Tuesday, August 9, 2016

Brexit: Fantasy vs. reality

I am seeing an unusual level of rising anxiety over the political implications of Brexit. Last week, Stratfor published a report entitled "Brexit: The First of Many Referendum Threats to the EU", which detailed the threats of additional referendums to the future of Europe.

Jim Rogers, writing in the Daily Reckoning, also painted a dire picture of the world after Brexit:
Are we at a point right now where it feels like it’s accelerating. People all over are very unhappy about what’s going on. If you read history, there are a lot of similarities between now and the 1920s and ’30s. That’s when fascism and communism broke out in much of the world. And a lot of the same issues are popping up again.

Brexit could be a triggering moment. This is another step in an ongoing deterioration of events. It’s also an important turning point because it now means the central banks are going to print even more money. That may prop the markets up in the short term...

The European Union as we know it is not going to survive. Not as we know it. Britain voted to leave, and France could very well be next. Why France? One of the main reasons is because the French economy is softer than the German economy. At least in Germany people are still earning money and making a living, despite all the recent turmoil. In France, the same malaise that’s settling over the U.S. and other places is settling in. And it’s going to spread.

There is no place to hide with what’s coming. I’m not saying it’s coming this year, or even the next. I can’t give a specific date. But imbalances are building up to such a degree, they just can’t continue much longer.
In addition, Philippe Legrain fretted about Brexit opening the door to European disintegration in an essay in Project Syndicate.

I beg to differ. In fact, the Brexit experience has made Europe stronger, not weaker.

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