Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Brexit Would Trigger Devolution of Europe

Politics / EU_Referendum Jun 20, 2016 - 12:17 PM GMT

By: John_Mauldin


UK citizens will vote on June 23 whether to leave the European Union. The latest polls suggest that the vote is very close and the “Leave” side has a slight edge.

The poll I saw recently, however, showed “Leave” ahead by a full 10 points—55 to 45. More importantly, the trend over the past few weeks has seen the spread in favor of “Leave” widen.

If you are in the “Remain” camp, you have to be worried.

It is hard to overstate the impact Brexit will have, should it pass. And the impact will spread far beyond Britain’s borders.

The UK is the EU’s second largest economy after Germany and one of its largest exporters. Numerous laws and international agreements may need to be rebuilt.

Even with years of planning, Brexit could make the Y2K bug look puny.

Brexit would have a domino effect on the largest members

A major concern is that a winning Brexit vote might inspire other nations to do the same. French voters dislike the EU even more than UK voters do, according to a recent Pew survey reported by Ambrose Evans-Pritchard.

The EU racked up a 61% unfavorable rating in France versus 48% in the UK. Opinions in Spain and Germany are worse. The EU doesn’t look like an “ever-closer union” to the citizens of its largest members.

I recently got the following note from Brent Donnelly (trader par excellence at Citi FX, whose morning note is a must-read). He is quoting the London Daily Express:

EU FALLING APART: Now HOLLAND wants its own referendum to follow historic Brexit vote.

NINE out of ten Dutch people hope the Netherlands will hold its own EU referendum amid mass discontent at Brussels bureaucrats. A whopping 88 percent of people polled by a top Dutch newspaper said they would be in favor of an in/out vote along British lines. They have been inspired by the possibility of Britain quitting the bloc on June 23—and hope ‘Nexit’ will follow Brexit.

Harry van Bommel, MP for Holland’s Socialist Party, told “If Britain leaves, that will give other countries courage.

“So now debate is beginning in the Netherlands about having a referendum on EU membership.

“We cannot go on the way we are—financing Greece, trying to keep countries in the eurozone. The eurozone will break up eventually.”

He added: “Because we’re in the euro, Dutch people see budget cuts, unemployment going up, and they relay that to the EU. These facts make the EU very unpopular. People distrust Europe and some people even hate Europe—it’s in an existential crisis.”

The graph below shows the general negative trends in opinions on the EU in other European countries.

Despite this trend, Politico reported that French leaders intend to push for severe consequences against the UK if Brexit passes.

Paris thinks it must send a strong warning to other would-be deserters that leaving the EU would be very painful. Maybe they also want to send that warning to their own citizens.

Stuck in two minds

The EU is a distinct entity from the Eurozone currency area, which has its own problems. I think the EU can probably survive a Brexit, but it won’t survive a Frexit, Germexit, or Spexit.

And that would leave Europe back where it was before World War II: a fragmented continent in which disagreements get very ugly and occasionally turn violent.

No one wants that outcome, but very few Europeans outside EU headquarters in Brussels seem happy with the status quo, either. This summer could see the beginnings of devolution. It’s up to UK voters now.

Just as the rest of the world cannot understand what America was thinking when we nominated Donald Trump for president, most of us who think we understand the consequences of Brexit are wondering what the British are thinking. Can they be serious?

I had this discussion with Jim Bianco yesterday. He pointed out that it is almost impossible to turn the TV on in England without seeing Labor Party leaders, Tory Party leaders, economists, and everybody else except Boris Johnson telling people why Brexit is a bad idea.

The mood in Europe is part of the same phenomenon with Trump and Sanders in the United States. There is growing discontent with the establishment, no matter which party people are aligned with.

The pollsters are going crazy trying to figure out how to handicap this referendum vote in England. The numbers are not breaking down along the normal left/right lines that they have in their political models.

By the way, if England does decide to leave the EU, expect a quick call for a referendum on Scotland’s leaving the United Kingdom and joining the EU on its own.

Subscribe to John Mauldin’s Free Weekly Newsletter

Follow Mauldin as he uncovers the truth behind, and beyond, the financial headlines in his free publication, Thoughts from the Frontline. The publication explores developments overlooked by mainstream news and analyzes challenges and opportunities on the horizon.

John Mauldin Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules