It is late Friday afternoon going into Friday evening as I write this posting. It’s been a strange last few days for me. This week this website went dark, (See Apology And Explanation), the UK voted to leave the EU and the world began to react. My basic reaction can be summed up in the phrase: shock and dismay.
Like most Americans I have a very favorable view of the Brits. They have proven time and again to merit that high opinion. Going into Thursday’s Brexit vote I figured the majority would see beyond the right wing rhetoric and realize that the UK was better off in the EU than going it alone. I was incorrect. Despite the fact that the UK had arguably the sweetest deal of any member nation, (they kept their own currency and were exempt from many immigration agreements), by a small margin the electorate voted to exit.
I was not alone in my surprise. World financial markets had also expected the Brits to make the prudent decision. At closing the Dow (America) was down over 600 points or over 3%. The Japanese Nikkei was down 8%, France’s exchange was also down 8%, Germany’s main exchange closed 7% lower and London’s FTSE closed down 3%. In currencies the British Pound fell 10% while the Euro was trading down nearly 2.5% at 4:30pm EST. Liquid wealthy fled to the American dollar which was up 2%. That last piece of news is not all good. It means American goods are more expensive abroad and travel to America is less attractive.
Negative though they may be, those near term repercussion are not what worry me. I fear the possible long-term implications of the Brexit.
British Prime Minister David Cameron tendered his resignation. A likely successor is Boris Johnson. Cameron is a Conservative and we often disagree on basic political philosophy, but he is a reasonable global statesman. Johnson is to a great degree the UK’s version of Donald Trump, albeit with some actual governing experience. I would not sleep as easily with Johnson at the helm of arguably America’s most important ally.
If despite a sweet deal the UK exits the EU what is to prevent something similar from happening in Germany or France. Those are among the largest and strongest economies in the EU. It would be like New Jersey leaving the USA. States like Alabama and Mississippi need states like New Jersey to pay their way. Even an economically strong state like Florida saw that it needed the collective strength of the USA to make it through the housing bubble’s burst. The EU won’t be very strong if it consists of mainly countries like Spain and Greece with their weak economies. History teaches us that the two world wars both started in Europe. Hungry people do desperate things. It’s difficult to find a winner if the Brexit is the start of a rush to the door.
The UK itself is now in jeopardy. Scotland is already rumbling about another exit referendum. Northern Ireland could be close behind. How can a UK consisting of England and Wales and outside the EU possibly be stronger than the UK that existed when the week started?
Right wing governments are taking hold in Europe. People like Boris Johnson and Donald Trump could soon be at the helms of major nations. Looming recessions, depressions and the human desperation they bring. This is starting to look serious and a 3% drop in the Dow doesn’t look so scary in comparison. We need to stop the “bleeding”!
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