Jun 242016
 
 June 24, 2016  Posted by at 10:16 am Finance Tagged with: , , , , , , ,


Stephen Green 18×24 inches. 2016. Acrylic on canvas. MuseumofAwesomeArt.com

Well, they did it. A majority of Britons made clear they’re so fed up with David Cameron and everything he says or does, including promoting the EU, that they voted against that EU. They detest Cameron much more than they like Nigel Farage or Boris Johnson. It seems that everyone has underestimated that.

Cameron just announced he’s stepping down. And that points to a very large hole in the ground somewhere in London town. Because going through a list of potential leaders, you get the strong impression there are none left. Not to run the country, and not to negotiate anything with Brussels. Which has a deep leadership -credibility- hole of itself, even though the incumbents are completely blind to that.

But first Britain. The Leave victory was as much a vote against Chancellor George Osborne as it was against Cameron. So Osborne is out as potential leader of the Conservatives. Boris Johnson? Not nearly enough people like him, and he fumbled his side of the Leave campaign so badly his credibility, though perhaps not being fully shot, is far too much of an uncertainty for the Tories to enter the upcoming inevitable general elections with.

Who else is there? Michael Gove? Absolute suicide. Likeability factor of zero Kelvin. That bus these guys drove around which proclaimed they could get £350 million extra a week for the NHS health care system in case of a Brexit will come back to haunt all of them. Just about the first thing Farage said earlier when the win became clear, was that the £350 million was a mistake.

I guess you could mention Theresa May, who apparently wants the post, but she’s an integral part of the Cameron clique and can’t be presented as the fresh start the party so badly needs.

 

Talking about Farage, who’s not Tory, but Ukip, he’s done what he set out to do, and that means the end of the line for him. He could, and will, call for a national unity government, but there is no such unity. He got voted out of a job today -he is/was a member of the European Parliament- and Ukip has only one seat in the British parliament, so he’s a bit tragic today. There is no place nor need for a UK Independence Party when the UK is already independent.

Then there’s Labour, who failed to reach their own constituency, which subsequently voted with Farage et al, and who stood right alongside Cameron for Remain, with ‘leader’ Jeremy Corbyn reduced to the role of a curiously mumbling movie extra. So Corbyn is out.

Shadow finance minister John McDonnell has aspirations, but he’s a firm Remain guy as well, and that happens to have been voted down. Labour has failed in a terrible fashion, and they better acknowledge it or else. But they already had a very hard time just coming up with Corbyn last time around, and the next twist won’t be any easier.

Cameron, Osborne, Corbyn, they have all failed to connect with their people. This is not some recent development. Nor is it a British phenomenon, support for traditional parties is crumbling away everywhere in the western world.

 

The main reason for this is a fast fading economy, which all politicians just try to hide from their people, but which those same people get hit by every single day.

A second reason is that politicians of traditional parties are not perceived as standing up for either their people nor their societies, but as a class in themselves.

In Britain, there now seems to be a unique opportunity to organize a movement like (Unidos) Podemos in Spain, the European Union’s next big headache coming up in a few days. Podemos is proof that this can be done fast, and there’s a big gaping hole to fill.

Much of what’s next in politics may be pre-empted in the markets. Though it’s hard to say where it all leads, this morning there’s obviously a lot of panic, short covering etc going on, fact is that as I write this, Germany’s DAX index loses 6% (-16.3% YoY), France’s CAC is down 7.7% (-18.5%) and Spain’s IBEX no less than 10.3% (-30%). Ironically, the losses in Britain’s FTSE are ‘only’ 4.5% (-11%).

These are numbers that can move entire societies, countries and political systems. But we’ll see. Currency moves are already abating, and on the 22nd floor of a well-protected building in Basel, all of the relevant central bankers in the world are conspiring to buy whatever they can get their hands on. Losses will be big but can perhaps be contained up to a point, and tomorrow is Saturday.

By the way, from a purely legal point of view, Cameron et al could try and push aside the referendum, which is not legally binding. I got only one thing on that: please let them try.

As an aside, wouldn’t it be a great irony if the England soccer (football) team now go on to win the Euro Cup? Or even Wales, which voted massively against the EU?

 

Finally, this was of course not a vote about the -perhaps not so- United Kingdom, it was a vote about the EU. But the only thing we can expect from Brussels and all the 27 remaining capitals is damage control and more high handedness. It’s all the Junckers and Tusks and Schäubles and Dijsselbloems are capable of anymore.

But it’s they, as much as David Cameron, who were voted down today. And they too should draw their conclusions, or this becomes not even so much about credibility as it becomes about sheer relevance.

Even well before there will be negotiations with whoever represents Britain by the time it happens, the Brussels court circle will be confronted with a whole slew of calls for referendums in other member states. The cat is out of Pandora’s bag, and the genie out of her bottle.

Many of the calls will come from the far-right, but it’s Brussels itself that created the space for these people to operate in. I’ve said it before, the EU does not prevent the next battle in Europe, it will create it. EC head Donald Tusk’s statement earlier today was about strengthening the union with the remaining 27 nations. As if Britain were the only place where people want out…

Holland, France, Denmark, Italy, Spain, Hungary, they will all have calls for referendums. Greece already had one a year ago. The center cannot hold. Nor can the system. If referendums were held in all remaining 27 EU member states, the union would be a lot smaller the next morning. The Unholy Union depends on people not getting a say.

The overwhelming underlying principle that we see at work here is that centralization is dead, because the economy has perished. Or at least the growth of the economy has, which is the same in a system that relies on perpetual growth to ‘function’.

But that is something we can be sure no politician or bureaucrat or economist is willing to acknowledge. They’re all going to continue to claim that their specific theories and plans are capable of regenerating the growth the system depends on. Only to see them fail.

It’s high time for something completely different, because we’re in a dead end street. If the Brexit vote shows us one thing, it’s that. But that is not what people -wish to- see.

Unfortunately, the kinds of wholesale changes needed now hardly ever take place in a peaceful manner. I guess that’s my main preoccupation right now.

 

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
Yeats

Home Forums Brexit: The System Cannot Hold

This topic contains 9 replies, has 8 voices, and was last updated by  John Day 1 year, 12 months ago.

Viewing 11 posts - 1 through 11 (of 11 total)
  • Author
    Posts
  • #28917

    Stephen Green 18×24 inches. 2016. Acrylic on canvas. MuseumofAwesomeArt.com Well, they did it. A majority of Britons made clear they’re so fed up with
    [See the full post at: Brexit: The System Cannot Hold]

    #28918

    Nassim
    Participant

    Very nice summary. Thank you Raúl 🙂

    Maybe Farage is not quite dead yet. We will see.

    #28920

    V. Arnold
    Participant

    I posted this at the thread below, so now that there’s a dedicated (Brexit), I’ll re-post it here:
    I posted this at MoA (a cautionary tale):
    I wouldn’t be getting too exuberant here; 48% – 51.7%. A country truly divided with barely a majority win.
    I hope they (Brits) leave; at least 3 maybe 4 other EU states are talking about leaving; so, it’s begun, but, some very slimy characters with lots to lose are going to do everything they can to change the outcome.
    If, in the end, they fail to stop the exit, “we” win. We being the working stiffs, the ones usually cheated and robbed by the neo-liberal scum.

    #28922

    V. Arnold
    Participant

    I love Yeats:
    Turning and turning in the widening gyre
    The falcon cannot hear the falconer;
    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and everywhere
    The ceremony of innocence is drowned.
    The best lack all conviction, while the worst
    Are full of passionate intensity.

    That last line says it all for today’s world, no?

    #28924

    Ken Barrows
    Participant

    Don’t think the lack of a FTSE drop (relatively) is ironic. This will hurt the EU more than the UK.

    #28926

    Professorlocknload
    Participant

    Deflationary?

    #28927

    Professorlocknload
    Participant

    What to do?
    Get the hell out of the bonds, including the dollar? 1.47 Yield? Do we really think this is going even more negative? Or do we suppose the PPT/Fed is in full on liquefy-it-all mode, Katy bar the door?

    Busy weekend at Eccles 😉

    #28929

    VisionHawk
    Participant

    Brexit – perhaps a little clarity??

    I suspect that even Cameron voters changed horses – and the reason is the fear of being swamped by hordes from elsewhere. Under EU rules Britain would have to accept what the EU decrees – now it doesn’t.
    Yet again matters Economic are obfuscating the real reasons…..

    Having said that – let’s look forward to the dawning of better days!

    #28930

    VisionHawk
    Participant

    Brexit – perhaps a little clarity??

    I suspect that even Cameron voters changed horses – and the reason is the fear of being swamped by hordes from elsewhere. Under EU rules Britain would have to accept what the EU decrees – now it doesn’t.
    Yet again matters Economic are obfuscating the real reasons…..

    Having said that – let’s now look forward to the dawning of better days!

    #28931

    TheTrivium4TW
    Participant

    >>It’s high time for something completely different, because we’re in a dead end street.<<
    We are in a dead-end debt monetary system. If you change the “street” without changing debt-based monetary systems to non debt-based monetary systems then you’ve accomplished very little – and nothing in the long run.
    But we aren’t supposed to touch the debt-money system per Krugman’s warning, right?

    I see debt-people in the debt-money Matrix.

    #28932

    John Day
    Participant

    Massive losses will be “realized” throughout the world by second-tier and lower elites. Soros bet hard against markets, bought gold, and warned how everything would be so chaotic and bad in finance if Brexit was voted in. Did top tier elites make it look like they would rig this vote, then not-rig-it on purpose? Big head-fake, if so. The BIS boot was full of busy bankers yesterday and today. Looks like globalism just got an embolism.

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