EU Referendum: Best night to Buy Kiki!

[Jambalaya]

If Britain HAD adopted the euro, would it have made pulling out of the EU impossible? And why? I want to say instinctively that Britain could not have pulled out if it had the euro, but I can't seem to articulate why I feel that way. Does anyone know what the scenario here would have been if Britain had the euro? I know it's only an "if" since Britain certainly isn't getting the euro now, but I just think it's a really interesting hypothetical thing to think about, in the light of what's happened.

IMO, UK was smart not to adopt the euro. I mean, why would they wanted to have financial ties with BK countries like Greece, Italy and Portugal?. Germany will be the next country to exit the EU followed by France.

Goodness, if that happens, there'll hardly be any EU left, financially speaking, since France, Germany, and the UK are/were by far the three biggest economies paying by far the most (I think).

I was quite shocked about that figure in the Wall Street Journal quoting 61% disapproval rates in France for the EU. Of course, feelings of disapproval are quite different from actually checking out.

It does seem that there are so very many people who want their countries to be independent again. The EU was formed after World War II because countries that trade together are less likely to go to war together. However, those reasons are probably not relevant today. I say the following with caution, because we must always be very careful of the way that history tends to repeat itself, but I can't imagine countries such as France and Germany, or Germany and the UK, going to war together today. Perhaps the reasons the EU was formed no longer hold true. Some people say that EU restrictions and regulations are stifling, and that the EU is getting ever more heavy-handed. I am not familiar with EU legislation for each member state and have even less idea how such legislation affects the laws of a given member. I also don't really know just how much legislative power the EU has over its members and how that power affects the independence of the members. It's all enormously complicated. But it does seem as if there's a lot of discontent with Brussels throughout the union. I wonder if we're just witnessing a moment where people simply want their independence back. Of course, not so many people alive today knew what it was like to live, at least as an adult, in the nightmare of Hitler's Europe.

And then there are the Leavers who aren't so much concerned about the economy but are coming from xenophobia, and perhaps some racism. I've heard phrases such as "taking Britain back." I suppose that means taking it back from immigrants, but if people voted Leave thinking that they would have less immigration, I think they'll be disappointed. I thought immigration issues were governed by Britain, not by the EU.

 

[Jambalaya]

I saw a report back in February that the pound/US dollar exchange was very good for Americans, and I just looked it up - the worst was 1.386 to the pound on Feb 29. I'm not sure what happened on Feb 29. Right now it says 1 British pound is worth 1.37, which is a recovery from 1.33 on Thurs night. So if it hasn't changed that much from some rates of recent months, maybe it's an indicator that things aren't so bad. Maybe this is more of a temporary shock. Trying to stay positive about things. I mean, countries managed perfectly well before the EU.

What interesting is that even experts can't predict how this is all going to play out. No one knows.

 

[jaaron]

I saw a report back in February that the pound/US dollar exchange was very good for Americans, and I just looked it up - the worst was 1.386 to the pound on Feb 29. I'm not sure what happened on Feb 29. Right now it says 1 British pound is worth 1.37, which is a recovery from 1.33 on Thurs night. So if it hasn't changed that much from some rates of recent months, maybe it's an indicator that things aren't so bad. Maybe this is more of a temporary shock. Trying to stay positive about things. I mean, countries managed perfectly well before the EU.

What interesting is that even experts can't predict how this is all going to play out. No one knows.

What happened on Feb 29th was that it was the day that UBS released a report that predicted a long term slide for sterling (parity with the Euro) if Britain voted for Brexit.

And yes, some countries managed perfectly well before. Some didn't. Between the two world wars and the Great Depression, I don't think before and now are really comparable.

I do know that the UK used to have a very manufacturing based economy and now has almost none. In 1948, manufacturing accounted for 41% of the British economy. In 2013 that was down to 14%, with the services sector at 79% - construction stayed roughly the same at 6%, and farming went from 6% to 1% (farming has been a very heavily EU subsidised industry--the national farmers' union were in the Remain camp). While this balance is roughly in line with most of the major economies, it is also the largest and most rapid slide in manufacturing of any of the G7 countries.

So as far as I can see, leavers can talk all they want about the EU blocking free trade, but that's based on some economic model that doesn't even exist here any more-- even the infrastructure for that economy doesn't exist.

 

[Jambalaya]

Thanks for that very eloquent explanation, Jaron, written in plain language I can understand. (Some of the newspaper articles in the WSJ etc assume a lot of prior knowledge on economics, politics, and finance.)

The thing is really don't understand is how so many people can be completely wrong. It isn't just uneducated xenophobic voters who wanted to leave - not all are the Farage type, but many are the Boris type. I have a co-workers whose daughter lives there and two highly educated bankers in London that she knows voted to leave, and she says they're definitely not xenophobic Farage types. Apparently she was really surprised that they voted to leave. So there are some "thinking" people who want to leave, too. I'm just very confused about who's "right" and how each side can be so sure of their decision. It's incredible how split down the middle the populace is. I started off thinking that of course Brexit is the wrong thing, but now I'm wondering how so many - over half of voters - can definitely be wrong, you know? I suppose only time will tell.

It does seem to have sparked off a "trend" against globalization and toward independence. This seems to be the mood. I even saw a headline about "Texit" - Texas wanting to leave, or should leave, the US - I didn't click on it, so not sure which. But there are strong anti-Europe sentiments in other Continental countries, and I guess the big question is: Will Brexit have a domino effect on other countries? It will be very interesting indeed to see what happens with Scotland.

I do think that this global mood toward nationalism could give the Trump movement some extra steam, because many people are sheep and they see this trend and listen to all the rhetoric about "taking our country back" and "making America great again", and they respond to the strength of those messages.

 

[Jambalaya]

Jaron, you said about the UK having a services-based economy, not a manufacturing one. So basically the UK doesn't have a lot of tangible goods to export? Yet they still have the second-largest economy in the EU, after Germany. So doesn't this mean that the economy will just go on as before, services-driven and not too dependent on exports and therefore not too dependent on trade agreements, either? Is that broadly correct?

If so, it does mean that economic reasons to vote Leave were moot. I'm sure some Leave voters acted out of facism/xenophonia but said their reasons were economic, but I'm also sure many thought they were genuinely doing the right thing for the UK in economic terms.

However, that's another reason I don't understand the Leavers. Let's say that Voter X has zero prejudice, is not in the least bit xenophobic or racist, and supports the strength of a diverse, multicultural society. Voter X's only concern is economics. Here's the interesting part: Every business and finance leader warned that exit would be a bad thing, including the Bank of England. If I were truly concerned about the country's economics. I'd listen to the Bank of England and other finance leaders, the real experts. How could I think that I would know better than them?

I suspect that many Leave votes were about immigration/migrants, rather than pure economic concern.

Jaron, I hear you. If the UK doesn't export a lot, how will freer trade benefit them?