Sovereign debt and unilateral withdrawal

Back in 2012, five US banks were heading for default by the generally accepted indicators of what default means:

The body is the ISDA. The event was the impending default next day [first day of February]. Media blackout. total. Only bloggers. How many financial blogs did you go to and how many ran this?

Have you heard of it?  No, because the ISDA determined the banks had not defaulted, according to their new rules. Whaaa? You default as an individual – does the bank determine you haven’t? They call you in, don’t they, for restructuring, to keep the bailiffs at bay.

This with the ISDA points not only to collusion at the highest levels but to what was at stake. Governments do not, despite the rhetoric and attempts to apply normal profit and loss rules to them, operate in the same ways as companies and individuals. Russia defaulted in 1998 – simply said they couldn’t and wouldn’t pay – and got away with it.

Britain is in a critical situation on paper – the benefits scam plus quangos plus all the other rip-off merchants, the sheer debt and non-productivity, are driving the country deeper and deeper into a sovereign debt crisis. This means the plug can be pulled on sovereignty, as it was in Greece, at any time. We are no different to the PIIGS in this respect.

Plus, on November 1st, 43 different powers we did have within our own borders cease to effectively exist. Not in the day to day running, to be sure but in terms of final arbitration.

The UKIP figure of 75% of powers in the country v Clegg’s 7% of primary legislation I think has now been established. But does it mean anything if it is all lies and dishonestly arrived-at figures or figures that don’t really matter for governments at a pinch?

Well it could matter … or not. Depending entirely on the whim or poltical needs at the time of creditors out there. Just because your bank manager can call you in, doesn’t mean he’ll do it today.  But you, effectively, have lost your financial independence.  And if you’re a government, it might not be in the interests of the creditor to have you back on your feet, for political reasons.  it might avail him to keep you dependent.

In this country, we can sheet part of our malaise home to Nye Bevan but only part. There are the known problems in the UK:



low interest loans uk

But chipping away at this are other things too:

# Wolfie: “Globalization makes it almost impossible for governments to regulate content and quality of any product. If I start a business here I’ll be regulated to insolvency, do it abroad and ship here – no problem. This set-up is economic suicide.”

# Sackerson:  “But watch for changes in pension taxation, esp. what used to be called the Tax Free Lump Sum and is now ominously called the Pension Commencement Lump Sum. And the NEST scheme, with its compulsory enrolment and compulsory employer’s contributions, is basically a second tranche of National Insurance.  Increasingly, I feel one should have one’s wealth in easily-accessible, portable form.”

# The brain drain

# The sheer laziness and benefits happiness of too many Brits, along with the wrongness of foreigners coming in to add to our benefits debt.

# The level of company tax, the range of taxes, the way small business is almost regulated out of business and then the councils administer the final greedy take – none of that augurs well for recovery and makes the UK excessively vulnerable to default and takeover.  Legitimate takeover, by the book.

Then come the international factors:

Sure it’s not all plain sailing for China and its own debt,   But that in turn threatens recovery around the world:

The majority [of economists polled] sees a risk from China’s economy because the slowdown is already under way. On Thursday, China reported weakness in January-February industrial production and retail sales. Plus, as the world’s second biggest economy, China has an outsized impact on trade flows, emerging-market currencies and the overall global financial system.

“There are real financial instabilities in China that pose the biggest downside risk to the global outlook,” said Julia Coronado of BNP Paribas.

Then comes India.  India has a woeful economy, given its level of population and yet we continue to trade with it.  In a post earlier, I reiterated that this country makes the wrong choices far too often and that includes trading partners.

And then the elephant in the room – the EU.  We simply haven’t the freedom of movement, at government level, to make our own arrangements – all is subject to EU oversight.  It’s an extraordinary situation for a country which entered this body because it saw it as increased economic opportunity.  And whilst under that yoke, their own debt crisis adds to ours.  I know people will point out we’re not in the Euro but we’re still made to obliquely share the debt that those countries are in and the position the Euro is in.

Obviously I’ve left out some factors and you can supply them but overall, the bottom line is we’re not our own boss.  I’ve read Flexcit, I’ve seen the various versions of Brexit, I’m not sure UKIP even knows how it’s going to do it, except to quote Article 50.

You’ll call this outrageously naive but I think we should just unilaterally declare we’re going.

F*** ’em.  No – it is NOT wild and naive.  I saw it work in ’98 in Russia and we can do that too.  Now here is an example for you, which shows that fortune favours the bold:

crimea sovereignty

We just need a leader with the hide of a rhinoceros. And I’m well aware of the opinion of Chatham House and Richard North on this.  I’m well aware this is not “the done thing”.  F*** the “done thing”.   We’re in deep do-dos and it needs a radical change which does not play down their post-crash plans and involves our loss of sovereignty.  We make our own rules and they can fall in line later or not – heaps of trading partners out there.

It needs a real conservative, so Cameron can’t be relied on for it.  It needs a thick hide and being hated for some years but inevitably, if we have anything to trade, then nations will trade.  Many forget that our unilateral declaration puts the cat among the pigeons for them more than it does for us.  The sane who could be bothered replying to this outrageous suggestion will say it simply can’t be done.  We’re already committed to agreements we can’t escape so easily.

Yes we can.  We can do whatever we want in a moment of dire crisis.  The quislings behind our government beg to differ?  F*** ’em.

And that’s the thing.  Yes we can.  Welfare collapses in the country, the IT sector and services stay afloat, tourism remains constant, the City continues to trade and then comes the restructuring.  The whole edifice of taxation rates, stealth taxes, foreign aid, loans, council greed and rentals, small business regulation – it is all overhauled by people in the field, chaired by MPs we still elect for now.

We start to trade again with the higher countries in the Commonwealth food chain, make new agreements with the US, every agreement with every country becomes bilateral, we set hard conditions with the BRICS but do trade with them, there are no trading “zones” for us any more.  We rearm and commission new weaponry, new ships built at our yards, we do it as Russia did it before it joined the western lure.  We severely cut our lifestyles to more accurately reflect where we are in the world.  We cut all foreign aid to reflect our new economic level and our lack of influence anyway.

To paraphrase that song: “Brits are doin’ it for themselves.”  We’re not Little Britain, in fact the opposite – our eyes are on anyone in the world we haven’t offended to trade with us, even Muslim nations.

Our functioning businesses and trade agreements which weren’t lost in fits of pique by the other partner are protected by government.  The others we determine to pay back according to long-term repayment plans.

We will start producing across the regions again and firms building things will take on workers and not on zero hours contracts.  We’re quite capable of producing cars and bikes again, we still have enough shipyards.  Admittedly coal is gone.

All it needs is willpower, a whole lot of gall and a determination that we are our country and we run what happens here.  Three to four years of hell – so what?  Is this any better and would another global war be any better for our people?

cameron not even trying

1 comment for “Sovereign debt and unilateral withdrawal

  1. Rossa
    July 31, 2014 at 2:36 pm

    Wonder how your scenario would fit into the bankers end game James?

    I’ve been saying for years that you can no longer ‘win’ any war militarily, only economically. Even a ‘cyber’ war is best aimed at the financial system.

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