Brexit Debate Focus Shifts to Chickens, Dead Cats, Taxes

By: Mike Shedlock | Thu, Jun 16, 2016
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After having already proven he is a liar and poor negotiator, Prime minister David Cameron also proved he is a "chicken little" by backing out of an anti-Brexit appearance for political reasons.

And in the ever-escalating fear campaign put on by "Remain", chancellor George Osborne made the preposterous statement that he would raise taxes or cut spending by £30 billion if "Leave" won.

Osborne's proclamation raised the eyebrows of every thinking person on the planet.


Coward Cameron Backs Out of anti-Brexit appearance

The Irish Times reports David Cameron pulls out of anti-Brexit event with Taoiseach.

The reason is amusing: "Remain strategists believe he has become a liability in the drive to persuade working-class Labour voters to back the pro-EU campaign."

Mish Brexit Tweet 1

Let's rephrase that Tweet so that it makes even more sense: "Cameron is a liability to the UK - Period"


Dead Cats and Taxes

Brexit Budget

Win or lose Osborne is now a politically "Dead Cat".


Osborne's Gamble

The Financial Times reports Osborne Gambles with Threat of Severe 'Brexit Budget'.

George Osborne gambled his future as UK chancellor with a warning that a vote to leave the EU would force him to raise taxes or cut spending by £30bn, in a sign of the deepening anxiety among Remain campaigners that they will lose next week's referendum.

Mr Osborne's move drew an angry response from 65 Conservative MPs who said they would block any emergency "Brexit budget" and accused the chancellor of attempting to "talk down the market and the country". Others said he was in a state of panic.

Mr Osborne's warning that he would have to fill in a £30bn "black hole" in the public finances in the event of a Brexit vote -- warning that this could involve raising taxes or cutting spending to the NHS -- was certainly eye-catching. But it also raised some big problems. Firstly, if Britain votes to leave the EU, it is not certain Mr Osborne will keep his job. Secondly, both Conservative MPs and Jeremy Corbyn, the Labour leader, have said they will not support such an austerity budget.

"This is what Lynton Crosby calls a dead cat," said one Osborne loyalist, referring to the Australian election strategist's tactic of making dramatic statements to capture the attention in a campaign.

But if Mr Osborne's tactics help to deliver victory on June 23, it may come at a significant political price for the chancellor. Some MPs within his own party now say his chances of succeeding Mr Cameron as prime minister are over.

On Wednesday a leading Conservative campaigner for Leave said his side was "quietly confident" of victory, adding: "The only question is how big the [winning] margin will be."


Economic Vandalism

Telegraph writer Ambrose-Evans Pritchard, with whom I have had many disagreements with over the years, nails things accurately in his report Osborne's 'Punishment Budget' is Economic Vandalism.

George Osborne is disqualified from serving as Chancellor of the Exchequer for a single week longer. Whatever his past contributions, his threat to push through draconian fiscal tightening in an emergency Brexit budget is economic madness, if not criminal incompetence.

Such action would leverage and compound the financial shock of Brexit, and would risk pushing the country into a depression. It violates the known tenets of macro-economics, whether you are Keynesian or not.

We all understand why George Osborne is toying with such pro-cyclical vandalism - or pretending to - for he is acting purely as as partisan for the Remain campaign. He has fatally mixed his roles. No head of the Treasury can behave in this fashion.

The Treasury has already warned that the short-term shock of Brexit would slash output by 3.6pc, or 6pc with 820,000 job losses in its 'severe' scenario. The Chancellor now states he will reinforce this with austerity a l'outrance.

Brexiteer Iain Duncan Smith says he has never seen such "irresponsible" behaviour from a British Chancellor. Nor have I.


Osborne Promises Idiocy

Pritchard is part-Keynesian and part-Monetarist. I am firmly in the Austrian camp. Thus, Pritchard and I have had numerous disagreements in the past, but we have had some agreements as well.

Pritchard nails it accurately with this sentence "It [hiking taxes in a recession] violates the known tenets of macro-economics, whether you are Keynesian or not."

Osborne promises a recession as well as tax hikes if Brexit wins. In short, Osborne promises idiocy.

Pritchard saw early on (as in decades ago), how this was going to play out. He knew upfront the flaws of the Eurozone, even though he later tended to gloss over eurozone and EU problems with cures he knew in his heart could never really work.

Fortunately, Pritchard has regained his senses with his well-stated Telegraph editorial: Why I am Voting to Leave the EU.


Don't Panic!

Osborne panicked with a preposterous bluff that will end his political career. If you are a UK voter, I offer this final thought: Ignore the charlatans like Osborne and Cameron. Above all ...

Mish Brexit Tweet 2

 


 

Mike Shedlock

Author: Mike Shedlock

Mike Shedlock / Mish
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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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