Current Affairs

Cornwall has issued an urgent plea for reassurance that it will not be worse off following the Brexit vote.

The county has received a “significant amounts” of funding from the EU for the past 15 years due to its “relatively weak economy”.

But, after 56.5% of voters in the county chose to leave the Union, the council says it is now seeking urgent reassurance that money allocated to it will still be received.

Prior to the vote the Council said they were told by the Leave campaign that funding would still be available.

They also said they had been told Cornwall “would not be worse off” in terms of investment they received.

Here is the link.  Overall the regions most dependent on the EU economically were most likely to vote for Brexit.

This time around the UK was probably hurt somewhat; British stocks are down around 4% as I write. But French and German stocks are down 7% to 8%. The markets in southern Europe are down 10% to 15%. Brexit’s most powerful effect is to make the eurozone crisis worse, by increasing doubts as to whether the eurozone will stay together.

That is from Scott Sumner.  Here is David Beckworth’s analysis, he focuses on the contractionary effects of a strengthening dollar.

Here is David Goodhart writing about the UK:

…while many people in the top 20 or 30 per cent of the educational and economic hierarchy have become less attached to national social contracts in the past couple of generations, most people have actually become MORE attached to them. There are several reasons for this. The welfare state has been expanding not contracting in recent decades—think tax credits and the rise of housing benefit—and although state employment overall has been in decline, if you live in some of the most run down parts of Britain you are more likely than ever to be employed by the state. The fragmentation and disappearance of a once familiar industrial working class culture and the declining status of much non-graduate employment may also have contributed to a greater attachment to the symbols and benefits of national citizenship. The loss of tight local communities may have produced a stronger attachment to the imagined community of the nation. And the benefits of national belonging CAN be diminished by European integration and rapid, large scale immigration: this is not merely false consciousness.

The article is of more interest generally, and for the pointer I thank Alex X.

Risen:

Scots

Those predicting Irish unity within a generation

The Irish

David Goodhart

Pollsters

Fallen:

David Cameron and Co.

Angela Merkel

Jeremy Corbyn

The Governor of Gibraltar

Advocates of economic self-interest theories of voting

Julien Benda

Those who pooh-poohed “backlash” objections to open borders

Those long the zloty

Prime Minister Abe

Old people

People

Still unknown

Boris Johnson

Central bankers

Vladimir Putin

Zhou En-Lai

Heard in Baghdad: “I never thought Britain would break up before .”

That was from Ben Wedeman

I’m afraid we are about to find out that most, if not all, the Remain economic warnings were true

That was from John Gapper

CNH at 6.65. Forget Brexit. If PBOC piggybacking on this, this will be the new story

That was from Christopher Balding

worth remembering that no European country has had an election/referendum explicitly pitting national vs EU where EU won. None.

That was from Austan Goolsbee

Weird night for Netflix to drop the first live episode of Black Mirror.

That was from Le Vine

ITV now reporting that Sinn Fein calling for new vote on united Ireland. Brexiters were adamant that this wouldn’t happen.

That was from Simon Nixon

Thank goodness the world economy has the steady hand of the American voter to steer it to calmer waters.

That was from Justin Wolfers

My sympathies with Mexicans out there wondering why their currency has been smashed by 5.6% on a UK election result.

That was from Toby Nangle

No political change was ever postponed because it would freak out traders.

That was from Kristi Culpepper

Though I don’t drink, some nights I need to stay up a little later.

That was from me

Molenbeek is the “Islamist” section of Brussels which recently became well-known as a breeding ground for terror attacks; it is sometimes described as a kind of desperate hell hole.  The Time Out guide for Brussels doesn’t mention it at all.  Naturally I wanted to see it.

I visited yesterday morning and saw the fruit, vegetable, and clothing market, and then walked around for another two hours.  It was charming, everyone was friendly to me, and I never felt threatened.  I bought some excellent cherries at a very good price (“cheap cherries,” and the surrounding streets offer “cheap charcuterie” as well).

Most of the people seem to be either Moroccan or Turkish.  The high ratio of Muslim women to Muslim men in the market was striking.

On the vegetable but not the clothing end of the stalls, I saw a fair number of blond Belgian women pushing their baby strollers and buying produce.  On my way in from the airport, my (white) Belgian cab driver told me he lived in Molenbeek and loved it, including the low rent — my apologies to Thomas Friedman of course.

Inside the boundaries of the market is a well-known Art Deco church from the 1930s, which upon first glance appeared to be an old mosque tower.  At that moment I was surrounded by hundreds of Muslims, and so was primed for the mosque look I suppose.  I walked up the stairs of the church to the door, and found it was barred and showed no signs of life.

One plaintive-looking Belgian man was standing on the steps, and he asked me quietly (in French) “Are you here for Mass?”  “Yes,” I said, not wanting to end the conversation.  “You’ll have to wait, then,” was his dead pan response.

Molenbeek

Here are ten reasons you should never visit Molenbeek.

China bank spank

by on June 23, 2016 at 2:32 pm in Current Affairs, Economics | Permalink

The trainer, Jiang Yang, has issued an apology, saying the spanking was “a training model I have tried for years” and had not been instigated by executives at the bank…

The video, which first surfaced on Monday, appears to have been taken by someone in the audience on a smartphone.

Mr Jiang is seen reprimanding eight bank employees on stage, asking them why they received the lowest scores in a training exercise.

The employees give answers including “I did not exceed myself”, “I did not co-ordinate with my team” and “I lacked courage”.

Mr Jiang then says “get your butts ready” and proceeds to spank them with what appears to be a thick piece of wood.

Here is more along with the video.  It seems the spanker focused his apology toward the bank executives rather than those who were spanked.

For the pointer I thank Ray Lopez.

“The betting is just massive,” says Mike Smithson, founder and editor of PoliticalBetting.com, a website that is something like a Bloomberg terminal for people who wager on political events. He characterizes the referendum as “the biggest political betting event of all time, anywhere.”

On Tuesday and Wednesday alone, the Brexit vote attracted wagers worth more than £3 million ($4.4 million), most of it via online transactions, and three-fourths landing on remain, Mr. Smithson estimated.

Yet in contrast:

William Hill estimates that the bookmaking industry will rack up wagers of £500 million ($735 million) on the European Championships. A World Cup final alone tends to attract £200 million ($294 million) in wagers to William Hill’s books.

That is from the NYT.  Last I saw the odds on Brexit were down to about 12 percent.  I also walked by the European Commission in Brussels, and saw not the slightest sign of panic or for that matter interest.  Nor was anyone in Molenbeek this morning gazing at the Brexit odds on their smart phones — most were too busy selling vegetables.

…note that Solar City’s stock, after jumping up 12% at yesterday’s open, ended the day only up 3%; both are well below the 25%~34% premium offered by Tesla, suggesting the market is very skeptical of this deal happening. The problem, though, is that Tesla dropped 9.2% at open (representing a market cap loss that was double Solar City’s worth), but instead of moving back up in the opposite direction of Solar City’s drop, the stock actually closed down even further for a 10.5% decline. This suggests that a good portion of the drop is not due to the possibility of Solar City being acquired, but a loss of confidence in the company.

That is from Ben Thompson’s Stratechery newsletter, worth paying for or so I find at least.  Here is basic background on the proposed deal.

Rates of marijuana use among Colorado’s teenagers are essentially unchanged in the years since the state’s voters legalized marijuana in 2012, new survey data from the Colorado Department of Public Health and Environment shows.

In 2015, 21 percent of Colorado youths had used marijuana in the past 30 days. That rate is slightly lower than the national average and down slightly from the 25 percent who used marijuana in 2009, before legalization. The survey was based on a random sample of 17,000 middle and high school students in Colorado.

That is from Christopher Ingraham at Wonkblog.  Those are surveys, yes, but even the continuing feeling that one needs to lie and say no should count for something.

Newspaper headlines trumpeted that the middle class is shrinking but to a large extent that is because people are moving into the upper middle class not because they are getting poorer. By one measure, the middle class has shrunk from 38% of the US population in 1980 to 32% today but at the same time the upper middle class has grown from 12% to 30% of the population today.

Josh Zumbrun at the WSJ has an excellent piece on new research from the (liberal-leaning) Urban Institute and elsewhere:

upper middle

There is no standard definition of the upper middle class. Many researchers have defined the group as households or families with incomes in the top 20%, excluding the top 1% or 2%. Mr. Rose, by contrast, uses a more dynamic method similar to how researchers calculate the poverty rate, which allows for growth or shrinkage over time, and adjusts for family size.

Using Census Bureau data available through 2014, he defines the upper middle class as any household earning $100,000 to $350,000 for a family of three: at least double the U.S. median household income and about five times the poverty level. At the same time, they are quite distinct from the richest households. Instead of inheritors of dynastic wealth or the chief executives of large companies, they are likely middle-managers or professionals in business, law or medicine with bachelors and especially advanced degrees.

Smaller households can earn somewhat less to be classified as upper middle-class; larger households need to earn somewhat more.

Mr. Rose adjusts these thresholds for inflation back to 1979 and finds the population earning this much money has never been so large. One could quibble with his exact thresholds or with the adjustment that he uses for inflation. But using different measures of inflation, or using higher income thresholds for the upper-middle class, produces the same result: substantial growth among this group since the 1970s.

Critics attribute such medical experimentation in China to national ambition, generous state funding, a utilitarian worldview that prioritizes results, and a lack of transparency and accountability to the outside world.

If that is the critics, I wonder what the defenders say!  That concerns transplanting one person’s head onto the body of another.  From that NYT article, the procedure still seems impossible.  Nonetheless I am not sure the NYT’s articulation of the critical charges sounds as damning as many biomedical ethicists might wish to think…

Paris recently made a bold pitch to woo City of London bankers in the event of Brexit. But, HSBC aside, most banks scoff at the idea that Paris would be a natural venue. Frankfurt, home of the European Central Bank and the financial capital of Europe’s biggest economy, is also problematic. As a small city with a population of less than 700,000 people, it is seen as provincial and unpopular with staff. Dublin is English-speaking and attractive on tax grounds, but it is a relative backwater. The most likely outcome is that foreign banks with large operations in London would shift their staff to a spread of eurozone locations where they already have operations — including Frankfurt, Dublin, Paris, Warsaw and Lisbon. That would fragment the financial services industry in Europe, potentially weakening the continent’s ability to compete internationally.

It’s not Europe, but of course we have to add New York City to the list of alternative cities.  The Patrick Jenkins FT article is interesting throughout.

The Dutch are still consuming about 5 per cent less, on average, than they were almost a decade ago.

Furthermore:

Yet the employment rate for Dutch 25-54-year-olds, a reasonable measure of the economy’s underlying vigour, is still about 5 percentage points below the pre-crisis peak.

Here is a possible surprise in this context:

It has the biggest current account surplus, as a share of output, in the entire euro area, making Germany look almost Anglo-Saxon by comparison.

Much of the remainder of the Matthew C. Klein Alphaville post builds an interesting comparison between the Netherlands and Belgium, recommended.  Part of the problem may be the Dutch housing market and tough bankruptcy law.

…the market cap of four of the largest coal companies was more than $35 billion in 2011. After a flurry of regulation, it’s now a smudge on the graph below, a decline of 99 percent.

That is from Sam Batkins, via Rick Newman and Joanna Bryson 2.