We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

A change of tune

“Brussels moves to preserve access to London clearing houses”, reports the Financial Times.

Brussels is to adopt emergency measures to preserve Europe’s access to crucial UK financial market infrastructure after the country’s post-Brexit transition period expires, the bloc’s regulation chief said on Thursday.

Valdis Dombrovskis, the European Commission’s executive vice-president in charge of financial policy, said Brussels would adopt “time-limited” access rights to make sure that European companies could still access UK-based clearing houses after the end of this year.

“This decision is being taken to address the possible risks to financial stability related to the specific area of derivatives clearing,” Mr Dombrovskis said. “However, we would encourage all market participants to prepare for all possible eventualities, as we have consistently called on them to do throughout this process.”

Mr Dombrovskis did not specify when the access rights would expire, but the move will provide short-term certainty for traders in the specific area of clearing while Brussels continues to discuss future relations with the UK.

To be frank I have only the vaguest idea what a clearing house does. It sounds worryingly like tidying. But whatever it is, for the EU to adopt “emergency measures to preserve Europe’s access to crucial UK financial market infrastructure” seems a distinct change from its previous policy, also mentioned in the article:

Brussels has repeatedly urged the financial sector and companies to adapt to the fact that Britain is leaving the single market; the EU also adopted legislation last year to make it easier to force clearing houses to relocate to the continent. But progress has been slower than the EU had hoped and investors have kept their business in the UK.

I am not surprised at the investors’ decision. I do not need to be an expert in decluttered differentials to be able to work out that if the EU felt the need to pass laws to make it easier to force investors to move their business out of the UK that means they would be better off staying put.

L’affaire Cummings

Please. Stop acting like this Dominic Cummings farrago is actually about “what Dom Cummings did within the context of Wuhan Coronavirus in the UK”.

It ain’t.

Almost everything in UK media & politics makes perfect sense when viewed through the lens of Brexit, and that will be true until 1st January 2021.

Cummings is usually described as ‘hard line’ on the recommendations he gives regarding Brexit. It is obvious that the Cummings lynch mobs are really only interested in ‘salvaging’ some kind BRINO from the ‘catastrophe’ of Brexit.

In spite of coronavirus, it is still actually Brexit that really still drives everything in UK. Everyone worldwide is going to try and use coronavirus to leverage their preexisting political objectives, and UK is no exception. Normal politics will resume next year.

Security against what?

“China proposes controversial Hong Kong security law”, reports the BBC:

China is proposing to introduce a new security law in Hong Kong that could ban sedition, secession and subversion.

And:

Hong Kong’s mini-constitution, the Basic Law, which provides the territory certain freedoms not available on the mainland, does require its government to bring in a security law. It had tried to enact the so-called “sedition law” in 2003 but more than 500,000 people took to the streets and it was dropped.

I would have welcomed more information on this mysterious clause in the Basic Law that requires Hong Kong’s government “to bring in a security law”. On what timescale? Who is the judge as to whether a security law does or does not meet this mysterious requirement? Oh yes, and SECURITY FROM WHAT?

But that paragraph was a model of robust independent reporting compared to this one:

A mainland source told the South China Morning Post that Beijing had decided Hong Kong would not be able to pass its own security law and the NPC would have to take the responsibility.

That makes it sound as if Hong Kong’s parliamentarians were not clever enough to pass this law, or that they were dodging the “responsibility” of passing it the way a negligent father might dodge his maintenance payments. To be charitable, these are the words of a “mainland source”, that is, a man whose tongue is operated from a distance by a controller with a joystick, but why does the British Broadcasting Corporation let pass without challenge the Orwellian language of the Chinese Communist Party? We do not have to do that. We are not in the EU any more.

Covid-positive sex-mad Nazis and the Terminal Markets Act 1973

OK, the inclusion of the words “sex-mad” in that title was merely a desperate scheme1 to try and get you to read an article on a case brought against the UK by the European Commission in the European Court of Justice regarding the Terminal Markets Act 1973. However there really is mention of Nazis, and of the coronavirus, though not of the former being infected by the latter. In fact I would have preferred it if there had been less of the Nazi stuff2: the rather tasteless comparisons to World War II made me inclined to dismiss this “Briefings for Britain” piece on the case from two days ago, but I have a feeling that maybe it ought not to be dismissed.

In it, Caroline Bell writes:

This Thursday, the European Court of Justice delivers its verdict in the European Commission’s infraction proceedings against the United Kingdom for failing to impose VAT on transactions in the City’s multi-trillion-dollar derivatives markets. Launched during the murky days of the Brexit withdrawal negotiations in 2018, this judicial time bomb has the potential to blow up both free trade talks and the Withdrawal Treaty itself if the Court finds against the UK.

Which it did. The judgement issued today can be read here.

Caroline Bell speculates that a decision against the UK might have dramatic consequences:

In terms of trade talks, an adverse judgment would probably mean the City could kiss goodbye to any sort of enhanced equivalence (which Brussels is not willing to grant anyway) and even basic equivalence for financial services could be an issue. But for every blow the EU tries to strike here, the UK is in a position to retaliate much harder against EU financial institutions, so the outcome is again likely to be neutral. Does anyone even expect there to be a financial service agreement with the EU anymore? The EU’s action against the Swiss in this area to try to bring them to heel has badly backfired, and would do so if they applied the same tactics on the UK.

I know that quite a few of our readers work in the legal and financial fields. Is there anything to this story? What effect will the verdict on Case C‑276/19 have?

1I think it was the humourist Alan Coren who said that since the bestseller charts back then in the 70s always seemed to be topped by sex books, WWII books and golf books, his next book ought to be about sex-mad golfing Nazis. Edit: I had misremembered. Alan Peakall and Mr Ed have pointed out the existence of Golfing for Cats, pub. 1976. How many publishers would dare have that cover today?

2A wish shared by most of Planet Earth in 1945.

Yes, we have no Eurobonds, we have no Eurobonds today

There’s a fruit store on our street
It’s run by a Greek.
And he keeps good things to eat
But you should hear him speak!
When you ask him anything, he never answers “no”.
He just “yes”es you to death, and as he takes your dough
He tells you
“Yes, we have no bananas
We have-a no bananas today.”

Those are some of the words to the 1923 hit song “Yes, We Have No Bananas” by Frank Silver and Irving Cohn. The song is mostly associated with World War II, but according to Wikipedia it had found its way into the history books before that:

The song was the theme of the outdoor relief protests in Belfast in 1932. These were a unique example of Protestants and Catholics in Northern Ireland protesting together, and the song was used because it was one of the few non-sectarian songs that both communities knew. The song lent its title to a book about the depression in Belfast.

For nine decades “the depression” meant the one that started in 1929. But the coronavirus looks likely to bring in its wake an economic depression that may well take the definite article for itself. Naomi O’Leary of the Irish Times reports,

Euro finance ministers reach compromise to fund pandemic recovery

Deal dashes hopes of Italy, Ireland and seven others for the roll out of so-called corona bonds

The 19 members of the euro zone agreed a compromise on Thursday to aid states in need of funding to address the profound economic fallout from the coronavirus pandemic.

But it dashed the hopes of Italy, Ireland, Spain and six other member states that had called for eurobonds to bring down borrowing costs and send a signal of unity as the continent confronts a health crisis that is threatens to become an economic disaster.

Under the deal, states can borrow from the European Stability Mechanism bailout fund to finance spending needed to overcome the crisis.

I do not seek to play down their achievement in reaching a compromise at all. Every finance minister on Earth must be passing sleepless nights wondering how best to deal with our current predicament. But the dilemma faced by the Eurozone countries is particularly acute. Italy and Spain will never forgive the EU if they receive no help in their hour of need. But the northern countries were repeatedly assured that EU membership and the adoption of the Euro would never mean they had to write a blank cheque to what they see as the spendthrifts to the south (and a few other directions besides). The Dutch, the Germans, the Finns and the Austrians must hope that when they say, “yes, we have no Eurobonds” the upbeat momentum of the first three words will carry them over the next two.

Samizdata quote of the day

There are no limits to our commitment to the euro.

Christine Lagarde, President of the European Central Bank. The linked Guardian article in which I found the quote is titled “ECB U-turn shows it fears coronavirus could destroy eurozone project”.

Samizdata quote of the day

Seid umschlungen, Millionen!
Diesen Kuß der ganzen Welt!

Be embraced, Millions!
This kiss to all the world!

– Friedrich Schiller’s Ode to Joy, Beethoven’s setting of which is the Anthem of Europe.

Sing all the way through this while washing your hands to help avoid the spread of coronavirus. Other songs recommended for this purpose include Stairway to Heaven and Another One Bites the Dust.

This video has been viewed 726 million times

Europe – The Final Countdown

Name me one good thing about Brexit…

Start with this:

Article 13: UK will not implement EU copyright law

Universities and Science Minister Chris Skidmore has said that the UK will not implement the EU Copyright Directive after the country leaves the EU.

Several companies have criticised the law, which would hold them accountable for not removing copyrighted content uploaded by users, if it is passed.

EU member states have until 7 June 2021 to implement the new reforms, but the UK will have left the EU by then.

The UK was among 19 nations that initially supported the law.

That was in its final European Council vote in April 2019.

This Samizdata post from March 2019 contains a list of links to other posts that give the background.

If you want to be welcome, do not demand entry

The ceremonial of the State Opening of Parliament includes a moment when Black Rod, the Queen’s representative, approaches the door of the Commons to summon MPs for the Queen’s Speech. Tradition demands that he – or in 2019, she – has the door slammed in her face to symbolise the independence of the Commons from the Crown. Only after knocking three times is Black Rod allowed to enter.

The door closed to a demand but open to a request is a powerful symbol.

In the election we have just had, one of the most contentious issues was immigration and nationality. As stated in its manifesto Labour’s policy was to give the vote to “all UK residents”, and not just the vote, automatic citizenship, according to the Shadow Business Secretary Rebecca Long-Bailey. Labour did not exactly shout about the fact that “UK residents” includes foreign citizens, but several people including the Prime Minister’s adviser Dominic Cummings did notice. He then informed the nation in his own inimitable style: “BATSIGNAL!! DON’T LET CORBYN-STURGEON CHEAT A SECOND REFERENDUM WITH MILLIONS OF FOREIGN VOTES”.

But underneath the all-caps headline he made a fair point:

Before the 23 June 2016, many such as the Economist and FT predicted a Leave win would boost extremists and make immigration the central issue in politics. VL said the opposite would happen: that once people know there’ll be democratic control, it will quickly fade as an issue and attitudes towards immigrants will improve. VL was right, the FT was wrong — as all academic research shows. If you want immigration to fade from politics, then democratic control is the answer. If you go with Corbyn and free movement for the whole world, then immigration will be all over the news and extremism will grow. A system like Australia’s will be fairer, good for the economy and take the heat out of the issue.

Imagine that Corbyn had won, formed a coalition government, enacted Labour’s manifesto promise to give the vote to EU citizens and others, and held a second referendum in which their 2.4 million votes for Remain swept away the majority for Leave among British citizens. Imagine if the ignored and scorned people of Leave-voting towns in what were once Labour heartlands saw that Labour had imported a new foreign electorate to replace them. Some may not like that wording but it would have been accurate. Imagine the bitterness towards foreign residents in the UK if that had happened.

It didn’t, thanks in no small measure to Mr Cummings himself. In a month or two the Guardian will report that public hostility to immigration has gone down and attribute it to a burgeoning movement to rejoin the EU. But the real reason will be that people will feel that at some level the wishes of the existing citizens of the UK control who else comes in the country. When you know you can close the door you become more willing to open it in welcome.

Having written the above, I remembered that this is not the first post of mine with a title that uses the metaphor of knocking on a door. Rather than be embarrassed at repeating myself, I will assert that it is a metaphor with several applications. Here is the old post: “To knock on the door is better than booting it in”. It is about relations between transgender and cisgender women.

Galileo in darkness

Kieren McCarthy has written an article for the Register that brings together two themes of interest to many Samizdata readers:

“One man’s mistake, missing backups and complete reboot: The tale of Europe’s Galileo satellites going dark”

In mid-July, the agency in charge of the network of 26 satellites, the European Global Navigation Satellite Systems Agency (EGSA), warned of a “service degradation” but assured everyone that it would quickly be resolved.

It wasn’t resolved however, and six days later the system was not only still down but getting increasingly inaccurate, with satellites reporting that they were in completely different positions in orbit than they were supposed to be – a big problem for a system whose entire purpose is to provide state-of-the-art positional accuracy to within 20 centimeters.

Billions of organizations, individuals, phones, apps and so on from across the globe simply stopped listening to Galileo. It’s hard to imagine a bigger mess, aside from the satellites crashing down to Earth.

The article concludes,

In the meantime, a dangerous amount of political maneuvering means all the engineers are keeping their heads down. Which is a shame because by all accounts, there is a lot of good work going on, not helped by organizational silos.

In short, Galileo is a classic European venture: a great idea with talented people that has turned into a bureaucratic mess in which no one wants to take the blame for problems caused by unnecessary organizational complexity.

The Way into the Planned Economy

If anyone can suddenly get a loan with a negative interest rate, then it is to be expected that the credit demand will get out of hand. To prevent this from happening, the ECB will have to resort to credit rationing: It determines in advance how many new loans it wishes to hand out, and then allocates this amount of credit. The credit market no longer decides who gets what and when and on what terms and conditions; those decisions are made by the ECB.

According to which criteria should loans be allocated? Should anyone who asks for credit get something? Should employment-intensive economic sectors be favored? Should the new loans only go to ‘the industries of the future’? Should weakening industries be supported with additional credit? Or should Southern Europe get more than Northern Europe? These questions already indicate that the planned economy is established through a policy of negative interest rates.

More than ever it will be the ECB that reigns over credit: It will effectively determine what will be financed and produced and where and when; it will determine who will be in a position to buy and consume on credit. As a central planning authority, the ECB — or the groups that greatly influence its decisions — determines everything: which industries will be promoted or suppressed; which economies are allowed to grow stronger than others; which national commercial banks are allowed to survive and which are not. Welcome to the planned economy in the Eurozone!

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