CNS: In remarks following England’s historic vote to exit – Brexit — from the European Union, the head of the UK Independence Party, Nigel Farage, who has fought for Brexit for decades, said “the EU’s failing, the EU’s dying, I hope we’ve knocked the first brick out of the wall.”
Farage, a member of the European Parliament since 2010, also said the next step is to set up a Brexit government in England – Prime Minister David Cameron announced his pending resignation following the vote – and proposed that June 23 become a national bank holiday, “and we will call it Independence Day.”
“An opinion poll in the Netherlands said that a majority there now want to leave,” said Nigel Farage in a speech today, covered by numerous media (and video here from RT). “So we may well be close, perhaps, to a Nexit. And similarly in Denmark, a majority there are in favor of leaving. So we could be quite close to Dexit. I’m told the same may apply to Sweden, and perhaps Austria, and perhaps even Italy too.”
Go for it, the lot of you.
So it’s gonna be musical chairs with Merkel playing DJ: France, Austria, Netherlands, Hungary, Finland, Denmark, Italy…
When they break up, I will be interested to see who the new “10” will be.
After all, they’re just another brick in the wall.
The EU could always react poorly, invade and overthrow withdrawn EU territories to force their collective will against the people of member states.
It worked well for Lincoln.
Next up, Merkel will put the band back together and “re-visit” the rest of Europa, once again, this time in the name of “Gebensraum”.
Britain Leaves EU: THE SKY IS FALLING!
They predicted it and, for a moment, I panicked. On my morning walk today, I noticed I was breathing that same stuff that I see surrounding the clouds. Maybe they were right and the sky had really fallen. Maybe the end was near.
After a little recovery I realized that it was just the same stuff that I had been breathing for the last 59+ years: air. So, much to my relief, the sky is still pretty much in the same place as it had been last week.
But the Dow did shed about 3.5% of its value yesterday, which must mean that all of those greedy capitalist stockholders (such as teacher pension funds, etc.) pulled 1/285th of their stock certificates out of the vault and burned them. Or maybe all of the businesses blew up a similar proportion of their factories. All this because the British people decided that they didn’t want to be governed by the European Commission any more. (At least, for once, it wasn’t due to global warming!)
Actually, what happened was that those who had stocks sold them and those who didn’t bought them. Believe it or not, but there were just as many shares of stock after the Brexit vote as there were before it. The buyers didn’t burn the proceeds from the sales, but instead they put them into low risk highly liquid equities, where they will stay until these same people decide that it’s a good idea to buy again. The nervous nellies (as the late Louis Rukeyser loved to label them) followed suit, pushing the market down further. Once it bottoms out, those in the know will move their low-risk money back into stocks and the market will go back up. It happens all of the time.
But maybe it won’t. If you listen to the 48% of financial experts that the media has chosen to interview, the Brexit will be an un-recoverable calamity. However, to understand this figure properly, you first need to understand the nature of stock market prognosticators. The very best stock market predictors are the active traders in the stock exchanges. They have teams of economists working for them and they use the latest analysis software – all to predict the future of the specific stocks in which they trade. And in every single transaction, one of them gets it right (i.e. the buyer of the rising stock or the seller of the falling stock) and the other gets it wrong. So in other words, either 50% of all stock market experts get it wrong all of the time, or all of the experts get it wrong 50% of the time, or something in between. Nonetheless, 50% of all stock trades result in regret. Think about it: the 48% of the experts warning us of a Brexit disaster are of a class of experts who get it wrong 50% of the time! Who would fly on a plane designed by engineers who got it wrong 50% of the time? Maybe the sky will only lower in elevation only by about 50%.
But, you might say, “The value of the British Pound has fallen as a result of the Brexit.” Well, it dropped from $1.45 per GBP to about $1.37 per GBP overnight as a result of the news. So you might be on to something. If current trends continue, it should be trading at $0 by then end of next month and next year they’ll pay us to take them off their hands. However, the Pound was trading at $2.35 in 1974, the year before Britain joined the EU, so it still has a lot of making up to do before we can blame an exchange rate catastrophe on the Brexit.
And the lower Pound is not such a bad thing. For the Brits, it means that their goods and services become more affordable to the rest of the world, which will result in an increase in exports – even to Europe. (Do you really think that the French, the Germans or the Italians are going to pass up a bargain out of spite?) This will result in an increased number of people employed in Britain, which will increase British tax revenues, which will pay for all of those social services that they have to provide for the influx of migrants.
It’s also a great deal for American tourists to Britain. Just think, the average price of a pint went down by about 7%. In other words, for every 14 pints you drink, you get the 15th one free – and you don’t even have to get numbers punched out of a dog-eared loyalty card to get it! (For you teetotalers, the same analysis applies to bangers and mash.) Now all you have to do is find the time to get over there.
Anyone who follows the stock and currency markets knows that long term trends in the markets rarely have anything to do with a single event. Britain had a healthy economy before it entered the EU and it will have a healthy economy once it leaves. It will all really depend on the world-wide demand for goods and services and Britain’s ability to fulfill that demand.
The same cannot be said for the EU, since Greece is still a member and the Greeks are still treating the Euro as though it comes from a Monopoly set. If Greece defaults on its sovereign debt, then Spain will be left holding the bag, and Italy will follow suit.
At any rate, the Brexit vote will not start the end of the Western economy. Britain will survive. We will survive. The EU might not, but its prospects were dim any way.
And if you find yourself concerned at inhaling that stuff from the clouds during your next sojourn in the great outdoors, don’t worry: it’s just air. The sky really is not falling.
A lot of people are using the divorce analogy. It’s apt. When your spouse is a psychotic leech it’s worth the pain and chaos of a divorce to get out of the terrible relationship.