Tuesday, June 21, 2016

Brexit Rules The Week
John Rubino* summarizes the issues, concerns & challenges of the Brexit vote this week .. Would Brexit be a big deal in the long run? - "Here it’s easier to speculate, because market forces come into play. If one country leaves the EU then several more might do so in short order, and that might unravel the whole organization. This would produce ongoing chaos as each new election risks installing an anti-EU government and the Brexit drama is repeated continuously — though with new names like Frexit and Sprexit. The resulting uncertainty would be bad for the value of financial assets that depend on faith in governments and central banks. All those negative interest rate bonds would behave like junk, dropping to 70 cents on the dollar as buyers demand some return to go with their risk. Equities, which trade in part with reference to bond yields, would probably also behave like junk, falling in response to uncertainty instead of rising on the expectation of central bank salvation. So bad in the long run for the current irredeemably corrupt financial system — which is to say probably good for most regular people." .. Bexit & its aftermath are just symptoms of a deeper problem - "To paraphrase an old saying about inflation, today’s political turmoil is always and everywhere a monetary phenomenon. We’ve borrowed too much money and now nothing works any more. Electoral turmoil is simply what you get at the tail end of an epic debt binge. In that sense it doesn’t matter (within reason) who ends up being prime minister, president, or premier unless they figure out a solution for their balance sheets. And that — assuming it’s even possible — won’t be quick or easy."
LINK HERE to the commentary

1 comment:

Anonymous said...

Queen should resign if they stay in the E.U.