Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Brexit Rules The Week

ElectionOracle / EU_Referendum Jun 20, 2016 - 04:35 AM GMT

By: John_Rubino

ElectionOracle

The Brexit vote is this Thursday, so nothing else matters until then. And polls, just to make it even more stressful, have it neck and neck. See Brexit poll tracker back to even at 44-44.

While we’re waiting, let’s consider some related questions:

Would leaving the EU be good or bad for Britain in the short run? A lot of definite-sounding opinion is being tossed around on this count — see ‘Negative and substantial’ impact on UK if it leaves EU: IMF — but it’s important to take such things with a grain of salt. No one has the slightest idea how such a divorce would go and if its immediate impact would be positive or negative.


Government agencies in particular view official statements as a tool for herding the masses in the proper direction. But they demonstrably suck at actual prediction. Go back through the history of Fed or IMF or ECB or Congressional Budget Office reports — here’s classic Bernanke on the previous decade’s housing bubble — and you’ll see that their predictions aren’t even random: Because their purpose is to shape public opinion rather than express truth, they’re right even less than half the time. So question number one can only be answered with a shrug and a “who knows?”

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.

Will the Brexit vote count be fair? Almost certainly not. This is not a gratuitous jab the honesty of today’s officials but a recognition of historical fact. When elections are tight, they tend to be stolen by the side with the most efficiently-corrupt machine. JFK’s win over Nixon in 1960 thanks to suspiciously favorable results from Mayor Daley’s Chicago is still hotly debated. In Robert Caro’s biography of LBJ the author asserts (with copious attribution) that Johnson stole literally all his elections prior to the presidency (in his only losing run his opponent simply stole more votes). The recent Austrian election in which a barely-acceptable-to-the-establishment Green beat a totally-unacceptable nationalist is currently in court over allegations of fraud.

With the advent of electronic voting machines that — get this — leave no paper trail and so can’t be verified, it’s possible that there will never again be a completely fair election. And with Brexit, which European elites really, really don’t want to see happen, it would be a shock if they go down without a very dirty fight.

Will Bexit matter to the euro? However the UK vote goes, the genii is out of the bottle. Other nationalist parties are gaining strength on the continent and will demand exit votes of their own. Especially in countries having trouble living with a relatively strong euro, this is a given in the next few years. How will the EU head this off? Only one way: devalue the euro aggressively to make life easier for Italy, Portugal, Spain, Greece, et al.

But how, when most EU interest rates are near or below zero and governments have already accumulated record amounts of debt (and when populations are aging out of the workforce and immigrants cause more problems than they solve) does the ECB devalue the euro? Now we’ve arrived at the heart of the matter, which is the shape of the next stage of experimental monetary policy. Something amazing this way comes.

Would a plunging euro equal a soaring dollar? Maybe. Since in a fiat currency world national currencies are valued against each other, when one plunges others by definition go up. This might cause US stocks, bonds, and real estate to rise for a while, but at a huge cost. The too-strong dollar has already pushed domestic corporations into an earnings recession. An even stronger dollar would crush corporate profitability, and there’s no historical instance of a healthy economy in which the private sector is making less money each year.

So Bexit and 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.

By John Rubino

dollarcollapse.com

Copyright 2016 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - 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