Brutus was an honourable man

Mint – Blain’s Morning Porridge

But Brutus says he was ambitious, and, sure, he is an honourable man…

Since it really does not feel like the market is going anywhere in particular, and everyone has already done the fact most corporate results aren’t actually that bad, except for Apple which is crashing on declining sales of the not-quite-so-bright shiny-thing and the absence of any next-bright-shiny-thing to replace it.. let’s start with two contrasting views on Brexit (British exit from the European Union).

As I was leaving the flat this morning, the BBC’s Brekdrek was interviewing one of the eight (yes, count em, eight!, a full eight! I didn’t know there were so many in the whole country…) senior economists who think the UK would be better leaving the EU.

Their thesis is simple – the “stay” platform is scaring the electorate and has loaded the debate to fool the people. Hear.. hear.. After much consideration these erudite economists have come down from Olympus to balance the argument. (Phew. Thank goodness for their intervention.. I was worried I might have to make my own mind up on this weighty issue.)

I wasn’t really paying attention, but one of them was on the red sofa in Leadenhall market making a less than thoroughly convincing argument that staying in Europe means we wouldn’t attract the skills necessary to maintain the UK’s pre-eminence in global finance and admitting immigration is a good thing for growth. Or something like that..

 I’m not sure I quite followed his reasoning.. but if the likes of Roger Bootle, Gerard Lyons, Ryan Bourne (City AM, since you ask), and Patrick Minford.. who are we to doubt them? (Hang on.. is that the same Patrick Minford my lecturers back in Heriot-Watt used to scare us young acolyte economists back in the early 80s with? “If you don’t study yer ISLM curves.. we’ll feed you to the Liverpool School.. ah.. happy memories.. back in the day Minford was the mad, bad and dangerous economist..) And that was 35 years ago. Experience over youth any time.. and they are honourable men..

On the other hand, back in London, in the People’s Democratic Socialist Republic of The London School of Economics, the OECD’s Angel Gurria was giving the Brexit argument a right shoeing.

Now you might argue a foreign economist and former Mexican finance minister have no right to be commenting on our Brexit debate. Quite right.. what would he possibly know.. and how dare he opine on this very British issue? Blackguard.. 

And since he’s foreign, and a Mexican to boot, I’m sure we’ll all agree his contribution to the debate is irrelevant (remember, though, that he was in his hot seat in Mexico during the Latin American debt crises of the 1980s). So let’s not ponder his cogent economic analysis touching on how growth, immigration, and trade would all be at risk from a UK exit. His key point: Brexit will cut a month’s salary from workers wages by 2020 would be a wake-up call.. but of course, no Brit will listen to a foreigner). He also showed half of all UK growth from 2005-2015 was driven by net immigration, and even Brexiters admit much immigration is good and creates jobs.

Fortunately this unfortunate intrusion into our Brexit debate was quickly dismissed by the Vote Leave little Englanders: The Financial Times carries their in-depth rebuttal of Gurria’s arguments, quoting a “spokesman”: “The OECD (Organisation for Economic Co-operation and Development) is in the pay of the EU. Angel Gurria is part of a global bureaucracy that feathers its nest with vast expense claims. OECD officials avoid paying taxes – he is in no place to lecture us.”

Ah.. the joy of free speech. And I’m glad we’ve cleared that up. For the record.. my favourite joke is about Economists: As so often happens, a boat is shipwrecked on a desert island with a mathematician, a physicist, and an economist on board. After a month they are starving when a tin of beans washes ashore. The physicist looks at it and opines: “if we light a fire under it, the tin will expand and explode..” the mathematician grabs the argument and starts scribbling on the sand with a stick: “and I can calculate the trajectory of each bean so we can collect them.” They turn to the economist and ask: “What do you think?”.. “Well..” he says.. “assume we had a tin-opener..”)

Back in the real world – a hats-off to Deutsche Bank for posting a surprise profit with trading doing better than anyone expected. Not bad when every other bank looks utterly pants. Of course they didn’t get thumped with a massive “bad-boys” legal bill last quarter, 9,000 jobs are still to go, vast swathes of the business are to be “exited”, and dividends remain.. scrapped. Still.. what’s not to like.. er.. their capital level?

Anyway.. next week I must get round to a round-up on banks' dismal first quarters.. now if only I could think of any reasons why they might get better over the next three months… Er.. nope.. nothing occurs to me..

Back to the day job..

Bill Blain

Mint Partners

44 207 786 3877