Re-Moaners and Trump’eters respective terms for Remain campaigners in Brexit and Donald J Trump supporters
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.
The Euro’s value 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 signalled upwards in the US, and stay the same or lower in the UK. That 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 by a lot, and 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?
For Oval Office satire try One Morning In The Office