Army Rumour Service

This is a sample guest message. Register a free account today to become a member! Once signed in, you'll be able to participate on this site by adding your own topics and posts, as well as connect with other members through your own private inbox!

The Brexit Consequences Thread

Really? You really should read the paper first - a paper incidentally, which has no legal force, but is an attempt to address the scenario I outlined above. (My bold)



As I said, no legal way to exit the euro. The paper describes inventive ways of expelling a country from the euro - a very different matter.

How about doing your homework before your next post on the subject?

Wordsmith

So if there was no provisions for leaving the EU in the original treaties, how did UK do it?
Because of the one you linked to, Article 50 was brought in which does allow a member to withdraw from the EU and, if they do, they no longer retain the EU as their currency.

So you are misreading it
Really? You really should read the paper first - a paper incidentally, which has no legal force, but is an attempt to address the scenario I outlined above. (My bold)



As I said, no legal way to exit the euro. The paper describes inventive ways of expelling a country from the euro - a very different matter.

How about doing your homework before your next post on the subject?

Wordsmith

German iIld (pdf) but also reported by Wiki (no, I'm not using that as a reference but the German one is pdf)

Withdrawal from the Eurozone denotes the process whereby a Eurozone member-state, whether voluntarily or forcibly, stops using the euro as its national currency and leaves the Eurozone
Really? You really should read the paper first - a paper incidentally, which has no legal force, but is an attempt to address the scenario I outlined above. (My bold)



As I said, no legal way to exit the euro. The paper describes inventive ways of expelling a country from the euro - a very different matter.

How about doing your homework before your next post on the subject?

Wordsmith

And you need to read the things you link to a bit better. Especially the bit that says:
" Consequently, the only way to withdraw from EMU is to withdraw from the EU "

in other words, unless you have your little one track mind on. if a country wants to leave the Euro the only way it can do it is by leaving the EU which is laid down under Article 50.

So I call bollox once again.
It is saying, in many words, you cannot leave the euro unless you leave the EU in entirety.
 

Wordsmith

LE
Book Reviewer
So if there was no provisions for leaving the EU in the original treaties, how did UK do it?

Because the UK is not a member of the euro - and hence the complications I cited above didn't apply.

in other words, unless you have your little one track mind on. if a country wants to leave the Euro the only way it can do it is by leaving the EU which is laid down under Article 50.

As I pointed out before, the paper I cited (https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp10.pdf) (a) is a specific attempt to provide exit mechanisms from the euro that do not presently legally exist and (b) is a position paper that has no legal force.

Let me cite another chunk of it:
a Member State’s exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable; and that, while perhaps feasible through indirect means, a Member State’s expulsion from the EU or EMU, would be legally next to impossible.

English translation - booting someone out of the euro (because there is no legal exit mechanism) would be - as the text itself says 'legally next to impossible'.

Hence the conundrum I stated in my original post.

Wordsmith
 
Because the UK is not a member of the euro - and hence the complications I cited above didn't apply.



As I pointed out before, the paper I cited (https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp10.pdf) (a) is a specific attempt to provide exit mechanisms from the euro that do not presently legally exist and (b) is a position paper that has no legal force.

Let me cite another chunk of it:


English translation - booting someone out of the euro (because there is no legal exit mechanism) would be - as the text itself says 'legally next to impossible'.

Hence the conundrum I stated in my original post.

Wordsmith

Agreed, you can't boot someone out of the EU nor can you make them leave the Euro.
But that's a totally different ballgame. A country leaving the EU under Article 50 would also remove themselves from being a member of the eurozone and would revert back to their own currency. So, no, they can't stop using the euro as their currency unless they withdraw from the EU.
 

Wordsmith

LE
Book Reviewer
Agreed, you can't boot someone out of the EU nor can you make them leave the Euro.
But that's a totally different ballgame. A country leaving the EU under Article 50 would also remove themselves from being a member of the eurozone and would revert back to their own currency. So, no, they can't stop using the euro as their currency unless they withdraw from the EU.

I don't think anyone in the EU considered the conundrum I cited - hence the apparent contradiction. But I would not be surprised if the situation came up for real in 12 - 18 months. Italy is deep in the financial smeg and it has several populist parties that want to exit the euro. Were one or more of those parties to form a government, they might start seeking a euro exit. As present a euro exit is not conceivable - there is still majority support for the euro in Italy. And any referendum to leave the euro (which would surely be needed) would be defeated.

But should the EU try and impose Greek style austerity on Italy, public opinion might change radically - potentially opening up the path to a demand to leave the euro.

I think in those circumstances, the EU would attempt a very limited treaty change - making it legally possible to leave the euro. However, the EU would also demand that Italy settled its debts under Target 2 before they left the euro - making it financially impossible for Italy to do so.

The UK is increasingly heading into the financial smeg - we've going to have 1.5 million unemployed in a year, plus the need for public sector cutbacks - all due to Covid 19.

However, I think the EU has bigger problems - they're either heading for a massive euro bailout (Club Med + France), or a euro breakup. Either will be eye wateringly expensive. We're leaving at an opportune time - we're going to be hit for some bills for the EU's financial woes, but we should avoid the really big bills.

Germany on the other hand...

Wordsmith
 
The paper I cited above reeks of indignation that the peons aren't doing their master's bidding. For comedy value I cite one of the more indignant paragraphs.


How dare the BASTARDS oppose further integration - we've told them it's good for them!!!!

Wordsmith
Still a victim?
 
#
Crap. You need to get up to date and and read the European Central Bank ruling of 2009. If a country leaves the EU under article 50 then it automatically ceases to use the euro as well. It would not be possible to leave the EU and retain the euro.

Things change.
In fact, the ECB also ruled that while a EU country cannot leave the Euro (unless it exits the EU entirely) it could trigger Article 50, leave the euro and then reapply to join the EU. If it meets the criteria it could rejoin but keep its own currency even while committing itself to adopt the euro at a future date like some countries currently do.

It was actually suggested that that would be a way forward for Greece.

If an MS leaves the EU under Art. 50, it can subsequently use any currency it chooses. The newly liberated state would simply select the Euro as its reserve currency (where the asset base of the central bank would be in Euros). It would, obviously, have no input on Eurozone monetary policy, but there are plenty of precedents for that and, after all, nor do current EU MS enjoy such influence.

Since the gold standard was dropped, central bank reserves are held in foreign currency, not hard assets.

Moreover, the newly liberated country can issue sovereign debt in any currency it chooses, as is common in debt markets.
 
The paper I cited above reeks of indignation that the peons aren't doing their master's bidding. For comedy value I cite one of the more indignant paragraphs.


How dare the BASTARDS oppose further integration - we've told them it's good for them!!!!

Wordsmith
Well it comes down to Friday (I think) when there will be considerable head banging in respect of the 750 Billion Euro will be in the form of Grants or Loans and there is considerable disagreement. I don't think they'll resolve it- Euro news itself doesn't see any immediate solution. This is where autonomy and direct control of the currency matters.
 
So if there was no provisions for leaving the EU in the original treaties, how did UK do it?
Now that's where I believe the Kerr amendment that became A 50 is the culprit. Let me put it this way If you join the RAC or the AA the moment you stop paying the subscription you are out. If you elect to stop paying you merely go. At the very start it was determined that the process of leaving would be the reverse of Joining, which was automatically in the EU's favour and which Brown signed. IMHO the first thing May should have done before enacting A50 should have been testing it's validity and there would have been an ensuing squabble between the SC and the ECJ
 

Wordsmith

LE
Book Reviewer
And should be told to go and do one. We left the EU on the 31st January 2020.

We're still legally liable for some things after we leave - for example the pension bills accrued during our time within the EU.

But we need to raise two fingers towards any long term Covid 19/euro breakup stuff. The EU can foot the bill for those - no longer our problem.

Wordsmith
 

Wordsmith

LE
Book Reviewer
Well it comes down to Friday (I think) when there will be considerable head banging in respect of the 750 Billion Euro will be in the form of Grants or Loans and there is considerable disagreement. I don't think they'll resolve it- Euro news itself doesn't see any immediate solution. This is where autonomy and direct control of the currency matters.

The fight will be between the German camp (the frugal four) and Club Med. The first will believe that Club Med should impose austerity upon itself; Club Med that there should be debt forgiveness. The question will be who feels the worst pain. But whichever option is chosen will result in the rise of anti EU feeling in the countries concerned.

The other problem the EU has got in the structural imbalances in the euro. Some countries have improved productivity and held inflation down - some have not - and hence some euro countries have prospered at the expense of others.

The only corrective mechanism the euro has is internal devaluation - forcing wages down in countries with low productivity and higher inflation. That compensates for lower productivity, etc. But that comes about because of a heavy dose of austerity.

It was the medicine imposed on Greece, Portugal, Cyprus and Ireland when they had to ask for EU bailouts after the last recession. And some of their economies have yet to fully recover. In addition, anti-EU sentiment rose in those countries as a result. The EU has no good choices left - and whatever they do is going to pi$$ off large segments of the population.

It's been 14 years since the last recession, and the EU has done nothing to put the euro right in that time - not least because the treaty change required was political impossible. Now time has run out and the chickens are coming home to roost.

Wordsmith
 
The fight will be between the German camp (the frugal four) and Club Med. The first will believe that Club Med should impose austerity upon itself; Club Med that there should be debt forgiveness. The question will be who feels the worst pain. But whichever option is chosen will result in the rise of anti EU feeling in the countries concerned.

The other problem the EU has got in the structural imbalances in the euro. Some countries have improved productivity and held inflation down - some have not - and hence some euro countries have prospered at the expense of others.

The only corrective mechanism the euro has is internal devaluation - forcing wages down in countries with low productivity and higher inflation. That compensates for lower productivity, etc. But that comes about because of a heavy dose of austerity.

It was the medicine imposed on Greece, Portugal, Cyprus and Ireland when they had to ask for EU bailouts after the last recession. And some of their economies have yet to fully recover. In addition, anti-EU sentiment rose in those countries as a result. The EU has no good choices left - and whatever they do is going to pi$$ off large segments of the population.

It's been 14 years since the last recession, and the EU has done nothing to put the euro right in that time - not least because the treaty change required was political impossible. Now time has run out and the chickens are coming home to roost.

Wordsmith
Well that would be like forcing a Devaluation of the Scottish pound against the English. Light blue touch paper and retire.
 

Wordsmith

LE
Book Reviewer
Well that would be like forcing a Devaluation of the Scottish pound against the English. Light blue touch paper and retire.

It's easy to force a massive devaluation of the Scottish pound - all they have to do is vote for independence and watch the SNP use the magic money tree to trash their economy.

Wordsmith :twisted:
 
D

Deleted 72187

Guest
The fight will be between the German camp (the frugal four) and Club Med. The first will believe that Club Med should impose austerity upon itself; Club Med that there should be debt forgiveness. The question will be who feels the worst pain. But whichever option is chosen will result in the rise of anti EU feeling in the countries concerned.

The other problem the EU has got in the structural imbalances in the euro. Some countries have improved productivity and held inflation down - some have not - and hence some euro countries have prospered at the expense of others.

The only corrective mechanism the euro has is internal devaluation - forcing wages down in countries with low productivity and higher inflation. That compensates for lower productivity, etc. But that comes about because of a heavy dose of austerity.

It was the medicine imposed on Greece, Portugal, Cyprus and Ireland when they had to ask for EU bailouts after the last recession. And some of their economies have yet to fully recover. In addition, anti-EU sentiment rose in those countries as a result. The EU has no good choices left - and whatever they do is going to pi$$ off large segments of the population.

It's been 14 years since the last recession, and the EU has done nothing to put the euro right in that time - not least because the treaty change required was political impossible. Now time has run out and the chickens are coming home to roost.

Wordsmith
Point of order.

Do you perhaps have a blind spot with regards to your currency predictions, i.e. a bit closer to home.

You seem to post quite a lot about the Euro being in mortal peril so to speak, yet over the past 5 years, GBP has fallen against the EUR by around 25%.


1594821360140.png


If you believe the EUR to be terminally weak, why is the GBP doing so poorly against it?

I know that this is good for exports, but considering we run a, what £75 billion trade deficit with the EU, the net result is a loss for UK consumers, at least 2015-20.

Do you expect the EUR to collapse, with GBP reasserting itself relative to EUR and thus make our holidays and EU imports cheaper at some date very soon?

I'm not sure what point you are trying to make with regards to the EUR and how post-brexit Britain can capitalise on this considering our close trading relationship with the EU behemoth

HF
 
Point of order.

Do you perhaps have a blind spot with regards to your currency predictions, i.e. a bit closer to home.

You seem to post quite a lot about the Euro being in mortal peril so to speak, yet over the past 5 years, GBP has fallen against the EUR by around 25%.


View attachment 489871

If you believe the EUR to be terminally weak, why is the GBP doing so poorly against it?

I know that this is good for exports, but considering we run a, what £75 billion trade deficit with the EU, the net result is a loss for UK consumers, at least 2015-20.

Do you expect the EUR to collapse, with GBP reasserting itself relative to EUR and thus make our holidays and EU imports cheaper at some date very soon?

I'm not sure what point you are trying to make with regards to the EUR and how post-brexit Britain can capitalise on this considering our close trading relationship with the EU behemoth

HF
Not being rude, but that should be obvious. The fact is that the globe is in recession and Gold as a hedge has tended for the up over recent years. It's why I say there will have be an international adjustment in order for some sort of parity to remain possible. 75 Billion is relatively peanuts but the EU is trying to spend 10 times that amount as some sort of a protective measure. That's just my personal view. No one currency is going to be strong enough in the short term.

Moreover we won't stop trading in Europe we just won't be in the EU. The frantic scrabble to open Schengen borders to capitalise on what's left of the summer does underpin what happens to the Med economies in the short term. And it will be very short term. Fridays meeting requires unanimity- I'm not holding my breath.
 

Latest Threads

Top