Which Countries Are The EU's Biggest 'Takers' (And 'Givers')

The question of which countries are paying more in EU contributions than they are getting out is a contentious issue for some and was also one major factor in the Brexit vote in the UK.

In the 2017 budget, there were ten EU members contributing more than they got out of the EU, at least in terms of direct monetary contributions. As Statista's Katharina Buchholz notes, UK came in second place in the ranking, with roughly 7.5 million euros of net contributions. Germany, topping the ranking, put in 12.8 billion euros more than it got out.

Poland was the biggest monetary benefactor from the EU, coming out with 8.2 billion euros earned, far ahead of Greece (3.7 billion euros) and Romania (3.4 billion euros).

But being on top of this list doesn’t have to send a country scrambling to leave the political union. In Germany, for example, support for the EU is high. While budget contributions might outweigh direct financial benefits for the country, a study by the Bertelsmann foundation suggests that the single EU market increased the average incomes of Germans by over 1,000 euros, above the EU average increase of 840 euros.

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BoE Deputy Governor Gives Crazy Speech Warning Markets Have Underestimated Rate Rises

On 2 November 2017, the Bank of England raised rates for the first time in a decade and Sterling’s initial rise was promptly sold off by forex traders as we discussed.

The 7-2 vote by the Monetary Policy Committee was not the unanimous decision some had expected, while Cunliffe and Ramsden saw insufficient evidence that wage growth would pick up in line with the BoE’s projections from just over 2% to 3% in a year’s time. Ben Broadbent, MPC member, deputy governor and known to be a close confidant of Governor Carney, gave a speech today at the London School of Economics (LSE) in which he warned markets that Brexit issues didn’t necessarily mean that interest rates have to remain low.

Bloomberg reports that Broadbent stated that the Brexit impact on monetary policy depends on how it affects demand, supply and the exchange rate.

"There are feasible combinations of the three that might require looser policy, others that lead to tighter policy."

Which sounds alot like he doesn't know, although he stuck to the central bankers trusty tool, reassuring LSE students the Phillips Curve "still seems to have a slope".

According to the FT.

The deputy governor of the Bank of England has warned that financial markets have underestimated the chance of further interest rate rises. In a speech at the London School of Economics on Wednesday, Ben Broadbent said markets had placed too much emphasis on the idea that interest rates needed to be kept low in the face of Brexit uncertainty. The deputy governor said it was “uncertain” and “complex” to anticipate how Brexit would affect inflation. But he rejected the assertion that Brexit “necessarily implies low interest rates”.

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Do You Trust What JP Morgan CEO Says About Bitcoin?

JP Morgan CEO Jamie Dimon commented that he thinks Bitcoin is a fraud, and that “it will eventually be closed.”

CNBC continues its amazing economic news coverage with his interview.

Yes, the CEO of a major financial institution thinks Bitcoin will be “closed.”

Look, however unlikely, it is possible that the Bitcoin price goes to $0. It is not, however, anywhere within the realm of possibilities that the crypto-currency will be “closed” as Dimon put it.

This is because there is nothing to close. It is not a business. It is not owned by anyone except a vast and disunited network of Bitcoin miners and those who own Bitcoins.

So again, miners could conceivably shut off their computers. People who hold Bitcoin could conceivably sell off at such a rate that the price crumbles. But no one can “close” the cryptocurrency.

If you listen to his complete remarks, what he seems to mean is that governments will crack down on Bitcoin when it becomes too popular.

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Pound Surges After UK Government Loses Article 50 Lawsuit; Brexit Needs Parliamentary Approval High Court Rules

The decision means that the U.K. must hold a vote in Parliament before starting the two-year countdown to Brexit, a panel of London judges decided, setting up a constitutional confrontation at the country’s Supreme Court.  London judges deliver a decision that could be a setback for Prime Minister Theresa May’s plan to unilaterally start the process by the end of March by invoking Article 50 of the Lisbon Treaty.

U.K. Trade Secretary Liam Fox said “the government is disappointed by the court’s judgement.” adding that "The country voted to leave the European Union in a referendum established by an act of Parliament." Speaking to lawmakers in the House of Commons in London, Fox also said that "It’s right we consider it carefully before deciding how to proceed."

The UK Government seeks to appeal the ruling on December 7 at the Supreme Court.

Absent an overturn on appeal, lawmakers could now influence Theresa May's approach to Brexit and if a majority is opposed it could theoretically delay or even stop the process. Mrs. May’s ruling Conservative Party is the largest party in Parliament, with a majority of 15 seats.

More details from Sky News, which explains that according to the ruling, Theresa May cannot trigger Brexit without putting it to an MPs' vote in the House of Commons, the High Court has ruled.

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The UK Is Now "At The Front Of The Queue" As America Rushes To Pass A Trade Deal

Less than 3 months ago, on April 22, in an address to the British people that may have cost David Cameron his job and led to the ever more rancorous divorce between the UK and the EU, Barack Obama warned that the UK would be at the “back of the queue” in any trade deal with the US if the country chose to leave the EU, as he made an emotional plea to Britons to vote for staying in.

Two months later, a majority of Brits gave Obama the finger and Britain is no longer part of Europe.

But while that story in itself would be quite satisfying, it turns out that Obama lied. Again.

As it turns out, not only is the UK not at the back of the queue, it now finds itself at the very front. As reported by the FT, the Obama administration has begun preliminary discussions with senior UK officials about how they might pursue a trade agreement between the two countries following Britain’s exit from the EU, Washington’s top trade official said. 

The discussions were revealed on Thursday by Mike Froman, the US trade representative, and coincide with a growing push by Republican Brexit supporters in Congress for President Barack Obama to launch talks on a commercial pact quickly.

So much for yet another typically hollow, worthless threat by the well-spoken, teleprompted golfer in chief. Even the FT is amused by the idiotic diplomacy of the president, which highlights "how quickly the president and his administration have backed away from his warnings before last month’s referendum that Britain would be at the “back of the queue” for any trade deals with the US if it voted to leave the EU."

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"Maybe You Can Reverse Brexit" - Jamie Dimon Chimes In On How To Ignore The Voters

There's been much fearmongering around Brexit and how it will impact the people of the UK specifically, and the broader global markets. What the people of the UK truly need, just like a hole in the head, is some friendly advice from Jamie Dimon.

Thankfully, everyone can relax, because Dimon has imparted his wisdom on the Brexit situation - with a bit of a carrot for listening to him as well, in true banker fashion.

"Brexit has put a lot of uncertainty in the markets and in the economy. The markets will calm down a bit." Dimon said

Alas, as we reported earlier the Nasdaq erased all Brexit losses this morning - so far so good Jamie, so far so good.

Dimon's next comment, as reported by Bloomberg, is the key - Dimon was discussing the results of Brexit and specifically the use of the "passport rule" which currently enables companies with operations in the UK to sell their services to the other 27 nations in the bloc. If the UK can't win continued use of the passport rule, Dimon said he would be "forced" to consider shifting his 16,000 UK-based staff...

"If we have that passport after Brexit, we likely would not have to make any change at all. But I think the European Union will not accept that. It will put more conditions on the UK and might force banks to become smaller in London."

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Britain Doesn't Need The EU To Thrive

The United Kingdom will tomorrow vote either to leave or remain in the European Union. This is the most important European event of this century since it will likely have important domino effects for the rest of Europe.

A recent poll showed that if the UK could keep free trade with EU nations, the British people would vote overwhelmingly to leave the EU. To drum up support for staying in the EU, the UK government and quasi-government agencies, like the IMF and OECD, have issued continuous warnings about the costs of such a divorce. The IMF recently reiterated its forecasts that Brexit would have a significant negative effect on the UK economy with a drop in GDP anywhere between 1% and 9% over the long term.

The reality is that Brexit would probably only have a minor initial impact on trade or GDP and, on the contrary, would open up vast possibilities for the UK to exploit trade relations with other faster growing regions of the world without having to reach complex trade agreements that satisfy the vested interests of the other 28 members of the EU. 

The impact of Brexit on trade has been grossly exaggerated. In today's world, a product has parts coming from all over the world. A BMW is only called German because of historical association. In reality, the steel in a BMW may come from Brazil or China, the upholstery from the UK, the engine from France, and the electronics from the USA. Labor costs are only 10% of a car and some may even be foreign labor. Also, profits are distributed to BMW shareholders and bondholders which are more likely to be sent to a hedge fund in Japan than to the mechanic in Dusseldorf. The world is massively economically integrated. Relatively free trade and free movement of capital is no longer an option for most countries, whether it is the UK or any of the other countries in the EU. That boat sailed years ago!

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Why A UK Billionaire Believes Brexit Would Be "Good For The UK"

The City of London and the pound would both benefit from the U.K. leaving the EU, says billionaire Peter Hargreaves. Brexit may knock the pound initially, but it would rebound, the co-founder of Hargreaves Lansdown — the largest U.K. retail broker, with more than $84.1 billion equivalent in assets — told Bloomberg Briefs' Geoff King in a June 17 interview.

Q: Why do you support "Leave"?

A: Every year in the EU it gets more political, it gets more legislative, more regulative; we don’t seem to get very much benefit from it. We will be far better out. The EU as an economic mark is declining in the world, when there were only nine countries in it was 30 percent of the world's GDP, now there are 28 it is only 17 percent. That's some serious decline. Other countries that are growing — India, parts of Africa, Brazil, China and even Russia — are the places we should be trading with.

Q: How do you counter strong economist/analyst support to remain?

A: There's a huge amount of vested interest, a lot people making these comments are politically motivated and also work for big banks that aren’t British. They’ve built these enormous dealing rooms and offices in the City of London and Canary Wharf and their bosses are saying we don't want to endanger this huge investment of ours. I don't think it will endanger that huge investment. You can't move the City of London to anywhere else in Europe. It's madness to suggest it. Frankfurt, the place everybody keeps talking about, only has a population of 700,000, it could not accommodate anything like the City of London. The City of London is absolutely guaranteed, it is bound to survive. The only center that could take over would be Zurich and that's not in the EU either. It's absolute drivel that the City of London will be affected. The City of London will go out and it will deal with these emerging economies in the Pacific Basin, Southeast Asia, Africa —  they're all going to want finance for different things. You can't set up the City of London anywhere else. It takes years, and during that time the City of London will have grown stronger. Any attempt at usurping it will fail.

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Brexit: All Eyes On European Banks

No One is Discussing the Real Issue

Those in the “leave” or “Brexit” camp are in the headlines citing a long list of understandable issues:  economic underachievement, immigration, lack of transparent democratic processes; frustration with challenges seemingly beyond the control of local governments. They fail, however, to mention the real issue that is a risk to today’s financial markets. 

The real issue should be known to Europe’s politicians and especially understood by its central bankers.   The real issue is debt and how its tentacles spread throughout Europe and indeed the world.  The Euro as a currency is not just flawed; it’s also the financial equivalent of a thermonuclear debt bomb.  Its many and terrible design failures make it dangerous.  Its designers and defenders either don’t want to acknowledge its shortcomings or, even worse, are simply unaware of them.  Let us explain.

Europe’s banks are bigger, more leveraged, and more indebted than U.S. banks.  This means a smaller cushion to guard against unexpected losses.  Furthermore, the EU’s fragile financial system of massively overleveraged banks is choking on cross-border liabilities from other banks in a way that almost no one can truly quantify and even fewer understand.  Further complicating this issue, the governments that have borrowed in Euros are not free to print Euros to backstop their own banks.  Our concern is that this terrible flaw could spread far beyond the limited and understandable issues that divide Britain’s voters.  As we have argued many times (“Is Spain the Next Greece?” June 1st 2016), those countries with currencies pegged to the Euro are most at risk from its design flaws – Spain, Italy, and France, just to name a few.  But the debts of these countries’ banks to other banks, and frankly the debts of those banks to others, create the preconditions of systemic weakness not seen since the days after Lehman Brothers failed.

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