The "experts" all said Brexit was going to cause huge financial problems. Other "experts" told us Global Warming Climate Change was going to increase the frequency and strength of hurricanes.
Wrong on both counts.
British stocks have completely recovered from the Brexit panic.
It's almost like those "experts" are trying to scare us into giving them more money and more power.
I kind of suspect that the rebound is at least partly because it is looking like the Brexit is actually not that likely to happen, in spite of the vote. Cameron decided not to invoke Article 50 and officially start the exit process, instead he is resigning and left it to his successor to handle it. And the likely successors are looking like they think this is a poison pill that will end their careers, and they are now kind of wishing the whole business would quietly go away.
There is a very good chance that this will turn out to be a lot of sound and fury, that ultimately signifies nothing.
Letting the people vote on something this large and then telling them, "Thanks, but we're not going to listen to you" is pre-revolutionary in nature. Once the people realize that there is no legal, peaceful means to impose their will on the government, the government is in trouble.
My bet is that the markets know that the suits in Brussels contribute next to nothing to trade and profits. A few panicked, hence the drop, but most know the vote isn't going to have a lasting, negative impact on the British economy. In fact, with a layer of regulators gone, it ought to be moderately positive.
This happens every time there's a big decision-- even if it's not one where the media guessed wrong about how it would turn out.
Build up, market goes up as people make their bets; choice made, market goes down as people who bet wrong fix it; stuff shakes out, things return to a more normal level as people try to guess what is going to happen next.
Brexit happened in no small part *because* the EU was pulling the "we'll let you vote but we'll do whatever we want anyways" trick.
I kind of suspect that the rebound is at least partly because it is looking like the Brexit is actually not that likely to happen, in spite of the vote. Cameron decided not to invoke Article 50 and officially start the exit process, instead he is resigning and left it to his successor to handle it. And the likely successors are looking like they think this is a poison pill that will end their careers, and they are now kind of wishing the whole business would quietly go away.
ReplyDeleteThere is a very good chance that this will turn out to be a lot of sound and fury, that ultimately signifies nothing.
Letting the people vote on something this large and then telling them, "Thanks, but we're not going to listen to you" is pre-revolutionary in nature. Once the people realize that there is no legal, peaceful means to impose their will on the government, the government is in trouble.
ReplyDeleteMy bet is that the markets know that the suits in Brussels contribute next to nothing to trade and profits. A few panicked, hence the drop, but most know the vote isn't going to have a lasting, negative impact on the British economy. In fact, with a layer of regulators gone, it ought to be moderately positive.
"It's almost like those "experts" are trying to scare us into giving them more money and more power."
ReplyDeleteWell, we know that *that* can't be it!
This happens every time there's a big decision-- even if it's not one where the media guessed wrong about how it would turn out.
ReplyDeleteBuild up, market goes up as people make their bets; choice made, market goes down as people who bet wrong fix it; stuff shakes out, things return to a more normal level as people try to guess what is going to happen next.
Brexit happened in no small part *because* the EU was pulling the "we'll let you vote but we'll do whatever we want anyways" trick.