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Here's the German Reaction To the U.K.'s Brexit Vote


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Reaction is a mix of sorrow, pragmatism and a touch of anger


The global reaction to the U.K.’s decision to leave the EU is generally one of shock. But the reactions of politicians and business leaders in one particular European country are particularly worthy of attention. Germany is, after all, the powerhouse of the union.


The first major German reaction came from Manfred Weber, a Bavarian member of the European Parliament and the leader of the center-right European People’s Party, the biggest political bloc in that parliament.



“Leave means leave,” Weber said in a press conference.


This was a reference to the idea that the U.K. can now take months to decide when to invoke Article 50 of the Lisbon Treaty—the mechanism that officially triggers the divorce proceedings between the U.K. and the EU.



The “Brexit” camp is keen to take its time in order to maximize its leverage, but the European Parliament, with Germans at the forefront, is in no mood to wait around. This is understandable, as the great institutions of the EU want to avoid contagion, and have little incentive to play nice with the country that just spat in their direction.



As for Angela Merkel (whose Christian Democratic Union works in tandem with Weber’s Bavaria-specific Christian Social Union), the German chancellor is in a more cautious mode.


Merkel said she had “deep regret” over the U.K.’s decision, but the remaining 27 members of the EU should be “willing and able to not draw quick and simple conclusions from the referendum…which would only further divide Europe.”


The chancellor said the countries should “calmly and prudently analyze and evaluate the situation, before making the right decisions together.”



Meanwhile, the business newspaper Handelsblatt reported that Merkel’s finance minister, Wolfgang Schäuble, had secretly drawn up a plan for what would happen in the event of Brexit.


Schäuble and Merkel would apparently like to see a treaty between the EU and the U.K., covering trading rules and other regulations that would “not offer too much leeway to Britain in gaining access to the European Union’s internal market.” Again, the aim here is to avoid creating incentives for other countries to consider following the U.K.’s lead, and leaving the EU.


Handelsblatt also said Merkel and Schäuble want to avoid letting France and Italy use the Brexit pandemonium to push for a greater pooling of liabilities in the Eurozone.


Merkel’s coalition partners, the center-left Social Democratic Party (SPD), said the U.K.’s vote for Brexit should be seen as a signal for the rest of the EU to press its case for greater integration—precisely what the Brexit voters reacted against. The party said committed Europeans had “failed to clearly point out” that the fears motivating the shift—over immigration, employment and refugees—were “unjustified.”

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Isn't this whole issue a lot like business monopolies? They coalesce, get so big and corrupt that finally you have to step in and break them up. Even the most true blue economist will argue that monopolies are bad. EU is a monopoly.

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This about sums it up:

http://www.slate.com/blogs/moneybox/2016/06/24/david_cameron_has_secured_his_place_as_one_of_the_worst_pms_ever.html

David Cameron may be the worst prime minister in modern British history. That dishonor is typically bestowed upon Neville Chamberlain, who ceded Czechoslovakia to the Nazis in 1938 and will forever be bound to the word appeasement. But poor Neville’s defenders can at least argue the man didn’t have many better options, since Britain wasn’t necessarily ready to take on Hitler’s forces in a war, and the time gained by sacrificing the Czechs allowed it to arm up. On the other hand, Cameron’s calamitous decision to allow a referendum on whether the U.K. should remain in the European Union—which unexpectedly ended in a vote to leave Thursday night—was a blunder entirely of his own making.
Cameron, who announced Friday that he will resign, did not want to leave the EU. For a long time, he didn’t even truly want a referendum on the issue. He felt compelled, however, to appease his party’s angry Eurosceptic faction in order to keep a firm hold on power. “At the 2015 general election Europe seldom featured in the top 10 of issues listed by voters among their principal concerns; Mr Cameron’s problem was that for some of his MPs it was the main reason they went into politics,” the Financial Times writes. And so Cameron promised to renegotiate the terms of Britain’s membership in the EU, and then put the question of whether to remain to a popular vote. Some of his fellow Tories, like Chancellor of the Exchequer George Osborne, thought it was an absurd gamble.* But the prime minister assumed that the British people would choose to stay and that he could put to rest the idea of secession once and for all.
Instead, the Brexit campaign became an outlet for the angry nativism of England’s aging working-class voters, impervious to fact or reasoned judgment. Now the world has to live with its consequences. And, as the terror in the markets and plunging value of the British pound should tell you, not many people outside England’s obscure suburbs and villages think the effects will be worth cheering. The U.K. is about to sever itself from a massive trade bloc, calling into question its own economic future, all while creating the specter that energized anti-European parties in other countries will push for their own secessionist referenda. The far right in the Netherlands and France are already celebrating. Nobody knows what the future holds, of course, but Europe’s tomorrow looks a lot bleaker than it did before this completely unnecessary vote.
Theoretically, Britain does not have to go through with this idiocy. The referendum is not legally binding. David Cameron doesn’t have to push his country off a cliff, just because voters thought it might be fun.
But he seems determined to do so anyway. “The will of the British people is an instruction that must be delivered,” he said during his resignation speech Friday. He might as well have quoted H.L. Mencken, who wrote, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”
But then again, there’s a reason developed democracies don’t typically make world-historic decisions by referendum. Voters are fickle. They make decisions in the heat of the moment and change their minds quickly. Twitter has been filled on Friday with stories of regretful “Leave” voters waking to realize that they’d made a mistake, that they’d never believed Brexit would actually prevail. The final count in a single election can be influenced by freak accidents or the weather; on Thursday, storms flooded much of southeast England and turned London’s evening commute into an unholy mess as trains were delayed and canceled, which surely cost the “Remain” side some votes. If the result of the Brexit goes poorly, there isn’t necessarily anybody to hold accountable—a country can’t vote itself out of office. That’s all fine if the results of a popular vote are reversible, if you’re deciding on whether to legalize marijuana or cap property taxes. But when they’re not? Perhaps its better to leave the decision-making to the people elected to do so. You wouldn’t put a war up to a popular up or down vote, since you can’t unfire the first shot. The decision to leave Europe forevermore shouldn’t have been any different.
Whose will is being represented? The “Leave” campaign relied largely on the votes of aging English people—those younger than 50 generally preferred to remain in the EU. Of course, older people are typically more enthusiastic about voting. But should the rash decision-making of Britain’s senior citizens really be the factor that decides whether a child born today will get to be a citizen of Europe, whether someone who graduates college in a couple years can work in 27 other countries, or just one?
According to Cameron, it should. Which is why historians will throttle him.
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Isn't this whole issue a lot like business monopolies? They coalesce, get so big and corrupt that finally you have to step in and break them up. Even the most true blue economist will argue that monopolies are bad. EU is a monopoly.

No, it's not though. The EEA agreements needed reform, but breaking it up isn't going to make any country in it stronger. It's like saying there are problems in the US so every state should secede and go it alone. And it's really not comparable to US policy because the US is still the US. We're still one nation, no one ever suggested we splinter off into separate countries instead of states.

This is more comparable to the dissolution of the USSR in terms of political and economic power than anything strictly to do with immigration policy.

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Could LONDON declare independence? After the capital's overwhelming vote against Brexit, calls grow for new Mayor Sadiq Khan to break away

this is gettin really mysterious now....
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The UK parliament is discussing a possible 2nd referendum! What a fucking joke! "The people have spoken but they didn't say the right thing" :lmao:

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Isn't this whole issue a lot like business monopolies? They coalesce, get so big and corrupt that finally you have to step in and break them up. Even the most true blue economist will argue that monopolies are bad. EU is a monopoly.

The EU has less than 30 countries, the UN more than 150. Would you say the UN should be broken too?

We are not talking about business or monopoly, we are talking about unions between nations. Both the EU and the UN were created after WWII in order to create dialogue and peace between nations. These unions are not bad, they are very important.

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-first:it's amazing for me that a country can decide freely about such a huge thing.go away from the european union is a huge thing to do,and still to be able to vote it, for me, it's incredible.

-the european union has to think about the reasons of this.I would have voted to stay, but there are a lot of unclear things about how the decisions are taken in the union.

-problems with the emigration? is really that big?I don't think so,but I don't know it really

-it's surprising that scotland and north ireland are so clearly in favour, and england so against.I would love to know why.

-london is different,as madrid is different, or other big cities, a lot of times they don't have any similarity with the rest of the country they belong to.

well,so now what?

I hope the union changes the non transparency of a lot of decisions,and I also hope they don't humiliate the UK,but I would love the european union to be energetic against them, and if they want a treatment it has to be similar to other countries,you can't be out but with all the privileges.and the exit has to be faster,it can't last two years.this crisis has to end fast,to start healing fast too.but to heal doesn't mean privileges for the UK, sorry

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The EU has less than 30 countries, the UN more than 150. Would you say the UN should be broken too?

We are not talking about business or monopoly, we are talking about unions between nations. Both the EU and the UN were created after WWII in order to create dialogue and peace between nations. These unions are not bad, they are very important.

This.

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Brexit: What does it mean for British tourists travelling to Europe?


The freedom for British airlines such as easyJet to fly within and between EU countries could be curtailed





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Our most intense engagement with Europe is when we holiday there.


With the peak travel season about to begin, millions of British holidaymakers are set to discover the immediate effects of the Leave vote in pushing up prices abroad. Longer term, there will be more big changes.



Will holidays cost more?


In the short term, the slide in sterling to its lowest level for years means the price of everything from a cup of coffee in a cafe in Paris to a night in a luxury hotel in the Maldives will rise.


The level of the increase depends on what level the pound settles at: before the referendum, the Treasury predicted sterling would lose 12-15 per cent of its value on a Leave vote.


Longer term, the two key rates are against the euro and the dollar.


The €:£ rate is crucial because we take the majority of our foreign holidays in the single-currency area; the Spanish costas, the French countryside, the cities of Italy and the islands of Greece.


Further afield, prices in destinations including the US, Dubai and China will rise in proportion with the strength of the dollar relative to sterling; many currencies are locked to the US$.


Even if you never venture beyond Europe, the $:£ rate is also significant. Oil is priced in dollars, as are aircraft. So a 12 per cent fall in sterling will push up the price of petrol, diesel and aviation fuel, as well as the cost of aircraft for airlines such as British Airways and easyJet.



Will I be asked to pay more for my holiday this year - or next?


The Package Travel Regulations allow tour operators to impose surcharges when the cost of a package holiday goes up after you booked because of currency fluctuations or rising fuel costs.


The company must absorb the first 2 per cent of any increase, and if the surcharge goes above 10 per cent then you have the right to cancel.



If you have already paid for your holiday in full, it is unlikely that you will need to pay a surcharge.


The company will probably have hedged its currency requirements for paying airlines and hoteliers. Some firms will also have hedged, at least partially, costs for 2017 holidays.


Anyone who has put together their own trip, and has yet to pay for accommodation or a rental car, will find that the cost in sterling terms has risen.




Will cheap flights disappear?


“Open skies” represents one of the most tangible benefits of European Union membership. Since 1994, any EU airline has been free to fly between any two points in Europe.


The freedom to fly allowed easyJet and Ryanair to flourish, and has forced “legacy” carriers such as BA, Air France and Lufthansa to cut costs and fares. On any European journey you care to name, the typical fare is around half what it was in the early 1990s - and anyone who can be flexible about timing can save even more.



Before the referendum, some in the Remain camp speculated that open skies would be among the first arrangements to be binned.


If the UK negotiates a similar arrangement to Norway, within the European Economic Area (EEA), then little would change; Norwegian, a non-EU budget airline, flies successfully within Europe and from the UK to the US.


If Britain does not reach such an accord, in theory every route between the UK and the EU might need to be renegotiated on a bilateral basis. The bureaucratic logjam would be immense. Similarly, British Airways and Virgin Atlantic have easy access to America because of an EU-US treaty on open skies.


But given that London is the world hub of aviation, and a key destination for dozens of airlines, it looks unlikely that routes to and from the UK will be affected.



The freedom for British airlines such as easyJet to fly within and between EU countries could be curtailed; nations such as France and Italy have in the past been protectionist of their home airlines.


The chance to clip the wings of the likes of easyJet could be welcomed by politicians and airlines in other EU countries - if not by travellers. It is likely that airlines will restructure into separate UK and EU-based corporate entities, adding complexity and cost, and reducing flexibility. Immediately after the result, Carolyn McCall, easyJet's chief executive, said she had written to the UK government and European Commission urging them "to prioritise the UK remaining part of the single EU aviation market".



How will passengers’ rights be affected?


The EU stipulates care and compensation in the event of disruption for airline passengers (and, to a limited extent, international train and ferry travellers).


These automatic rights would end for UK airlines when flying from British airports, though EU airlines ‒ including Ryanair ‒ would continue to be governed by them. It is possible that a future British government would create its own rules on passenger rights.




Could using our phones abroad cost more?


Another tangible benefit for EU consumers has been the squeeze on the excessive roaming charges levied by mobile phone companies.


The maximum surcharges phone firms can add for calls, texts and data while abroad have just been reduced again. By next June they will disappear completely; that will happen despite the vote to leave.


Once Britain leaves, it is difficult to imagine any UK government saying to the mobile-phone firms: “As we’re out of the EU now, feel free to bring back excessive roaming charges.”


In addition, mobile phone companies will start demonstrating a year from now that they can survive on zero roaming fees within Europe, and it may be that competitive pressure is sufficient to keep a lid on price rises.




What about British people who live in other EU countries?


The immediate impact for those who depend on savings or pensions in sterling is that the cost of living will rise; the exact amount depends on how the local currency strengthens against the pound. Longer term, the automatic right to live and work in EU countries will end, but it is likely that long-term expatriates will be able to stay.



UK passports and driving licences are “EU-branded”. Will we need to get new ones?


No, and for the time being new UK driving licences will continue to show the EU symbol and British passports will bear words “European Union” on the cover. But within a few years, when you renew either your passport or driving licence the design will change.



Some say we’ll need visas to go to Europe?


During the campaign some elements of the Remain side hinted darkly that we’ll all be queuing up outside the Spanish Embassy before we’re allowed to go to Benidorm.


The Green MP Caroline Lucas said that, in the event of the UK leaving the Single Market, “We would need to have visas”.


Yet the UK is second only to Germany in terms of the tourists it exports to other countries. Britain runs a massive “tourism deficit” (the excess of what we spend abroad compared with what we earn from foreign tourists), much to the benefit of bartenders from Benidorm to Benitses.


The suggestion that the governments of Spain, Greece, Portugal, etc would single out Britons for tougher treatment at the border is far-fetched. We will simply continue to show our passports on arrival, as we do now - as the UK is outside the Schengen Area.



Will there be border controls on the land frontier between Northern Ireland and the Republic?


Unlikely. There has been largely unrestricted travel between the two countries since 1921 under the terms of a Common Travel Area (which also includes the Isle of Man).


The government says: "A person who has been examined for the purpose of immigration control at the point at which he entered the area does not normally require leave to enter any other part of it."


The Republic of Ireland will probably remain outside Schengen, and the current absence of frontier posts will probably continue.



We’re told always to travel to Europe with our EHICs. Presumably health care will get more expensive and travel insurance costs will rise?


European Health Insurance Cards indicate entitlement to public health care on the same basis as local people in EU countries.


But before joining the EEC (as was), the UK had reciprocal health agreements with many European nations.


We still maintain bilateral deals with 16 countries, such as Australia, New Zealand and the former Yugoslavian republics of Macedonia, Montenegro and Serbia.


It is likely that a similar range of deals would be concluded with some or all EU members. If they are not, then the need for travel insurance will increase - and premiums could rise.

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What about duty-free?


When the UK leaves, it is likely that the limits that apply elsewhere in the world will be re-imposed. For alcohol, that means one litre of spirits, four litres of wine and 16 litres of beer.


The tobacco limit will be 200 cigarettes. In addition, a limit of “other goods” of £390 will be imposed.


A silver lining for airlines and cross-Channel ferry operators is that proper duty free would return; anyone who currently promises “duty free” for a journey within the EU is fibbing.



What will change for British motorists in Europe?


No more filling up the boot with cheap claret in Calais. In addition, fuel prices and motorway tolls will be more expensive in sterling terms. Current legislation means any car insured in one EU country is automatically insured to the minimum legal level in any other EU country. This will not apply once the UK leaves the EU, but many insurers will continue to extend comprehensive cover for short European trips either free or at a reasonable cost.



Looking at the UK tourist industry, the slump in sterling is presumable a benefit?


With weaker sterling, the rest of the world will get more pounds for its euros, dollars, yen, etc, making the UK a cheaper destination to visit.


Conversely, going abroad becomes more expensive for the British traveller, who may then choose to holiday in Cornwall rather than the Costa del Sol.


But it’s more complicated than that, especially in terms of British holidaymakers’ behaviour. Demand for overseas travel is price-inelastic.


If people find foreign holidays significantly more expensive, some may opt to stay in the UK. But between the summers of 2008 and 2009, when the cost of going abroad increased by roughly 25 per cent, the number of overseas trips by British holidaymakers reduced by a much smaller percentage.


Looking at foreign visitors coming here: EU rules allow European citizens to come to Britain with only a national identity card.


The UK government could re-impose the rule that all foreign nationals must have a passport, though the British travel industry would lobby strongly against anything that makes it more difficult for many EU citizens to visit the UK.

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No, it's not though. The EEA agreements needed reform, but breaking it up isn't going to make any country in it stronger. It's like saying there are problems in the US so every state should secede and go it alone. And it's really not comparable to US policy because the US is still the US. We're still one nation, no one ever suggested we splinter off into separate countries instead of states.

This is more comparable to the dissolution of the USSR in terms of political and economic power than anything strictly to do with immigration policy.

But it's still a broad swath of power over once independent organizations, like monopolies. And the higher you go up, the more concentrated the power comes in lesser hands. Those "lesser hands," we'll call them the elite few, typically fall off into corruption. That's why so many people argue for states rights. Sure they have representation, but now it's only one or two guys in some fancy pants far away building with lots of flags out front, instead of Peggy down the hall or the local mayor that have to see you face to face. They can't run and hide as easily. Corporate management that takes over companies don't face their workers because they know they're screwing them over. They leave that to middle management. Billionaire elitists who, let's face it, truly run Europe, don't face the population. They HIDE.

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Duty free booze and cigs are back yes?

That will probably be for the EU to decide. Seriously.

Basically every single thing that was said in the other thread by those with an iota of common sense, then.

Could LONDON declare independence? After the capital's overwhelming vote against Brexit, calls grow for new Mayor Sadiq Khan to break away

They probably could if there was a public hunger for it. Would YOU want to be saddled with the rest of little england as it sinks? They'd need a new capital city though. Maybe....Birmingham.

The UK parliament is discussing a possible 2nd referendum!

First I've heard that. Won't happen.

-it's surprising that scotland and north ireland are so clearly in favour, and england so against.I would love to know why.

Scotland has historically been a left of centre, progressive country and is at least able to vote for it's own devolved parliament thus having it's main political ideology actually represented. There's a lot of disenfranchisement and alienation in many Northern English and midland towns and cities, intensified by the scaremongering over immigration caused by the current conservative administration. That frustration has probably funneled it's way into this exit vote. Little do they know it's just about to get a whole lot tougher for them.

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But it's still a broad swath of power over once independent organizations, like monopolies. And the higher you go up, the more concentrated the power comes in lesser hands. Those "lesser hands," we'll call them the elite few, typically fall off into corruption. That's why so many people argue for states rights. Sure they have representation, but now it's only one or two guys in some fancy pants far away building with lots of flags out front, instead of Peggy down the hall or the local mayor that have to see you face to face. They can't run and hide as easily. Corporate management that takes over companies don't face their workers because they know they're screwing them over. They leave that to middle management. Billionaire elitists who, let's face it, truly run Europe, don't face the population. They HIDE.

I understand the problem, and I agree there is one, but do you think that problems in the US would be solved by each state seceding from the whole? Reform is needed, but not demolition of the entire government. Basically this is descending into anarchy. You can only negotiate for a place of power FROM a place of power. By giving up your economic and political voice, you ensure no say in the outcome of the issues.

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The EU has less than 30 countries, the UN more than 150. Would you say the UN should be broken too?

We are not talking about business or monopoly, we are talking about unions between nations. Both the EU and the UN were created after WWII in order to create dialogue and peace between nations. These unions are not bad, they are very important.

Yeah, well, far too often these days it seems the "dialogue" between nations is about what the ones who are doing the dialogue want, not the people they're paid to represent.

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I heard a pro LEAVE student saying now that the UK is out of the EU there's less likelihood of terrorism than in other countries because they can control who gets in or who doesn't. Seriously, I can't. Luckily most students and the younger generations predominantly understood that in the 21st century the REMAIN option was the most sensible one

Everywhere but in the tabloid press there are dozens of articles saying how basically older rural generations have screwed up and robbed off the new generations for years to come

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I understand the problem, and I agree there is one, but do you think that problems in the US would be solved by each state seceding from the whole? Reform is needed, but not demolition of the entire government. Basically this is descending into anarchy. You can only negotiate for a place of power FROM a place of power. By giving up your economic and political voice, you ensure no say in the outcome of the issues.

Food for thought. Rebelvvv is smart.

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Krugman weighs in

Brexit: The Morning After

Paul Krugman

June 24, 2016 10:21 am

http://krugman.blogs.nytimes.com/2016/06/24/brexit-the-morning-after/?smid=tw-share

Well, that was pretty awesome – and I mean that in the worst way. A number of people deserve vast condemnation here, from David Cameron, who may go down in history as the man who risked wrecking Europe and his own nation for the sake of a momentary political advantage, to the seriously evil editors of Britain’s tabloids, who fed the public a steady diet of lies.

That said, I’m finding myself less horrified by Brexit than one might have expected – in fact, less than I myself expected. The economic consequences will be bad, but not, I’d argue, as bad as many are claiming. The political consequences might be much more dire; but many of the bad things I fear would probably have happened even if Remain had won.

Start with the economics.

Yes, Brexit will make Britain poorer. It’s hard to put a number on the trade effects of leaving the EU, but it will be substantial. True, normal WTO tariffs (the tariffs members of the World Trade Organization, like Britain, the US, and the EU levy on each others’ exports) are low and other traditional restraints on trade relatively mild. But everything we’ve seen in both Europe and North America suggests that the assurance of market access has a big effect in encouraging long-term investments aimed at selling across borders; revoking that assurance will, over time, erode trade even if there isn’t any kind of trade war. And Britain will become less productive as a result.

But right now all the talk is about financial repercussions – plunging markets, recession in Britain and maybe around the world, and so on. I still don’t see it.

It’s true that the pound has fallen by a lot compared with normal daily fluctuations. But for those of us who cut our teeth on emerging-market crises, the fall isn’t that big – in fact, it’s not that big compared with British historical episodes. The pound fell by a third during the 70s crisis; it fell by a quarter during Britain’s exit from the Exchange Rate Mechanism in 1992; it’s down about 8 percent as I write this.

Here, from Bloomberg, is the pound-euro rate over the past 5 years. This is not a world-class shock:

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Furthermore, Britain is a nation that borrows in its own currency, not subject to a classic balance-sheet crisis due to currency devaluation – that is, it’s not like Argentina, where the fall in the peso wreaked havoc with firms and consumers who had borrowed in dollars. If you were worried that fears about Brexit would cause capital flight and drive up interest rates, well, no sign of that – if anything the opposite. Here, again from Bloomberg, is the interest rate on British 10-year bonds over the past five years:

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Credit

Now, it’s true that world stock markets are down; so are interest rates around the world, presumably reflecting fears of economic weakness that will force central banks to keep monetary policy very loose. Why these fears?

One answer is that uncertainty might depress investment. We don’t know how the process of Brexit plays out, and I could see CEOs choosing to delay spending until matter clarify.

A bigger issue might be fears of very bad political consequences, both in Europe and within the UK. Which brings me to the politics.

It seems clear that the European project – the whole effort to promote peace and growing political union through economic integration – is in deep, deep trouble. Brexit is probably just the beginning, as populist/separatist/xenophobic movements gain influence across the continent. Add to this the underlying weakness of the European economy, which is a prime candidate for “secular stagnation” – persistent low-grade depression driven by things like demographic decline that deters investment. Lots of people are now very pessimistic about Europe’s future, and I share their worries.

But those worries wouldn’t have gone away even if Remain had won. The big mistakes were the adoption of the euro without careful thought about how a single currency would work without a unified government; the disastrous framing of the euro crisis as a morality play brought on by irresponsible southerners; the establishment of free labor mobility among culturally diverse countries with very different income levels, without careful thought about how that would work. Brexit is mainly a symptom of those problems, and the loss of official credibility that came with them. (That credibility loss is why the euro disaster played a role in Brexit even though Britain itself had the good sense to stay out.)

At the European level, in other words, I would argue that Brexit just brings to a head an abscess that would have burst fairly soon in any case.

Where I think there has been real additional damage done, damage that wouldn’t have happened but for Cameron’s policy malfeasance, is within the UK itself. I am of course not an expert here, but it looks all too likely that the vote will both empower the worst elements in British political life and lead to the breakup of the UK itself. Prime Minister Boris looks a lot more likely than President Donald; but he may find himself Prime Minister of England – full stop.

So calm down about the short-run macroeconomics; grieve for Europe, but you should have been doing that already; worry about Britain.

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Brexit worse on GBP than 2008 financial crisis


World stocks and British pound sterling fall dramatically over fears of UK recession after its decision to leave the EU.






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A British vote to leave the European Union has shocked the world's financial markets and has brought the British pound down to a 31-year low, its biggest fall in history.


The final results of the historic EU referendum - a 52 to 48 split in favour of Britain's exit - have set the UK down an uncertain path towards independence and represent the largest blow to European efforts at greater unity since World War II. But the exit vote is also bad news for investors.


British banks took a $130bn hit on Friday, with financial giants such as Barclays and Lloyds down 30 percent.



The pound sterling sank as low as $1.35, a near 10 percent drop in value and its lowest rate against the dollar since September 1985, before recovering to $1.37.


The fall was reportedly even larger than the drop during the 2008 global financial crisis.



If the pound continues to weaken, the UK's central bank, the Bank of England, may be forced to intervene.


The bank will have to either shore up the currency by purchasing more pounds with other currencies or raise interest rates, a move that would hit UK citizens with loans and mortgages.


Property analysts in the UK have said that a British exit from the EU will bring about a slowdown in property price growth, and even a fall in prices.


And while the long-term effects of a Brexit on the markets are less clear, some analysts have warned that an exit could cause mass job cuts and a significant drop in foreign investments.


"It's an extraordinary move for financial markets and also for democracy," said Richard Benson, the co-head of portfolio investments of London-based currency specialist Millennium Global.


"The market is pricing interest rate cuts from the big central banks and we assume there will be a global liquidity add from them in the next few hours," he added.


Many global investors have dropped the pound and fled to safe havens such as gold and the Japanese yen.


Such a body blow to global confidence could prevent the US Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks, Reuters news agency reported.


Global currencies suffered throughout the day as Asia and Eastern Europe woke up to news of a Brexit and alarmed investors worried about pulling funds out of emerging markets. Poland, where many of the Britain’s eastern Europeans come from, saw its zloty slump by at least 7 percent.


Analysts said they are worried that London's status as a financial capital may now be eroded, especially if the UK loses "passporting" rights, which allow banks to reside in the UK and sell their products and services throughout the EU.


Standard & Poor's, an American financial services company, has said it will strip the UK of its AAA credit rating.



Fears of recession


Financial markets have been gripped for months by worries about what Britain’s exit from the European Union will mean for Europe's stability.


"Obviously, there will be large spill-over effects across all global economies if the Leave vote wins. Not only will the UK go into recession, Europe will follow suit," predicted Matt Sherwood, head of investment strategy and fund manager at Perpetual in Sydney.


Richard Buxton, head of UK equities at Old Mutual Global Investors, predicted a similar fate, saying Britain's decision to leave the EU is likely to result in the country entering into recession, adding that domestically focused British businesses would be hardest hit.


"Investors should now brace themselves for an unpleasant period of relatively indiscriminate selling as funds aim to meet redemptions in conditions where liquidity may be more limited than usual," Buxton said.


However, Mark Carney, the Bank of England chief, has said that the bank can provide liquidity in foreign currency if it is needed to ensure market stability. Similar assurances were made by Bank of Japan Governor Haruhiko Kuroda.




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