Fake or Real News and Headlines

The never-ending debate on Brexit continues to polarise opinion with now the new PM adding to the fray. His request to the Queen to prorogue the UK Parliament has been treated with varying degrees of support or hostility based entirely on the already dived opinion line of Remain or leave. I wish the Remain camp would stop arguing their opposition is against no deal when they voted against a deal negotiated with 27 other countries. At least the Lib Dems are honest enough to admit that.

My concern is in the so called impartiality of figures who should know better and yet claim precedent or lack of it. But I’ll start with the BBC coverage and one headline in particular.
Yesterday BBC news and web site reported the following

https://www.bbc.co.uk/news/business-49493885

“Pound Falls” is the less of a headline than BBC news which headlined at 18:00 “Pound crashes” on news. The web sites now has volatile rather than crashes. So what has happened to the pound this month – think I may have mentioned this before

No headline at all about the pound’s rise against the dollar in particular since the 6th August but a half cent drop on one day is a crash. What happened on the 6th? Not a lot as far as can tell. Personally it looks great as I’ve just had to buy some dollars for a forthcoming trip and I’ve had a better rate this week than last. When I heard crash I was worried my next purchase would be harder, but the headline means it must be not that I’m better buyting this week than I was at the start of the month – a real transaction by the way.

Really BBC – must do better

Now to the meat of the subject – sorry vegans the main point then… The word unprecedented.(dict’ definition never having happened or existed in the past

As in the Prorogation of Parliament is unprecedented or sometimes with the caveat of in recent history with no definition of recent which given nearly 1,000 years of Parliament is hard to judge.

Prorogue of parliament

https://www.parliament.uk/about/how/occasions/prorogation/

The longest parliamentary sessions since 1945.

This is the amount of time for a parliamentary session i.e. the current session being prorogued is quite long and the longest since the World War II

The next use of unprecedented refers to the length of time Parliament is Prorogued in this case 23 days. If we caveat with recent. Then the longest most recent was 1997 for 19 days. There have  been much longer periods in history Elizabeth 1st the first had no sitting parliament for over 3 years. 23 days is not unprecedented. Many governments even since universal adult suffrage from 1928 (after the equalisation of the voting ages for men and women) have used various trick to get their plans through. This has included doing the opposite of now i.e. Prorogation and adding an additional session to prevent House of Lords interference (Labour 1948 to allow nationalisation of Iron and Steel without Lords amendment)  or as in the case of 1997, to prevent difficult questions in the House of Commons – The cash For Question Scandal.  In both cases the government did not resign nor was there an election. After the break there was a new Queen’s Speech and a new Parliamentary session as is proposed to start on 13th October which I believe is still before 31st October and therefore MPs still have time to pass or amend legislation.

the lack of historical context despite our long history continues to be troubling. The NOW generation infects our media reporting. We see this is numerous ways from sports results ignoring decades of previous results just because a competition name changed to the use of the word democracy but only when applied to the speaker’s narrow definition of the vote they mean. i.e Johnson is undemocratic because he replace May whereas Brown replacing Blair was democratic neither were unprecedented or undemocratic. they are the rules we have lived by for centuries.

In the case of Brexit the UK Sovereign Parliament voted to leave the EU (without a deal) on 1st Feb 2017 as the European Union Bill, supported by the Labour leadership, by 498 votes to 114. This remains the default legal position. Since then the same Parliament has rejected 3 times the negotiated deal and merely passed a delaying law now to 31st Oct or rather a delay requesting the EU to grant an extension.

But let’s not let facts get in the way of a good story

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Re-Moaners and Trump’eters

Another few weeks drift past and yet the same issues which seem to have been in the news all year, remain.

The US never-ending election still has over 3 weeks to run and just when you think the behaviour and approach of both camps can’t get any worse they manage to achieve it. If it’s not sexual abuse allegations it’s more leaked emails. I pity the American voter. I thought our choice this side of the Atlantic was pretty bad but the candidates there look appalling.

I watched the clip of Gary Johnson who is apparently also standing as a Libertarian Party candidate – I mean really? Over five years into a civil war in Syria and this man who wants to be President of the most powerful nation on earth does not know what Aleppo is?

At least Trump and Clinton have managed to answer some questions on the subject. It’s not unusual for foreign affairs (not the sexual kind) to play little part in a US election, but one might have expected that confrontations with Russia over Syria, Ukraine and Crimea, to have some impact. Likewise relations with China over the Spratley Islands rather than ridiculous notions of simplistic arguments over manufacturing jobs in the US should have some policy. It remains completely unreported what either candidate’s plans for North Korea are. Better not ask Trump but his rhetoric can’t be worse than the accusations from US Security services that NK was behind the Sony attack.

What still amazes many commentators is that Trump is still popular with large swathes of the US electorate despite all the gaffes. It demonstrates how unpopular Clinton is but more importantly how upset many American voters are with the established political class which Clinton embodies.  Here we have some of the parallels with the UK EU debate despite the referendum.

Although there is an element of the moaning bad loser side in some of the pronouncements from what was the remain side, many did set out the risks to the economy an no-vote would bring. Several senior economists have stated that the currency changes that we have seen since end of June were a long overdue correction to Sterling’s position just exasperated by the vote for exit and on-going uncertainty of what that means. In the percentages shown everything is referred to the currency position post 23rd June, failing as usual to mention that Sterling’s value had risen significantly in the lead up to the vote.

Euro over 5 years from here shows a different story than the headlines might have you believe on 19th Oct 2011 the exchange rate was 1.14 and it closed on 14th Oct 2016 at 1.11. In particular, the rise of the pound in 2015 and the lead up to the vote is dramatic. US Dollar to Sterling is a significant fall over the same period 1.57 to 1.21 and the comments on reserve currencies should be concerning, but at the same time interest rates have been signaled upwards in the US and stay the same or lower in the UK which does not help Sterling investors. By the way Euro to US Dollar has gone down from 1.37 to 1.11 in the same time period.

I have picked an arbitrary period but some of us can remember much better and worse Pound to Dollar rates. It reached a low of 1.05 in February 1985 after the ERM fiasco and was as high as 2.11 in November 2007 as sub-prime crashed the dollar

What do we learn from that brief history- currencies fluctuate – sometimes a lot – thousands of traders around the world make money doing that.

Final discussion for today is on Credit Rating Agencies and their comments – yes the same folks that branded those sub-prime investment funds as AAA, are doing all their warnings on where the pound might go next. All the discussion is based on what the UK might do as if what might happen in the Euro (How is Greece by the way and Italy, Portugal, Spain?) will have no impact. Remember Euro zone and other EU exports to the UK, exceed UK Exports to the EU – we both have a lot to lose if we are stupid and put in unnecessary tariffs.  World trade will be damaged if Trump introduced tariffs to protect American jobs and cancels NAFTA. Likewise what will be the impact on the dollar if Trump wins and implements that piece of rhetoric.

Guess what the pound might go up or down or sideways.  Can we moan about currency traders instead?