for more state intervention in every aspect of life, commerce and the UK economy.

    P

  18. Eur In Trouble Now

    @john77

    TM signalled they’re not willing to make the sacrifices required to remain in the single market. That’s Hard Brexit in the jargon. And markets are fundamentally discounting mechanisms that bring the future forward. The current assessment of the market is that Brexit is going to make Britain a much poorer place than it would have been otherwise. Hence sterling is in the toilet.

  19. Yes the markets can overshoot. They also correct.

    Wait until announcements get made during negotiations. Then expect to see some changes in the markets as the news affects things.

    Brexit, rightly or wrongly, is something that is going ahead. How it ends up is very much up in the air but those who have to factor risks into planning must take account of what can happen.
    And what is happening now.

  20. Eur In Trouble Now

    @Theo

    Of course they do. But do please address the question in my original post if you think they’re wrong in this instance.

  21. @ Eur in Trouble Now
    You’re nuts. The market speculation is that the £sterling will be lower relative to the US$. That will improve our competitive position in internationaltrade and the official estimates of export orders have increased since the end-June decline in the £:$ exchange rate, which will *increase*, *not* decease UK GDP.
    If you want to start a scare story, pick one that is self-consistent.

  22. Id take a little economic disruption to avoid the specter of Mad Merkel forcing us to take hundreds of thousands of rapefugees.

  23. The Sterling started dropping against the dollar in mid 2014 albeit with rallies now and then.

    That it continues to fall is somehow linked to Brexit?

    This post hoc ergo propter hoc — it fell today, we discussed Brexit today, so it must be Brexit — completely ignores the fact that it has been dropping for two years now.

  24. “The Sterling started dropping against the dollar”

    Being pendantic, is that correct? “The Sterling”? Shouldn’t it just be “Sterling”?

    It’s like people who say “The HMRC”. What?

    “The Her Majesties Revenue & Customs”?

    It’s just “HMRC”.

  25. john77, yes exports can be more competitive. Can.
    We live and work on an island group, how much gets imported to be manufactured into something?
    If its more expensive to buy in the raw material because of the exchange rate then being able to export the finished product, costs have gone up anyway so is the finished product that much better off?
    Will depend on whats imported of course.

  26. @john77

    “Market speculation”? Sterling IS lower against the dollar. That’s what spot FX is. Go and try and buy some dollars on Monday with pounds. It’ll be expensive. UK GDP is similarly lower.

    @Chester

    Jesus. Just … Jesus. Go and get a GBPUSD or GBPEUR chart from 23 June to now. Even better, get one that tracks the night of the 23rd.

  27. So Much For Subtlety

    Eur In Trouble Now – “The pound is in free fall because after the festival of fools last week, it’s clear the EEA option is off the table and the true economic catastrophe of hard Brexit is starting to unfold.”

    Sorry but what is the catastrophe if the pound falls a little? How does this affect the actual real economy? How does it close a single factory?

    “If you think the UK can prosper without access to the single market, financial passporting and EU labour in the domestic market, I’d really love to hear how…”

    How much of the British economy do you think is 100% dependent on those? We do a lot of trade with the EU – and with a lower pound we will do a lot more. It doesn’t really matter what tariffs they put up, the currency drop will make exports highly competitive. Much of the City works with Europe. They will continue to do so because the EU is such a regulatory disaster zone. Much of it does not. It looks to the rest of the world. That will continue. The sooner we get rid of cheap Bulgarian rapists the better.

    The real economy will continue. Because it is made up of good laws, stable government – and smart people. A drop in the pound will not make anyone dumber. It will just mean more exports, and more inward investment. Bad news for housing prices. Big deal. When the fundamentals are right, the rest is noise.

  28. Eur in trouble now said: ” If you think the UK can prosper without access to the single market”

    Depends what you mean by access. More than a few Politicians both in Westminster and Brussels use it to mean ‘being a member of’ but never quite get around to explaining that to the public. Other people just mean ‘access’ as trading with and I get the sense that many of the politicians on the Brexit side use it in that manner.

    ‘Trading with’ is likely to happen whatever the outcome of negotiations.

  29. Bloke in Costa Rica

    What’s the GBP trade-weighted average look like? Good? Bad? Indifferent? Inquiring minds want to know.

  30. Urine Trouble (Thank you Theo)–Your Remoan crap is a joke. How are your mates at the Deutsche Bank doing? Not to mention their Italian buddies?

    Yes prosperity is set to reign in the EU alright.

    They are well-rid of us. They should invite a more deserving country to join and replace us –to help boost their awesome economic future.

    Japan should do it nicely I think.

  31. EUR in trouble, you fail to distinguish between short term spikes triggered by political actions and their base cause which actually drives them. The pound has been falling for years and the short term panics of the traders started before Brexit was thought of. The base cause predates Brexit.

    You are like a football coach who blames his team’s loss on the goalie, because he let the goals in. The critical time is when a goal is scored, sure, but the whole team’s play determines the win or loss.

    Thinking short term panics are the long term drivers of markets is idiot thinking.

  32. @pcar: The best formulation (ahmelessly ripped off from someone on Twitter) is continental Brexit vs full English Brexit…

  33. Urine Trouble

    “Of course they do. But do please address the question in my original post if you think they’re wrong in this instance.”

    John77 has done that, I think.

  34. SMFS: A drop in the pound will not make anyone dumber.

    It can apparently flush out dumbness in our dysuric bretheren, however.

  35. Eur In Trouble Now

    @Chester

    Sometimes the movements of markets are mysterious, requiring us to consult the soothsayers to see if their auguries can shed any light. This isn’t one of those times. The pound plunged unprecedentedly the day after the referendum, and has plunged again following May & Rudd’s foray into nativism. Cause and effect are really friggin’ obvious here.

    @Theo

    Thanks for trying. As both Martin and I have pointed out, john77’s answer was just incoherent babble. You may join Ecks on the colouring books.

    @SMFS

    Excellent Harold Wilson impersonation. In the “real economy”, people use money to buy things.

    As for “100% dependent” what kind of nonsensical yardstick is that?? Business is tough and competitive. Losing an edge costs. Devaluation (apart from the fact it makes everyone in the UK poorer) doesn’t help the City do euro-denominated deals. Without passporting they can’t do deals at all without setting up new subsidiaries or just relocating to Frankfurt or Dublin or Paris.

    Again: the verdict of the markets is that hard Brexit is going to be very, very expensive for Britain. Which is why sterling is taking a kicking. No one here seems to have any answer to that other than denial.

  36. We have wasted enough words on your fantasy bullshit Remona. We will see how the Deutsche and their Italian Banking buddies do soon enough.

    Increasingly tho’ it is time for action against treasonous crew like yourself. The well-off CM London Bubble scum are massively dependant on state largesse despite dross like you posing as an economics guru. Time that money and their propaganda sources that depend on it are cut.

    No more BBC, no more govt job ads, no more quangos, no more 3rd sector scum. All need defunding.Time for the Uni purge and lots of extra action against CM scum.

    Hopefully these measures–and many more will clean your clock also Urine Trouble.

  37. If you honestly think any of those you are arguing with here are in denial, then you really are not that smart!

  38. Urine Trouble

    Your flow is uninterrupted; but your arguments (like your moniker) are tendentious. The currency markets are unsettled by uncertainty. When the outline of a deal is clearer, the £ will probably recover. And if the negotiations prove rockier than expected, then the UK must look to the long term.

    I am astonished at how you remainiacs can see EU membership as desirable when the EU wants to punish the UK for Brexit in order to deter other countries from leaving its corrupt and failing set-up. The UK has decided to leave the Franco-German empire and no longer pay tribute money to Brussels — and the result is threats of punishment. This shows beyond doubt that the EU is not a benign organisation.

  39. @ Martin
    Cost (as distinct from price) of exports equals cost of materials plus cost of labour. Cost of materials in €uros or dollars is unchanged by the fall in the pound, cost of UK labour is reduced.
    Therefore our exports *will* be more competitive QED

  40. “The UK has decided to leave the Franco-German empire and no longer pay tribute money to Brussels — and the result is threats of punishment”

    A New Hope. Feel. It.

  41. Eur In Trouble Now

    @Theo

    While erudite, your latest missive is horseshit. (Sorry, had a Hunter S. Thompson moment there.) While the currency markets certainly do hate uncertainty, sterling is sinking because a deal is looming into view, and it’s a lousy one. The only way the £ will recover is if the chances of some sort of EEA arrangement improve.

    And I’m not saying this because this is how I get my giggles … Brexit is a mistake, and the only way to limit the damage is to buffer the blow through soft Brexit. There you go, cards on the table.

    “Look to the long term” — that sounds like you haven’t got the foggiest what will happen in the short term, and are hoping something will turn up. Groovy.

    @Ecks

    “No more BBC, no more govt job ads, no more quangos, no more 3rd sector scum. All need defunding.”

    I couldn’t agree more, but it’s the private sector that needs access to the single market. As one of the most dynamic and free trading economies in Europe, Britain has benefitted enormously from the EU. You’re so blinded by rage, you’re calling in airstrikes on your own positions.

    @Heisenberg
    lol

  42. Still waiting for the evidence that non-EU countries that are in the EEA are on balance schitholes compared to EU countries that have gone all-in on the project to make us all equal and to transfer as much public funds as possible to foreign landowners.

  43. Eur In Trouble Now

    @AC

    I’m not sure who you’re waiting for. We need to be in the EEA. It’s the non-EEA non-EU option that is the danger zone and that the government is steering for, full steam ahead.

  44. Urine Trouble

    “sterling is sinking because a deal is looming into view, and it’s a lousy one. The only way the £ will recover is if the chances of some sort of EEA arrangement improve.”

    That is a testable statement. Let’s see who is right in the next 6 -18 months.

    “Brexit is a mistake,”

    I disagree, along with 52% of the electorate. Mistake or not, it is now a fact.

    “and the only way to limit the damage is to buffer the blow through soft Brexit.”

    Highly debatable. That lens you are looking through wouldn’t be distorting your vision, would it? Confirmation bias, perhaps?

  45. @EITW – You have clearly stated that Brexit was a mistake, and that the EEA Option is inferior to full membership of the Brussels regulatory orgy. I was hoping you could provide evidence of why NOR, ICE, Ald, SWI, Gue, IoM etc which have a variant of EEA membership with FoM but are not in the EU are comparative schitholes.
    Alas, that won’t be the case.
    You’re busted.

  46. Eur In Trouble Now

    Theo

    I hate to quote myself…

    “If you think the UK can prosper without access to the single market, financial passporting and EU labour in the domestic market, I’d really love to hear how…”

    but either bring something of substance, or stop wasting everyone’s time.

  47. Eur In Trouble Now

    @AC

    I’m advocating the EEA option. I have no idea why you think otherwise. From my very first post

    “it’s clear the EEA option is off the table and the true economic catastrophe of hard Brexit is starting to unfold”

    that’s a bad thing, mmmkay?

  48. I’m advocating the EEA option

    No, you’re not. You’re advocating full membership. You said:

    Brexit is a mistake, and the only way to limit the damage is to buffer the blow through soft Brexit. There you go, cards on the table.

    And you’ve failed to answer a single question (of many above) as to why you think we should be In.

    Don’t worry, no one is holding their breath. We’ve seen all this before with that earlier “Steve dot bot” thingy..;)

  49. I sense a guy with a model and not Rod Stewart with Britt Eckland. Just another macro economic idiot. They abound on the Internet, using up oxygen. Simon Wren – Lewis is perhaps even more stupid than urine

  50. Eur In Trouble Now

    @AC/PF

    I don’t have a time machine, Marty McFly. Brexit: bad, but the vote has happened. Soft Brexit (aka EEA): less bad. Hard Brexit (May Day): very bad. This is not inconsistent. Hope this helps.

  51. So Much For Subtlety

    Eur In Trouble Now – “In the “real economy”, people use money to buy things.”

    So they do. A lower pound means more of them in work and hence able to buy things. Perhaps some things will become more expensive. Other things will be cheaper. You have not shown why anyone should believe this is a national disaster.

    “As for “100% dependent” what kind of nonsensical yardstick is that??”

    You are claiming Brexit will be a catastrophe. With no evidence I can see. The City trades with the world. Some business may be lost. Some business may be gained. We will have to see. But it is unlikely that Brexit will devastate anyone much because the British economy is not remotely 100% dependent on Europe.

    “Business is tough and competitive. Losing an edge costs. Devaluation (apart from the fact it makes everyone in the UK poorer) doesn’t help the City do euro-denominated deals.”

    How do you know it doesn’t? Some will lose an edge. A lower pound means others will gain one. How do you know that the net effect will be negative much less as bad as you are claiming?

    “Without passporting they can’t do deals at all without setting up new subsidiaries or just relocating to Frankfurt or Dublin or Paris.”

    What makes you think that? The big finance centres in Europe tend to be those the French cannot touch – London, the Swiss, and so on. It may well be that the City will benefit from Brexit. In the same way that insane American regulation created the Eurodollar market.

    “Again: the verdict of the markets is that hard Brexit is going to be very, very expensive for Britain. Which is why sterling is taking a kicking. No one here seems to have any answer to that other than denial.”

    Well not very very expensive. It is more likely to be uncertainty that is spooking them. But we will see. I think it is worth paying the price. So do a lot of British people. So some merchant bankers can’t buy a third house with their annual bonus? Cry me a river.

  52. Like Theo said : Time will tell.

    And I still don’t hear any snappy answer from your fount of EU-sucking wank as to how the oh-so-wonderful firm of Drunker & Shadmock * (like Scrooge & Marley but without the redemption) are going to weather the forthcoming German/Italian co-production now heading their way.

    * Shadmock–see the “Suppose if does clear the air, yes” thrad from yesterday and remember for future reference.

  53. I profoundly want to engage with our polyuric contributor on all of his interesting contentions but I might have to postpone the pleasure until the emergency budget is announced, house prices plummet, the jungle-dwellers of Calais hijack Norbert Dentressangle trucks to take them on the first leg of their trip back to Niamey and Asmara and the fisher-folk of the Maghreb are dragooned by NGOs into rescuing drowning returnees from their coastal waters.

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