Day: January 7, 2018

Breaking: 4 Brexit scenarios that just might come to pass in 2018

This is the year when the biggest political and economic conundrum to face the U.K. in modern times will be solved, further complicated or even abandoned in all but name.

 Within 10 months, the British government and European Union aim to have an agreement on their divorce and at least the outline of their future trading relationship. They have different ideas about what Brexit should look like and different views on how the talks themselves should be ordered.
 Then there are the divisions within each camp. The U.K.’s governing Conservatives, whose decades-old rift over EU membership was the catalyst for Brexit, remain split over what it really means. The opposition Labour Party is avoiding the question, and the Scottish nationalists don’t want to leave at all.
 The EU may be putting its unity before any other priority, but negotiations could reveal conflicting national interests among the remaining 27 members.

So after a year of flawed predictions, here’s a look at several scenarios that just might come to pass in 2018.

The Base Case

While the U.K. wants the full trade deal done by the time it leaves on March 29, 2019, the EU wants it ready to go by January 2021. This is what EU experts reckon could happen:

After a couple of months of uneventful talks, an agreement is reached on the transition deal that businesses have been crying out for. It’s not legally binding yet, but it’s enough to prevent a mass exodus of companies. In March, trade discussions start.

The U.K. fights for the City of London, but soon realizes that all the banks have contingency plans anyway and a fair amount of business will still be done in London after the split. The EU won’t budge on its refusal to let the U.K. keep the best bits of membership and Prime Minister Theresa May’s Conservatives won’t let her make the concessions that would be needed to remain in the EU’s single market.

In October there’s an outline agreement, which is vague, but detailed enough to be clear that Britain is headed for a trade deal that’s a lot like the one Canada struck with the EU.

It will keep tariffs off most goods, but put up barriers at customs and won’t do much for the service industries that make up most of the U.K. economy. Carsten Nickel of Teneo puts the chances of this scenario at about 60 percent.

The Irish border is back as a major obstacle. In the end, May calls the bluff of her Northern Irish allies in the Democratic Unionist Party and they accept that in some areas they will have different rules to the rest of the U.K. to keep the border with the Republic of Ireland open.

Growing popular support for Labour under Jeremy Corbyn makes the DUP reluctant to walk out on May and let the leader they loathe come to power.

The dreaded cliff-edge scenario has been avoided, but companies start preparing for the trade barriers that lie ahead. No one knows when the detailed trade negotiations will finally end, so businesses are stuck with the outline for a while to come.

The Upset

Talks on transition go well enough. Then, by October, it’s clear negotiations on the future trade partnership are failing. The question of how to keep the Irish border open without a customs agreement rears its head again.

This time, it proves impossible for May to satisfy her three most difficult audiences: the Irish government, which is backed by the EU; the Democratic Unionist Party, which is propping up her government; and the ardent Brexit-backers within her own party.

Despite two weeks of crisis talks with the DUP, no deal is reached. May’s minority government collapses and an election is called for Thursday Nov. 15. The Conservatives have no time to choose a new leader so against the odds May takes the party into the short campaign.

On election day, the first in the fall since 1974, voter turnout is down. Labour manages to mobilize the youth vote while elderly Conservatives stay at home on a damp autumn day. Shortly before dawn, Corbyn is declared the winner and becomes prime minister with a small majority of 20. Once in government, Labour’s policy moves toward closer ties with the EU.

By December, the time for talking is over as Brexit day looms. At an emergency negotiating session on Christmas Eve, the U.K.’s chief negotiator, Keir Starmer, accepts the EU’s offer of membership of the European Economic Area.

It means Britain will maintain full access to its biggest market for goods and services, but now has to accept rules it has no say in making. It has also failed to “take back control” of immigration, a major issue in the Brexit debate.

The Walkout

Talks on transition take longer than the U.K. hoped and the start of proper trade discussions is delayed. It soon becomes clear that the services industry is going to be largely left out of the future trade deal.

Businesses squeal and Brexit-backers at home wonder in public why May agreed to pay a hefty divorce bill in return for such a bare-bones trade deal. Loose ends that weren’t properly tied up in the first few months of talks continue to dog discussions.

The EU again reminds the U.K. that it needs to find a way to keep the Irish border open after the split, but it won’t give an inch to help find a solution.

The October deadline comes and goes and toward the end of the year talks break down with the U.K. team reluctantly walking out. Both sides are now hurtling toward a no-deal Brexit in March 2019 unless they can patch things up quickly.

The Wish

Talks on trade and transition start quickly in January and by February a deal on transition is agreed.

The U.K. convinces the EU that it should offer it a “Canada plus, plus, plus” deal. That means a broad trade agreement that keeps tariffs off goods and also allows services companies, including banks, to continue to operate across the continent. The EU was divided on financial services but the pragmatists in Europe win the day.

Britain also convinces the EU that it needs to get a fully detailed trade agreement drafted in time for exit day so that it can be signed immediately after Brexit. Businesses and customs officials now have a palatable two years to prepare for the shift to the new arrangement.


Categories: Politics

A beginner’s guide to bitcoin: All You Need to Know About Bitcoin’s Rise, From $0.01 to $15,000

The initial price of bitcoin, set in 2010, was less than 1 cent. Now it’s crossed $16,000. Once seen as the province of nerds, libertarians and drug dealers, bitcoin today is drawing millions of dollars from hedge funds. The recent price surge may be a bubble. Or it could be a belated recognition by the broader financial community that so-called cryptocurrencies — digital forms of money — are going mainstream. It might be time to nail down what a bitcoin is, and why its price has been going through the roof.

1. What exactly is bitcoin?

It’s a form of money that’s remarkable for what it’s not: It’s not currency you can hold in your hand. It’s not recognized by most Main Street stores. It’s not issued or backed by a national government. At their core, bitcoin and its imitators are sets of software protocols for generating digital tokens and for tracking transactions in a way that makes it hard to counterfeit or re-use tokens. A bitcoin has value only to the extent that its users agree that it does.

2. Where did the bitcoin system come from?

The original software was laid out in a white paper in 2008 by a person or group of people using the pseudonym Satoshi Nakamoto, whose identify remains unknown, despite several efforts to assign or claim credit. Online fantasy games had long used virtual currencies. The key idea behind bitcoin was the blockchain — a publicly visible, largely anonymous online ledger that records bitcoin transactions.

3. How does that work?

Think about what happens if you make an online transfer using a bank. It verifies that you have the funds, subtracts that amount from one spot in a giant database it maintains of accounts and balances, and credits it in another. You can see the result if you log on to your account but the transaction is under the bank’s control. You’re trusting the bank to remove the right amount of money, and the bank is also making sure you can’t spend that money again. The blockchain is a database that performs those tracking functions — but without the bank or any other central authority.

4. Who performs the bank function for bitcoin?

It’s done by consensus on a decentralized network. Bitcoin transactions can be made through sites offering electronic “wallets” that upload the data to the network. New transactions are bundled together into a batch and broadcast to the network for verification by so-called bitcoin miners.

5. Who gets to be a miner?

Anybody, so long as you have really fast computers, a lot of electricity and a desire to solve puzzles. The transaction data in each batch is encrypted by a formula that can be unlocked only through trial-and-error guessing on a massive scale. The miners put large-scale computing power to work as they compete to be the first to solve it. If a miner’s answer is verified by others, the data is added to a linked chain of blocks of data and the miner is rewarded with newly issued bitcoin.

6. How does the system prevent cheating?

Because every block contains data linking to earlier blocks, an attempt to spend the same bitcoin twice would mean revising many links in the chain. Plus, as miners compete, they verify each other’s work each step of the way.

Bitcoin and Blockchain

7. Wasn’t bitcoin used by drug dealers?

Yes, back when its primary appeal was its relative anonymity. It was, and still is, used by websites peddling everything from arms to drugs to paid hits. One such $1.2 billion marketplace, Silk Road, was shut down by federal agents in 2013. But others soon took its place. Joseph Stiglitz, a Nobel laureate in economics, said recently that bitcoin “ought to be outlawed” because it’s designed to evade regulation and “doesn’t serve any socially useful function.”

8. What changed?

Bitcoin’s reputation has improved, partly because there are fewer large-scale thefts like the one in 2014 in which bitcoins were stolen from a bitcoin exchange called Mt. Gox. (Security has improved, but it’s still an issue.) And many technology and financial firms grew interested in blockchain as an idea separate from bitcoin.

9. What is blockchain’s appeal?

Enthusiasts see it as a new way of doing all sorts of business. Costs could be lower without a central middleman doing the work of keeping track of transactions, and charging for it. Banks and stock exchanges have invested heavily in developing blockchain technology, while retailers like Wal-Mart Stores Inc. are experimenting with using blockchain for ensuring food safety. Central banks are even speculating about issuing blockchain-based official currencies. And other forms of blockchain emerged, often using their own cryptocurrencies to facilitate transactions. The most prominent is the etheriumblockchain, sometimes described as a platform for so-called smart contracts.

10. Why hasn’t the competition hurt bitcoin?

As the number of cryptocurrencies and tokens multiply — they now reach into the thousands — bitcoin remains the best-known, time-tested and valuable. That’s led to it being viewed by some as the most predictable venue for people wanting to bet on blockchain’s exponential growth.

Play Video

Bitcoin: What’s Coming in the Year Ahead
Bitcoin: What’s Coming in the Year Ahead

11. What explains the surge in bitcoin’s price?

New investors, and expectations of many more to follow, has increased the price of a bitcoin about 11-fold so far this year. CME Group and other exchanges plan to offer bitcoin futures contracts, potentially expanding bitcoin’s appeal. The fact that bitcoin’s software guarantees that there will be a finite supplyhas added to the fear of missing out for some investors. Coinbase, a bitcoin exchange, was overwhelmed by two to three times its normal traffic on Nov. 29, when bitcoin’s price soared past $11,000, making its service temporarily unavailable to some users. New crypto-focused hedge funds are opening up weekly, and already surpass 100. Most of them invest at least part of their funds in bitcoin.

12. Is this a bubble?

Possibly. Some people, most notably JPMorgan Chase & Co. Jamie Dimon, call bitcoin a “fraud.” Yet his own bank is considering offering bitcoin futures to clients. Fund manager Mike Novogratz calls cryptocurrencies “the biggest bubble of our lifetimes,” and yet he is starting a $500 million fund to invest in them. Depending on whom you talk to, bitcoin’s value could double again — or it could go down to zero.

13. How can I buy bitcoin or invest in it?

There are a bunch of ways, all with different risks. People can buy the coins directly from exchanges like Coinbase. Accredited investors can also invest in vehicles like the Bitcoin Investment Trust, which tracks bitcoin’s price. Soon investors will be able to invest through their regular brokers in bitcoin futures, and possibly in bitcoin exchange-traded funds, once regulators feel comfortable with the idea. But be warned: Even plenty of people who believe in bitcoin’s future think some wild rides lie ahead. As if in proof, the Nov. 29 surge to over $11,000 was followed by a 20 percent drop. And yes, you can bet on a crash.

The Reference Shelf

Before it’s here, it’s on the Bloomberg Terminal.


Categories: Business

Breaking: Venezuelans lined up at supermarkets after the government ordered stores to lower the prices of certain products in an effort to fight soaring inflation

Source: Twitter

Categories: World

Bernie Sanders: The American people do not want to spend billions of dollars on a wall which Trump told us would be paid for by Mexico. They want to protect Dreamers and working families.

Source: Twitter

Categories: U.S