The ties that bind could become the rope that hangs

On June 23rd the electorate in Britain will go to the polls to decide the country’s future, or lack thereof, in the European Union.  Already the main story is about which Conservative heavyweights will back their leader’s play and fight to stay in Europe, and which ones will join the campaign to get out.  With all the infighting the actual hard facts and scary truths of the EU referendum stand a good chance of being missed.
Britain is no longer “Great” in the way that the leave campaign would like people to think. We don’t have an empire anymore and no matter how much the man in the street may want one we aren’t going to again. Europe provides us with the best possible outcome in an imperfect world to maintain at least someone dominance in international affairs, as well as relevance.
Trade with the EU counts for approximately 45% of Britain’s total exports and 53% of its imports come from the bloc, based on 2014 figures.  The amount of finance generated by trading with other countries outside the EU pales into insignificance. Leaving the EU will not change the fact that we still need to trade with it, all it will mean is that we have to pay higher rates to do so and have no say in the tariffs and regulations in place which monitor it. British companies will still have to meet EU regulations, however, this time they won’t be able to have a say in what those regulations actually are, inevitably leading to a tiered system which will create immeasurable damage, particularly for small to medium sized enterprises.
There are those who claim that we can cover the trade deficit by increasing exports to non-EU states. While this may seem like a nice idea on paper the practicality is that it will fail. The majority of arrangements we have in place with countries outside of the European Union are based, at least tacitly, on the idea that Britain will act as a gateway to the rest of Europe. An easy option for trading with the whole so to speak. The exogenous impact of leaving Europe is incalculable, not because it doesn’t matter but because it matters so much. Britain would be economically crippled.
The same goes for the financial sector. London acts as a useful node for business not despite its ties to Europe but because of them. France is already punching to have a greater say in global economic affairs and it is not in the least unrealistic to see a shift in dominance from the City to Paris should the UK up and leave.
Then there is the question of security. Out campaigning Works and Pensions Secretary Ian Duncan Smith has claimed that to remain in Europe puts Britain at ever greater risk of a Paris style attack due to open borders. As Britain will always have at least one back door to Europe in Ireland this is a moot point all on its own. Add in the fact that the security arrangements created by our ties to Europe would be weakened and it quickly becomes clear that it is obfuscation at best, lying at worst. Mumbai is not a member of the EU bloc and that didn’t prevent attacks against the city.
The European union is far from perfect it is however here to stay no matter how much the “Out Campaign” may want it to be otherwise. For expats it provides a measure of security which they will not be afforded upon Brexit and for those living in the country it is essential for economic success and security. To think that leaving will mean that we are no longer tied is inconceivable. It just means that the ties which bind us will become the rope which hangs us.

The Tragedy of the Commons is a common tragedy

IT was reported earlier this week that the Chinese Government was finalising plans to introduce strict fuel standards on large ships to help combat marine pollution.
Li Qingping, a senior official at the ministry’s Maritime Safety Administration, told a news conference in Beijing that once the rules are implemented, certain toxic emissions from ships would be reduced by 65 percent and particulate emissions by 30 percent by 2020, as compared with current emissions.
Being honest China has not always been the leader in pitching environmental ideas so the fact that they are taking such a hard line to reduce the damage being done to the oceans should act as an indicator of how bad things have become.
A walk along any of a million beaches will show just how much rubbish is being deposited in the seas, and that is just the tip of the iceberg, which are coincidently also being destroyed at an unimaginable rate. Whereas previously the tragedy of the commons with the oceans had been overfishing, nowadays it is over dumping.
The tragedy of the commons stems from a simple idea, that commons, something which anyone can use, are at risk of being overused by some and therefore their overall utility reduced. The theory has been used to address the need for fishing quotas and carbon permits as a way to impose a degree of restraint and prevent them being depleted for future generations.
The issue is that while there are measures in place to stop people polluting the seas they are incredibly hard to monitor and punishments tend towards the laxer end of the scale. With so much open ocean to cover it is a mammoth task to patrol and once in international waters one which is hard to persuade governments to invest in.
If something isn’t done though the lasting harm will be immeasurable.  A report published by the Ellen Macarthur Foundation in January entitled “The New Plastics Economy: Rethinking the future of plastics” gave a stark warning of the threat facing the oceans, by 2050 there will be more plastic in the oceans than fish.
“Each year, at least eight million tons of plastics leak into the ocean—which is equivalent to dumping the contents of one garbage truck into the ocean every minute,” the authors wrote. “If no action is taken, this is expected to increase to two per minute by 2030 and four per minute by 2050.”
It is not just the plastic bags and bottles which we see littering our beaches causing the problem though, although they provide a starting point. It is the microplastics, tiny particles of plastic which have been broken down in the water.
A simple experiment is to take some sand from the beach and put in a glass, now add water and give it a bit of a stir. Pretty quickly you will see these plastic particulates separating out and floating to the top.
When these are mixed in with the sea water they are mistaken by marine life as food, which as might seems obvious causes immense suffering followed by death.
If we are to stop this then we all need to take part. The real tragedy of the commons is that it is something we can all stop if we work together. A collective decision to be responsible and not misuse the utility of the commons is essential, as is the need for a coordinated international approach to enforce genuine measures to protect them.
It doesn’t take much and anyone can help. Think twice about the waste you throw away, and more importantly how you dispose of it, if you see a plastic bag on the ground pick it up and bin. There are beach cleanup schemes across the world, take part, help out and if there isn’t one then why not set one up? If our children are to have the same benefits from the sea we have then we need to act now. There really is no time like the present because the future is looking particularly uncertain.

Market futures are looking murkey

Don’t let the recent shock waves in the economy fool you we still haven’t figured out what the markets will do in 2016.
A drop in oil prices normally heralds a period of economic growth and the reasons are fairly obvious. We need oil literally greases the mechanisms of production. Lower fuel costs mean lower production costs, which in turn mean, theoretically, lower prices for consumers. As prices drop people buy more, which puts more money in the pockets of the people producing allowing them to either raise wages employ more staff. Either way it means more money being pumped into the economy which is good for everyone.
There is a problem though. When oil prices have dropped previously it has been due to an excess of supply, the more of something there is the lower its prices. This time round, however, it appears that the drop in prices is due more to a drop in demand. Oil just isn’t the commodity it once was. Not necessarily a bad thing, it does mean that people are paying attention to renewables more after all which is, hopefully, good for the environment.
For the markets though it poses a serious risk. Oil has been a strong base for many investors and the thought that it could collapse is putting the frighteners on more than one. Economists don’t like uncertainty and that is exactly what they are facing.
Coupling this with recent developments in China and the markets for 2016 are looking as though they are likely to be in for a rocky time. This has been evidenced this week by the drop in the Shanghai index, due in no small part to the drop in the price of oil.
These developments have not come out of the aether however. China’s rapid expansion and construction boom has longed looked like a bubble set to burst. What keeps it stable though is the influence of the government over the whole situation. Should the growth of industry, without the supporting infrastructure, we have seen in China have been attempted by America or Europe then it would be a dramatically different story. As it is the Chinese government is likely to impose measures to prevent the spiralling decent of its economy. It won’t be pretty but it may just be enough to stave off collapse.
The issue of oil prices however is one which may not have such a hopeful future. Large swathes of the global economy are built on high oil prices, whether directly or indirectly, in some cases without it being evident to the industries themselves until it is too late. A curtailment of supply may help to drive prices up slightly, however, it would be an illusionary fix which defeats the object. Investors know the oil is available it is just a matter of them waiting until they can access it.
For now the future is uncertain and likely to remain that way. The loss of revenue from oil is likely to create further instability in the Middle East and create a domino effect of devaluation. As the main beneficiaries of oil wealth withdraw their support from other enterprises the economy as a whole will feel the pinch.
Whether we like it or not oil is still the life blood of market enterprise and right now the markets need a transfusion.