Things probably won’t ever be the same for Britain, even if Brexit doesn’t happens. The well has been poisoned. The EU has no reason to trust England (specifically England) on anything now. Further, Junker et al plan to make things as unpleasant as possible for the UK to prevent other countries from bolting. Look, Greece tried to leave, and has been relentlessly impoverished as punishment.
Breaking: Boris Johnson vows cooperation with EU, weaseling out by saying the 52-48 referendum vote was not overwhelming, so a single market is still a-ok but Britain wants none of those icky EU regulations. No word yet on whether this is acceptable to the EU, to those who voted Leave thinking Boris would keep his word to them, and of course, under such a system, Brits would have less protections, not more. Well done Brexiters, you’ve gotten nothing of what you wanted and lost some of what you have.
I thought the following would be a fine Monday morning post, however events are breaking too fast now. However, everything below is still quite valid.
Scotland and Northern Ireland may have veto power of the referendum and it’s unclear if Brexit could even pass British Parliament, as it must in order to be legal. This is shaping up as a monumental train wreck. George Soros says the EU is doomed and is probably massively shorting the pound and euro, as are other financial institutions.
It is becoming apparent that The Scottish Parliament and Northern Ireland Assembly may have veto power over Brexit per the House of Lords European Union Committee.
So we have a royal mess coming down the pipeline.
I now confess to having run out of clues. I have got no idea where this is all going to end up.
How unpleasant could the EU make things for Britain? Very.
The European Central Bank said Britain’s financial industry, which employs 2.2 million people, would lose the right to serve clients in the EU unless the country signed up to its single market – anathema to “Leave” campaigners, who are set to lead the next government in London.
London is the banking capital of the planet. It could easily lose that status now, with resultant huge unemployment and a big hit to the economy. Other icebergs loom too.
In the short term, the risk is a liquidity shock, or what’s more commonly called a Flash Crash. That could happen today, or it could happen next week if some hedge fund or shadow banking counterparty got totally wrong-footed on this trade and — like Bear Stearns — is taken out into the street and shot in the head.
In the long term, the risk is an acceleration of a Eurozone break-up, which is indeed a Lehman moment (literally, as banks like Deutsche Bank will become both insolvent and illiquid). There are two paths for this. Either you get a bad election/referendum in France (a 2017 event) or you get a currency float in China (an anytime event). Brexit just increased the likelihood of these Humpty Dumpty events by a non-trivial degree.