British Pound Dives As Brexit Reality Sinks In

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Posted: Jul 17, 2019 10:47 AM
British Pound Dives As Brexit Reality Sinks In

Source: AP Photo/Rui Vieira

The pound is the worst-performing major currency in the world since March. Brexit reality is starting to sink in.

Worst Performing Currency

On March 12, the British pound hit 1.3385. It's now 1.2410. That's a decline of about 7.3% making the British Pound the Worst-Performing major Currency in the World.

Johnson and Hunt Rule Out Backstop Completely

The Pound sank following Comments of Boris Johnson and Rival Jeremy Hunt in last night's debate.

  • Johnson: “The problem is really fundamental. The backstop needs to come out. It has been devised by this country as an instrument of our own incarceration in the single market and customs union.”
  • Hunt: “The backstop, as it is, is dead. I don’t think tweaking it with a time limit will do the trick. If we are going to get a deal we must have an absolute cast-iron commitment to the Republic of Ireland that we will not have border infrastructure."

Election Over

The election is over as Johnson is a Guaranteed Winner based on votes already cast.

Although the election is over, the statements by Johnson and Hunt reflect a hardening of opinions.

Guardian Live

The Guardian Live Blog has pertinent comments.

Both leadership candidates appeared categorical on Monday that they would throw it out of the deal entirely – or proceed to a no-deal Brexit.

The two hopefuls to succeed May took a more conciliatory tone than in previous debates, with Hunt helping Johnson as he struggled with a question about his private life. Hunt then joked that he would be living in No 10 and Johnson in No 11 as his chancellor.

Hunt Meows

It is clear that Hunt realizes beating Johnson is a long-lost cause. Hunt is now another one of those Remainer Dogs Now Meowing Like Brexit Cats.

Meow. Please make me the Chancellor of the Exchequer.

The chancellor position is roughly the equivalent of a Finance Minister position in the EU. To a lesser degree, the position is similar to the Secretary of Treasury position in the US.

Love Meow from Gove

It was Michael Gove who did in Boris Johnson in the last leadership challenge. He ran against Johnson, splitting the vote which lead to the disastrous compromise choice of Theresa May.

Today we have a love Meow from Gove to Johnson.

Exchange Rate Forecast

I expect the pound will soar once the uncertainty of no-deal becomes reality.

Suspend Parliament Take I

Suspend Parliament Take II

Sam Coates - Sky News

The Prorogue Parliament story as presented by Sam Coates.

Insiders have confirmed they are looking at scheduling a Queen's speech to mark the start of a new parliamentary session in early November.

Guto Bebb, a Tory MP who wants to stop no-deal and hold a second referendum, confirmed he had heard the plan and was trying to work out what to do. He told Sky News: "I read consideration is being given in the Boris camp for proroguing parliament without a deal.

A Johnson campaign source said: "A number of ideas are under consideration, including this one."

More MPs are considering following Mr Bebb by announcing they will stand down at the next election, freeing their hand to vote against the government in a vote of no confidence in the House of Commons.

Seriously Brexit

The timeline aspect of the above story rings untrue but the idea itself seems sound.

Johnson would not have to delay scheduling the Queen's speech until November. Indeed, a couple of weeks would seem more than sufficient.

I have gone through the math before but let's revisit because I keep seeing other assessments. Instead of making assumptions, here are the absolutes.

Absolute Minimums

  • An election takes 1 day. Elections are typically Thursday but let's assume the best case of any day.
  • It takes 25 working days to schedule an election.
  • A successful motion of no confidence takes 14 calendar days.

Schedule In Reverse

  • Wednesday, October 30, new UK PM asks for extension or cancellation
  • Election Tuesday October 29.
  • Election Scheduled on Tuesday September 24 for October 29.
  • Motion of No Confidence Succeeds September 10

That gives parliament a week to pass a motion of no confidence. But it assumes a Tuesday, not a Thursday election. It also assumes zero slack days and zero debate days.

Indicative Time Table From House of Commons

The schedule assumes a Thursday election date and works back. Since October 31 is a Thursday, the above schedule is a week tighter than my mathematical analysis.

Parliament would have to act on the first day back from recess.

Scenario 2

The Tory ballots to determine the next Prime Minister will be tabulated on Monday, July 22.

The announcement will be Tuesday, July 23. UK Parliament Recess starts July 25.

If there is a successful motion of no confidence on Wednesday, July 25, then Parliament does have time to force a vote in time to hold elections.

Motion of No Confidence Time Table 2

Nuclear Options

Any Tory voting to bring down the government would immediately be outed. But it would not take many, assuming an equal number of Labour MPs did not also buck their party.

The Statesman discusses Would MPs really back a no confidence motion to stop no-deal?

A successful no confidence vote would require just two Tory MPs to actively vote for it (or four to abstain) if all opposition MPs remain united.

On the Tory side, the former Attorney General Dominic Grieve is the obvious candidate. Just a month ago, he told the House of Commons he “will not hesitate” to bring down the government to stop no-deal without parliamentary approval. Beyond him, though, the picture is less clear. Father of the House Ken Clarke had suggested he might back a no confidence vote as a last resort, but subsequently rowed back. A handful of other MPs have publicly put themselves in “not ruling it out” territory, including Philip Lee, Antoinette Sandbach, Margot James, Roger Gale and even Philip Hammond, though only Lee and Sandbach have a track record of rebellion on Brexit. Keep an eye, too, on Guto Bebb, the second referendum advocate announced yesterday that he will not stand again as a Conservative MP, and may therefore feel that he has little to lose

Even those who have floated the possibility of a no confidence vote may not put their money where their mouth is. Voting no confidence in one’s own government is a huge, likely career-ending decision for any MP to make.

The other crucial piece of the jigsaw is the behaviour of opposition MPs. For instance, if just two opposition MPs abstained, the magic number of Tory rebels needed jumps from two (plausible) to four (much more challenging).

Ultimately, the number of potential confidence rebels on both sides of the Commons is tiny — even a generous estimate suggests less than half a dozen swing votes on either side. Given that the Government has more votes to begin with, the opposition is at a slight disadvantage — essentially, they need the number of Tory rebels to be two more than the number of opposition rebels.

Labour MPs Willing to Buck the Whip

The Statesman also noted Labour MP Kate Hoey as a "committed no-dealer who is stepping down at the next election anyway and has nothing to lose."

"Successful" Motion Could Backfire

A "successful" motion could easily backfire in a landslide for Johnson or a Johnson Brexit-Party coalition.

Convenient Excuses

Also, please consider the Tory convenient excuses

  1. I would not vote for no confidence because it would lead to the election of Corbyn
  2. I want to give Johnson a chance

If Corbyn does not call for a motion on July 24, assuming he has a chance, the reason will be that he knows he does not have the votes.

Corbyn has one likely vote: Dominic Grieve. But even then, I suspect Grieve will buckle if the votes are not there.

Johnson Not Bluffing

Those who thought Johnson was bluffing about leaving do or die on October 31 need to reconsider.

There will not be another referendum in time nor will there be a people's vote in time. Nor should there be a people's vote. The people already voted.

There is a short mathematical window in which to oust Johnson. I am uncertain if there is a realistic window outside of a successful motion of no confidence on July 24.

If Johnson has a way to delay that vote, even by one day, or if Corbyn delays for any reason, recess then takes hold and it would take a perfect setup to get a vote in time to stop Brexit.

Beyond September 3 is mathematically impossible to stop Brexit in the Commons Scenario. It's September 10 in my Tuesday election schedule.

Ignore the prorogue (suspend Parliament) discussion. It is a media sideshow in that it simply does not matter.

Meanwhile, the British Pound seems convinced Brexit is happening.