Bloody Brothers

By DeusExMacintosh

David Cameron has said he has “no bad blood” towards Conservatives who defied orders to oppose a call for a referendum on the UK’s EU membership.

Ministers won the vote but 81 Tories backed the call, the biggest rebellion on Europe against a Conservative PM. The prime minister said he knew people felt “strongly” about the issue but he had to “give a lead” on the issue.

Some Conservative MPs were annoyed that the party imposed a three-line whip on a backbench motion.

Asked whether he regretted the order – which meant any Conservative MP who voted against the government would be expected to resign from government jobs – he said: “No I don’t, in politics you have to try to confront the big issues, rather than try to sweep them under the carpet and that’s what we did yesterday.”

He said Europe had always been a difficult issue for the Conservatives and “always will be” but he had to do the right thing for the country.

“It wouldn’t be right for the country right now to have a great big vote on an in-out referendum,” he said…

In total 81 Conservative MPs, including two acting as tellers (the name given to the MPs who count the votes) supported the referendum motion and two more MPs – Mike Wetherley and Ian Stewart – actively abstained by voting both yes and no.

A further 12 MPs did not vote – although that figure includes Foreign Secretary William Hague, who put the government case against the motion before having to leave the debate early to travel to Australia, and another minister Mike Penning, who was in China.

It was the biggest rebellion against a Conservative prime minister over Europe – the previous largest was in 1993, when 41 MPs defied John Major on the Maastricht Treaty.

BBC News


  1. kvd
    Posted November 7, 2011 at 12:23 pm | Permalink

    OK Lorenzo. I gives up; please stop with the problems; where are the solutions?

    Much as I hate to admit it Patrick is looking prescient in his contempt for the various (non)deals of the past couple of months. It’s not that I hate that he’s probably right; more that I hate the thought he is probably right – as Gordon Brown might have said to clarify meaning.

  2. Posted November 7, 2011 at 3:12 pm | Permalink

    [email protected] There are no solutions, merely outcomes of various degrees of disastrousness.

    Two bright, photogenic young things discuss the full horror.

  3. Patrick
    Posted November 7, 2011 at 4:04 pm | Permalink

    Ah, kvd, I’m so sorry.

    Unfortunately Europe’s social democratic party was always going to come unstuck, it was just that even the most skeptical libertarians didn’t think it would happen so quick or that when it did the Europeans would be so inept (although in hindsight I’m kicking myself at missing that one haha).

    It’s a real tipping point kind of thing, mediterranean social democracy – once the illusion cracks it really cracks.

    That sound you hear is the sound of a massive structural shift in the west to greater labour-market flexibility, privatisation and de-regulation. Either that, or the hoofbeat of the four horses. I’m hoping for the former.

  4. Posted November 9, 2011 at 3:46 am | Permalink

    [email protected] One of the aformentioned bright young things has a couple of suggested solutions. Unfortunately, the rely on the ECB acting as something other than the Deutschesbank on steroids, so are unlikely to happen.

  5. kvd
    Posted November 9, 2011 at 5:25 am | Permalink

    [email protected] that’s very interesting, and I’m also attracted by comment #1 over there re vat/reverse vat. But that approach assumes all parties are playing by the rules, not operating in a black economy.

    The thing about 30 year bonds which always intrigues is what you’re actually getting? I mean have you ever done a NPV calculation on the cashflows arising from 30 year bonds, assuming your 2-3% ‘good’ inflation range? I’m thinking what you are getting is reliability of inflows and outflows – not the eventual repayment of same.

    I saw there was an Italian bond series which sought to address this as to interest, by accounting for inflation each period in addition to the nominal interest rate. But even that did not seem to address just how deflated the capital amount would be over/after 30 years.

  6. Patrick
    Posted November 9, 2011 at 10:36 am | Permalink

    kvd the NPV is not the point. You can always trade the bond to avoid capital depreciation?

    I am not as impressed by those recommendations.
    Here’s a hint for would be euro-heroes: the yields on Italian et al debt are the symptom (the liquidity crisis), they are not the problem (the solvency crisis)!

    Scenario 1 is basically correct insofar as liquidity goes but ignores the solvency aspect – as I indicated above it is just treating the symptom so as to kick the can down the road.

    Germans, not being as stupid as market commenters, have realised that this is a once-in-a-lifetime chance to ‘fix’ the absurd Mediterranean economies – i.e. treat the disease, not the symptom.

    Scenario two just makes no sense to me at all. I don’t understand how the ECB assuring the liquidity of the B-class bonds does anything at all to make the A-class liquid. Even assuming that this could somehow treat the symptom, it would not treat the disease any more than option A.

    I thought this was particularly funny:

    3) The EU or owner of SCB still has a stick. It can always sell its holdings of Sovereign Debt and push a country back into default territory.


    It’s like the poor guy thinks the status ante quo (call it the ‘give my stupid greek cousin my credit card’ model) was so freaking brilliant he just wants to recreate it.

  7. kvd
    Posted November 9, 2011 at 11:55 am | Permalink

    kvd the NPV is not the point. You can always trade the bond to avoid capital depreciation?

    Yes, I do understand that Patrick, but the point remains that a promise to pay, say, $1bn in 30 years’ time is the same as a promise to pay roughly $400M tomorrow morning – assuming a 3% constant or average inflation rate.

    Sure, people trade them, and I suspect the inflation factor is offset by some sort of ‘need to employ cash opportunity cost’ against a sovereign guarentee, but my word, that is an enormous differential. That’s all I’m saying.

  8. Patrick
    Posted November 9, 2011 at 12:42 pm | Permalink

    I think the missing point, kvd, is that the interest rate on a sovereign 30-year note should be the inflation rate, i.e. there should not be any capital depreciation.

    I.e. the latest US Treasury 30 year notes auctioned at a stonking $112 per $100 Note with a rate of 3.75%; which translates into a yield of 3.12% which is basically the market’s expectation of long-run US inflation.

    Fwiw the 30-year German version is now trading at around 2.28%.

    The catch is the solvency discount (probably close to nil for both of those bonds), which is when you realise that the market long ago ‘rated’ non-German euro bonds way below AAA.

  9. kvd
    Posted November 9, 2011 at 1:00 pm | Permalink

    Too complex for me Patrick. This is all ‘the king has no clothes’ stuff. You’re happy to get a simple interest return equating roughly to the anticipated inflation rate?

    I’m thinking that rate is cumulative in effect.

  10. Patrick
    Posted November 9, 2011 at 1:48 pm | Permalink

    Maybe I’m stupider than I feel, but why does it matter that it is simple?

    You can of course choose to re-invest the coupon if you would rather it compounded.

    Which would give you about $304 at the rates cited above in 30 years, assuming of course a constant yield.

  11. Posted November 9, 2011 at 6:57 pm | Permalink

    Let’s not forget the consol!

  12. Patrick
    Posted November 10, 2011 at 4:53 am | Permalink

    Or the war bonds, which are similar. Quite a few perpetual securities in the UK!

  13. Posted November 10, 2011 at 6:33 am | Permalink

    Stratfor has a simple explanation as to why the Northern European economies are richer. That canals and railroads are the work of people seems to slip by their analysis. As done that useful waterway called the Mediterranean.

  14. Posted November 10, 2011 at 11:02 am | Permalink

    Meanwhile, a Chinese econocrat tells the Europeans they need to reform their labour laws and welfare systems.

    Oh, the irony! (I wonder how many American liberals/progressives are going to continue to push the line “they do it better in Europe!”).

  15. Posted November 10, 2011 at 12:16 pm | Permalink

    [email protected] Paul Krugman has a solution.

  16. kvd
    Posted November 10, 2011 at 2:55 pm | Permalink

    Lorenzo I read that piece when it came out. It seems to suggest that a solution might be to print more money. But it’s a catchy tune 😉

    Patrick, can’t find a suitable example of the effect of deflation, but maybe think about the RBA’s inflation calculator – and how it applies in reverse to capital sums?

  17. Patrick
    Posted November 10, 2011 at 6:09 pm | Permalink

    Nope, kvd, I’m too thick for that. You’ll have to explain what you want me to think about more slowly, I’m sorry!

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