July 4, 2016 by Chris Kite
It has been just over a week since the UK stunned the world and voted to exit the EU, or Brexit as it is commonly known.
The initial reaction was one of panic around the world. Markets fell and we seemed to be in for a very bumpy ride. Experts predict that the market will continue to be volatile, but US stocks regained most of the their losses and the damage was minimized. At least for now.
But it doesn’t look like the UK is going to get off quite that easily. The British Pound had been trading around $1.45 leading up to the vote. It is now hovering around $1.33. That is a loss of about 8%, which means, for UK residents, anything made in America just got about 8% more expensive.
A UK recession is predicted, and that isn’t good news for an economy that is already soft.
So how did Britain get here?
In the run up to the vote, both sides sold their position. The “stay” side sold hard on the economic damage that would occur, as you would expect for a country pulling out of an economic union that represents about one fifth of the world’s GDP. The leave side claimed this was all fear mongering. It is yet to be seen how big the impact will be on the UK economy, but so far, the stay side seems to have been right.
The leave side talked about a number of issues, but the one that seemed to resonate most was the xenophobic immigration issue.
That probably sounds familiar, because it is one of Donald Trump’s most popular issues. Those that love him, love that he is a xenophobic, Islamophobic, racist, bigot. Or, in their “I don’t want to sound like a racist term,’ not politically correct. And that is what attracted an awful lot of voters to the leave camp in the Brexit vote. Those voters were attracted to anti-immigration rhetoric that seems to always be paired with a distrust of those that have an education.
It is that attitude that the “elites” don’t know what they’re talking about and that we just need to take action and everything will be okay.
It certainly doesn’t seem that everything will be okay in the UK, and it is very unlikely it will be the case in the US. Most financial experts are predicting that Trump will create a trade war and a significant recession, if not a worldwide economic slow down. His plans to stiff US bond holders on some of what they are owed is widely recognized as leading to global economic collapse. Why? Because the US Constitution guarantees that all debt will be repaid and because of that, most of the world relies on the US dollar as the world currency.
Ignorance is not a really a positive virtue. But if you’re a Trump supporter that thinks all the so called experts are just selling fear, you’re probably at the top of the ignorance heap.
If you think Brexit is bad, just wait until you see what happens if Trump wins.