Tag Archives: Greece

Financial Implications of Brexit, Currency Crash, Stock Markets Tumble

Osborne & Carney try to stabilise markets … and fail, at first

Pound v Dollar lowest in 31 years
Pound v Dollar lowest in 31 years

As George Osborne, David Cameron, Boris Johnson, and the Bank of England’s Mark Carney rush to reassure the financial markets – the Pound, the FTSE, and the UK’s sovereign credit rating all dive. Sterling has been battered and remains at a 31-year low, the FTSE 250 has witnessed in as many days two of its top-five one-day losses, and S&P have trashed our credit outlook by two-notches, increasing borrowing for the Government and businesses. A second BoE reassurance on Tuesday 5 July caused the FTSE 250 and Pound to dive further.

Former Governor of the Bank of England, Mervyn King essentially said “Keep Calm, Don’t Panic”:

“Markets move up, markets move down. We don’t yet know where they will find their level…What we need is a bit of calm now, there’s no reason for any of us to panic.”

Was this just a two-day shock? We haven’t seen all out financial Armageddon, but just what are we getting, and for how long?

As of Tuesday 28 June morning, adventurous investors were buying into the flatlined market and the FTSE 100 was up 2% and FTSE 250 up 3.3%, although within the hour the gains had fallen back to 2.6-2.8% – still 11% down since the Referendum. At the close it was 3.5% up, restoring a quarter of its Brexit losses. To quote the Financial Times, Markets Live blog:

“It’s still a bloody mess, even if markets have steadied.” FT, 11am Tuesday 28 June

In the first hour of Tuesday’s trading the Pound was up just 1%, barely 1.5c higher after its 18c fall, but by 10.30am had lost half that gain already, only to regain it after lunch and lost most of it by 5pm. There has been no recovery against the € Euro.

Perhaps, this was on hopes of a second referendum, called for by millions including Tory Health Secretary Jeremy Hunt, and Sir Richard Branson, despite being ruled out by the outgoing PM, David Cameron.

By Wednesday 29 June midday, the FTSE 100 had recovered all of its losses, whilst the FTSE 250 remained 10% down.

It could be, too, that the market is recovering on the news that nothing will happen in the short term, that Brexit reality is delayed, and won’t kick-in properly till after Article 50 is actioned and up to 2 years later Exit terms agreed and then years worth, but some counts 5-10 years, of negotiating new trading terms with the EU and some 50 agreements with the rest of the world that were based on our membership of and access to the European Single Market.

Thursday 30 June saw previous day gains restore the FTSE 100 to parity and by the close it was 2% above 23 June’s high. Whilst the more British based companies index, the FTSE 250, remains 7% down despite two more days of gains. It has gained 8.5% or 1300pts up on 14,967 since its low point on Monday. The Pound:Dollar exchange rate added 2%, lost 1% overnight, then made it back by lunch but after Mark Carney said financial easing might be required and Boris Johnson ruled himself out of the Conservative leadership, the Pound lost all the week’s gains, falling another 1.5% and remains 12% down.

In a Radio 4 interview early this week, George Osborne repeated his claim that Brexit “would make Britain poorer” and lead to “an economic downturn”.

Mark Carney had been accused of breaching the Bank of England‘s (BoE) independence by commenting quite forcefully pre-Referendum that Brexit might trigger recession. So, for him to say we are “resilient” now, is a little “flip-flop” but he did say that in the long term growth would be slower and the Bank could only “mitigate” against negative effects rather than resolve them. Mitigation includes the possible injection of £250bn.

Currency Markets

Currency Markets GBP Pound Crash against USDollar
Currency Markets GBP Pound Crash against USDollar

The £ Pound on Monday did not rally against the $ Dollar, instead, it continued its slide to around $1.31, nearly 13% off its 2016 peak to which it had risen on the short term belief that the UK would Remain. Instead, it has settled at its lowest level for 31 years, despite a 1% recovery on Tuesday morning. A week later, and by Wed 6 July Sterling dropped as low as $1.28 and is now hovering at $1.29, a 15% devaluation.

Sterling is predicted to fall further to around $1.15-$1.25, a 20-25% devaluation. This could add 15-20p to a gallon/3-5p a litre to the price of petrol within the month, as oil is priced in Dollars. There could be an 8% rise in food and drink prices imported from Europe since at €1.17 the Pound is 23% off its Euro peak and nearly 9% down since Thursday.

Global Stocks and UK Shares

FTSE 250 drops 11.4%, worst drop ever
FTSE 250 drops 11.4%, worst drop ever

Some $2.5 trillion was wiped off global markets in hours after the Referendum result – between 100-400 years worth of the nobody-can-agree-on-the-actual-figure of UK contributions to the European Union. Seeing £100bn wiped off leading FTSE companies in 2 days is way more than the £350m a week (less than £10bn/year after rebates) supposed EU savings, i.e., equivalent to more than a decade’s worth of EU contributions. So no new money for the NHS then!

Stock markets in the poor-performing economies of Europe, e.g., Greece, Italy and Spain, tumbled 12-15% on Friday, other world markets fell 3-8%.

Italy announced a €40bn rescue of its banks after they lost a third of their value post-Brexit vote, despite a 5% bounceback they remain over 25% down since Thursday, June 23.

FTSE 250 as UK Financial Indicator

FTSE 250 Share Index Crash
FTSE 250 Share Index sees record one-day fall

A far better indicator than the FTSE 100, which has ‘only’ seen 2-3% daily falls since Brexit and a 2% recovery on Tuesday, is the FTSE 250. It is made up of more mid-size predominantly British companies with 50-70% UK-based trade – the powerhouse of employment in the UK. Some 75% of Small and Medium Enterprises (SMEs) voted Remain.

The FTSE 250 has lost over 14% since Thursday’s vote, reaching 7% late-afternoon, continuing its near-8% slide last Friday when, at its worst, it dropped 14% in hours – its “worst drop ever”. It’s nearly 20% off its peak due to Brexit uncertainty over the last few months, its worst crash since 1987. During the 2008 crash, over a number of months, it lost nearly half its value leading to lay-offs. recession and austerity.

As to the financial market reaction not being as bad as 2008, that is not yet evident. The FTSE 100 is insulated by its international makeup but the FTSE 250 is more British. Back in October 2008’s crash it suffered a one-day fall of around 6.5% amounting to nearly 40% over 3-4 months. After the Referendum, it’s lost 8% and 7% across 2 days. It’s fourth and fifth biggest one-day falls ever from Sep/Oct 2008 have been eclipsed by Brexit day 1 and day 2, so far. This is the worst FTSE 250 crash since 1987, although Brexit days 3 and 4 are looking brighter, having recovered over a third of the losses, yet it remains 10% down, despite 1.9% gains Wednesday morning. A week later and by Wed 6 July, the FTSE 250 was down again drifting towards an 11% loss, eradicating any intervening recovery,

The FTSE 350 lost £140bn in a day, recovered, lost it all again by 4.30pm Monday but has now recovered 5% from its 7% loss.

Banking Sector

Banks (domestic and foreign) in Britain have been told by EU members France and Netherlands that they will not be able to use the European financial ‘single passport’ access to unhindered trading resulting in additional banking costs and a reduced incentive for US and Asian banks to be based in the UK – Dublin, Frankfurt and Paris, are suddenly more attractive and expected to gain financial jobs from the City of London. Barclays and Royal Bank of Scotland (RBS) have lost 35% in value since Thursday and had their shares temporarily suspended on Monday. On Tuesday there was around a 5% recovery.

Whilst many 99%-ers on the Left might celebrate another banking collapse, those businesses that employ millions depend upon a stable lending banking system to finance their growth and pay wages.

Inflation Risk

The costs of imported raw materials, food, wine, petrol etc could rise 10% because of the Pound’s fall alone. If British businesses selling at home want to keep prices the same, they will have to cut back office costs and jobs instead. Yes, we will recover, but book a “one-way ticket”, to quote George Osborne, for more austerity, unemployment and inflation pain first.

Housing Market

House prices may fall in the short term according to Savills but so will affordability, mortgages, and lending criteria stress tests may rise. International buyers may take advantage of a cheaper Pound to buy here, whilst locals are priced out of the mid-market. House builders have seen significant share price falls and the FTSE triggered its ‘circuit-breaker’ to suspend trading in all house builders temporarily. For instance, Taylor Wimpey fell 16% (40% since Thursday), Persimmon 17.4% (38% in 2 days) and Barratt Developments fell almost 20.7% (38.4% in 2 days), Bovis Homes 33% in 2 day etc. In addition, with the credit rating trashing they will find it harder to fund new building developments, further intensifying our domestic housing crisis.

Radio 4’s You and Yours is reporting people seeing immediate 5% drops in house sale prices due to Brexit – ‘Brexundering’.

We could eventually see a quadruple-whammy of wage restraint, credit crunch, inflation and interest rate rises, affecting house buyers and stifling the pressured renting sector too.

Pensions

It has been reported that particularly those living abroad may lose UK annual increases with inflation to their pensions, but also those at home might lose the “triple lock” guarantee. Pension funds held privately on the stock market will obviously go up and down with the fortunes of the FTSE, currently down. Of course, Leave leader, Boris Johnson said pensions would be unaffected, he also said the NHS would get £350m a week and that among many pseudo-promises has already been pulled.

Credit Rating and Economic Outlook

After the Brexit vote, Moody’s changed the UK credit outlook to “negative” from stable. Fitch see it likewise and downgraded it to AA negative. Today, Standard & Poor (S&P) have followed suit and downgraded our last remaining Triple-A national credit rating two-notches from AAA to AA:

“In the nationwide referendum on the U.K.’s membership of the European Union (EU), the majority of the electorate voted to leave the EU. In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. … The vote for “remain” in Scotland and Northern Ireland also creates wider constitutional issues for the country as a whole. Consequently, we are lowering our long-term sovereign credit ratings on the U.K. by two notches to ‘AA’ from ‘AAA’.” – S&P

“Fitch has revised down its forecast for real GDP growth to 1.6% in 2016 (from 1.9%), 0.9% in 2017 and 0.9% in 2018 (both from 2.0% respectively), leaving the level of real GDP a cumulative 2.3% lower in 2018 than in its prior ‘Remain’ base case.” – Fitch

“S&P maintained its negative outlook on the UK, which means there is a one-in-three chance of another downgrade in the next two years. The UK is now deemed less credit worthy than the US and EU by S&P, and the decsion marks its exit from an elite club of countries such as Switzerland and Australia that stil have a AAA rating.” – Daily Telegraph

A survey of 1,000 directors at the weekend reveals that roughly 20% are expecting to issue redundancies, over 20% are freezing recruitment, and 20% considering moving some operations to Europe.

Worst Economic Crisis since WWII

A former Organisation for Economic Cooperation and Development (OECD) economist has warned that the UK faces its worst economic crisis since the Second World War. It is certainly on track to challenge 2008’s banking crisis and 1987’s Black Monday crashes which saw £63bn wiped out. Other crises include  the 1974 General Election which saw one-day losses of 7.1%. Back in 1929 the Dow Jones witnessed a 22.5% drop in a single day.

Always Look on the Bright Side …

Yes, we will weather it, and in the long term it may make little difference, but the short-medium term is going to be harder. We still have to pay into the EU budget, but will begin to be shut out of meetings and decisions, we will still have freedom of movement and migration for EU citizens for at least 2 years, if not beyond if we follow the likely Norway or Swiss models. It is highly unlikely the EU will allow us the Canadian model, indeed Angela Merkel said today that the UK would have to accept freedom of movement. The EU do not want to encourage other exits. Many are trying to find legal ways to vote out of the Referendum result.

 

Olympic Games, Spirit & Ideal Reborn in Athens 1896, 120 years ago today

First Modern Olympic Games, Greece 1896

Olympiad 1896 First Modern Olympics, Athens report cover
Olympiad 1896 First Modern Olympics, Athens report cover

On April 6, 120 years ago, the Olympic Games, its spirit, and modern ideals, were reborn in Athens, Greece. They were not the first attempt, nor born overnight, and came some 1600 years after the last ancient Greek games which had run for nearly 1200 years every 4th year or olympiad. In 394 AD the Roman Christian emperor Theodosius banned all pagan festivals including the Olympics, despite New Testament metaphors drawing inspiration from athletics. It took a Frenchman, inspired by the traditions of several English towns and cities, in combination with the philanthropy of two Greek brothers – who rebuilt an all-marble sports facility on the site of an ancient Athenian stadium, to restore the Olympic Games that we know today.

History of pre-Modern Olympics Games

Several attempts to bring back the Olympic Games were made during the nineteenth century and earlier. Some were local and just used the Olympic name. These included the Cotswold Olimpick Games, near Chipping Campden in England, first organised by Robert Dover between 1612 and 1642.

220 years ago, revolutionary France launched L’Olympiade de la République, between 1796 and 1798 in front of 300,000 spectators in Paris. These games included a chariot race and were dedicated to la paix et à la fécondité – “peace and fertility”. The 1798 Games introduced metric distances and measurements for the first time.

Google Doodle 120th anniversary of first modern olympic games
Google Doodle for the 120th anniversary of first modern olympic games

In 1850 Dr William Penny Brookes founded an Olympic event at Much Wenlock, Shropshire, which, in 1859, became known as the Wenlock Olympian Games. Still continuing to this day, its aim was:

“to promote the moral, physical and intellectual improvement of the inhabitants of the town and neighbourhood of Wenlock, and especially of the working classes, by the encouragement of outdoor recreation and by the award of a prize…”

Not to be left out, Liverpool held an annual Grand Olympic Festival between 1862 and 1867, including events in Llandudno 1965-1966. They were founded by John Hulley and Charles Melly, and were open to all local and international ‘gentlemen amateurs’, although the first truly national Olympic Games were held at Crystal Palace Park Cricket Ground and on the River Thames at Teddington, 31 July 1866. In 1869, Hulley also organised Britain’s first velocipede and bicycle races, at which the UK now excels.

Leicester, in 1866, also held a Grand Olympic Festival, on the site of the current University of Leicester, Fielding Johnson Building, but which was formerly the Leicestershire and Rutland Lunatic Asylum.

The forerunner to the British Olympic Association was the Liverpool-founded National Olympian Association, in 1865, which went on to inspire the International Olympic Charter. The OC outlines the “fundamental principles of Olympism” and rules of the International Olympic Committee (IOC).

Olympic Games, Athens

Spiridon Louis entering the Athens Olympic stadium at the end of the 1896 marathon
Spiridon Louis entering the Athens Olympic stadium at the end of the 1896 marathon

The 1820s and 30s had seen interest in a revival of the Olympic Games gathering momentum. In 1856 the sponsorship of Evangelos and Konstantinos Zappas was accepted by the Greek king to fund the restoration of the Panathenaiko Stadio, or “Panathenaic Stadium“, in Athens. This was not, in fact, the original ancient Games location, since the older panhellenic Games were held at Olympia, but instead, part of the Athenian Games tradition.  1859, 1870 and 1875, then saw the first modern Greek Olympics held.

In 1890, Frenchman Baron Pierre de Coubertin, was inspired to found the International Olympic Committee after visiting the Wenlock Olympian Games. This led to the first international Games, of 1896, also at Athens. The top prize was actually a Silver Medal, rather than Gold.

1896 Olympic marathon
1896 Olympic marathon

There were just 9 sports and 43 events over 10 days, but, significantly, the marathon, actually run from Marathon, was won by Greek athlete Spyridon “Spyro” Louis in front of 100,000 spectators.

Women’s Olympic Games

Although Athens, was not dissimilar to the Games of Liverpool and Wenlock, it was still unlike our truly modern Games, in that women were excluded from their late-nineteenth century revivals.

De Coubertin was opposed to women competing, although in 1900 they were allowed to enter tennis and gold, and London in 1908 added the Figure Skating event for women, gradually women became involved. This was not fast enough for another French national, and rower, Alice Milliat, who founded the independent Women’s Olympics in Paris in 1922, continuing through to 1934, owing to the refusal of the IOC to allow women to enter track and field events. The IOC forced a name change in 1928 to the Women’s World Games, in exchange for grudgingly admitting more events for women at the Olympics.

Even in ancient Olympics, although separate, there were some female Games, such as those of Hera at Olympia which included a separate racing competition for women. Spartan women used to take part in sports and exercises, semi-clothed – with one breast exposed, like Amazon archers, leading to a “remarkable conjunction of homosexuality, feminism, and athletics” at Sparta. Plutarch suggests that younger Spartan girls and boys would compete and exercise in the nude alongside each other.

Ancient Olympic Traditions

Most of the ancient Olympics were competed in, naked – and only by Greek-speaking freemen. For a while, women were able to enter chariot horse teams, but not enter themselves. Furthermore, they could not spectate if they were married women. Stories tell of one chariot team owner being caught crossdressing as a man to enter the trainers area and watch her team which led to even trainers having to be in the nude. Even the word ‘gymnasium’, comes from the Greek gymnos, “naked”.

“The modern Olympic ideal is completely alien to the spirit of the Greek original, which despised women, slaves and foreigners and celebrated sectarian religion, nudity, pain and winning at any cost.” – Christopher Howse, Daily Telegraph, Athens 2004

Early-on, loincloths were outlawed among the competitors and the only thing allowed was a kunodesme, “putting the dog on the lead”, penis-strap, to stop it getting in the way. Many events involved the athletes covering themselves in olive oil – the mind boggles at the wrestling events!

“The attempt to link modern athletes and ancient athletes inevitably runs up against major cultural differences…we must never lose sight of the popular savagery of the pankration. Even in more conventional events, antiquity showed a tolerance, or perhaps a taste, that is utterly alien to the modern world.” – New Republic, 2004

Rio de Janeiro, Brazil, 2016

The ancient Games included sacrifices to the gods, the effective wearing of knuckle-dusters in the boxing, and opportunities for music and the arts alongside the body-worship and savagery. The next Games in Rio, this summer, may omit the sacrifices and savagery, and the nudity, but will still put athletic bodies centre-stage. The modern Olympic ideal of the taking part being more important than the winning, is long gone. Instead, we have doping and bribery scandals, not to mention long-running issues over the place of intersex athletes and how to include and ‘define’ them, given that the Games now includes women in most of its events rather than the original’s men-only events. The IOC can’t make up its mind on the definition of male and female athletes (like Caster Semenya and Dutee Chand), leaving many intersex athletes out in the cold, censured, or even facing compulsory surgeries to conform to standardised sex ideals.

The mission of Olympic Spirit is to:

“build a peaceful and better world in the Olympic Spirit which requires mutual understanding with a spirit of friendship, solidarity and fair play – Olympic Spirit strives to inspire and motivate the youth of the world to be the best they can be through educational and entertaining interactive challenges. Olympic Spirit seeks to instill and develop the values and ideals of Olympism in those who visit and to promote tolerance and understanding in these increasingly troubled times in which we live, to make our world a more peaceful place.”

 

 

Elections – Psephology, Psephologists, Psephos, Pebbles, Politics and Polls

Psephology is literally the -ology or study of pebbles – Greek ψῆφος psephos, or ‘pebble’, or the more prosaic, study of elections. It is a branch of political science notoriously fraught with failed election predictions via pre-election sample polling that can totally miss the main result. The term was first used in the UK in 1952 by historian R B McCallum to describe “the scientific analysis of past elections”. Elections and ‘scientific’ seem somewhat oxymoronic to me!

Athenian Secret Ballot Discs WikimediaVoting using pebbles or such common items such as mussel shells was certainly in use in 5th century BC Greece and earlier. By the 4th century BC some were using bronze or lead ballots with solid or hollow axles through the middle to distinguish between voting outcomes. The ballot with the pierced axle is inscribedpsephos demosia” or “public ballot”.

We get the word “ballot” from the Italian word ballotta or medieval French ballotte, a “small ball”. The casting of ballots is not to be confused with the throwing of stones such as done by a ‘ballista’, the medieval siege engine that could fire heavy bolts or large round stones. Latin ballista comes from the Greek βαλλίστρα ballistra from the Greek verb βάλλω ballō “to throw”.

Ostraka OstracismBy the 2nd century BC the Romans were beginning to use paper ballots – more practical than the Greek use of ostraka, shells or broken pottery sherds/shards, used to inscribe the names of people to be voted for as election nominees, or for rejection, as persons to be ostracised. Hence why, and from where, we get the word ostracism.

Votes, for or against, guilty or innocent – often a black stone for the former (hence ‘blackballing’ someone) and white for the latter, were deposited in urns or jars and subsequently counted. Initially, votes and voters were not secret or private, but, ever-innovative Greek democracy was beginning to establish the need for secret voting by the 5th century BC.

Ancient Greek Voting Ajax British Museum WikiA Greek wine cup of the period,in the J Paul Getty Museum Collection, depicts an early voting scene with an unhappy outcome. During the Trojan War, after the killing of Achilles, two Greek heroes, Ajax and Odysseus, both claim and compete for Achilles’ possessions – his weapons and armour, Ajax having saved and retrieved Achilles’ body from battle with the Trojans. Rather than argue or duel a vote is held. The terracotta wine cup shows Odysseus getting more pebbles and Ajax’s head-in-hands disappointment leading to him committing suicide by falling on his sword. He’d lost by just one vote and ironically took his life on a pebble beach, as depicted on the inside of the cup.

Well it was civilised up until that point! One can only imagine the losers in modern elections or contests like Eurovision and X-Factor falling on their swords after losing. Although, the psychological pressure to win in these talent competitions is so intense that I don’t doubt many end up depressed, self-harming or worse.

In the Bible, in Acts 26:10, St Paul describes how pre-conversion he’d sent Christians to their deaths by casting his vote (psephon, Strong’s Number #5586) against them.

Psephos is also the eponymous name of Adam Carr’s excellent Election Archive, the world’s largest online archive of election statistics from 182 countries and counting – Eurovision, So-and-so’s Got Talent, and X-Factor shows are not included! It includes excellent coverage of Australian, US, and UK, elections down to regional results.

Paul the psychic Octopus WikimediaPolling and predictions are perilous tasks for the non-psychic, being as relied upon in reality as an aquarium octopus vulgaris divining the World Cup results. Actually, Paul the German ‘common’ (for that is what vulgaris literally means) octopus was fairly accurate in his short 2 year life at predicting German football results! He was 85% right about the 2010 World Cup results and 100% right about the German games.

In order to better illustrate, inform, and “sex-up”, the presentation of political results, the BBC began, as far back as 1955, using the now infamous Swingometer – not an indicator of how polyamorous one is at certain private parties! Initially, the Swingometer was created to show swings between the two main political parties. From 1964 it began to illustrate the likely effect of voting on the composition of the UK Parliament, number of seats, majority or hung parliament outcomes.

SwingometerThe Swingometer was invented by Peter Milne and enhanced by psephologist Robert McKenzie, who, though Canadian, was one of the main BBC’s General Election programme presenters (1955 to 1979). McKenzie had also been, in 1963, a strong interviewer, a.k.a. early Jeremy Paxman-style, of Lord Hailsham during the infamous Profumo scandal.

The ebullient Peter Snow took over, following McKenzie’s death, and became renowned for his excitable gesticulations and reintroduction of the Swingometer from 1992. In 1994, he parodied his election night role by presenting analysis of the Eurovision Song Contest entries.

With the onward march of technology and television, election coverage has become ever more graphic, not in the Game of Thrones violence sense, just a plethora of graphical data, charts, numbers, infographics, visuals – but it seems the predictions are no better and people no more interested in participating.

Referendums (or referenda – see below) have been held recently in Crimea and Donetsk with dubious methodologies and legitimacy. Voter turnout of around 75% and pro-Russian support were surprisingly high for a nation that 22 years ago voted 90% in favour of leaving the Soviet Union. But then, that’s politics for you. Political affiliation and union, these days, needs its own swingometer to measure current dissatisfaction with the incumbent rulership.

The UK will soon have its own referendum on full devolution for Scotland – why not Wales, Northern Ireland, London and Greater Birmingham too? The fabulous 1949 Ealing Studios comedy, Passport to Pimlico, comes to mind with its comedic declaration of independence!

The main political parties are also under pressure to offer a referendum on leaving the European Union, unfortunately it is the European Broadcasting Union we would have to leave to get out of the Eurovision Song Contest!

At least pedants will always be able to argue whether it is referendums or referenda – it doesn’t affect the outcome, but is something to talk about during the vote count!

[Parts of this article were first published by me here]

Image Credits

http://en.wikipedia.org/wiki/File:Athenian_Secret_Ballot.jpg
http://commons.wikimedia.org/wiki/File:AGMA_The_Ostracism_of_Themistocles.jpg
http://commons.wikimedia.org/wiki/File:Voting_scene_BM_E69.jpg
http://en.wikipedia.org/wiki/File:Oktopus-Orakel_Paul_mit_Schuh.JPG
http://en.wikipedia.org/wiki/File:Swingometer.jpg low resolution fair use for the purpose of identification and reference