It is Obvious

Chris Rick has got altogether too much to say

Archive for September, 2018

Riddle me this Batman

Posted by chrisrick13 on September 27, 2018

It is obvious: we have no idea what we are doing

With the huge resources of HMG behind her, surely on March 29th Mrs May went into the front of her Yellow Pages and looked up the contact number for AAAAAAAAA_Negotiate_It Inc?

It might not seem like it but surely someone with some negotiating ability is in there advising?

In a negotiation if someone is not acting in any predictable way or the way that seems most obvious then you are probably missing information and that becomes the most important part of the negotiation at that point: find the missing information.

There is history there. The EU has been in a lot of negotiations over recent years. The way it operates is well known. It ought to be much the same for the UK. Not as much negotiating but still history to look at.

Here is what the EU is doing (possibly). If the UK leaves the EU it will be a disaster the EU will be gone unless a very accommodative solution is worked out. If that happens there will be a queue at the door. So the EU is trying to bully us into another referendum, which it is far from clear will be a remain win, or to giving in to all their demands. They have to keep that secret. If it does not happen then they know they can knock out a working agreement in a couple of months based on the work already done. Last minute down to the wire stuff. The EU has history. But the EU need to hang on as long as possible. Let us defeat ourselves.

So what is Mrs May doing? She is keeping us from a second referendum and running the EU out of time. A very fine balance and she is doing it. The deadline for the UK giving in is approaching fast. Who will blink first – I hope it is not the UK.

However I have said a lot in the past that it is unlikely that there will be an EU for us to leave. Along the way it has looked that I was going to be wrong on that one. A week is a long time in economics. Italy is in disarray. It needs and wants write-offs of debt. The largest debt owner, Germany, is not likely to agree to this. (At some point the German population is going to realise just how much debt they are on the hook for. Debt that will not be paid off. They might force Mrs Merkel’s hand.) The Italian government now looks like it might collapse before the budget and that puts Italian bond yields very high. The long night will begin.

Italy is not alone though. The French GDP has just recorded two quarters of 0.2% GDP growth. Be wary of these figures. France is running along on a prediction of 1.6% growth. It will be hard pressed to make 1%. That means that the second largest economy in the EU is rapidly heading towards recession.

The German economy is not doing so well either and the Fed keeps lifting interest rates. The ECB is on the point of tapering QE down to zero though not thinking of paying any of it back yet. This has the makings of a perfect storm.

I wonder if Mrs May has this in her mind as well?

It is obvious: we have no idea what we are doing – perhaps

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One man’s cherry is another man’s…

Posted by chrisrick13 on September 22, 2018

It is obvious: fog in the Channel

There are a few simple rules to learn as a negotiator. I have learnt them. (It does not mean I am a better negotiator because I’m not.) If you lean the rules it does mean that there a lot of errors you will not make and when someone is trying a trick on you, you will spot it and know the counter.

There are two types of negotiation. The first is principled negotiating. Both parties are trying to get the best deal possible for them both. This is the long-term relationship where you will work with the other party over a long period to your mutual benefit. The carpenter and his lumber merchant. The farmer and his seed supplier. UK and EU???

The second is the adversarial negotiation. You will have no dealing with the other party after the current negotiation so get what you can at any cost. Second hand car salesmen fall into this category.

This second type of negotiation is the one that the EU have chosen to adopt with the UK’s exit from the EU. It seems they have not noticed that the UK is not moving away from the continent after the exit into the Pacific, say. It will still be there. There is business that can be done to mutual benefit…or not as the EU would have it. There is a mutual interest in defence for example with Russia regularly overflying UK territory to see if we respond.

Most of these rules of negotiation are very simple:

Never accept a first offer. After the deal is done one side will regret they didn’t ask a higher price the other will regret they didn’t make a lower offer.
Never allow time pressure. If the car is available until tonight at £10,000 walk away. It will likely be on offer for £9,000 tomorrow. If not you can be sure you will get it for £10,000.
Never split the difference. A good negotiator will just accept that as new price from which he can work.
Never negotiate by giving gifts. A good negotiator will accept the gift and not change his negotiating position or give any credit for the gift.
Never argue against yourself. Make your offer and shut up.
Never do a gentle barb. It makes you feel good. It annoys the heck out of the other party and makes an implacable enemy. Think of an example…hmmm…Salzburg on Thursday.

I could fill a book – as many have.

How does the UK deal with the adversarial other side? Two things: never underestimate your power and avoid criticism of your negotiating partner, traps for the partner to fall into and barbs of the partner that enrage them.

Note I have called the other party just that or a partner. They are not an opponent unless you are doing adversarial negotiating as the EU are.

After the rejection of the Chequers deal the UK should sit back and wait for a counter offer. Do not ‘improve’ our deal or they will do it again.

There is time pressure on the EU. As the various deadlines approach and are passed, the chance of a UK exit with no deal increase.

The big problem is ROI and the border with the UK. If this is closed then the ROI economy with its 2.4 trillion Euros of external debt will not last even weeks. Italy will quickly follow and the EU ship will be deserted in short order.

The EU knows this but they think that by doing unprincipled negotiating they can somehow trick the UK into a very poor deal.

If I was the negotiating team for the UK I would suspend all contact. Tell the EU that if they have something meaningful to offer we’ll look at it. Anything they send to us will take at least a month for any response.

I would say that Spain is nice this time of year for the negotiators…but it won’t be! Maybe the beaches of Western Australia are the place to be until the EU responds.

So what about the cherry picking? Who said that is not allowed? In this negotiation does the EU expect the UK to offer just to take the burnt scrapings off the baking tray and leave all the cherries to the EU? No way. Why don’t the EU do that? We will grab as many cherries as we can. So will the EU. Then we negotiate.

Problem is that the EU have forgotten that people of the UK we are good friends and implacable enemies, when we could all be working to our mutual advantage.

The EU is scared that if others see a good deal for the UK they will follow. If the EU was any good then there would not be any good deals to lure other countries away!

Taking this approach shows just how poor the leaders of the EU are. They confirm they are unfit for purpose. They certainly confirm to me that this European Union is not one I want to be in.

It is obvious: fog in the Channel – EU isolated

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The Horsemen of the Apocalypse (First XV) – back-room team

Posted by chrisrick13 on September 22, 2018

It is obvious: we’ll all be richer outside the EU

Donald Tusk:
What power have you got?
Where did you get it from?
In whose interests do you use it?
To whom are you accountable?
How do we get rid of you?

Jean-Claude Junker:
What power have you got?

Michel Barnier:
What power have you got?

Mario Draghi:
What power have you got?

As an aside I might add –
Mark Carney:
What power have you got?

To name but a few. Then I might mention –

Theresa May:
What power have you got? I can appoint and fire ministers.
Where did you get it from? The British people via the ballot box.
In whose interests do you use it? The British people.
To whom are you accountable? The British people.
How do we get rid of you? Via the ballot box or your MP who got where he is via the ballot box – all boxes filled by the British people.

Then I might mention Viktor Orbán, the PM of Hungary. He is unique in the EU in that his party got within a whisker of an outright majority of votes.

I think he is quite objectionable for his views and even dangerous. Put him in a room with Le Pen and Matteo Salvini and there would not be much to disagree on. None of them are mass murderers but add in Hitler and they still might have difficulty finding points of disagreement.

By a 4-to-1 majority the EU parliament has voted to censure Hungary for immigration and other policies they are enacting. These are polices that the Hungarian people voted Orbán into power to carry out.

It is obvious: we’ll all be richer outside the EU and I haven’t even considered the financial consequences

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The Horsemen of the Apocalypse (First XV) – comments from the training pitch

Posted by chrisrick13 on September 20, 2018

It is obvious: I’m not stupid

Last month I was in France where the price of diesel is a lot less than petrol. The reverse of the UK. Unless there is a big tax differential one population or the other is being taken for a ride…or both of them.

When the price of oil goes up and contributes, say, an extra 1p to the price of a litre of fuel (including tax) the price rise is always much more than 1p. The cost of the crude oil in a litre of fuel is very, very low.

I buy chicken breasts quite a lot. I noticed that the printed weight had gone from the label on the front to the one on the back. The pack I buy (for an unchanged price) weighs 640 gms when it used to weight 650 gms.

When I look at the calories for a pack of just about anything it gives a 100 gms price or a ‘portion’ price. It never says how many calories there are in the packet I am holding in my hand.

When the base rate goes up (just twice in the last 10 years) the interest rate on borrowing goes up the next day by at least the base rate increase. The interest rates on savings take a very long time to increase and are never as much as the base rate increase.

Everything in banking happens very quickly except crediting money to your account when you deposit a cheque.

Energy price rises are announced in spring and apply at the beginning of winter. Price cuts always happen in the spring, announced in winter. Energy is forward bought so any cuts in energy cost cannot be reflected in the price until the forward buying unwinds. Increases are applied quickly and forward buying forgotten about.

The Bank of England does not count RPI as a valid measure of inflation and uses the always much lower CPI but does use RPI when inflating payments to staff from its pension fund.

Counterfactual is king from government and BoE: I know that it happened despite what we did but it would have been a lot worse otherwise. Just once something that actually works would be nice!

I have a new, large wheelie bin from the council for paper and cardboard…but I cannot put shredded paper in it.

“Here are the main points of the news…” Who decided that then?

“The banks are safe now”. Vince Cable 16/09/18 on the Andrew Marr show…and not challenged.

My house is worth gazillions. It isn’t, never was and never will be. The current market value is gazillions and its price can move in any direction at any time, often very quickly, as that market changes.

Pay your (mostly “their”) fair share of tax. Can I define ‘fair’ please? Actually, can I find any two people whose definition of ‘fair’ in this context is the same? Why is that phrase never challenged when uttered on tv?

The government guarantees the first £80,000 in my bank account.  Yeah.  Right.

 

It is obvious: I’m not stupid – doesn’t help though

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Horsemen of the Apocalypse (First XV) – new close season signing

Posted by chrisrick13 on September 20, 2018

It is obvious: a paper bag is difficult to negotiate out of

The Republic of Ireland (ROI) is famous for the government emptying its fully funded state pension and leaving an IOU in it. Despite that it has 2.43 trillion Euros of external debt.

Not a problem. Italy has 2.42 trillion. Spain, Portugal and Greece between them have nearly 2.4 trillion.

The ROI has something the others don’t have: the majority of their trade tied into a single state: UK.

If the UK went for a hard Brexit it could let the EU decide how it wanted to work the border with Northern Ireland. The Irish government would not be very cooperative at creating a hard border. The UK could also run a hard border itself.

This would be painful for the UK. It might even be very painful.

However it would only take weeks for the ROI economy to collapse. Because of the intricate linking of European economies with all that debt, Italy would be a close second for a collapsed economy. There is a good chance though that it will manage that all on its own long before Brexit. Spain, Portugal and Greece would all be looking for podium positions very soon after.

This is a lot more pain than the UK might suffer.

I am on the look-out for triggers and the ROI/NI border might be it.

So now the UK government should turn to the EU (un-elected officials) and say: Over to you. Then sit back and do absolutely nothing.

It is obvious: a paper bag is difficult to negotiate out of if you are a UK Brexit negotiator.

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