Is The Uk Too Big To Fail?

[wonderpup]

The core case of the remain camp in the referendum is that a Brexit would precipitate a game of hardball in which our former EU colleagues would extract a heavy economic price for any trade deals that might subsequently be done, resulting in a severe economic shock to the UK.

But I noticed that during the meltdown of 2008 the massive bailouts of the UK financial sector were justifed in part on the basis of global systemic risk- meaning that the UK banking sector was simply too systemically important to be allowed to fail.

Has it escaped the attention of the remian camp that the City of London is located in the UK? And since that is the case any shock to the UK is likely to be transmitted to the city and then on to the wider global economy- which includes the EU, and in particular the Eurozone- hardly a bastion of stability in itself.

So exactly what incentive would there be for the EU to engage in economic sabotage of the UK economy if the resulting blowback would rapaidly engulf them as well as us?

I suspect that should a Brexit occur the outcome will not be a conflict between the UK and EU- in fact the opposite is likely to be true- both sides would have far too much to lose to indulge in petty politcal games playing- the aim would be to create a viable deal for both sides as quickly as possible to prevent a contagion of economic instability from sweeping the globe- in fact even the possibility of a Brexit is leading to preperations for exactly this kind of mutual co-operation;

Here They Come: ECB Pledges To Bailout Markets In Case Of Brexit

With British mood turning sharply negative toward remaining in the Eurozone according to recent polls, and Brexit suddenly looming, the worst case scenario for the scaremongers is starting to play out: with the endless doomsday scenario postulated by pundits, economist and central bankers, among which BOE governor Carney himself warning of a potential recession, a collapse in Sterling and a sharp drop in capital markets and David Cameron going so far as threatening with war, this may be about to play out. And, if anything, the passage of Brexit would test just how bad at forecasting all the supposedly smartest people once again are.

However, these ridiculous predictions of fire and brimstone will not happen. The ECB has made sure of that.

According to a Reuters report, the European Central Bank would publicly pledge to backstop financial markets in tandem with the Bank of England should Britain vote to leave the European Union.

http://www.zerohedge.com/news/2016-06-14/here-they-come-ecb-pledges-bailout-markets-case-brexit

Compare and contrast this approach of the ECB to it's role as a stormtrooper in the Eurogroup's campaign to subdue the Greeks- In Greece the ECB shut down the banks to terrorise the population, but in the case of a Brexit the UK will not be targeted by the EU for the simple reason that-unlike Greece- the UK is too big to fail. As we see, far from the kind of belligerance on display in Greece, the ECB is keen to ensure that the UK banking sector would remain as stable as possible.

So the entire remain campaign is predicated on a M.A.D strategy that no one in the EU has the stomach to contemplate- damage limitation will be the priority, not the chastisement of ungrateful Brits who chose to exit the european stage before the final act of eurozone self immolation inevitably takes place.

[spyguy]

No.

[Royw6]

No.

Perfectly summed up, the answer is no

[canbuywontbuy]

Perfectly summed up, the answer is no

Unfortunately for you, the answer is yes.

[Bruce Banner]

It has failed, it's being propped up by debt and a housing bubble.

Edit: Found it at last....

Mr Osborne began his speech at the British Museum by saying the "old" economic model was built on "shaky foundations" of a public spending boom, an "overblown" banking sector, and consumer borrowing based on a house price "bubble" - and said new sources of growth were needed.

http://news.bbc.co.uk/2/hi/uk_news/politics/8492583.stm

Edited June 14, 2016 by Bruce Banner

[GloomMonger]

I agree, but we must be punished and made an example of.

[Bruce Banner]

I agree, but we must be punished and made an example of.

I'm not sure who you mean by "we", but I would like to see a few politicians punished and made an example of.

[canbuywontbuy]

I agree, but we must be punished and made an example of.

If so, then great! Let the EU punish us. Bring it on. Anything but the status quo.

[wonderpup]

No.

Then why this?:

According to a Reuters report, the European Central Bank would publicly pledge to backstop financial markets in tandem with the Bank of England should Britain vote to leave the European Union.

Does it seem likely to you that as the ECB was trying to calm things down the EU would be at the same time trying to play hardball with UK economic stability- where is the logic in that? What this announcement by the ECB makes perfectly clear is that the EU is not going to be blocking a deal for UK trade but actively trying to facilitate one in order to prevent a panic.

Where the rhetoric of the remain camp falls into it's own trap is by arguing the need for a global scale response to global issues while presenting the outcome of Brexit itself as a purely localised affair- clearly the ECB does not share the view that a Brexit would only impact the UK alone.

All predictions of a financial armageddon post Brexit are self extinguishing because their very apocalyptic dimensions mean that they wil never be allowed to happen. The EU is going to be too busy firefighting to have any time to play games of economic chicken with the Brits.

[bobbo]

Why are the financiers in the city pro remain then. Yes there will be supports, but in the case of bremain support won't be needed? Go figure.

[Maursh]

Well, I don't know whether the UK is "to big to fail", but I think the premise is rubbish.

Europe can choose not to trade with us "to set an example" and we stop buying 1mln German cars and start importing japanese ones...

The UK / Europe trade imbalance is horrendous - I think £20bln to £12bln for April alone. There is no chance they will stop trade.

Furthermore, there are other countries which will be queuing up to do deals. Australian beef farmers are one that I know of since I had a conversation with one at the weekend who is very keen for Brexit.

Britain joined the EU at a time when global trade tariffs were very high. Now they are very low and we don't need trade deals to trade either, these are just arrangements politicians make among themselves for lower tariffs.

We will not implode on Brexit, life will go on. British farmers can produce, we can buy bananas from the Caribbean islands once again

Now, overseas owners selling up their London property....this is another matter altogether.

[Maursh]

Why are the financiers in the city pro remain then. Yes there will be supports, but in the case of bremain support won't be needed? Go figure.

TTIP

[ChewingGrass]

I would be more worried about remaining in and being dragged into a European civil war. Once the EU gains an army/paramilitary police force then any dissenting former states will be dealt with by force rather than financial means.

[bobbo]

I would be more worried about remaining in and being dragged into a European civil war. Once the EU gains an army/paramilitary police force then any dissenting former states will be dealt with by force rather than financial means.

Or leave and be dragged into a world war? (I don't think either will happen)

[bobbo]

TTIP

Exactly.

[frederico]

Britain failed a long time ago but it's been hidden by ever more ingenious ways of getting into debt.

[GreenDevil]

If there was a tariff on bmws and audis, it would be worth having our own car industry again..

[bobbo]

FTSE was down 2% today. Don't hold your breath for any soothing announcements before next Thursday. Don't hold your breath for the referendum result to be honoured either.

[wonderpup]

Britain failed a long time ago but it's been hidden by ever more ingenious ways of getting into debt.

Not just Britan- the entire 'western world' is in a similar position.

My point is this- how can the same people who cite 'globalisation' as the prime reason to remain in the EU deny that Brexit would itself have global implications for the financial system? Implications that would make it very dangerous for the EU to 'punish' the UK for leaving without threatening the stability of the whole system- particulary given the fact that fraud central- the very nexus of the financial ponzi scheme- is the city of london?

Remain can't have it both ways- if the world is indeed global then so will the consequnces of a messy Brexit be global- which means that the predicted negative response of the EU to a Brexit will not happen- because the risk of induging in such petty revenge would be too high to be worth taking for all concerned.

As I said- the scaremongering threats of an isolated and failing UK should Brexit come to pass are self extinguishing because the global financial system cannot tolorate this outcome and so this outcome will be avoided.

Think about it- if the UK banks are deemed too big to fail then by simple logical extension the country that hosts those banks must also be too big to fail- such is the ongoing symbiotic relationship between the credit ratings of the big banks and their potential bailout sovereigns that they are in effect a single descrete organism- and if you kill one then you kill the other.

Put more simply I don't see how the EU can take down the UK without bringing down the financial system along with us.

So much as our erstwhile EU friends might like nothing better than to punish a Brexit by attemtpting to damage the UK economy the reality is that a failing UK is as much of a threat to them as it would be to us- and I don't think this is a risk they will ultimately wish to take.

[bobbo]

^^ So what if the EU does try to offer the UK a good deal, and it still isn't enough to fix the situation. Economically this is not the best time to be going it alone.

[long time lurking]

Personally i think the risk lays in the EU ,if we leave that leaves a very big hole in their budget secondly i think they are shit scared of contagion as in others will follow

I am beginning to think electoral fraud is now on the table ,the rhetoric coming from the EU is beginning to reveal how much they fear a brexit and as the OP states it`s very unlikely they will be able to do anything about it ,as in make an example of us and they know it

[long time lurking]

^^ So what if the EU does try to offer the UK a good deal, and it still isn't enough to fix the situation. Economically this is not the best time to be going it alone.

You could also argue, is there ever a good time to be shackled to a rotting corpse

[GreenDevil]

Not just Britan- the entire 'western world' is in a similar position.

My point is this- how can the same people who cite 'globalisation' as the prime reason to remain in the EU deny that Brexit would itself have global implications for the financial system? Implications that would make it very dangerous for the EU to 'punish' the UK for leaving without threatening the stability of the whole system- particulary given the fact that fraud central- the very nexus of the financial ponzi scheme- is the city of london?

Remain can't have it both ways- if the world is indeed global then so will the consequnces of a messy Brexit be global- which means that the predicted negative response of the EU to a Brexit will not happen- because the risk of induging in such petty revenge would be too high to be worth taking for all concerned.

As I said- the scaremongering threats of an isolated and failing UK should Brexit come to pass are self extinguishing because the global financial system cannot tolorate this outcome and so this outcome will be avoided.

Think about it- if the UK banks are deemed too big to fail then by simple logical extension the country that hosts those banks must also be too big to fail- such is the ongoing symbiotic relationship between the credit ratings of the big banks and their potential bailout sovereigns that they are in effect a single descrete organism- and if you kill one then you kill the other.

Put more simply I don't see how the EU can take down the UK without bringing down the financial system along with us.

So much as our erstwhile EU friends might like nothing better than to punish a Brexit by attemtpting to damage the UK economy the reality is that a failing UK is as much of a threat to them as it would be to us- and I don't think this is a risk they will ultimately wish to take.

I think Camerons primary reason to remain is the financial ponzi that is London. He has his bankster friends to protect. A vote to exit is to stick two fingers his way.

[billybong]

If there was a tariff on bmws and audis, it would be worth having our own car industry again..

If the Japanese could copy stuff after WW2 then Britain should be able to copy stuff as well.

[billybong]

The ECB has made sure of that.

According to a Reuters report, the European Central Bank would publicly pledge to backstop financial markets in tandem with the Bank of England should Britain vote to leave the European Union.

Thanks but no thanks. Britain can print it's own money - and copy BMW, Audi, Volkswagon etc blueprints and components etc.

The last thing Britain needs is to be in hock to the ECB and that bunch of self serving own pocket lining troughing ******** turning up at some future date making demands. It's enough with the BoE self serving troughers.

Edited June 15, 2016 by billybong