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Britain is Screwed

The British pound has already lost more than 25 cents against the dollar, the worst drop in the history of the UK. Similar drops in various stock markets are expected. It is estimated that the British economy will shrink by 3.8 to 7.5 percent.

This is what happens when xenophobia and rampant nationalism win. Brexit won because of fear of immigrants, but the cure might be far worse than the disease.

Sound familiar?



  1. Hassan wrote:

    So democracy has limitations?

    Friday, June 24, 2016 at 12:04 am | Permalink
  2. Iron Knee wrote:

    Or human stupidity is unlimited.

    Friday, June 24, 2016 at 12:08 am | Permalink
  3. Hassan wrote:

    Yeah, so pure democracy where majority rules cannot be always right. 9 wolves can vote to eat one sheep and call it fair democratic process.

    Friday, June 24, 2016 at 12:11 am | Permalink
  4. Hassan wrote:

    Technically this is non-binding vote though.

    Friday, June 24, 2016 at 12:11 am | Permalink
  5. TJ wrote:

    The British pound lost value because financial people are guessing that this will turn out badly, and therefore created a self-fulfilling prophecy. They are not right and there is no reason for the panic that has occurred. The move may be a failure or it may be a success, but no one could possibly know that now; “experts” think they know and right behind them comes a market panic.

    The US stock market fell sharply the day after President Obama was elected in 2008, and again in November 2012. All because Wall St. thought Obama would be bad for business and the market. The market has doubled since then – the Nov 5, 2008 DOW close was $9,139 and today’s close was $18,011. Wall Street was wrong. In the end today’s vote in Britain may go either way, but I do know the financial panic is unnecessary.

    Friday, June 24, 2016 at 12:33 am | Permalink
  6. TJ wrote:

    Also, Hassan – Democracy definitely has limitations. It’s a terrible system, for the reason you pointed out in post 3. That’s why thankfully neither Britain nor America is actually a Democracy. “Spreading Republic” doesn’t sound as good though.

    Friday, June 24, 2016 at 12:37 am | Permalink
  7. Iron Knee wrote:

    Hassan, “No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” – Winston Churchill.

    TJ, you have just described how economics works. It is all a big competition between confidence and uncertainty.

    Friday, June 24, 2016 at 3:16 am | Permalink
  8. Jonah wrote:

    “democracy” at work

    Friday, June 24, 2016 at 6:46 am | Permalink
  9. jb wrote:

    This from the Guardian: “Despite voting to leave, the 77 year old said he was surprised by the news. His wife Pam said her first thoughts as the results came is was “Oh dear!”

    The vote split quite cleanly along the lines of old/under-educated/non-major city or rural/tabloid readers and young/educated/city/serious newspaper readers.

    And the mis-information in the print media has been outrageous. Yesterday: $500m a week that now goes to the EU goes to the National Health Service. Today: We made a mistake…

    Can a whole country qualify for a Darwin Award?

    Friday, June 24, 2016 at 8:14 am | Permalink
  10. Iron Knee wrote:

    Meanwhile, Trump (who is in Scotland opening his luxury golf course in Turnberry) says that Brexit is “a great thing that happened” because “when the pound goes down, more people are coming to Turnberry, frankly. For traveling and for other things, I think it very well could turn out to be a positive.”

    Not only is he happy at Britain’s misfortune, because it will help him make money, but he doesn’t seem to know that Scotland voted heavily to stay in the EU, and is now talking about leaving the UK so they can rejoin the EU on their own.

    As always, it is all about Trump.

    Friday, June 24, 2016 at 8:18 am | Permalink
  11. PatriotSGT wrote:

    Lots of wealthy people are profiting off the market volatility and helping it go down. Soros is a big short seller amd there are many others like him.
    Personally I don’t think it will be bad for the UK, it’ll take a couple years to untangle them from the EU, but I bet they leave the free trade part in there, as it would hurt other economies like Germany just as much. Tje stock market will come back as soon as the short sellers cover their positions. Cause lord knows there arn’t many high yielding bonds to buy. Investers got to pit their money somewhere. It’ll work out fine.

    Friday, June 24, 2016 at 11:27 am | Permalink
  12. Canadian Tim wrote:

    As a Canadian I was wondering would some one please ask Trump if he thinks this was such a great example of Democracy how he would respond to say Washington State Voting to leave the US and joining us. Just wondering

    (Yes this is a real thing that has come up before)

    Friday, June 24, 2016 at 11:28 am | Permalink
  13. Iron Knee wrote:

    PSgt, the EU is keenly aware that if nothing bad happens to the UK when they leave, that other countries will be encouraged to leave. So I would be really surprised if they leave the free trade part in there, or any other advantages. The EU has been making concessions to the UK for a while to keep them in, and I think Europe is tired of that.

    Tim, sign me up! (I have lived in Canada several times in my life).

    Trump crows that Brexit is a good thing because it makes more money for his golf course in Scotland, but he fails to mention that it will make golf courses in the US less profitable (not to mention any business that depends on tourism or on exports). So much for his claim to always being “USA First”.

    Friday, June 24, 2016 at 11:33 am | Permalink
  14. westomoon wrote:

    Yesterday, I found myself wondering whether the EU’s treatment of Greece played a role in the sudden boiling-up of this issue in the UK.

    The ways in which the EU chafes its member States haven’t changed in decades. But until we watched the EU feed Greece into a meat-grinder to save the profits of German banks, I think there had been the assumption that Brussels, however ham-handed or misguided its actions, had the welfare of its member States as a primary goal.

    After watching Brussels, which sure looked like another name for “Greater Germany” in this instance, cold-bloodedly pin Greece into a corner and shred its citizens’ lives, the illusion is shattered. I think it’s no accident that Brexit’s main backers were, say, the British 60%. Call them ignorant, but they are also the sector of the population that was coldly and intentionally thrown to the wolves in Greece.

    Friday, June 24, 2016 at 12:15 pm | Permalink
  15. ThatGuy wrote:

    IK has it right that the EU won’t, or really can’t, be too kind to the UK as it leaves the EU. If a state can get the benefits without being a member, why would anyone else tether themselves to Brussels? Why effectively subsidize a non-member?

    The EU is far from perfect, but it has had a pretty remarkable track record in terms of maintaining peace and cooperation in Europe. With this move, the UK is effectively ceding a leadership role both politically and economically.

    Friday, June 24, 2016 at 2:45 pm | Permalink
  16. Jonah wrote:

    Regarding UK being part of the single EU market, the misconception is that can happen without the freedom of EU workers to move around. It can’t. Switzerland and Norway both belong to the single market and have to abide by the freedom to move rule. Plus they don’t have any say in any of the labor regulations. Norway was actually encouraging the UK to stay since the agreement UK currently has is more advantageous than what Norway has.

    One of the main reasons UK voted to leave was immigration. However the only way to truly curb it to completely exit the single EU market. That is not a simple change and will come with enormous adverse economic ramifications. Banks, Car manufacturers exporting to EU do not have an incentive to stay in the UK and the UK will lose a ton of jobs. The weaker pound may be advantageous in terms of export or tourism but the UK really doesn’t have too many things to export and will have less once manufacturers leave their shores.

    Anyone arguing that things will revert back to the status quo isn’t really thinking it through.

    Saturday, June 25, 2016 at 5:39 am | Permalink
  17. Iron Knee wrote:

    Here’s a good article with an opposing view. They think the UK leaving the EU might be what the EU needs to save itself.

    Saturday, June 25, 2016 at 12:23 pm | Permalink