Monday, June 13, 2016

The saddest news -- Brexit may well happen!

I cannot believe that I am on the same side as the big investment banks; I always though that the UK had more to gain inside of Europe than outside (Economics valuation).  Turns out the new polls are showing that a majority of Brits are for exit from Europe.  

It will be expensive economically, the pound is certain to take a hit, Britain is very reliant on foreign capital (to the tune of 7% of GDP). There is no doubt that Europe will go out of its way to make things difficult for Britain (and what about Ireland?).  Europe's bureaucrats will try to punish the Brits by killing the City' s access to Europe's businesses -- just because they can. Although I am not so sure that Germany wants that poison chalice, although I am sure that France would -- I wonder what Investment banking looks like with a 35 hours work week? (just saying...)

This morning I read Abrose Evans-Prichard, who just two weeks ago said in his weekly column that the departure of the UK would be very expensive.  However, yesterday he wrote that he would vote for the exit.  He is a hugely smart, well spoken guy.  First, he doesn't buy the Brexit proponents that an exit of Europe would be a no cost outcome, maybe even a gain for the UK.  He believes that the short term cost of the exit will be very high indeed.

However, AEP is more worried about democratic institutions.  There is no doubt that the ECB's secret letters to Italy and Greece, its actions in Cyprus and elsewhere are deeply undemocratic.  In fact, a referendum that SPECIFICALLY rejected the Mastrich agreement was just disregarded.  The ECB is the executant of Angela Merkel's political decisions that all that is right in Europe is the making of Germany and that everyone else is at fault.

AEP writes: "We are deciding whether to be guided by a Commission with quasi-executive powers that operates more like the priesthood of the 13th Century papacy than a modern civil service; and whether to submit to a European Court of Justice (ECJ) that claims sweeping supremacy, with no right of appeal."

Fighting words in deed.  In a sense his reasons for leaving are the same than those who though the Munich Agreement (appeasing Hitler) was a disaster and treason was that it was going the easy way "Peace in our time" was a way to avoid the unpleasant truth that something was not right (BTW I am not linking Europe to Hitler -- rather sometime unpleasant actions have to be taken based on principles with disregard to the economic consequences).

Read AEP's article here .  A unfortunately worthy argument! 


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