Friday, 16 November 2018

To Prevent Meltdown, Stop Brexit Now

The BBC, Sky News and the rest of the Tory media have gone into overdrive to try to save Theresa May, and her bad Brexit deal. They have been trying to threaten and bully Labour MP's, in particular, as well as Remainer Tory MP's, and the SNP, into backing May's terrible deal, by saying that if they vote it down, the result will be a No Deal crashing out of the EU that will result in chaos and ruin. They are right that crashing out will cause chaos, and ruin, and a meltdown of financial and property markets in Britain, but their argument that the way to avoid that is to vote through May's terrible deal is false. The real way to prevent chaos and a meltdown is to stop Brexit altogether, and do it now!

The Tory media, trying to push this disgraceful lie, have found a new argument, and hook on which to present it.  They refer back to the Troubled Assets Rescue Programme (TARP) put to the US Congress in 2008, by President Bush.  The programme was introduced, by Bush, as US financial markets were collapsing, following the bursting of the insane US house price bubble, along with the equally insane bubble in the prices of global shares and bonds, that had been blown up during the previous thirty years, as a result of the conservative policies, first introduced by Thatcher and Reagan, that encouraged households to borrow recklessly to make up for their stagnant and falling wages, which deregulated financial markets, so as to facilitate that reckless borrowing, by encouraging reckless lending by banks and other financial institutions, and then used central banks to reflate those asset markets whenever reality began to impose itself upon them.

As part of that collapse, US households, sold subprime mortgages, a bit like the PPI mis-selling scandal in Britain, started to default.  Their houses were worth much less than the outstanding mortgages they had on those houses, much like had happened in Britain, in 1990, when house prices collapsed by 40%, in a matter of months.  So, those US households, began to just leave their houses, and leave the banks that had lent them the money holding the debt, which further threatened to collapse the banks.

Bush's TARP programme sought to bail out the banks, and other large US companies, such as the big car companies, such as GM, and Ford - these companies had been making losses on their actual production of cars for years, but had covered it, because they had expanded into finance themselves, providing not just car loans, but also moving into the provision of mortgages and other loans - by providing them with $750 billion of support.  The Republicans in the Congress, who historically are conservative, and in favour of low taxes, and opposition to government intervention, voted down Bush's programme.  That caused US stock markets to crash even harder.  Republican politicians were threatened that if they didn't pass Bush's TARP programme, the US financial markets would go into meltdown, leading to disaster.  So, the Congress was quickly recalled, and the measures were voted through, stemming the panic on US financial markets.

The Tory media are now presenting this as the situation facing the chaos that May's Brexit bad deal is creating.  It is of course, nonsense, and a huge lie.  The choices being faced by Congress in 2008, were just vote through TARP to try to prevent the collapse in financial markets, or don't and see the stock, bond and property markets continue to collapse.  That is not the case today in Brexit Britain.  However much May and the Tory media supporting her try to say that the only choices are her bad deal, or a no deal, the real choice, the real alternative to her bad deal, is not no deal, but NO BREXIT.  That is what MP's should insist upon.  If May continues to refuse them the possibility of such an option, it will further illustrate the lie that she has perpetrated about Brexit being about restoring parliamentary sovereignty, because if MP's can't even vote on a solution that would stop the Brexit chaos and meltdown it is leading to, what kind of sovereignty is that?!

In the US in 2008, it was only the financial markets that were collapsing, even though, the credit crunch that went along with it, had seized up the circulation of commodities and capital.  The latter could have been resolved by measures to end the credit crunch without TARP, though the US economy, unlike that of Britain and the EU, after 2010, did recover faster, due to the fiscal stimulus that Obama put in place.  But, in Britain, it's not just that financial and property markets would crash - which is going to happen in the near future anyway, and will actually be a very good thing - it's that the spark for that crash, in those markets, will be caused by the very real economic damage that a No Deal Brexit will impose.  A No Deal Brexit will cause the Pound to collapse, and interest rates to rise sharply to defend it.  It's that, in the first instance, that will cause UK share, bond and property prices to collapse.  The Pound will collapse, because a No Deal Brexit will mean that all of the current licences and other certificates that UK businesses, including airlines, airports, pharmaceutical companies, and so on require, in order to trade, will, overnight, become invalid; it will mean that huge tailbacks at UK ports will build up, preventing the flow of goods into the country, which is why the NHS and large UK companies like Premier Foods have been stockpiling ahead of that chaos erupting.

Its that real economic chaos that would persist, not just for a few days, like when motorways have been turned into lorry parks, in the past, but for months, if not years, that would cause the Pound to collapse.  For the last few years, the Brextremists have been saying that such predictions of such events are just Project Fear, but now, it's becoming clear that such chaos is very real and imminent, if May pushes through a No Deal Brexit.  The answer to that chaos, is to Stop Brexit Now!

In 2008, the TARP Programme, together with other bail-outs for the banks were about bailing out the parasitic money lenders on Wall Street, who had gambled recklessly on stock, bond and property markets and ultimately lost, as those prices, having been astronomically inflated, fell back towards Earth.  It would, in fact, have been better not to have bailed them out.  When UK house prices collapsed by 40% in 1990, it was only a reflection of the fact that, in the previous ten years, they had quadrupled!  Between 1980 and 2000, the Dow Jones index in the US rose by 2300%.  It rose more than five times faster than the US economy, during the same period.  And, the same reckless lending that fuelled that rise also fuelled the rise in US house prices, just as it had done in Britain in the 1980's, and did again after 1996.

When the Dow Jones fell in 2008 from its high of just over 14,000 to its low of around 6400, that only reflected how grotesquely inflated its level had been.  In fact, to have reached a more rational level, it probably needed to fall to more like 5,000, which would have still have meant that it would have been six times the level it had been in 1980.  And, the same is true of property prices, which in the UK need to fall by around 75% to get back to their historic averages, and restore some sense of sanity to the housing market.  The TARP in the US was about bailing out the banks and all of those big money lenders, who have been living off this huge rise in asset prices at the expense of the real economy.

A collapse in stock, bond and property markets is inevitable, and will represent a healthy correction to economies that, over the last thirty years, have been built upon reckless gambling rather than building real productive potential, providing decent jobs to people.  But, Brexit will not just hasten such a collapse of all of that speculative froth, in Britain, it will cause real economic damage, and it will cause real hardship, not just economic, but in terms of all of the shortages of vital commodities, the collapse of services like the NHS, and social care, as EU workers rush to escape Britain back to their homes in the EU, and so on.

The answer to that is to STOP BREXIT NOW!  But, Labour's failure to oppose Brexit over the last two years is undermining opposition now to May's bad deal, and to the Tory media's attempt to impose it on us, as the only alternative to No Deal.  Corbyn, has said that Brexit can't be stopped.  The Labour Front Bench have tried to sell the ridiculous notion that they could have cake and eat it where the Tories can't, by somehow, negotiating a deal with the EU that would meet its Six Tests, and provide Britain outside the EU with a better arrangement than being inside the EU!  That dangerous nonsense, has let the Tories off the hook for the last two years, during which time, Labour should have been mobilising a mass social campaign to Stop Brexit, and to demonstrate what a reactionary policy it is.

Don't let the Tory media get away with their bullying and harrying based upon their lie that the choice is May's bad deal, or No Deal.  The real solution to prevent the chaos and to prevent an immediate meltdown is to Stop Brexit Now  We should demand that MP's do that now!

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