Monday, September 16, 2019

No Deal Brexit A Disaster? Currency Markets Cry "Bollocks!"

Since the Brexit Referendum was announced in 2016, the legacy media has been full of the dire prognostications of the many trials and tribulations that would befall the United Kingdom should they actually up and quit the EU.

Despite the best efforts of the naysayers of Project Fear, Brexit passed with a healthy margin.

And still the naysayers kept up their drumbeat of depressive doomsday declarations.

Theresa May turned what ostensibly were relatively straightforward "divorce" proceedings into the stuff of tabloids, and then the naysayers felt vindicated. As her Brexit deal was voted down an embarrassingly three times, the naysayers gloated.

Then Theresa May resigned as Prime Minister, and on July 24, 2019, Boris Johnson moved into 10 Downing Street. How the narrative has shifted!

During the first five days of August, the Brexit headlines were talking up the "inevitability" of Boris Johnson having to negotiate a proper Brexit Deal, despite all his chest-thumping rhetoric, as this random sampling of news sources demonstrates:
The conventional wisdom during those five days was quite definitely tilted towards there being a Brexit deal of some sort--either a revision to Theresa May's proposal, a Brexit delay followed by a deal, or Boris Johnson would whip up an entirely new deal at the eleventh hour to save the day and the country.

However, during the next five days, the tone of the news shifted. Slowly, perhaps even grudgingly, the legacy media conceded that Boris Johnson might not be bluffing after all, that he might actually push to crash the UK out of the EU in a "No Deal Brexit" on October 31st--the ultimate "Trick Or Treat" for All Hallows' Eve:

With yet more vindication in hand, surely the Brexit naysayers are gloating over the Brexiteers as the markets begin to punish Britain for the folly of separating itself from Europe.....right?

Wrong.

The chart at the top is the changes in currency valuation, the Euro vs the British Pound, over the last two months (from 17 July to 16 September).  Notice how the Euro peaked on August the 10, at £0.93927? Notice how the Euro has steadily declined against the British Pound since that date? Even before the potential "Black Swan" events of September 14-15 (the Iranian/Houthi attack on Saudi Arabia's oil production facilities and resultant loss of half of the Kingdom's production capacity), the currency markets were shifting away from the Euro and towards the British Pound. This is the exact opposite of the movement one would expect if the currency markets were betting against the British Pound.

Intriguingly, the Euro against the US Dollar shows a similar peak on August 10, followed by a persistent decline, although in the case of the Dollar the shift is more erratic and more pronounced. While there may have been the beginning of a Euro recovery against the dollar starting in September, the aforementioned "Black Swan" moment appears to have squelched that bounceback.


When comparing the US Dollar to the British Pound, the two currencies were more or less moving sideways during August, and then the dollar fell against the pound starting on September 3, and only beginning to regain ground on September 14--quite likely a "flight-to-safety" reaction to the Iranian/Houthi attack.


Full Disclosure: I am not a currency trader nor a financial analyst, and none of this is to be taken as investment advice or guidance.

In business especially, actions always speak louder than words. The words of the legacy media have been that Brexit, and particularly a "No Deal" Brexit, will be a disaster for the UK. The actions of the world's currency speculators, who are literally betting fortunes on the next economic ripple within the worlds leading economies, has been in the past month a somewhat derisive "Bollocks!" (apologies to any actual British folk if I am using the colloquial expletive incorrectly). Currency markets are steadily bidding up the British Pound and bidding down the Euro as the deadline for Brexit draws closer; it may lack a certain dramatic flair, but it is nevertheless a solid vote of confidence in Brexit, even in the "No Deal" Brexit.  The Euro would not be steadily losing ground to the Pound if the currency markets had any misgivings about Brexit.

When China let the bottom fall out of the yuan during the last few days of August, I noted that while much was made of the yuan's fall against the dollar, very few financial commentators even noticed a seemingly synchronous drop of the euro against the dollar, despite the absence of any negative EU news at the time. At the time, I offered up the following conclusion:
The one thing that seems certain about the legacy media's prognostications about the state of the world is that they have the narrative all wrong. With respect to China and Europe, they have it provably wrong, which only begs the question what else do the chattering class "experts" have completely wrong?
There will be no final answers until November 1, if then, but, if the current currency market trends hold through October, we quite possibly could add Brexit coverage to the list of things the chattering class "experts" within the legacy media have gotten very wrong.



Note: the currency graphs are courtesy of xe.com and were obtained using the following search parameters at the time of writing:
  • Euro to British Pound: https://www.xe.com/currencycharts/?from=EUR&to=GBP&view=1M
  • Euro to US Dollar: https://www.xe.com/currencycharts/?from=EUR&to=USD&view=1M
  • US Dollar to British Pound: https://www.xe.com/currencycharts/?from=USD&to=GBP&view=1M

These Are Not Democrats. These Are Fascists

Be afraid. Be very afraid.

In the third Democratic debate, candidate and former Congressman Robert Francis O' Rourke let the cat out of the bag on gun control: The Democrats intend to confiscate America's guns. This policy mandate comes even as Americans' enthusiasm for gun control is trending down--probably due to government abuses such as the recent demand of Apple for the names of all the people who've downloaded a gun-sighting app.

Yet this is not the most remarkable policy position that has been embraced by the Democratic 202 Presidential hopefuls. As former Vice-President Joe Biden has demonstrated, the basis for Democrats' domestic policy proposals (to the extent they have any) will be race; to a man, the Democratic Party is now the party of racism. They are also proposing to be a party that will think nothing of deciding how stock markets should behave.

At CNN's hours-long climate change "town hall", Senator Kamala Harris declared her willingness to rewrite the Senate's procedures by eliminating the filibuster:

This notion has been echoed by Senator Elizabeth Warren:
Beyond the Presidential candidates, Congress itself has undertaken to not only criticize Supreme Court rulings, but has expressed a desire to arrogate unto itself full legal authority to regulate voting:
The "boldness" the Democrats seek is more government intervention in the daily lives of Americans, more laws, more regulation, more centralized control over just about everything. They have said this, time and again, in different forums, different contexts, and with regards to different issues.

In response to all their seeming "boldness" and apparent legislative enthusiasm, however, comes the crucial question: Where in the Constitution is either the Congress or the President given authority to act along these lines?

Without a doubt, this question should be at the center of every political debate in this country. As I have observed previouslyif we desire good law, we must begin with the Constitution. If we wish to enact good laws, we must take care not to enact laws which contradict the Constitution and violate even one of its strictures. If we hope to design good law, we must ask ourselves the right questions about the law, and the Constitution. 

Is there authority in the Constitution for any of what the Democrats propose to do? With respect to gun control and gun confiscations, the answer is most assuredly "No!". The Second Amendment is quite categorical in its construction, and thus in its meaning:
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
For Congress to have authority to regulate or confiscate firearms, the Constitution must have some other overriding clause. Alas for the Democrats, there is no such clause. The closest one gets to such authority is the Commerce Clause from Article 1, Section 8, but even the Supreme Court has acknowledged that the Commerce Clause is itself not without limits (United States v Lopez, 514 US 549 (1995)), one of those limits being restraint found elsewhere within the Constitution, such as the Second Amendment, a point further advanced in District of Columbia v. Heller (554 U.S. 570 (2008)).

Is there authority within the Constitution for the President of the United States to end the Senate filibuster? No, there is not. Each House of Congress sets up its own rules without outside input, and is explicitly empowered by Article 1 Section 5 to do so. The President cannot command the Senate to change its rules, and the filibuster is a Senate rule.

Does Congress have authority to regulate State and local elections? A plain reading of the Constitution does not permit this question to be answered in the affirmative. The main body of the Constitution itself is silent on whom may regulate elections, but the Tenth Amendment is quite clear that rights and powers not articulated within the Constitution belong to the states or to the People.

Note that these are not questions of propriety or even of efficacy, but of authority. One need not question whether the confiscation of a particular category of firearm would have an impact on violent crime, or if the elimination of the Senate filibuster would enable the passage of better legislation to acknowledge the reality that the President lacks the authority to do what the Democratic candidates are promising. One need not debate voter integrity laws to realize that Congress is not the body authorized to address elections, but the legislatures of the several states. In each example described above, the Constitution prohibits the Congress and the President from carrying out the legislative and executive order agendas promised by the Democrats.

Yet the Democrats as a party are unaware of this. They are oblivious to the patent unconstitutionality--which is to say, illegality--of what they promise. They are completely nonplussed that the very act of promoting these unconstitutional proposals flies in the face of the oath every Congressman and every Senator takes upon assuming their elected office, an oath that is mandated by law:
I, AB, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.
How can any politician or political party pride itself on the wholesale disregard of sworn duty? How can any politician seeking or holding high office in the United States fail to acknowledge the supremacy of the Constitution?

The only answer that presents itself is that said politician, said political party, cares nothing for the Constitution. The Democrats, as they have done since the days of Woodrow Wilson, view the Constitution not as a guiding light but as an inconvenience, a nuisance that is best ignored whenever possible. We know this because their promises and their deliberations flagrantly and even pridefully ignore the constraints upon government clearly laid out by a plain reading of the Constitution.

The Democrats are campaigning on a platform of dictatorship, of Constitutional abrogation, of the removal of fundamental rights and basic civil liberties. The Democrats are campaigning to end the rule of law in this country, and replace it with the rule of lawyers, of civil servants, of petty bureaucrats, unelected and unaccountable. They have said this directly and repeatedly. They have said this proudly.

The Democrats are not democrats. They are not adherents of democracy They care nothing for the fact that ours is a government by the people. They are dismissive of the Constitution's Preamble, beginning as it does with the emphatic declaration of popular sovereignty, "We The People...."

The Democrats are literal fascists. One need only look at the definition of fascism to see this to be true:
a political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition
Substitute "state" or "government" for "nation" in that definition and one gets the perfect summation of every Democratic talking point uttered in the past several years. This is not an exaggeration.

The United States is and has always been a representative democracy. As Alexander Hamilton said so famously, "here, sir, the people govern". "We The People" are the ones who are the final authority in this country. Not Congress, not government, and certainly not the Democratic Party.

Today's Democratic Party is campaigning on an agenda of stripping that all away. They are doing so openly. They are doing so proudly. And their supporters are cheering them on.

Be afraid, America. Be very afraid.