Brexit

Britain's Exit from the European Union Might Leave Both the U.K. and the E.U. Better Off

Brexit might spur U.K. reforms.

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If you want to understand why markets are crashing in the aftermath of yesterday's Brexit vote, take a quick glance at Dechert's guide to the legal and financial implications of the vote.

Although the referendum is non-binding, most observers now expect that the United Kingdom will move to separate itself from the European Union (EU). But exactly how that process will work, and what the end result will be, as well as when the separation will be final, is entirely unclear.

Dechert's guide offers a hint as to just how many knots there are to untangle: It covers everything from trade deals and financial regulations to intellectual property law data retention requirements. And a lot of the challenges of unwinding won't be discrete, since much of this stuff is bound together in various ways, and likely to continue that way for a while: Spain, for example, is calling for "joint sovereignty" with Britain over Gibraltar, which sounds…complicated.

The potential complexity of it all is incredibly intimidating. No one really knows how it will play out. So what you're seeing right now is panic induced by uncertainty, like kids becoming hysterical when they find out their parents are getting divorced. It's a big shock to the system.

But while uncertainty can be a prelude to catastrophe, and prolonged uncertainty can itself result in serious trouble, it's not necessarily a sign that everything is in the process of falling apart.

One potential outcome here is that, after a little while, the panic stops, and Britain manages its exit more or less smoothly, freeing itself from the grip of European regulators while encouraging the EU, an awkwardly designed governing body which has struggled in recent years to manage its affairs, to begin the process of self-examination and eventually institute a series of reforms.

That's the argument that British economist Andrew Lilico made recently in an interview with Vox's Timothy Lee—that while Britain has gained from being part of the EU, both entities will be better off apart, and that the split, while upsetting to markets in the short term, will ultimately pave the way toward long-term gains for both, with the EU becoming stronger and more unified in a way that it simply couldn't with Britain attached. Britain, in this thinking, helped set EU culture early on, but was simply too independent to ever fully integrate with the continent. Post-Brexit, basically, the EU is free to become the United States of Europe.

I'm a little less confident that this scenario will play out. Britain's exit from the EU is just as likely to lead to more sovereign squabbling and a further breakdown of the EU. But ultimately even that might be better in the long run, as the EU as it stands is a deeply dysfunctional governing body that has consistently proven itself unable to effectively respond to the challenges it faces. The design of the EU is inherently awkward: Its monetary union is undercut by its lack of a fiscal union, and its attempts to maintain some level of national sovereignty are undercut by its power imbalances and anti-democratic elements. The structure is inherently unstable.

Regardless of which way it goes, the Brexit vote is likely to spur the EU to take action and move beyond its current unstable equilibrium. It's as clear a sign as any that the EU can't go on doing what it's been doing. It's a wake up call, basically. So while there are certainly risks to a dramatic move like this, that's a good thing overall. 

In the meantime, Britain is probably better off no matter what. If the EU moves toward becoming the smoothly functioning super-state that Lilico hopes for, then Britain will have helped make that possible. And if the EU continues in its dysfunction, or breaks up further, Britain will have extricated itself, protecting its own interests. 

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  1. Meh, Apple stock plunges every time they report a record profit (or used to), too. What does it “mean”? Damned if I know.

    1. Yeah, I tend to think the same thing about the markets crashing this morning. All the people who work in the markets warned that, if Brexit happened, markets and the pound would crash. It seems like a version of self-fulfilling prophecy. That said, I’m willing to be wrong if someone who knows this stuff can explain it.

      1. Most of the bets were on “stay” and it was all priced in. When the “leave” vote came, it forced the markets to react.

        That said, everyone is now trying to predict the financial outcome of “leave”, but the actual results won’t occur for at least 2 years so it’s a big guessing game.

        1. The fact that the markets bet on the wrong side of the referendum up to the day of should be a good warning not to read to much into day-to-day fluctuations in the market as a predictive tool.

          In any case, I think it was Samuelson who said, “the stock market is so good at predicting recessions, it has successfully predicted 10 out of the last 5.”

      2. It’s a complex issue, but if nothing else, the introduction of tremendous uncertainty will cause markets to react negatively. It could work out for them in the long-run, but the short-term nosedive was definitely predictable.

      3. The Russian economy didn’t do great the day communism fell either.

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  2. I wish people would read more rational middle-of-the-road articles like this.

    1. I kinda even wish some of these optimistic middle-of-the-road articles took a little more liberty with their vocabulary about the uncertainty. Things *might* get better is pretty impartial and middle-of-the-road but comes across as pretty weak sauce when juxtaposed against WWIII.

      It’s not clear how or where extraction of the UK from the EU will end but, even if the EU’s current morass is only temporary, a leave/remain referendum seems a clear, rational, and relatively peaceful way to send the GYST message.

      1. The Enllightened? are a bit bent out of shape because The Wrong Side of History crawled out of the casket and pimp slapped them upside the head. They’ll get over it, eventually.

          1. The poor and uneducated, who overwhelmingly voted to Leave, will suffer the most under this result. The educated with means (who overwhelmingly voted to Remain) will, ironically, be the ones who can get away from what is going to be years of shit. There will be massive brain drain and investment drain. .

            The peasant class clearly doesn’t know what’s best for them.

            1. Obviously, they were lured by false promises. Whatever WILL they do without the Elitist Left to guide them?

              1. The fools, the fools. Why can’t they learn to follow their betters? Well, it’s too late now. Time to snap open my New York Times and suck down my preprandial Manhattan.

            2. The peasant class clearly doesn’t know what’s best for them

              Yet somehow they do in socialist paradises like Venezuela.

        1. I haven’t seen proggies shit their panties this much since the 2004 election.

        2. Well, this simply means they have to watch piano wire and lamppost futures a bit closer.

      1. Fuck off chicken little.

  3. Hmm, worst alt-text ever?

    1. You have to play it backwards.

      1. Thanks a lot, Rich. I played it backward, and now demons are getting into all my file drawers, and the boss keeps pounding on the wall and yelling “What’s that infernal racket?!?”

        1. *narrows gaze all the way from Zurich Flughafen*

        2. Be thankful it’s only your file drawers.

  4. “…It’s as clear a sign as any that the EU can’t go on doing what it’s been doing….”

    Since it’s a governmental bureaucracy, undisciplined by any profit motive, I’m guessing it *will* continue to do exactly what it is, hoping that a new administration will fix things.
    See the Brit NHS for example.

    1. I predict vindictiveness.

      1. What are they gonna do, have a trade war with Britain? That would hurt them just as much.

        1. I doubt it will hurt the technocrats, they’ll just Leech Moar Harder

        2. No wonder the EU is so confident about all the horrors Britain will face without it: they plan to impose them on Britain themselves.

  5. *sigh*. I wish I had jumped in with some of my meager savings. But I expected them to wuss out and vote to stay – like Scotland, I expected the ‘free shit’ battlecry to win them over.

    1. But what “free shit” does a Brit get from the EU?

      1. Diverse immigrants?

        1. Some of them, I assume, are good people.

          1. To be fair, Polish and such immigrants aren’t a problem in UK. They just happen to be used as proxy for the problematic ones, because they are The White (what progress we Slavs have made since the last time racial makeup was Science around 1945 or so).

            1. “To be fair, Polish and such immigrants aren’t a problem in UK.”

              From what I’ve heard, a lot of British people do not agree with this.

              1. Indeed, but when you ask why, it’s “they work harder for less (and are more pleasant to deal with)”. Not “they blow themselves on buses and decapitate off-duty soldiers”.

                1. I would imagine they would be more sensitive to getting literally and figuratively raped by socialism too.

                  1. Well yeah, I can imagine that the Poles aversion to socialism would be troublesome to quite a few Brits.

                    1. Unlike, say, Canadians or Pakistanis, Poles can’t vote in Parliament election without obtaining citizenship, so their views can only affect the feelz. Which, yes, should not be underrated. But again, Poles who want to dick in politics do that in Poland and eventually Brussels/Strasbourg..

                    2. Furthermore, criticizing the “Damn Poles” carries far less risk of social opprobrium than criticizing the “Damn Pakis”, if you’re foolish enough to make your opinions known in front of the perpetually offended Guardianistas.

                      That, and the fact that in general, the Poles represent the face you see when you call for a plumber, electrician, or other form of craftsman. They represent the ‘seen’ when experiencing one of those “Bastiat Moments”

                2. That first part shows a lot of flexibility and complete disregard for public decency.

                3. “they blow themselves on buses…

                  Sounds like someone’s just jealous. You only wish you could blow yourself.

                4. “they blow themselves on buses…”

                  How do they ever get angry enough to decapitate off-duty soldiers?

                5. “Blow themselves on buses”…..

                  Tell us more?

              2. Polacks work really hard for very little pay. Some of them are even smart and attractive but still work really hard for little pay. I actually like the Poles.

      2. You’d have to ask all the ‘Remain’ people – they keep spouting the benefits that the EU provides the UK.

        1. The EU gives money to local communities for various reasons, though overall the UK pays more than they receive.

          There are non-“free shit” benefits from the free trade zone and single market. We shall see if (in the long run) that outweighs all the negatives of the EU.

          1. “The EU gives money to local communities for various reasons, though overall the UK pays more than they receive.”

            Pretty sure one of those “communities” is Scotland, which explains a certain voting result.

            1. Interestingly enough, in England there was a correlation where the more money a community received from the EU, the more it voted to Leave.

              1. With contributions come controls

              2. When all your civic improvements carry a mandatory little metal sign in blue and gold, recognizing that but for EU Money, these public computer-controlled toilets for transgendered brony amputees would never have been built, I suspect the locals start to wonder why they couldn’t just have a simple public urinal, just like they asked for.

            2. A vote for Scottish Independence now would be great news for the Brits. They could hand off that anchor to the Euros.

              1. Since the Scots get their goodies from England more than from the EU, I doubt that would happen.

                1. Maybe the English can goad them into it.

                  1. In almost every rational, utilitarian way (not talking about national pride and things of that sort) it’d be incredibly great for the UK if they could pawn off Scotland and its debts on the EU. But the EU would have to be run by the worst sorts of morons to accept.

                    1. So you are saying it could happen?

                    2. Given how pissed the EU leaders are right now, I wouldn’t be surprised if they demanded another referendum for Scotland, just to (as they perceive it) spit in Britain’s face for the insult it just dealt the EU.

                    3. So… everybody wins?

          2. Nothing precludes free trade between the UK and the EU in the future.

            Of course, EU politicians are now scared shitless that the EU will unravel, in particular if the UK is successful going it alone, so they are going to try to sabotage the UK any way they can.

  6. Not to worry. Trump will just annex what’s left of the UK under a new principle of international eminent domain. We can make more profit off the UK as a theme park than they can.

    1. I read some fearmongering that this year will signal the rise of the Anglosphere as a counter globalist treat.

  7. most observers now expect that the United Kingdom will move to separate itself from the European Union

    Like most observers expected that voters in the UK would vote to stay in?

  8. What person with a libertarian bent would actually give a flying fuck if the EU was better off? It’s a goddamned socialist construct, the only way it is better off is if it’s dead.

    1. What person with a libertarian bent would actually give a flying fuck if the EU was better off? It’s a goddamned socialist construct, the only way it is better off is if it’s dead.

      A socialist construct that the members can opt/referendum out of is better than any/all future death pacts, no?

      1. Better in the sense that a stepping stone is better than the destination it was inevitably headed towards.

  9. Can the US voters get a referendum on leaving NATO?

    1. Let’s have a sit-in until we do!

    2. We need NATO, because we have to keep the Americans in, the Russians out, and the Germans down! What, that’s not a thing anymore? What year is it?

    3. I was thinking of State referendums to leave the Union.

    4. IF- I like the way you think. Newsletter, etc.

    5. Can we get a referendum to leave the US?

      Maybe the left coasts could go it alone with DC. In a global sense it would be a great thing. Since other than the Western parts of Pennsylvania, no one there serves in the military, if would slow DC down in sending troops all over since they would be lacking the troops.

  10. Steam Summer Sale starts.

    Value of the Pound drops drastically.

    Sorry British gamers.

    1. But games are priced in pounds already, so price stays the same (Steam region-locks, remember).

      You could try switching regions to buy them in pounds yourself, but then you’d pay VAT (20%) so you’d still make no savings.

      Now, if you are, say, a miniatures gamer living in US, now’s the time to expand your collection!

      1. Yep. Valve is getting dinged.

      2. Unless you like Games Workshops shit – in which case you’ve been SOL for a couple years now. They don’t allow online sales outside of each distribution region.

        Were getting pissed that people would buy online where it was cheapest instead of just sending them their cash.

        https://www.youtube.com/watch?v=_zSxQnZ3TM8

        1. God, they are the worst. I just ordered some Saracens to fight my Byzantines, and it was cheaper than buying from local store, even if Revenue Canada chooses to charge me sales tax.

        2. Games Workshop partnered with Creative Assembly to release Total War: Warhammer last month. It’s a fantastic product. I’m 50 hours in so far.

    2. Steam Summer Sale starts.

      I’ll be back in a week or two.

  11. David Milliband was on Bloomberg earlier hyperventilating about how Britain is REAPING THE WHIRLWIND of decades of hillbilly Euroscepticism.

    THE END IS NIGH HERE.

    1. How dare they reject the utopian vision of top men.

  12. BBC Sports already has an article up about how Brexit might mean that the best European players will be unaffordable to Premier League clubs because of the pound losing value. The best statement from the quoted expert:

    “It would be a shame if some of the great European players can’t come here but I don’t think that will happen.”

    1. Nice players you’ve got there, shame if something happened to them….

    2. I find that hard to believe. One interesting side effect may be that more Brazilians and Argentines come to play in the EPL

      1. Not really. More Brazilians and Argentines go to Italy and Spain. Argetinines to Italy in particular. And the greatest of both countries have usually started or played in Serie A and Liga.

    3. English football is overrated. Go Iceland!

  13. that while Britain has gained from being part of the EU

    Not so sure about that. I don’t have the exact statistic on hand, but every year since their membership in the EU predecessor the British economy has had more wealth extracted from it going to the EU than the EU has put into the British economy by a good margin.

    1. Which is why I think the Pound is going to rebound big against the Euro. Book those British vacations now – like right now.

    2. How would they even measure that?

      1. With meters and kilograms.

        1. There are two types of nations in this world: those that use the metric system, and those that have put men on the moon.

          1. Comment of the year!

          2. and once again, this is why we need a like button.

          3. Hmm…this seems to be true since the only vehicle I’m aware of that plowed into Mars at a high enough velocity to be unusable was a joint venture where part of the math was in metric.

            Whoops!

            Then there was the comet lander debacle too, although that was mostly egotism, bad luck, and a lack of decent forethought rather than math errors.

          4. As an engineer, I have always found the drive to the metric system puzzling. You know, it is just a matter of units chosen. The IDEAS, and the SCIENCE are the same. We are all plugging stuff into laptops so what earthly difference does it make? I convert from metric to imperial and back all the time. Who, besides the French, care?

            1. Drug dealers maybe.

    3. I think the largest net givers to the EU are the ‘Big Four’ and The Netherlands. I believe there are others but I forget and can’t find the link to those stats (nothing like saving links and not knowing where you put them. Sigh). So the UK isn’t alone in giving more to the pot.

    4. Is that just measuring their expenditures vs EU revenues, or is it accounting for non-fiscal benefits of EU membership (free trade zone, single market, etc.)?

      1. Don’t know if directed at me but who cares? I found this. It may or may not answer your question.

        http://www.theguardian.com/new…..pean-union

      2. I was wondering the same thing. If it’s merely measuring movement into and out of government accounts, then its not capturing the full effect that the EU has. Even if Britain gets the short end with regard to government revenues, the freer flow of labor, capital, and goods may still put them out way ahead of where they would be without them.

        1. Of course, there’s no reason not to have open markets between the EU and Britain without the forced transfer of wealth at the government level.

    5. The number quoted in the article i read last night said they contributed ~12bn per year to the EU, while receiving 4bn in benefits – making the net deficit around 8bn EUR

      i’d still apply a fish-eye to any attempt at simple quantification, as the bean-counters work for the govt. Here’s a chart from 2014 that summarizes the same general #s as the above

      1. To embellish a comment I made elsewhere in the thread, it’s “worse” than being down 8bn, because while you give Brussells 12bn, the 8bn you get back is contingent on you spending it on what the EU considers “worthy”.

        Needless to say, most of the ‘worthy’ projects are ones which the general public don’t benefit from.

        1. of course.

          i also remarked elsewhere that the true costs don’t quantify the costs of the controls they impose, and the opportunity costs created by the alternatives they squeeze out.

          the attempt to provide a simple net-net number is stupid. there’s completely different ways of calculating the benefit/liability and they all change depending on time-scales.

          I think the “leave” argument is best made not on a “do we lose money/ and how much” basis – because even if the UK were a net beneficiary, the case for leaving would still be the same. they’re better off having local control of issues that affect UK citizens’ lives.

    6. Well, I think it’s fair to say that Britain has gained from being part of the European free trade zone. But, it isn’t at all clear that that’s completely inseparable from membership in the EU.

      1. Assuming that the European “free trade” zone is actually free trade in more ways than it’s title, then yes you’d be right.

  14. Another marijuana-related death:

    As it turns out, if you have a bad heart and try to unload 12 million dollars worth of marijuana, you can in fact die.

    1. Marijuana is much heavier than it was back in my day.

    2. Nobody *needs* $12M worth of marijuana. If even one life can be saved by common sense marijuana restrictions, don’t we ow it to the Johnny Taylors of the world?

      1. ^
        +1 Vicious sarc

  15. My take: the British middle class doesn’t know what’s good for them.

    1. By “British Middle Class”, do you mean the British people who are part of what the US refers to as middle class, or do you mean what the British refer to as the middle class?

      1. I mean the people who voted to exit the European Union despite the pleas from their betters.

  16. If you have 12 million bucks’; worth of marijuana, you can afford a forklift.

    1. You would think!

    2. What do you think he spent all his money on?

  17. Listening to the parade of idiots boohooing piteously about the catastrophic effects of brexit amuses me. Oh, noes, not teh populismz.

    WHYCOME THEM NO LIKE PURTY EUROCRAT GEENYUSSIZ?

  18. From The Spectator: Brexit hammers markets…on the Continent

    … by lunchtime the FTSE had lost 260 points, or 4.2%. That’s a nasty hit. But it’s only fallen back to its level of, er, last Friday. In effect , a week of gains have been lost.
    Madrid’s IBEX 35 is down by 12.5 per cent. Milan’s MIB is down by 11 per cent. In Paris the CAC-40 is off by 8.4 per cent and even Germany’s mighty DAX is off by 7 per cent. In short, the losses across Europe are far worse than ours.
    So what’s up? The explanation is simple. In reality, the EU doesn’t make much difference to the UK economy one way or another. We export less and less to it every year, and the Single Market, while valuable in some ways, was never much use for the kind of high-end services we sell abroad.

    1. Yeah, the e-version of my local rag has the DJ “PLUNGING!”; 2.4%, after a “largely unchanged’ 1.3% gain yesterday.
      You might think there’s a bias in the reporting!

      1. People aren’t going to keep their money under the mattress very long. Stocks are the only place to be right now.

      2. Yes, it’s tumbled to about where it was in March of this year. Which is still over 1,000 points higher than February of this year. OH NOES!!!1!!!!

  19. Seems like the Left in the UK are just going to try and increase immigration even further as a form of revenge.

    1. Creation of the replacement electorate must be sped up! These Englishmen are ruining England!

      1. And Scotland! Very depressing there, did all of the good (True?) Scots just move?

        1. Ever since Boswell, yes, any Scotsmen of competence go to London or colonies. Scottish Enlightenment was a one-off.

        2. Yes, the blood left is Scotland is pink water.

          More “Scots” live outside the UK than in, but a long shot. The ones that are left … are those that were happy being on the dole.

  20. One thing that amuses me about this is how the US left is on one hand screaming about how only racists and xenophobes would be in favor of Brexit, while on the other hand screaming that all of the US’s trade agreements are just plots by evil corporations to destroy the middle class and should be abandoned immediately.

    1. You mean the left is inconsistent, intellectually dishonest, and utterly devoid of principles? Who knew?

      1. When I was young, I used to play a D&D style game called Runequest. One of the big differences between it and D&D was that Runequest didn’t have any analogue to the D&D concept of alignment (e.g. lawful good, chaotic neutral, etc.). The guidebook mentioned this was a conscious choice by the creators because the vast majority of people are not loyal to abstract philosophical concepts, they’re only loyal to other people.

        In the decades since then, I’ve increasingly become aware of how broadly that insight applies.

        1. Or as sarcasmic has put it: principals, not principles.

    2. Good point

    3. Amen to that. One of the oddest aspects of the whole thing is the leftists arguing that free trade and lack of barriers is a good thing for everybody. Of course then they have to go and spoil it by acting like Britain not being in the EU means that of course Britain and the EU must have trade barriers between them, like it’s not possible for people to be friends without also being tied together in some kind of three-legged race.

  21. The reason I prefer markets to government interference is because markets are more responsive to our desires than governments. The reason I prefer democratic governments to the autocratic kind is . . . the same reason.

    If London is more responsive to people than Brussels, then ultimately, they’ll be better off with a more responsive government.

    We had the same kind of controversy here in the U.S. once. Well, we were colonies of England at the time. The fact is that the British government was insufficiently responsive to the colonist’s desires. Brussels saw themselves as something to be imposed on idiots over their idiotic objections, too–just like the British saw the colonists in America.

    Sometimes it sucks to be the king.

    1. Here in the United States virtually this exact same situation resulted in almost ~800,000 deaths. Boy, that puts things in perspective…

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  23. The Conservatives need to win the coming election. Labour is ditching Jeremy Corbyn as well and will likely install a EU-puppet. But the election need to be won by someone who does continue the negotiations and not just kick the can forward.

    1. I still doubt that Brexit happens. Cameron is refusing to start the Article 50 process himself, which means the upcoming parliamentary elections will essentially be a second chance for Remain.

      1. Will there be new parliamentary election? There wasn’t a vote of no confidence, so I don’t believe Cameron’s resignation necessarily triggers new elections.

      2. Yeah, vote against and they will just make you vote again until the right result rolls out.

        1. Well, they thought that “STAY” was going to win, so the enlightened ones did not get the ballot stuffing going full out. Now they know, so expect the ballot stuffing operation to go into full swing.

    2. Since the UK was smart enough to keep the Pound instead of adopting the Euro, the negotiations should consist of :”We’re outta here, BYEE!!”

      1. Bye, Felicia.

      2. It is really a question of how serious the UK negotiators are. Recall that Germany exports LOTS of stuff to UK, way more than they buy. Negotiations about tariffs will go much better after UK negotiators remind the German ones how much Germany has to lose.

        The EU is really a Germany run project. It is always useful to remember who is REALLY pulling the levers.

  24. No more Easyjet flights to Greece anymore to load up on cheap cigarettes-indeed, the British working class have voted against their own interests!!

  25. “If you want to understand why markets are crashing in the aftermath of yesterday’s Brexit vote…”

    Two words: Buying opportunity.

    1. It depends.

      The thing about government regulations, from tariffs to other kinds, is that they really do work to make some well connected companies profitable.

      It’s not good for the economies as a whole and there are more losers than winners, but there are winners.

      If company stocks are losing value because they’re not likely to benefit from EU regulation anymore, then that’s probably not a buying opportunity. I’m skeptical that any company can lose intrinsic value because of Brexit, but if they lost value because their cushy set up is gone, . . .

      I’m not a financial advisor, and no investment decisions should be made without seeking the advice of a professional. Anything you say can and will be used against you in a court of law, yadda, yadda, yadda.

      BP is down 5% today, why? What, the EU isn’t going to buy their oil anymore?

      1. Eh, the markets are on incredibly thin ice right now.

        Bond yields are at 500 year lows
        The EU banks are in horrible fiscal shape
        The ECB is buying commercial bonds directly
        Japan is on QE 4,382 and still getting deflation
        China is in deep doo-doo
        US employment continue to suck
        The market has been propped up by buybacks for the last couple of years
        There’s a glut of oil and massive debt in the exploration business
        etc…

        The upshot? Everybody is extremely nervous and it won’t take much to tank the system right now. In my opinion, we need to tank sooner rather than later.

        1. I appreciate all that on a macro level. If we’re heading for a well needed 30% drop style bear, then a 5% overnight drop because of a knee-jerk emotional reaction isn’t really a buying opportunity.

          On the other hand, why is BP down 5%?

          Exxon was trading up earlier.

          1. Oil is off 4%. Exxon is falling as of right now.

        2. Bond yields are at 500 year lows

          the modern capital markets are barely 100 years old. saying things like this invalidates whatever reasonable observations might come after.

          1. Just one example

            http://www.businessinsider.com…..low-2014-9

            1. You’re just repeating someone else’s stupid headline-claim

              Markets weren’t trading the entire GDP of nations in split-seconds more than 100 years ago.

              1. True. And we’ve never had negative yields on bonds. We’re in completely uncharted waters as the central banks try to push inflation, but most likely they’re underpricing the risks involved.

            1. I think you really need to recognize that instruments such as Venetian Prestiti were really little more than a tax, and that the underpinning economies that issued such bonds were somewhat more solvent (and arguably, underpinned their bonds with tangible assets) in ways that todays’ issuers cannot.

              Other than that, why yes, our bond yields are quite reasonable and not at all worthy of attention.

              1. Of course when looking at centuries of financial data there are structural differences across the time spectrum that don’t allow direct comparisons. However, the overall point is that we’re in a fiscal state that we have zero experience with, and it is extreme to say the least.

            2. From your own citation

              The trend over the past seven centuries has been for bond yields to decline. This can’t be attributed to lower economic growth or lower inflation, but must clearly be attributed to lower risk of default

              IOW, if lower-yields are the natural effect of wider ownership of debt, far greater liquidity, and negligible risk of default, then you would see yields always reaching ever-lower levels anyway.

              It a meaningless fact to cite because it says nothing about some unique problem with contemporary fundamentals; its just a fact no different than “the population is larger than its ever been”; unless you’re trying to say something about specific countries and their specific debt-issues related to their current balance-sheet, then its just gibberish.

              1. And I think he’s incorrect on that point, at least when considering recent history.

                Bond yields are low because demand is high. Demand is high for a couple of reasons.

                1. They’re perceived as safe compared to stocks.
                2. More importantly, the central banks are buying them hand over fist as every nation is pushing on the money supply.

                It’s largely the result of every nation pushing on the money supply in order to stave off deflation.

                1. Everything you say is true there. Saying bonds are “the [most something] in 500 years!” is still silly on the face of it. that’s my only point – i wasn’t actually disagreeing with your general observation, just the manner in which it was being made.

        3. The sooner it crashes the sooner it will correct itself properly. Well, if they let it do that. Ever.

      2. An opposing view.

        Tariffs if applies broadly, are a good way to fund national governments. By broadly, I mean, of say, 20% on everything that comes in and everything that goes out.

        This does interfere with markets, but only in the encouraging independence way rather than picking winners and losers in the market.

        Of course, the great effect of this is to take the opportunity to eliminate all other funding sources for the national government.

  26. I will believe in a “United States of Europe” when it can be reliably determined that the French have forgiven the Germans for WWII. Since, last I heard, they still haven’t forgiven the Grmans for siding with Wellington against Napoleon, that might just be a while.

    1. Do you disbelieve in the US because the north and the south still haven’t forgiven each other for the Civil War?

      1. As a matter of fact, we (here in the south) have not forgiven them for using slavery as an excuse for a war, to continue using the south as England had once used the colonys, (a source of cheap raw materials, forbidden to sell to anyone else at market rates).

        Slavery is, and was horrible and sinful. It made a good story for the north to use, but even Lincoln admitted that was not the reason for the war.

    2. The French have long since forgiven the Germans – they’re all for greater political unity if ‘tax harmonization’ means they can levy a 75% or higher tax rate because there’s no where for the peasants to escape to.

    3. FWIW, the French price for their endorsement of German reunification was Germany’s acceptance of monetary union–so they could spend out the ying yang on the back of German monetary discipline.

      People point to that as a bug, but it was a feature as far as France was concerned. They wouldn’t sign off on reunification without West Germany making that concession.

      This Der Spiegel article is an example of excellent journalism.

      http://tinyurl.com/nnb58rl

      Isn’t that when Germany was forgiven?

      Now, when will Algeria forgive France?

      1. Now, when will Algeria forgive France?

        About when the Balkans forgive Turkey?

        1. Outside Greece, who has issues with Turks to this day (Cyprus for example), rest of the Balkans is pretty chill with Turkey. Shit, Ataturk destroyed the hated Ottoman Empire.

          Now, locals who turkified? No hate like in-group hate.

          1. Bulgaria is often peeved, yes?

            1. Yes, the local “Turks” are mostly descendants of Slavs who converted to Islam after conquest. They don’t clash with Turkish military or run political rallies with “Liberate Tsargrad” as a theme.

              Much like Serbs don’t have a problem with Turks anymore, they dislike local converts. Because 400 years is obviously not enough time to accept that they changed religion. And, to be honest, Turk Turks were less obnoxious and more just rulers than locals. Shit, Bosnian Muslims fought Ottoman Empire more often than Serbs did! Today, the greatest Bosniak hero is a guy who revolted against Sultan.

      2. Now, when will Algeria forgive France?

        When France becomes an Algerian province. They’re working on it.

        1. Haiti pulled kicked their buns. An Algerian Toussaint L’Ouverture might pull it of, but… who besides Germany would even want to conquer France?

          1. You gotta be careful about these things! Once you conquer France, how are you going to get someone to take it back?

  27. God bless Britain and its great people! They’ve decided that they’ve had enough and they want to take their country and civilization back from the demonic red-black alliance of international socialist leftists and Muslim terrorists.

    May the United States of America follow suit.

    1. Brexit is arousal from Stockholm syndrome. Of the EU Staats, only Cyprus and Ireland weren’t at least partly nationalsocialist, fascist or collaborationist during WW2. The good news is that Atlas Shrugged is now available in German in an Amazon Kindle edition the lumpenproletariat can afford. If Germany either drops out or turns libertarian the EU might abandon its Fourth Reich resemblance to a Terry Gilliam movie.

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    1. So was that a Jobxit?

  29. I don’t like Trump and I won’t vote for him but one of the benefits of him winning the presidency, from my perspective, is all the delicious lefty tears that will be shed. If it’s anything like the progtard tears about the Brexit it will be glorious indeed. And super delicious.

    1. I think the one benefit of this election is that no matter which horrible candidate wins, there will be plenty of yummy tears the day after from the supporters of the other horrible candidate.

      1. Speaking only for myself, I expect to be shedding tears either way since they are both horrible in ways I couldn’t imagine even a few years ago.

        1. I don’t control who is president, nor would my sadness make the president better, so there’s no reason to be saddened regardless of how bad the president is.

          To quote, Marcus Aurelius, “A cucumber is bitter.?Throw it away.?There are briars in the road.?Turn aside from them.?This is enough. Do not add, ‘And why were such things made in the world?'”

          1. How many cucumbers have thrown people in prison for speaking out against the cucumber?

  30. You don’t seriously think that the UK or EU political class will give up without a fight? They are going to drag their feet for many years to come, bring about some disasters that only the EU can rescue the UK from, and then vote again and again until UK voters vote “correctly”.

    1. I think its reasonable to be “half-cynical” but there’s little reason to be fully cynical.

      I think the process of disentanglement will take longer than people think; and trade negotitions will be ugly.

      but the EU will also be thinking of “Who’s next” in their dealings with the UK, and wasting time on pointless diplomatic squabbles won’t do much to solidify their case for a viable and sustainable Union

    2. Isn’t that exactly what was done to force the UK into the EU? Or was it another time they voted to leave and they kept having “referendums” till they got the result they wanted?

  31. “Britons madly Googling “What is the EU?” after voting to leave it”
    http://www.sfgate.com/news/art…..323105.php

    See? They should just do what the top men tell them to do!

  32. All the proggies I know are bemoaning the short-sightedness of the Brexit. I dearly loved George Takei lamenting that this was a step-back from the world Gene Roddenberry envisioned. Guess “Democracy” is horrible when it doesn’t go your way…..

    1. Yeah, George Takei also thinks that people should be disarmed. I guess that would make it easier for the Government to throw him back into the interment camps, huh?

      That guy irritates the hell out of me. I genuinely like the guy but his politics is nothing more than unprincipled activism and vapid bitching about things he clearly doesn’t understand. It’s easy forget he’s ancient. I swear the Asians found the Fountain of youth and just keep it hidden in North Korea or something.

      1. Yeah, George Takei also thinks that people should be disarmed. I guess that would make it easier for the Government to throw him back into the interment camps, huh?

        Spectacular.

    2. Wasn’t Roddenberry a socialist/collective utopian-ist? I am thrilled this sets back those plans.

      Screw him.

      1. Yep, Roddenberry was a creative genius. He was also a socialist utopian.

  33. I would bet that part of the reason for Brexit is that the EU has issued so many rules that are intrusive, heavy-handed, unnecessary, and stupid. Rules about food, about closing power plants, on and on. Perhaps the rules that force the UK to accept migrants they might not wish to accept is part of this also, and the riots at the chunnel.

    1. The EU has ruined the perfume industry, for one. The vast majority of people would shrug and say who the fuck cares, it’s PERFUME, but start banning farms and producers from growing and using natural ingredients in a product because a few people are supposedly allergic, it’s not too far of a stretch to imagine the EU banning Winsor & Newton oil paints because a small percentage of people get headaches from the fumes, toe shoes for ballerinas because they are “unnatural,” and all manner of natural, unprocessed foods because some people get sick.

  34. It seems to me that this is simply a federalist-like system that got over centralized. A piece of this new non-federal system said, “Screw central planning. I want independence back,” and left. If the EU falls… the solution is simple. A confederacy of sovereign states with the ability and interest in helping each other all without the Top Men in one place running it all.

    Well… there will be statists but now they have lots of little playgrounds rather than one huge one. Harder to screw everyone else at once.

    Sounds an awful lot like some other place I know… where federalism was tossed for central planning. Oh yeah! The US!

  35. RE: Britain’s Exit from the European Union Might Leave Both the U.K. and the E.U. Better Off

    How dare the Brits leave the EU!
    Don’t they know their British pound helps support corrupt and incompetent countries like Greece, Spain and Portugal?
    Now how will these politicians in these three countries get money to line their Swiss bank accounts?
    Damn Brits!
    How selfish can you get?

    1. The Brits also opted out of the Third Reich even as Vichy France was throwing up its hands and squealing “bitte bitte!” Fabian National Socialism is still National Socialism.

  36. No one really knows how it will play out.

    But everyone knows how the ever expanding power of the EU politburo would have played out.

    Britain is free! Maybe their freedom will pave the way for the freedom of much of the rest of Europe. Again.

  37. Ha, the Huffpo crowd is in full meltdown mode about British and European nationalism.

  38. Interesting article, but here is the problem. What does it mean to say that “Britain” is “better off”? What are “Britain”‘s “interests”? The same question, of course, applies to the EU or to any political collective.

  39. It is possible; it depends on whether they are committed to open markets and the common standards & regulations that facilitate commerce. In the short run, it depends on how expeditiously Britain and the EU work out the details; otherwise the uncertainty could lead to a recession.

  40. Post-Brexit, basically, the EU is free to become the United States of Europe.

    More like the European Union of Socialist Republics. The eurocrats will continue to pile on the regulations and will force their subjects into a Soviet-style collapse.

    -jcr

  41. Atlas Shrugged is also available in Russian, but at a price only the entrenched mafiosi and their politicians can afford. It took sth like 4 tries to get it into German, which has been a variant of Newspeak since the 1930s. Anyone who has despaired of getting a religious conservative to understand rights, freedom, trade… ought to try it with weapons-grade communo-fascist and socialist brainwashees elsewhere on the planet.

  42. UK is 5th largest GDP from my understanding so I would think they would do fine in the future when all this political squabbling is over.

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