http://themillenniumreport.com Wed, 17 Oct 2018 01:58:42 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.8 70783158
http://themillenniumreport.com/2018/10/wow-who-shut-down-youtube-worldwide-with-highly-trained-monkey-icon/ Wed, 17 Oct 2018 01:57:56 +0000
YouTube Down According to Reports Worldwide & Twitter Reacts
Users worldwide are reporting that YouTube is down for many people. The reason is not yet known, but reports are coming in fast worldwide. This is unusual for one of the most popular websites in the world. So far, YouTube hasn’t issued an official statement about what happened. Although the site may occasionally have brief issues, being down this long is very rare. This is a developing story.
Here are reports from Down Detector:
You can see that the errors just recently skyrocketed. Look at the reports above and now the reports next, just a few minutes later:
Errors range from just seeing a blank screen to getting a 500 internal server error to receiving “invalid response” errors. Others reported seeing ” https://www.youtube.com/?pbjreload=10″ when they tried to load the homepage or a video. The most recently reported problems involve watching videos, logging in, and problems just viewing the website.
And of course, people are reacting across social media:
SOMEONE BROKE #YOUTUBE SEND HELP!
— Shelket (@ShelKRiddle) October 17, 2018
You may just be seeing a blank screen in some cases:
Reports are coming in from people across the country and different parts of the world.
You may also see a 500 Internal Server Error on some videos. The error messages reads: “500 Internal Server Error Sorry, something went wrong. A team of highly trained monkeys has been dispatched to deal with this situation.”
Or you may see an “Invalid response received” error:
Some reported first recognizing the problem when their realtime stats began to plummet.
And the memes have also started:
But the most interesting responses are from police, who are asking residents to please not call 911 about YouTube being down:
Yes, our @YouTube is down, too. No, please don’t call 911 – we can’t fix it.
— Philadelphia Police (@PhillyPolice) October 17, 2018
It’s unclear at this time what has happened. This appears to be a bit unusual, as YouTube typically resolves any issues very quickly. This is a developing story.
http://themillenniumreport.com/2018/10/khashoggi-assassination-plot-a-highly-consequential-complex-and-convoluted-conspiracy-unravels/ Wed, 17 Oct 2018 01:13:21 +0000
Berto Jongman: Moon of Alabama Perspective on Khashoggi Case (PBI: CIA’s Greatest False Flag Entrapment to Support USA’s Greatest Heist?) UPDATE 1
PBI: Full text below the fold with strong comment. There is more to this and CIA is in the mix. Read on.
The negotiation over the Khashoggi case will be extremely difficult. The protagonists are headstrong and dangerous people. The issue could easily escalate.
The Ottoman empire ruled over much of the Arab world. The neo-Ottoman wannabe-Sultan Recep Tayyip Erdogan would like to regain that historic position for Turkey. His main competition in this are the al-Sauds. They have much more money and are strategically aligned with Israel and the United States, while Turkey under Erdogan is more or less isolated. The religious-political element of the competition is represented on one side by the Muslim Brotherhood, ‘democratic’ Islamists to which Erdogan belongs, and the Wahhabi absolutists on the other side.
There are more tactical aspects to this historic conflict. When the Saudis cut ties with Qatar it was Turkey that sent its military to prevent a Saudi invasion of the tiny but extremely rich country. This gave Erdogan the financial backing he urgently needs. In response to that the Saudis offered several $100 millions to prop up the YPK/PKK proxy force the U.S. uses to occupy north-east Syria. These Kurdish groups fight a guerrilla war within Turkey and are a threat to its unity.
The effective Saudi ruler, clown prince Mohammad bin Salman (MbS), made a huge mistake when he ordered the abduction (or murder) of the Saudi journalist Khashoggi in Istanbul. The botched operation gave Erdogan a tool to cut the Saudis to size.
But he needs U.S. support to achieve that. The recent release of the U.S. pastor (and CIA asset) Andrew Brunson is supposed to buy him good will with U.S. President Donald Trump. But Trump build his Middle East policy on his Saudi relations. He can not go berserk on them. Some solution must be found.
Khashoggi was a rather shady guy. A ‘journalist’ who was also an operator for Saudi and U.S. intelligence services. He was an early recruit of the Muslim Brotherhood:
Khashoggi’s intellectual interests were shaped in his early 20s when he studied in the United States and was also a passionate member of the Muslim Brotherhood. The brotherhood was a secret underground fraternity that wanted to purge the Arab world of the corruption and autocratic rule it saw as a legacy of Western colonialism.
Khashoggi helped in the U.S./Saudi/Pakistani project to destabilize Afghanistan. He met and interviewed Osama bin Laden in Afghanistan and Sudan. The man with the RPG in the upper left picture is Jamal Khashoggi himself.
Jamal Khashoggi supported the Muslim Brotherhood during the ‘Arab Spring’. This was in line with the Hillary Clinton/Barack Obama supported regime change program for most of the Middle East. After the fall of President Mubarak in Egypt and the election win by the Brotherhood the Saudi rulers feared to be the next in line. They started to finance counter revolutions in Egypt and elsewhere. Under the reign of King Salman and his son the suppression of all aspects of Brotherhood influence intensified. Having lost his protection Khashoggi decided to leave Saudi Arabia:
Friends helped Khashoggi obtain a visa that allowed him to stay in the United States as a permanent resident.
Fred Hiatt, the neo-conservative editor of the Washington Post, hired him. The Post published his columns against the Saudi rulers in English and Arabic.
Recently Khashoggi started a number of projects that reek of preparations for a CIA controlled color-revolution in Saudi Arabia:
Jamal Khashoggi, a prolific writer and commentator, was working quietly with intellectuals, reformists and Islamists to launch a group called Democracy for the Arab World Now. He wanted to set up a media watch organization to keep track of press freedom.He also planned to launch an economic-focused website to translate international reports into Arabic to bring sobering realities to a population often hungry for real news, not propaganda.
Part of Khashoggi’s approach was to include political Islamists in what he saw as democracy building.
Khashoggi had incorporated his democracy advocacy group, DAWN, in January in Delaware, said Khaled Saffuri, another friend. .. The project was expected to reach out to journalists and lobby for change, representing both Islamists and liberals, said another friend, Azzam Tamimi, a prominent Palestinian-British activist and TV presenter.
Tamimi said he and Khashoggi had set up a similar pro-democracy project together in 1992 when they first met. It was called Friends of Democracy in Algeria, he said, and followed the botched elections in Algeria, which the government annulled to avert an imminent Islamist victory.
Khashoggi has an enormous number of friends in Washington DC. Mainstream journalists see him as of one of their own. Like them, they feel, he does not deserve such ghastly fate. The neo-liberals as well as the neo-conservatives liked his ‘regime change’ Arab Spring support and his efforts against Saudi Arabia. Many people in Congress know him personally. They activated procedures under the Global Magnitsky Human Rights Accountability Act that will lead to sanctions against Saudi figures. Media, banks and well known personalities pulled out of a three-day financial conference in Riyadh dubbed “Davos in the Desert”.
Trump is under pressure to ‘do something’, to punish the Saudis and especially MbS.
But Trumps Middle East policy depends on Saudi Arabia and on Mohammad bin Salman personally. MbS finances the U.S. occupation in Syria. Trump’s son in law Jared Kushner build his ‘peace plan’ for Netanyahoo on Saudi endorsement. The sanctions against Iran can only be sustained if Saudi oil replaces the loss of Iranian output. Trump’s ‘Make America Great Again’ program needs the Saudi demand for U.S. weapons. He also needs the Saudisto avoid utter defeat in Afghanistan. Last but not least Trump will perceive the Kashoogi issue as part of the anti-Trump campaign.
Former CIA director Brennan, an avid anti-Trumper, lobbies to dethrone Mohammad bin Salman over the case:
As someone who worked closely with the Saudis for many years, and who lived and worked as a U.S. official for five years in Saudi Arabia, I am certain that if such an operation occurred inside a Saudi diplomatic mission against a high-profile journalist working for a U.S. newspaper, it would have needed the direct authorization of Saudi Arabia’s top leadership — the crown prince.
I am confident that U.S. intelligence agencies have the capability to determine, with a high degree of certainty, what happened to Khashoggi. If he is found to be dead at the hands of the Saudi government, his demise cannot go unanswered — by the Trump administration, by Congress or by the world community. Ideally, King Salman would take immediate action against those responsible, but if he doesn’t have the will or the ability, the United States would have to act. That would include immediate sanctions on all Saudis involved; a freeze on U.S. military sales to Saudi Arabia; suspension of all routine intelligence cooperation with Saudi security services; and a U.S.-sponsored U.N. Security Council resolution condemning the murder.
The Saudis know what is coming and they are not without defenses. In response to the sanction threats they released a ‘f*** you’ statement and openly threaten that any sanctions will be responded to with some 30 painful measures:
Riyadh is the capital of its oil, and touching this would affect oil production before any other vital commodity. It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.An oil barrel may be priced in a different currency, Chinese yuan, perhaps, instead of the dollar. And oil is the most important commodity traded by the dollar today.
All of this will throw the Middle East, the entire Muslim world, into the arms of Iran, which will become closer to Riyadh than Washington.
The US will also be deprived of the Saudi market which is considered one of the top 20 economies in the world.
These are simple procedures that are part of over 30 others that Riyadh will implement directly, without flinching an eye if sanctions are imposed on it, according to Saudi sources who are close to the decision-makers.
The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh!
The measures would also cause serious damage to Saudi Arabia. After they were published the Saudi stock market dropped sharply.
The U.S. dollar depends on the secret deal arranged in 1974 that recycles Saudi petro-dollars into U.S. treasuries. If the al-Sauds start to touch that corner stone of the relation, the U.S. will have to invade and smash their shitty country to smithereens. Mecca and Medina would be given back to the Hashemites now ruling Jordan, the Gulf coast line, which holds the oil and oil industry and is mostly inhabited by Shia, would become a state of its own. Yemen would regain its two northern provinces. The plans to do this have long been drawn.
Some solution must be found. The easiest one is for King Salman to fire his son and to reinstate Muhammad bin Nayef, who MbS had dethroned, as crown prince. Nayef is the CIA’s man. But if Salman is unwilling or unable to do this, an excuse must be found for whatever happened to Khashoggi.
The Saudis asked Erdogan to accept a “joint investigation” of the Khashoggi case. This was a request to come to some solution over the issue. Rumors speak of an opening offer of $5 billion as compensation. The Saudi King dispatched the respected governor of Makkah province, Prince Khalid_bin_Faisal_Al_Saud, to Ankara to arrange a deal. The EU3, UK, France and Germany, urge both sides to use this mechanism.
The process to close the case, if both sides wish to do so, is pretty clear:
In statements [..] President Recep Tayyip Erdogan has stopped short of directly accusing the Saudis. Turkish officials have said their president has held his fire in part because he hopes that Washington will help push Saudi Arabia to acknowledge what happened to Mr. Khashoggi.
Some of Saudi Arabia’s allies in Washington acknowledge that pressure from the United States could force the kingdom to offer some account of Mr. Khashoggi’s fate — even if it is a modified version that shields the kingdom’s day-to-day ruler, Crown Prince Mohammed, from any responsibility.
Some ‘rogue element’ of the Saudi state could admit that it killed Khashoggi. MbS would deny any knowledge. But fifteen of his most trusted men, those who were seen in Istanbul, would have to be punished. (How would the rest of his body guard react to that?)
The real problem is that both sides, Erdogan and MbS, are extremely headstrong. For both men the issue is much bigger than the Khashoggi case. The conflict has historic, strategic and very personal dimensions. That makes it difficult to find a deal.
Erdogan knows that he is extremely lucky that MbS committed this stupid act under the nose of his secret service. It gives him a tool to cut the Saudis to size. He will introduce new evidence bit by bit to increase the outrage over the case and the pressure on Saudi Arabia.
MbS on the other side will do his utmost to keep his position. He might even let his father die a sudden death should King Salman decide to fire him. Khashoggi was clearly a danger to the throne. MbS probably feels that he did the right thing and does not deserve any criticism over it. After all, abduction and, if needed, murder of dissidents in foreign countries are a long standingSaudi policy that never caused any serious uproar.
Mohammad bin Salman has one mighty ally that may help him to decrease the noise in Congress and the ‘do something’ pressure on Trump.
The Zionists already recognize that helping MbS is in their interest:
Eran Lerman, the vice president of the Jerusalem Institute for Strategic Studies and a former deputy national security council head, said: “It is certainly not in our interests to see the status of the Saudi government diminished in Washington.”
Lerman envisions a scenario where Jewish political organizations in Washington – such as the American Jewish Committee, which he once worked for as head of its Israel office – may actually go to Capitol Hill, as they have done in the past, and discreetly lobby for the Saudis, something that could paradoxically bring the two countries even closer together.
None of the protagonists of this geopolitical drama deserve any pity. Erdogan, Trump and MbS are thugs. Khashoggi was a willing tool in the destruction of many lives. Seeing these people at each others throat is highly entertaining.
But the conflict is also dangerous. It could escalate into something much bigger that could be painful for many people. Unfortunately there seems to be no one who could talk sense to these people and get them to bury the case.
While I earlier thought that the case would be settled rather sooner than later, I now expect the conflict to go on for weeks or months while collateral damage will accumulate around it.
Posted by b on October 14, 2018 at 01:59 PM | Permalink
Phi Beta Iota: There is clearly more to this than a simple murder — if indeed Khashoggi is dead. According to Benjamin Fulford, at the link below, this could be part of an official US move sanctioned by President Trump — or launched by the Deep State side of the CIA — to steal trillions from Saudi Arabia.
First, the murder (or psy-ops staged murder) of Washington Postcolumnist Jamal Khashoggi is part of a move to remove the Zionist/Satanic house of Saud from control of Saudi Arabia and Middle Eastern oil, according to Pentagon and CIA sources. The operation is also aimed at grabbing funds to keep the bankrupt U.S. afloat, CIA sources say.
This is how the CIA summed up the situation:
“The U.S. Treasury is holding between $3-5 TRILLION of Saudi Arabia’s petrodollars, which have been accumulating since the 70’s when this whole petrodollar sleight of hand began (around the same time that Nixon closed the gold window). These trillions have been confiscated and will not be returned. The same for the thousands of tons of gold stored in Credit Suisse and UBS banks in Switzerland, which was owned by Saudi Arabia (the House of Saud). It has been confiscated as well. It is game over financially for the Zionist Khazarian House of Saud. This really is Game-Set-Match.”
It is also no coincidence the Khashoggi incident happened just as the head of the CIA in Turkey, “Pastor” Andrew Brunson, was released from Turkish prison. The longer-term scenario will be for Turkey to resume control of its former holdings in Saudi Arabia and the Gulf States, while Israel becomes a Jewish autonomous zone under Turkish protection, the sources say.
As a preliminary step, “Saudi clown prince Mohammad bin Salman (MBS) may be purged, as Saudi Arabia is facing Western sanctions and boycotts in a dry run for an attack on Israel when 9/11 documents are declassified,” Pentagon sources add.
We have no direct knowledge. If the USA is actually taking down Saudi Arabia and pulling off a multi-trillion dollar heist, this could be one of CIA greatest moments, and the manner in which they set Khashoggi up, perhaps even fabricating communications the Saudi’s could intercept so as to drive them mad and lead them to maniacal action against Khashoggi that would be revealed and used to justify regime change, leaves one breathless with admiration. We endorse Ben’s point that IF this is happening, Zionist Israel is next. We pray that Iran and Russia demonstrate enormous restraint over the next few weeks.
http://themillenniumreport.com/2018/10/hungary-boosts-gold-reserves-10-fold-citing-safety-concerns/ Tue, 16 Oct 2018 22:54:11 +0000
By Marton Eder and Nicholas Larkin
Hungary’s central bank increased its gold reserves 10-fold, citing the need to improve its holdings’ safety, joining regional peers with relatively high ownership in the European Union’s east.
Following a similar move by Poland, the central bank in Budapest now holds 31.5 tons of the metal, taking the share among total reserves to 4.4 percent, in line with the average in the region, according to a statement published on its website Tuesday.
Governor Gyorgy Matolcsy touted the move as a way to improve the security of the nation’s wealth and a nod to Hungary’s heritage as one of the world’s largest gold producers in the Middle Ages. Marton Nagy, Matolcsy’s deputy, declined to say if the bank’s overall reserves had grown.
Hungary is the latest European Union nation to make a rare charge into gold. The purchase takes its holdings to the highest in almost three decades and comes after Poland added about nine tons in July and August. While global central bank bullion reserves have expanded over the past 10 years, the purchases have mostly been driven by countries including Russia, Kazakhstan and China.
While it’s a large purchase for Hungary, the country is still a relatively small bullion holder, ranking outside the top 50 globally, according to World Gold Council data. The U.S. for example, owns about 8,133 tons and Romania, another eastern European state, holds about 104 tons. Russia has been adding about 20 tons on average each month this year.
Poland’s central bank declined to comment on its latest purchases, but economists said gold’s drop to the lowest price in more than a year had helped make the metal more attractive. Since touching that low in mid-August, prices have risen about 6 percent to $1,228 an ounce in London.
The move into gold follows the Hungarian monetary authority’s decision to relocate reserves to within the country in March.
“With Hungary’s gold levels below average and regional peers adding to holdings, it makes sense to maintain some kind of parity,” said Gergely Palffy, an analyst at Raiffeisen Bank International AG in Budapest. “The announcement will have limited impact from a market perspective.”
(Adds background, analyst from 3rd paragraph.)
http://themillenniumreport.com/2018/10/italian-tremor-will-cause-an-eu-earthquake/ Tue, 16 Oct 2018 22:49:47 +0000
Juncker Warns ‘The EU Cannot Survive Without Italy’
Ignoring warnings from the European Commission, the ECB and the European Commission (as well as practically every other supranational organization in Europe), the populist-led Italian government managed to submit their draft budget to the Commission before a midnight deadline – an outcome that was cheered by BTP traders, who bought back into Italian bonds, once again compressing the spread to bunds, which has blown out in recent months.
But rather than representing a deescalation of tensions between Italy and Brussels, the game of fiscal chicken in which both sides are presently engaged is instead entering its most acute phase, as Brussels now has two weeks to review the budget proposal before it can either accept the plan, or send it back with requests for revisions. And anybody who has been paying even passing attention to the populist government’s denigration of EU budgetary guidelines over the past few months should already understand that Brussels won’t just sit back and accept the budget for what it is.
In fact, European Commissioner Jean-Claude Juncker hinted as much Tuesday morning when he told Italian reporters that accepting the budget would be tantamount to inviting an widespread revolt against the EU, per Italian newswire ANSA and the FT. Juncker also blasted Italy for abandoning the fiscal commitments it made when it joined the EU. However, though they have wavered from time to time, the Italians haven’t kept their intentions to press for a budget deficit equivalent to 2.4% of GDP a secret. Even Giovanni Tria, Italy’s economy minister, defended the draft budget, saying the deficit “would be considered normal in all Western democracies, not explosive.”
Undeterred by the fact that there’s absolutely no political will in the Italian government to back down from their budget stance, despite threats from the ECB to provoke a Greece-style banking crisis if the Italians don’t yield to EU rules.
“There is a gap between what was promised and what is being presented today,” said Mr Juncker.
“We are going to have a virtuous debate with our Italian friends who know that their level of public debt is too high and that the draft budget does not fully respect the recommendations of the eurozone ministers.”
“If we accepted the slip, some European countries would cover us with insults and tirades with the accusation we are being too flexible with Italy,” Juncker told Italian media.
Meanwhile, Italian Deputy Prime Minister Matteo Salvini, one of two party chiefs who are effectively running the country, said during a news conference that this budget “doesn’t accomplish miracles, it doesn’t multiply fish and bread, but it opens opportunities to work for hundreds of thousands of youths,” Salvini said in Monday evening news conference flanked by Prime Minister Giuseppe Conte, Di Maio, and Finance Minister Giovanni Tria. “After 137 days of governing, I think we can be satisfied with what we’ve done.”
In reference to the festering acrimony between EU bureaucrats and populist Italian leaders, who have even threatened to sue Juncker for jawboning Italian bond yields, the European Commissioner said speculation that he’s somehow “against Italians” is “rubbish”.
“They attack me, insult me but do not ask questions. Let’s stop saying that I am against Italy. It’s rubbish, it’s a lie,” said Mr Juncker.
Italian Prime Minister Giuseppe Conte is set to address EU leaders at a summit in Brussels on Thursday, despite fears that he might hijack the summit’s agenda, which leaders have hoped would focus on finalizing a draft Brexit deal. But while some EU leaders have pushed to give Italy a pass, fearful of provoking an EU “showdown,” Juncker has continued to insist that the EU must abide by its rules. Conte and Tria are expected to address Italian lawmakers Tuesday afternoon Rome time.
Officials are fearful the mini eurozone summit could become a flashpoint between Rome and the EU if hawkish governments such as the Netherlands demand Mr Conte stick to Rome’s budget commitments. A senior EU official warned against an EU showdown.
“There are clear procedures on assessment of national budgets,” said the official who urged “mutual respect” on all national spending plans. “It is not the role of other member state leaders to make any assessment of the budgets. The ball is in the court of the commission.”
Mr Juncker insisted the assessment would be made without any “prejudice” against Italy’s Eurosceptic coalition government, made up of the rightwing League and anti-establishment Five Star parties.
“Europe operates according to pre-established rules. Incoming governments must respect the word of those who preceded them,” he said.
As speculation about an ‘Italeave’ scenario has continued to fester as the budget showdown has dragged on, one reporter asked Juncker if he felt that European Union could survive an Italian exit. Citing polling data showing that most Italians favor remaining in the EU, Juncker insisted that the EU wouldn’t survive the departure of its third-largest economy – and that Italy wouldn’t survive an exit from the EU.
“Europe needs Italy and Italy needs Europe,” Juncker said, answering “No” when asked if Europe could survive an Italian exit.
But will this in any way shift Brussels’ evaluation of the Italian budget? We think not. Still, we imagine markets will be ‘disappointed’ when Brussels sends the draft back covered in red ink.
http://themillenniumreport.com/2018/10/a-no-deal-brexit-will-destroy-the-british-economy/ Tue, 16 Oct 2018 22:36:42 +0000
The magical wing of the Conservative Party believes that Britain can crash out of the European Union painlessly. It is leading the country into a recession.
BY SIMON TILFORD | FOREIGN POLICY
A country should theoretically be able to leave the European Union without wrenching economic dislocation and without doing long-lasting damage to relations with its closest neighbors. And that might still happen. British Prime Minister Theresa May and the EU’s leaders could still negotiate a deal that limits the economic damage and preserves strong political ties.
But it’s increasingly possible that they won’t—largely because Britain continues to demand a privileged relationship with the EU that Brussels will not, and probably cannot, agree to. That leaves the country on a path toward a no-deal divorce, which could also cost the United Kingdom its unity in addition to its economic health.
At present, trade between Britain and the rest of the EU is seamless. There are no checks at borders or tariffs, and London-based firms can buy goods and components from suppliers based in Belgium as easily as they do from those in Birmingham. Seamless trade means that U.K. manufacturers are embedded in a web of pan-European, just-in-time supply chains.
For example, at Honda’s factory in Wiltshire, a short drive west from London, the firm holds just 36 hours’ worth of inventory. Some orders from EU suppliers arrive there in less than 24 hours. Similarly, Britain’s food industry relies on just-in-time deliveries from suppliers all over the continent; there is currently no need for refrigeration at ports because food does not need to be checked.
Following a no-deal Brexit, frictionless trade in goods would end overnight.
Following a no-deal Brexit, frictionless trade in goods would end overnight.
Everything coming into Britain would need to be checked at the border, but the country does not have the infrastructure to do this, let alone the facilities to store food safely while it is waiting to be checked. It will take years to either build such infrastructure at Dover or expand existing facilities at U.K. ports, which handle British trade with the rest of the world, all of which is subject to customs checks.
The port of Dover in Kent, the nearest point in Britain to the continent, handles around 2.6 million trucks a year. Even with the necessary infrastructure, checking all these trucks would create huge delays. Without it, there would be traffic gridlock, resulting in far-reaching disruption of trade and hence to production and food supplies—as well as delays for commuters and any brave British families still seeking to vacation in Europe.
Outside the EU’s legal framework, many U.K. products would no longer be accredited for sale across the EU. For example, British pharmaceuticals and chemicals firms would lose their right to sell their goods across the EU. They would likely renegotiate that right pretty quickly, but the disruption would be very costly.
British-based airlines would no longer be allowed to fly to EU destinations because British authorization of those airlines would no longer be recognized by the EU. British airlines would probably negotiate such EU authorization soon after Brexit, but since the United Kingdom would no longer be part of the “single European sky,” its airlines would not be able to fly between airports within the EU, hurting British firms such as EasyJet, which flies dozens of routes between European cities, such as Paris to Rome and Amsterdam to Lisbon.
The service sector would also be hit hard. For example, British-based financial firms would lose overnight their right to sell their services across the EU—their so-called passporting rights—creating legal uncertainty over contracts.
British-based financial firms would lose overnight their right to sell their services across the EU—their so-called passporting rights—creating legal uncertainty over contracts.
This would affect the clearing and settlement of financial trades, especially of derivatives (futures, options, and swaps), which are overwhelmingly centered in London. The Bank of England estimates that around £29 trillion (approximately $38 trillion) of derivatives contracts, including 90 percent of euro-denominated interest rate swaps, would be hit by a no-deal Brexit.
Faced with such economic turmoil, the British pound would fall steeply, probably taking the currency below parity against the euro and to 40-year lows against the U.S. dollar, immediately pushing up inflation and reducing living standards.
The Bank of England could then face a choice between raising interest rates to defend the value of the pound and head off a surge in inflation and keeping interest rates low in an attempt to shore up economic activity. It may opt for the latter, betting that the inflationary surge resulting from a weaker currency will prove short-lived. But it would at the very least face a difficult trade-off.
A hard Brexit could also lead to a crash in the property market, especially if the Bank of England is forced to raise interest rates sharply. If it avoids doing so and provides sufficient liquidity to the banks, housing prices would still no doubt fall as economic uncertainty deters domestic buyers and foreign buyers shun U.K. assets until the situation stabilizes.
No deal would constitute a profound shock to the British economy. There is no doubt it would fall into recession; the question is how deep that recession would be
No deal would constitute a profound shock to the British economy. There is no doubt it would fall into recession; the question is how deep that recession would be
and how quickly the economy would rebound. There are good reasons to believe that the rebound would be slow.The British government and the EU would agree on measures to allow the resumption of trade in things such as chemicals and pharmaceuticals, but the imposition of tariffs would be very costly. Honda estimates that tariffs would push up the cost of a U.K.-built car by 10 percent. And British exports would face EU tariffs.
Some British Euroskeptics have argued that the government could cut tariffs on EU imports to zero. But under Word Trade Organization rules, members must grant the same “most favored nation” access to all members, so if the U.K. scrapped tariffs on EU imports, it would have to scrap them on all imports; at the same time, its exports would still face tariffs. This would have far-reaching implications for the country’s trade competitiveness; no U.K. government will opt for “unilateral free trade.”
Moreover, there is no reason to believe Britain will be more successful at signing free trade agreements with non-EU countries than with the EU. In any case, Britain would need to sign agreements with most of the world to offset the impact of much diminished access to the EU market. And free trade deals would not cover services, which constitute approximately 45 percent of British exports, and would be hit hard by the loss of access to the EU market.
The biggest hit to British living standards would arguably come through the impact of no deal on investment. The United Kingdom would become a less attractive place to invest in traded goods, such as cars and other complex manufactured goods that require a lot of imported components.
The United Kingdom would become a less attractive place to invest in traded goods, such as cars and other complex manufactured goods that require a lot of imported components.
Lower wage costs—the result of a weaker pound—would not offset the increased costs of trade because labor costs now account for a low and falling share of total costs in high-end manufacturing. Weaker consumption, the result of higher inflation, would also hit investment. The result would be slower productivity growth and hence weaker growth in wages.A no-deal Brexit would also create huge uncertainty over the legal status of the 3 million EU citizens living in the United Kingdom. The end of free movement of labor would lead to a sharp fall in the number of people coming to work in Britain from EU counties, slowing economic growth.
Both right-wing and left-wing Brexiteers argue that quitting the EU could be liberating in the long term, though for contradictory reasons. The right-wingers argue it would free the U.K. economy from stifling anti-business EU rules and regulations, boosting Britain’s economic dynamism. But according to the Organization for Economic Cooperation and Development, Britain’s markets for goods, services, and labor are already among the least regulated in the developed world. Britain could scrap EU labor regulations mandating statutory holiday entitlements, but no British government would do this, and there is no evidence doing so would boost economic performance.
For the left-wingers, the EU is a neoliberal construction, run in the interests of capital and to the detriment of workers. In their view, it prevents British governments from pushing through policies to tame capital and redistribute income from rich to poor. This argument fails to acknowledge that Germany redistributes far more than Britain does and that France and Sweden have much bigger public sectors than the United Kingdom has.
The anti-EU left also believes that leaving the EU would lead to reindustrialization by allowing the U.K. government to subsidize local industries, such as shipbuilding and other manufacturing. But erecting barriers to imports does not mean manufacturing jobs come back. By disrupting supply chains and increasing the cost of producing in Britain, a no-deal Brexit threatens a further shrinkage of manufacturing.