OT Brexit Vote

[albanyknight]

I didn't wade through five pages of posts but the formation was as much political as it was economic. It forced Europe into a system of mutual dependence largely so there would never be a 3rd World War.

The law of unintended consequences?

 

[vkj91]

Nobody knows what this means long term but I'd be willing to bet it's not the doomsday scenario the media and politicians want us to believe it is.

 

[vkj91]

Nationalism ebbs and flows, it was strong in the 30s. It will die down again after people realize how silly it is.

[roll]

 

[RUtix4me]

It put the entire EU in jeopardy with other members possible leaving. If that happens, several of the countries that might go bankrupt about a year ago, like Greece and Spain, will probably go bankrupt. All the European banks will get crushed and US banks will be affected negatively. The markets dropped dramatically when only Greece had the possibility of bankruptcy. Liquidity or loans to businesses will be extremely difficult to get or non existent. With Europe in disarray, US corporations that do a significant amount of business there will have their sales cut by 7-15% and the US Corp will cut their workforce. Most likely the doom day scenario that some were predicted, depression more than repression. The markets will at the minimum go down double digits. Right now, the Dow is down about 900 points from its high which is only 5% off the high. 10 % down would be another 900 points to 16,500. Greenspan is really worried and has mentioned about 23% down. This won't happen immediately but slowly over the 2 years while people worry.

http://www.newsmax.com/Finance/Stre...economy-Federal-Reserve/2016/06/24/id/735477/

http://www.bbc.co.uk/programmes/p03zdcgl?ocid=socialflow_twitter

The short term pain people are talking about is probably 2-4 years and the long term positives is 5-8 years just like the recovery from 2008 to 2016 if you consider the US recovery. During this entire period, expect job losses similar to 2008 or probably worst. Expect more of this with Trump winning the election. Trump brings the unknown and People will be in cash scared of the future and cut their spending. Not a good thing.

I didn't believe the doom day scenario Albany Knight keeps harping about but now I see it's possible. I don't know why people are cheering about leaving the EU since most experts expect negative consequences but I don't know why people will vote for a Trump.

I know you are dumbing this down, but Sovereign nations don't declare bankruptcy, they default on their debt obligations which is considerably different.

The connection to European banks getting crushed, I understand the underlying basis that the banks would be damaged, and don't disagree, but crushed is probaly a bit extreme. Please explain why they get crushed, over 80% of the Greek debt etc is owned by Sovereign, IMF, World Bank. Commercial banks hold very little, and if they still did they hold it at Fair Value and losses would have been incurred already. I know the impact on banks (I've seen the Brexit stress scenarios) and immediate losses are within well understood risk appetites and can be withstood. Are you saying that the stress scenarios are underestimating the potential impacts? I do think their stock values will suffer, Returns will suffer, but crushed in my view is not having sufficient capital.

I do think this (roll out of slowed growth) will be very different then the 2008 event. That was based on overvaluation of assets and extreme leveraging, which seized up the financing markets. This will be more about trade and and speed of the world's economy slowing. 2008 directly impacted the value of private citizens assets (housing and stocks) and was magnified by the amount of leverage they had assumed. This event wil slow economies, increase the preception and possibility that probabilities of entities defaulting (sovereigns, corporations, and banks), resulting in debt spreads widening, and borrowing costs rising for corporations. Job loss should occur, but I do not see this as a global event. It will first and foremost hit the UK. Job loss from slowed trade with the U.K. Is likely, but I don't see a global impact and cycle taking 5-8 years or nearly as large as 08. One issue is governments will only have minimal ability to spur growth through rate changes, given the continued absolute level of rates.

Agree that this is not good but the comparison to 08 in terms of impact and tenor, I am not so sure of.one interest impact has been increased gold and oil prices.....at least the oil sector which has been pummeled may benefit marginally. :). Interested in seeing more of the specifics that lead to your senior from a sector and regional view.

 

[pmvon]

Travel and information aren't globalism.

Thanks, but they will ensure it continues. that along with the law of comparative advantage and the fact companies are global and want declining trade barriers.

 

[LC-88]

The poor English are about to get hammered by the global bankers. I'd get my money out of the bank Monday morning if not already taken care of.

 

[Upstream]

My prediction - The EU will be divided into two groups of countries - the P5 and the G5. The bigger, more powerful countries will become the P5. Smaller countries in the G5 will try to become P5 countries because the P5 will have more economic power. UConn will change its name to EU-Conn and will try to join the P5 as a country, saying that it will "bring the U.S. market."

-Scarlet Jerry

 

[pmvon]

EU members pressing for speedy exit. As I said, they could play hardball as it's the survival of the EU now and the U.K. Has little bargaining power.

 

[rutgersguy1]

In the long run, this will be good for the UK economy because their trade deals don't include what's best for 26 other countries.

The problem the EU has is they can't "make an example of the uk" for leaving because France, Italy and Germany depend on selling into the UK. That is most of their economy. The UK exports only 44% go to the single market and they will have a trade agreement in place before they actually leave the EU (It will probably be a 2 year process according to Article 50 of the Lisbon Treaty).

Scotland can't leave the UK for a number of reasons. The first being their economy. Their economy is practically ALL oil from the North and with the price of oil currently, they are being heavily subsided by England (as are Wales and Northern Ireland). But, even if that wasn't a problem, several countries have said they would block their entrance into the EU.

In the end, it is always funny to see the leftists complain when they lose an election. If only those pesky, uneducated racists didn't vote against their interests, 100% of the vote would side with them. Hilarious.

You can't say if they will or won't "make an example" of the UK or not. How much carrot or how much stick you have no idea nor does anyone else. They won't want contagion into other countries wanting to experiment with leaving. That's why I said how much carrot and how much stick will determine how much pain both sides feel. You say "only 44%" as if that's some small number that's nearly 1/2 of exports then that's a huge number and it's trade that is right on their doorstep making it "convenient." How much stick they use will also hurt the EU too because a large part of their trade is with the UK but that's balance they have to figure but no one can know how that will go. You're dealing with people and while for now most have called for calm, humans are emotional and you can't know how they will act when it comes time for negotiation.

You can't say how many trade agreements they will have in place either before they leave. They'll have 2 years but who's to know how long it will take to negotiate all the deals. I'm sure some but who knows. 2 years isn't necessarily as much time as you may think to get this all done. I said in one of my posts that I saw a guy from the Blair administration say on average it took about 6.2 years to negotiate the average trade agreement. Will it happen eventually? Sure but you can't know if it's before after they leave or whenever.

As for Scotland, you say they can't leave but they almost did and that was with the EU on the table. Now that's gone. If you think Britain doesn't like being told what to do by Brussels do you think like Scotland likes being dragged of the EU against their will by most of England outside of London. All districts, not just a majority even, of Scotland voted to stay and the total vote was like 62-38 to stay in the EU. Again you're dealing with humans and for the same reasons many in England voted to leave I can definitely see many in Scotland and possibly Northern Ireland doing the same. On top of which from what I've read I'm not sure how productive those oil fields are these days I think they're starting to get a little long in the tooth. Regardless, they still almost left before and they purposely put in the agreement a possibility for another referendum should any material change occur like leaving the EU. They were on the cusp of it before but now I see odds of leaving as higher than staying.

Besides Cameron was campaigning hard for them to stay at that time. Who's going to do that now that they trust? Boris Johnson? Nigel Farage who's already come out and admitted one misleading fact out there by the leave campaign. I think it's very likely Scotland will leave. As for those countries who said they would block their entrance was that back when the UK was part of the EU and likely most in Europe wanted the UK to stay united? You sure those same dynamics still exist now that UK has voted out of the EU. I don't know about Northern Ireland but Ireland is already part of the EU and if they decide to reunify well then they would be too. I think you're quite presumptive to say it can't happen with Scotland for sure and Northern Ireland to a lesser degree.

I think you speak with too much certainty and there's a lot more uncertainty than certainty in the coming years.

 

[rutgersguy1]

A cheaper pound is great for tourists and for the British economy; it is bad for our economy because it raises the prices of American goods in Britain.

It's good for exports and bad for imports basically and could lead to some inflation.

 

[nick614]

You can't say if they will or won't "make an example" of the UK or not. How much carrot or how much stick you have no idea nor does anyone else. They won't want contagion into other countries wanting to experiment with leaving. That's why I said how much carrot and how much stick will determine how much pain both sides feel. You say "only 44%" as if that's some small number that's nearly 1/2 of exports then that's a huge number and it's trade that is right on their doorstep making it "convenient." How much stick they use will also hurt the EU too because a large part of their trade is with the UK but that's balance they have to figure but no one can know how that will go. You're dealing with people and while for now most have called for calm, humans are emotional and you can't know how they will act when it comes time for negotiation.

You can't say how many trade agreements they will have in place either before they leave. They'll have 2 years but who's to know how long it will take to negotiate all the deals. I'm sure some but who knows. 2 years isn't necessarily as much time as you may think to get this all done. I said in one of my posts that I saw a guy from the Blair administration say on average it took about 6.2 years to negotiate the average trade agreement. Will it happen eventually? Sure but you can't know if it's before after they leave or whenever.

As for Scotland, you say they can't leave but they almost did and that was with the EU on the table. Now that's gone. If you think Britain doesn't like being told what to do by Brussels do you think like Scotland likes being dragged of the EU against their will by most of England outside of London. All districts, not just a majority even, of Scotland voted to stay and the total vote was like 62-38 to stay in the EU. Again you're dealing with humans and for the same reasons many in England voted to leave I can definitely see many in Scotland and possibly Northern Ireland doing the same. On top of which from what I've read I'm not sure how productive those oil fields are these days I think they're starting to get a little long in the tooth. Regardless, they still almost left before and they purposely put in the agreement a possibility for another referendum should any material change occur like leaving the EU. They were on the cusp of it before but now I see odds of leaving as higher than staying.

Besides Cameron was campaigning hard for them to stay at that time. Who's going to do that now that they trust? Boris Johnson? Nigel Farage who's already come out and admitted one misleading fact out there by the leave campaign. I think it's very likely Scotland will leave. As for those countries who said they would block their entrance was that back when the UK was part of the EU and likely most in Europe wanted the UK to stay united? You sure those same dynamics still exist now that UK has voted out of the EU. I don't know about Northern Ireland but Ireland is already part of the EU and if they decide to reunify well then they would be too. I think you're quite presumptive to say it can't happen with Scotland for sure and Northern Ireland to a lesser degree.

I think you speak with too much certainty and there's a lot more uncertainty than certainty in the coming years.

You can't honestly say a country is going to destroy its own economy just to spite the UK. Guess what? The EU is over, other countries will be leaving soon. The EU could have worked if it was just the UK, France, the low countries and Germany, but their ego was too big.

Scotland may want to leave the UK now, but when they realize they won't get in the EU regardless, they will stay in the UK because they are a failed state independently.

You seem to have a disconnect with reality. So just sit back and see how wrong you are.

As they say,

Cheers mate!

 

[rutgersguy1]

I know you are dumbing this down, but Sovereign nations don't declare bankruptcy, they default on their debt obligations which is considerably different.

The connection to European banks getting crushed, I understand the underlying basis that the banks would be damaged, and don't disagree, but crushed is probaly a bit extreme. Please explain why they get crushed, over 80% of the Greek debt etc is owned by Sovereign, IMF, World Bank. Commercial banks hold very little, and if they still did they hold it at Fair Value and losses would have been incurred already. I know the impact on banks (I've seen the Brexit stress scenarios) and immediate losses are within well understood risk appetites and can be withstood. Are you saying that the stress scenarios are underestimating the potential impacts? I do think their stock values will suffer, Returns will suffer, but crushed in my view is not having sufficient capital.

I do think this (roll out of slowed growth) will be very different then the 2008 event. That was based on overvaluation of assets and extreme leveraging, which seized up the financing markets. This will be more about trade and and speed of the world's economy slowing. 2008 directly impacted the value of private citizens assets (housing and stocks) and was magnified by the amount of leverage they had assumed. This event wil slow economies, increase the preception and possibility that probabilities of entities defaulting (sovereigns, corporations, and banks), resulting in debt spreads widening, and borrowing costs rising for corporations. Job loss should occur, but I do not see this as a global event. It will first and foremost hit the UK. Job loss from slowed trade with the U.K. Is likely, but I don't see a global impact and cycle taking 5-8 years or nearly as large as 08. One issue is governments will only have minimal ability to spur growth through rate changes, given the continued absolute level of rates.

Agree that this is not good but the comparison to 08 in terms of impact and tenor, I am not so sure of.one interest impact has been increased gold and oil prices.....at least the oil sector which has been pummeled may benefit marginally. :). Interested in seeing more of the specifics that lead to your senior from a sector and regional view.

I agree with most of your post as I don't see this is leading to any sort of financial crash or any similar 2008 events. I think with all the new capital requirements put in place, stress tests, regulations etc..that most of the larger global money center banks should be ok. On a relative basis though I think the European ones will have more issues than the US banks. There will be support from central banks around the world to provide necessary liquidity too.

But I do think there could be some global affects with regards to slower growth. I mean the world was already growing at a slow pace and I don't see how this can help. So I think for sure there will be a recession in the UK and then possibly other parts of the world in the coming couple years. I think the US could be affected too but I think will be the best house in the neighborhood on relative basis.

 

[retired711]

It's good for exports and bad for imports basically and could lead to some inflation.

Well, it depends whose exports and imports you're talking about. It's good for British exports and bad for British imports, but precisely the reverse for the United States of America. Goods made here become more expensive in Britain, which hurts American jobs, while goods made there become cheaper here.

 

[rutgersguy1]

You can't honestly say a country is going to destroy its own economy just to spite the UK. Guess what? The EU is over, other countries will be leaving soon. The EU could have worked if it was just the UK, France, the low countries and Germany, but their ego was too big.

Scotland may want to leave the UK now, but when they realize they won't get in the EU regardless, they will stay in the UK because they are a failed state independently.

You seem to have a disconnect with reality. So just sit back and see how wrong you are.

As they say,

Cheers mate!

Haha, we'll see if they leave or not and if I'm disconnected with reality or not. I would agree with the fact about Scotland getting into the EU being a big factor. But I haven't seen a reference showing other countries saying they would block Scotland since the UK exit vote. I took a quick look and only found things from 2 years ago during their independence referendum. Got anything within essentially the last 24 hours, lol.

The EU would have worked if they had a central fiscal authority making sure the countries they let in met certain debt/GDP standards and spending restraints. It should be a more economic union than political one. I don't know that they were strict at all that with some countries and it came home to roost during/after the crisis. Really it should be UK, Germany, France. I'm not even sure parts of southern Europe like Italy/Greece should have been let in without tighter fiscal controls.

 

[rutgersguy1]

Well, it depends whose exports and imports you're talking about. It's good for British exports and bad for British imports, but precisely the reverse for the United States of America. Goods made here become more expensive in Britain, which hurts American jobs, while goods made there become cheaper here.

Well I'm referring to the country who's currency is devalued. I'm talking about it in a general sense regarding any country's currency.

 

[RutgersSam]

This might have something to do with very little spending on their public schooling. Less educated people have less opportunity.

Possibly. Or different cultures regarding how children are raised.

 

[retired711]

Well I'm referring to the country who's currency is devalued. I'm talking about it in a general sense regarding any country's currency.

Okay, understood. Devaluations are part of economic life, but this may be a sharp one that proves very disruptive both in the U.K. and elsewhere.

 

[HeyHuey]

Knee jerk short-sighted conservatives.

 

[pmvon]

Okay, understood. Devaluations are part of economic life, but this may be a sharp one that proves very disruptive both in the U.K. and elsewhere.

This is only part, given the potential increase in costs for UK businesses to do business across the economic area, they will likely move business to within the economic area. Which means fewer jobs in the UK. EU countries might view this as a positive now that the cats out of the bag.

 

[csphi]

Knee jerk short-sighted conservatives.

View embedded media

Only the ignorant stereotype.

You fit the bill to a tee

 

[jtung230]

This is somewhat repetition but some just don't get it.

1) The UK is the 5th largest economy in the world.
2) India is the 7th largest economy in the world.
3) India is an historic and natural trading partner for the UK.
4) Australia is also a large economy and an historic and natural trading partner with the UK.
5) Despite the importance of strong trade relationships with the UK, the EU will not let the UK give favored trade status to any non-EU country, like India and Australia.
6) If the EU puts up major trade barriers (tariffs) for trade with the UK, the EU members will lose the market of the fifth largest economy in the world, while the UK gains India and Australia, etc.
7) I am buying Pounds now just like I bought the Euro at 88 US cents. It will make traveling to the UK affordable again. That is a benefit of the possible reduction in the value of the Pound. It will also make UK goods more affordable and thus more popular worldwide. Unfortunately, the Pound will recover at least most of its value. The world craves stable currencies and the Pound Sterling has been one of the best for centuries.
Let everyone else panic. Things will level out. Both Europe and the UK need each other. They will work it out in as mutually beneficial a way as possible. And remember, this separation is a long process; at least 2 years, maybe more.

Careful on #7. Think there is more downside risk to both the Pound and euro. Anyone know what UK really export? The only things I own are clothes that are made in the UK.

 

[rutgersguy1]

Careful on #7. Think there is more downside risk to both the Pound and euro. Anyone know what UK really export? The only things I own are clothes that are made in the UK.

From reading around sounds like the pound has some short term support in the 1.30-1.31 area but possibly could drift lower to 1.25 or 1.20 area over time.

 

[retired711]

This is only part, given the potential increase in costs for UK businesses to do business across the economic area, they will likely move business to within the economic area. Which means fewer jobs in the UK. EU countries might view this as a positive now that the cats out of the bag.

yes, I understand that American companies are re-thinking investments in Britain. Perhaps I think people are too rational, but I think the British will soon want to undo their decision. But they need concessions from the EU on immigration and on the structure of the EU, which isn't democratic at all.

 

[retired711]

From reading around sounds like the pound has some short term support in the 1.30-1.31 area but possibly could drift lower to 1.25 or 1.20 area over time.

Airline fares are down, too. Anyone visiting Britain this summer is going to get a deal.

 

[jtung230]

From reading around sounds like the pound has some short term support in the 1.30-1.31 area but possibly could drift lower to 1.25 or 1.20 area over time.

I think the market is trying to keep calm and order. But the reality is that the Pound should be around 1.20. There will be selling but not panic selling. Aston Martin dealership hasn't mark down prices yet to reflect currency move. LOL

 

[j10oreo]

Exhilarating for some. Or is that ExHillaryhating?

lmfao ... I don't support either but this is flippin Hillaryous... well played sir... [cheers]

 

[jtung230]

Nobody knows what this means long term but I'd be willing to bet it's not the doomsday scenario the media and politicians want us to believe it is.

Should just look at what we do know. Their credit rating will get downgraded and London will not be a major financial hub going forward. Sounds pretty bad to me.

 

[DontTedonMe]

A sad day for the globalist nwo elites. I just look at who's unhappy about it and that's all I need to know it's a good thing.

 

[jtung230]

A sad day for the globalist nwo elites. I just look at who's unhappy about it and that's all I need to know it's a good thing.

You mean all the young people in UK?

 

[SteveVA2]

Going to London at the end of August. Just bought some cheap pounds.

 

[theRU]

You mean all the young people in UK?

if there is one thing that i know about young people its that most of us are sheep. Just being honest.

 

[rutgersdave]

if there is one thing that i know about young people its that most of us are sheep. Just being honest.

The old people wanted out but they don't know their purchasing power just dropped to a 30 year low, really gonna hurt the retirees.

 

[oldman87]

A day in the lives of British old people when keeping it real goes wrong.

 

[oldtimer67]

Nationalism ebbs and flows, it was strong in the 30s. It will die down again after people realize how silly it is.

Same is true for Globalism.

 

[oldtimer67]

The old people wanted out but they don't know their purchasing power just dropped to a 30 year low, really gonna hurt the retirees.

Seems to me their purchasing power only dropped for foreign goods. Domestic goods should not be affected by the exchange rate of the Pound.

 

[DJ Spanky]

yes, I understand that American companies are re-thinking investments in Britain. Perhaps I think people are too rational, but I think the British will soon want to undo their decision. But they need concessions from the EU on immigration and on the structure of the EU, which isn't democratic at all.

Well it is interesting that this was a non-binding referendum.

And I refer to my earlier post in that the leaders of the EU did not make their best effort in their offers to get the UK to stay. Why wouldn't they?

 

[theRU]

what is interesting is that globalism is in exact opposition to the hipster movement of locally grown/sourced/healthy movement. So its interesting that the youth in the UK are upset by the Brexit.

This is why i say young people are sheep. Many of us have no idea what the hell is going on, and the relationships between all of our ideals.

 

[pmvon]

Same is true for Globalism.

Yes, it does ebb and flow but it always continues toward globalism.

 

[Caliknight]

Not really. If the EU crumbles, which is a very real possibility, Globalism is trending backwards.

 

[nick614]

The EU would have worked if they had a central fiscal authority making sure the countries they let in met certain debt/GDP standards and spending restraints. It should be a more economic union than political one. I don't know that they were strict at all that with some countries and it came home to roost during/after the crisis. Really it should be UK, Germany, France. I'm not even sure parts of southern Europe like Italy/Greece should have been let in without tighter fiscal controls.

They did, but they blatantly lied to get Greece and other countries into the union, like I said their ego was so big they thought they could do anything they want. They want Europe to be one country like the United States, and that is never going to happen. It has been tried many times and always fails.

I haven't seen anything recently, but the Euro countries that are net contributors like France and the Netherlands don't want to add another insolvent country like an ind. Scotland. You are also discounting oil prices were still high and Scotland was doing okay during their last referendum, now they would be in severe depression without England.

Gloom and doom is always predicted when the leftists don't get their way and in the end everything works out ok. The EU isn't the end all be all and I would be highly surprised if it last 10 more years.