Britain's new Prime Minister, Teresa May, who campaigned against Brexit in the June referendum, is in no hurry it seems, to execute the will of the British people to quit the EU. Rather, her government has indicated that it will take its time, up to three years, to act upon the will of the people.
If a week in politics is a long time, three years is an eternity, during which the direction of any government may rotate one hundred and eighty degrees multiple times. Thus one explanation for Ms. May's slow mo approach to Brexit is that she has no intention of going through with the process, but
as we posited the other day, seeks rather to defeat the will of the people by avoiding Brexit altogether.
But this explanation for the UK Government's tardiness in implementing Brexit is not as compelling as it may at first appear. The EU, after all, is moribund, with most of its constituent nations resentful of the way that Germany, the EU's industrial power house, has prospered while ruthlessly imposing austerity on the EU's weaker members. Moreover, the weakness at the periphery of the Eurozone is a direct result of the strength at the center. The Euro, being under-priced relative to the productivity of Germany's workforce, has strongly stimulated the German economy, whereas it has more or less severely retarded the economies of other EU nations, where workforce productivity is lower, or much lower, than Germany's.
The economic difficulties of much of the EU combined with the widespread disgust at Ms. Merkel's enthusiasm for flooding Europe with millions of young, aggressive Muslim males suggest that the EU is now in a condition similar to that of the no less democratic Soviet Union at the moment of its of implosion.
Why then would Ms. May, apparently an astute politician, decline the opportunity that the Brexit vote provides to abandon a sinking ship?
The answer, surely, is to be found in geopolitics. If Britain were to exit the EU tomorrow, which it undoubtedly could, its relations with the United States would require drastic revision. As a member of the EU, Britain has a special relationship with the US. It is a convenient location for many American corporations doing business in Europe, and serves, by virtue of the "special relationship," as an agent of influence for the United States within the EU. Outside the EU, however, Britain is of rather little consequence to the US except as an unsinkable aircraft carrier, within striking range of Russia, North Africa and the Middle-East. In other words, outside the EU, Britain's value to the US becomes chiefly that of a military base, a European off-shore island under military occupation.
What then should Ms. May do?
Under the circumstances, the time is clearly ripe for a total reconsideration of the administrative structure, and economic and military relations of both the UK and the EU. The prospect of the imminent implosion of the EU must surely have concentrated the minds of a formerly complacent EU elite. The anti-nationalist policies of the EU are loathed and despised by all but the most brainwashed of the European population, while the anti-Russian policies forced upon the EU by the United States are resented by the business class for the damage they do to multiple industries from agriculture and tourism to engineering and the military industrial complex.
The remedy for Europe thus seems clear: change sides in the New Cold War. That means calling a new world into existence — the Eurasian World — to redress the balance of the old. Russia is back as a world power. Only a lunatic or totally enslaved Europe will wage war against Russia for the benefit of American global domination. Rather, Europe has no rational foreign and economic policy other than Eurasian integration: a free-trade zone and security zone from Atlantic to Pacific based on Russian resources and defense and space technology; European capital, science and advanced technology; the vast human capital of Asia; these linked by the new Silk Roads, Rails and Pipelines.
Domestically, the European nations must restore their democracies, drive out alien ideologies from political correctness to Islamic fundamentalism, while restoring the vitality of their indigenous populations and cultures.
The result?
One hundred years of peace, perhaps, during during which we might figure out how to rid the world of weapons of mass destruction, live in balance with the environment, and devise a long-term future for humanity.
It reminds me of 1986 when we planned on moving from the West Coast to Toronto. House prices in Toronto were on a crazy roll. Inventory was almost non-existent, and most of the houses that were for sale looked as though they were occupied by the kind of people who couldn’t possibly afford to buy a house for the kind of money their house was priced at.
But think about this. In 1972, we contemplated buying a house in the 4700 block of Vancouver's W 2nd Avenue, which was priced at $189 K. In the 46 years since then, that house has appreciated (according to the BC Assessment Authority) over 62 times to almost $12 million. That’s equivalent to a 500,000% increase per century. Does that sound like hyper-inflation?
Yet if real mortgage rates go negative, who’s to say prices cannot still sky-rocket!
Still, I don’t think things can go on as they have. In the short-run perhaps, but in the long-run, the trend for a huge and increasing proportion of income to be devoted to the payment of rent, either to landlords, or as interest on mortgages to banks, cannot continue. More capital has to go into productive sectors of the economy that generate real wealth, as opposed to capital gains on real estate which are in reality generational wealth transfers.
Of course I’m not complaining. Since the early 70's, our house (not in Vancouver) has appreciated about four times faster than wages, so when it is sold it should reap a windfall for someone — my estate I suppose — of around a million dollars (that's if I die soon, much more, on current trends, if I die later), the gain to be at the expense of the poor folks who will have to pay the mortgage on that amount.
Does that sound reasonable and fair? Will Canadians for ever put up with a Ponzi economy that punishes young adults most, i.e., young folks entering the RE market? It's great, I suppose, if you want to perpetuate the failure of Canadians, a tiny population occupying half a continent, to fully reproduce themselves (but that's another matter).
Question is, how did we get to the present state of the economy and how could that state be changed?
Steve Keen, and others outside the bubble of Nobel-Prize-winning bullshit economics, have well revealed the pathologies of the FIRE economy that has dominated the West since the drive for globalization went into high gear in 1994. That was the year Bill Clinton signed the GATT agreement, a treaty that exposed US labor to unrestricted competition from workers of the Third World earning less than 5% of US wages.
As American and other Western workers affected by the new wave of globalization became increasingly uncompetitive in the internationally tradable sectors of the economy, they made up for the short-fall in income by taking on ever increasing amounts of debt, the debt bubble continually stimulated by declining interest rates (now absurdly entering negative territory), and money creation, mainly by private institutions.
The question is, what to do to reverse this trend and stimulate wealth creating investment?
The answer, obviously, is to redirect capital from consumption and speculative investments in a Ponzi economy into productive activities. Trouble is, Western governments are all owned by the banks and other financial corporations that reap the profits of the debt-based economy and see less opportunity for profit from investment in productive endeavors than in driving asset bubbles.
So what to do? A lynching or two might help. At least the total public humiliation of scoundrel politicians such as Blair and Brown and Cameron, the Bush’s and the Clinton’s who do the bidding of the corporate elite (for pay) would be a start, so the ongoing public humiliation of Hillary, a life-long liar and swindler, is an encouraging start. A war crimes trial for Bush and Blair would be another step in the right direction. Publicly debagging some Central Bankers, past and present, would be a good idea too.