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Pound Crashes to Near Euro Parity as Brexit Chaos Returns

Pound Crashes to Near Euro Parity as Brexit Chaos Returns

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The British Pound has fallen significantly against both the dollar and the euro, down from 1.13 euros to now 1.08.

That’s close to the lowest it has ever been as markets price in a u-turn on the part of the British government which has brought no deal back on the table.

“We are being told that the EU will not only impose tariffs on goods moving from Great Britain to Northern Ireland, but that they might actually stop the transport of food products from GB to NI,” Boris Johnson said in selling a new act of Parliament, the Internal Market Bill.

On the surface that act appears to say what is self evident, what is legal in London is also legal in Belfast.

Yet the complexities it hides took three years to negotiate, and now one side is thinking of tearing up that agreement.

We are back to the past. Can no deal be on the table? And just like last year, the question is what would happen if there is no deal.

As you might remember at the last minute and just before a general election, Europe and the United Kingdom reached an agreement that basically gives shared oversight to UK and EU over the entry and exit of goods in Northern Ireland.

It was the ‘don’t call it a backstop’ agreement with some light touch checks at the border between GB and NI to prevent a hard border at NI and Ireland.

It didn’t matter at the time and hopefully won’t matter because the idea was to cancel out this backstop by getting a free trade deal, and then there won’t need to be such checks at the border.

However clearly those trade negotiations are not going very well because the French want fish and the Germans don’t want cheating by subsidizing companies against state aid rules.

While Britain is saying they are free now and they don’t care. Or as Boris puts it “the UK is serious about its new-found sovereignty.”

What was a Canada++ ambition, and then just Canada+, has now become a stated aim of securing a just Canada trade deal.

That Canada-EU trade deal was effectively vetoed by Cyprus recently, with Greece and Cyprus nowadays in charge of the trade and war/peace policy for Europe.

So good luck with even Canada if we’re talking weeks which is obviously cookoo land as you can’t negotiate such complexities in weeks with that Canada deal taking a decade.

You could however potentially have some sort of broadbrush agreement with a transitional period, but the dangers of UK bickering so loudly for years on end towards Europe are self evident you’d think.

On legal grounds, the Supreme Court of the United Kingdom has already found Boris Johnson breached the law when he suspended parliament last year.

Tearing up an international agreement through an Act of Parliament is also breaching the law, as they have admitted, not least because legal scholars have long reached a conclusion in regards to the hierarchy of laws.

There’s subordinate (MP made) law and case law (judge made). Then there are acts of parliament. Then there are treaties or validly implemented international law. And then there is the constitution at the top.

So parliament is supreme, like we all are, but it willingly binds itself when it signs or enacts an international agreement, like we all do.

An act of parliament can then over-rule that agreement, but everyone can also act in contravention of the law. There’s consequences at a national level, there are also consequences at the international level.

However when enforcing the law there’s the public interest question. In this case, do they really mean what they are saying, or are they just acting in a clown show for TV entertainment?

If they did mean it, and let us suppose UK does get out without a deal, and let us also suppose in this imaginary scenario UK wants to impose tariffs on Mercedes, how do they enforce that? How do they collect those tariffs if these Mercedes get through Ireland to Northern Ireland and then to the Internal Market Bill?

UK of course wouldn’t put up a border in Northern Ireland. So how can they claim they getting back control of their borders if these tariffed Mercedes can just whiz through without paying tariffs?

Ireland probably won’t put a border either. And what does that mean? Well it means if you want to send tariff free goods to UK regardless of what British law says, then set up shop in Ireland.

The British of course have thought about this, hence why they agreed to the withdrawal agreement and why the public didn’t say anything about it.

So for Johnson to claim there’s some extreme interpretation is obviously talk show. In addition, his threats of no deal are also obviously like a child thinking they can fool their parents with no one taking it seriously because practically it is impossible unless he or Ireland puts up a hard border, which neither will.

Is then there something more cynical? Is Johnson basically trying to rhetorically harm Europe, to otherise it, to ree these guys who are not our guys?

That’s an awful question to ask, but the European Union was created for a reason, and that reason is shown very well by this Northern Ireland border issue.

We shouldn’t therefore tolerate these rhetorics, however slight they may be, about some internal market like we are fools.

Bringing up that settled matter to try and gain concessions like France or Cyprus would care about some Northern Ireland border more than Britain, is a bit puzzling really.

That’s especially when you consider that after months of huge tensions last year, UK ended up to the same ‘don’t call it a backstop’ deal.

So from an observing point of view, all this sounds more like a sign that the British government is failing considerably at negotiating with the close to $20 trillion European Economic Zone.

By claiming to want to tear up previous agreements, they’re also saying they don’t want to trade with this huge economic block next door and on all sides. They’d rather go to the sea with Japan and India where they’d be a junior partner, as they would be with the EU now really.

So market is pricing in less demand for their goods because the generally poor Indians are not gone buy Rolls Royces at the scale of rich Europeans.

Less demand for goods means less demand for the pound, hence it falling with bitcoin of course a potential hedge.

No one in Britain seems to be caring very much however because they saw this show last year and they’re a bit sick of it.

So for now they’re more like: yeah whatever Boris. Sure, sure you’re a great negotiator while getting nothing for Britain so far.

They’re just watching, if they bothering to even do that, while companies act with their feat. First Coinbase, now Bitstamp.

As it happens we’re just watching too because these are tough negotiations, but the loudly confrontational tactic is regrettable because nearly 50% of this country voted to remain part of the European Union.

Does Boris Johnson represent them? And where is his agenda of infrastructure building, of a global open Britain that welcomes the best, many of whom are stuck in bureaucratic oppression by government policy and attitude as shown here with this confrontational approach towards neighbours.

Where is this booming optimistic Britain riding the waves? Stuck in 2019 is it? Stuck in the same broken tape of a disingenuous tongue claiming they gone do what they also say they’re not really gone do, but if we pretend then we get our way.

Just show, our lives, spectacle for Bullingdon Aristocrats to ruffle their hair for the TV when we all want to watch this optimistic, this booming, this global, this open Britain, not this fat buffoon antagonistically playing with our neighbours.