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Passports for Dogs and Cats Cancelled

Barnier warns that unless there is a Brexit deal, dogs and cats would be ‘unable to cross the channel’ and planes not able to land.

A Hard Brexit could see Britain removed from the EU’s pet passport scheme – used by 250,000 cats and dogs to the Continent on holiday each year.

Barnier also told the ‘Journal Du Dimanche’ that Britain had to settle outstanding debts on everything from the European Investment Bank, to aid programmes for Turkey and Ukraine.

He added: “The Europeans should not have to pay the price of a decision taken by the United Kingdom.”

Rabid Dogs vs Rabid Eurocrats

The witty reply of the day goes to Jacob Rees-Mogg, a eurosceptic Tory MP, via The Telegraph.

"It's really very silly. You can't take this man seriously, he is now negotiating absurdly. It undermines his credibility. The worry has always been of rabid animals coming from the Continent. I'm all for keeping rabid eurocrats out of the UK," said Mogg.

Economic Reality

Roger Bootle, a staunch free trade advocate and weekly columnist for the Daily Telegraph penned an excellent article on Brexit realities today: Political Turmoil Over Brexit is at Odds With the Economic Reality.

We are now entering one of the worst periods in the run-up to Brexit. The EU continues to press for more money upfront before it will deign to negotiate on trade.

The British government should stand firm. There is nothing in the Lisbon Treaty to say that a departing country should make a large payment to the EU before starting trade talks. And there is nothing in economics justifying the payment of a large sum to the EU in return for “access” to the single market.

What do countries as diverse as the United States and Singapore pay for their “access” to the single market? The answer is precisely zero.

Tomorrow a group called Economists for Free Trade (EFT), of which I am a member, will publish an alternative view of our future which includes a substantial fiscal dividend created by the economic expansion made possible by our exit from the EU, which the Chancellor Philip Hammond can spend on a mixture of debt reduction, higher government expenditure, and tax cuts.

I have always said that Brexit is not a magic wand. But, to mix my metaphors, nor is it a poisoned chalice. It presents a challenge and an opportunity. To meet the challenge and seize the opportunity the UK must embrace competition and free trade.

Fake News Brexit Style

The idea that planes won't fly, trade will stop, and the UK will go to hell in a handbasket if there is no deal is fake news.

Such nonsensical hype is sponsored by economic illiterates who believe mountains of EU rules and regulations provide some sort of benefit as opposed to huge overhead costs.

The same economic illiterates predicted the UK would already be in the gutter.

Beauty of Zero

I am a huge free trade advocate. A perfect free trade agreement would fit on a napkin: "Effective immediately, all tariffs and all subsidies on all goods and services are abolished."

Such a policy would have immediate benefits whether any other country did the same or not.

Fair Trade Nonsense

My inbox is filled with people telling me “China Doesn’t Play Fair“.

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Fair to whom? If China is indeed giving US consumers a great deal, we should all be thankful.

Imagine for one second that China gave everyone in the world a free car. Would not standards of living rise? Of course, China could do no such thing. It would be bankrupt.

US steel companies moan that China dumps steel. Let’s assume China offered steel for free, and the entire world except for the US, slapped huge tariffs on steel to make up for the price differential.

US auto manufacturers would win big time. Our costs would collapse. US exports of cars would skyrocket as we could undercut everyone else in price.

Any losses on steel employment would be made up by increases in auto production, shipping, and countless other things. Of course, China cannot actually give steel away any more than it can give cars away.

Three Rules

  1. If China, Mexico, or Japan offers products cheaper than they can make them, then by definition, this is to the advantage of US consumers.
  2. If it’s good for consumers, it’s a good thing.
  3. Standards of living rise when the costs of goods decline.

If China or anyone else is “dumping goods”, then we should be happy as it is to our advantage!

How can getting more for your money ever be a bad thing? It cannot, except for employees in weak industries who could not otherwise compete.

Trump and his protectionist team need to take a look at realities. So do all the misguided armchair “fair trade” activists.

True Source of Trade Imbalances

The true source of trade imbalances is not predatory practices by China, Vietnam, etc.

Explaining Balance of Trade

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The seeds of trade imbalances were sewn in 1971 when Nixon closed the gold window. The trade deficit rose, then skyrocketed.

Total Credit Market Debt Owed

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Following Nixon closing the gold window on August 15, 1971, credit soared out of sight to the benefit of the banks, CEOs, the already wealthy, and the politically connected.

For further discussion and more images, please see Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?

Mike “Mish” Shedlock.