Sat, 09/12/2020 – 09:20
In the same week Prime Minister Boris Johnson blew up trade deal talks with the European Union he signs a big trade deal with Japan.
In the same week Boris Johnson unveils new, very unpopular social distancing rules barring gatherings of more than six people, he puts the screws to the Scottish Nationalists who still think their support comes from their being arch-Remainers and not the contrary nature of most Scots.
In the same week that Boris Johnson sets an October 15th drop dead date for Brexit talks with the EU, President Donald Trump’s election chances rose to even for the first time this summer.
In the same week Julian Assange goes through a sham trial for the sake of protecting the indefensible actions of U.S. and UK intelligence agents Johnson’s government is mulling scrapping the BBC’s mandatory licence fee handing them taxpayer money to undermine world security as the tip of the Marxist spear.
Now given all of that, it’s clear that Boris Johnson as Prime Minister is a decidedly mixed bag. His response to the Coronapocalypse has been an unmitigated disaster, bowing to political winds he should have never exposed himself to.
In doing so he’s squandered the significant goodwill his Brexit maneuvers of 2019 garnered him and the Conservative party. So, it’s obvious by now that his lack of managerial/organizational skill is what is undermining his government.
At the same time, however, Johnson’s handling of Brexit has been nothing short of excellent, the valid criticisms of the Withdrawal Act by Nigel Farage notwithstanding.
Johnson inherited a poison pill from Theresa May and in his zeal to fulfill a political promise agreed to a treaty with the EU that would bring his hardball negotiating stance to the current crossroads because of his compromises on the issue of Northern Ireland.
As I said earlier in the week so much of the Withdrawal Act is predicated on there being a Free Trade Agreement between the U.K. and the EU on New Year’s Eve.
That looks unlikely and the introduction of the Internal Markets bill to parliament this week is meant to do far more than what Johnson is selling publicly — to clarify the parameters of the EU’s control over Northern Ireland with respect to British law and Parliament’s sovereignty.
And despite the histrionics from Europe and the Remainer crowd in London, it is the EU who are in breach of the Withdrawal Act by in no way measuring up to the standard of negotiating that Free Trade Agreement in good faith.
Michel Barnier’s demand are wholly inappropriate and contravene Parliament’s sovereignty if not the Withdrawal Act itself. For some context as to the legal arguments this is, refer here.
In short, Barnier hasn’t even offered a version of the deal Former European Council President Donald Tusk offered Theresa May in 2018, demonstrating a distinct lack of good faith.
Maybe it was always Johnson’s plan to push Barnier to finally reveal the extent to which he would go to demonstrate this bad faith. Then he puts the EU in the position to accept the effective changes to the Withdrawal Act as clarified by the Internal Markets bill or end talks completely.
This would then give Johnson and the Brits the right to terminate the Withdrawal Act as an international treaty, which cannot, as I understand it, supersede Parliament’s sovereignty unless Parliament agrees to it. This is what Section 38 of the Withdrawal Act clearly states.
And to remind both Mr. Barnier and anyone still reading who gives a good god damn, the EU signed on to.
No one in their right mind believes international law trumps national law. Only globalists like Barnier, Von der Leyen and the rest of the EU oligarchs who think they can sign papers and make them reality.
So, maybe we are on the cusp of something truly earth-shattering when it comes to Brexit after four years. Maybe this tortuous path that Boris Johnson has taken to get to this point was all part of the plan to clean up some of the swamp surrounding 10 Downing Street, doing what Donald Trump does on the other side of the pond.
Win by not budging on the important issues and forcing your opposition to expose themselves to the public the depths of their depravity and (in the case of both the Democrats and the Eurocrats) their incompetence.
I’ve been saying that the USDX has been giving us a very false signal as to what’s been happening in international markets for months. Solid demand for U.S. Treasury auctions belied strength in the pound, the euro and the yen.
Last week the British pound was pressing against $1.35 versus the dollar, forming a triple-top in the $1.35 area on the monthly chart.
But since last week when the odds of a No-Deal Brexit rose sharply as talks broke down and the dollar began firming, the pound has fallen sharply.
After August’s robust move to the highest monthly close in the pound versus the dollar in over two years, the price action this week took the pound back below $1.28 which would be a one-bar bearish reversal if it holds through the end of September.
Is this all about Brexit, though? Or is this just as much about Johnson’s insanely totalitarian move to ban all public gatherings over six people. Sure, the protests in London are just as much a political operation as the ones in the U.S. are against Donald Trump.
Yes, Brexit and Trump’s re-election are the twin pillars standing tall against The Davos Crowd’s Great Reset through the planned destruction of both economies through unnecessary and draconian lock downs. But, as Martin Armstrong points out, it may be just as much about the reality of keeping a damper on social unrest lashing out at those in power regardless of who it actually is.
Johnson’s mistake was caving to the political lynch mob during the worst of the COVID-19 scare. He should have stuck by his ‘herd immunity’ guns. Now he’s paying a stiff political price that only the hardest of hard negotiating stances over Brexit can mitigate.
Moreover, I do think this path to a No-Deal may have been the way his staff thought they could suppress the independence movements in Scotland and the eventual cleaving off of Northern Ireland by the EU. By scrapping the Irish border protocol he’s telling the EU that if a hard border happens it will be you that pus it up, not us.
This, to me, has been his trump card all along. Make the EU the bad guys in the fight for the Irish border. Put Dublin on the hook for its implementation not Westminster.
Scottish Nationals don’t like this path because it also puts them on notice that they can’t just adopt EU rules and force another balkanization of the U.K. through Barnier’s ‘regulatory alignment’ schemes.
And the SNP may just find that they are only popular because of their stance on an independence referendum, not because Scots are desperately simping to be a part of the EU.
In any case, a falling pound versus the dollar and a free trade deal with the Japanese are real boons to Johnson and his government today. Trump’s rising re-election odds are as well as signing a free trade deal with the U.K. will be his first act in any second term, even if the U.S. has dragged its feet at the negotiating table.
Brussels knows this. The Democrats, through Speaker Nancy Pelosi, have already said they would never give the Brits a deal if they break the Good Friday Agreement.
But it won’t be the Brits that do it if Johnson takes the U.K. out on No-Deal in December. It will be the EU. And that’s the basis now for any kind of movement in talks.
This is why the ghost of Nigel Farage is lurking bringing up the specter of Article 24 of the GATT Treaty which can keep tariff-free trade going in 2021 between the U.K. and EU if Johnson scraps the Withdrawal Act completely.
If the EU aren’t interested in that then they better hope Trump loses in 56 days. For now, expect the pound to fall, the FTSE to get a small boost and the euro rally to fade as the dollar firms on Trump’s rising re-election chances.
But no matter what happens from here, the autistic screeching from the EU and Remainers about the “U.K. breaching international law’ will continue right into the courts. But treaties are just paper. They can be broken and a fracturing, impotent EU which lost its Brexit fight and its gambit to break Trump and the U.S. is a toothless one in the long run, despite their image to the contrary.
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Author: Tyler Durden