The Long View for Britain and the United States

What are the long term ramifications for the United States, now that Great Britain has voted to leave the European Union?  Despite all the roiling waters and implicit threat that bodies will come floating to the surface, the long view is the only one that works for this truly amazing event.  Why amazing?  Because the status quo is very easy to achieve, and very hard to upset.  It takes courage to say “been there, done that, screwed up big time and it’s all on me.”  

The first thing we need to know about the long term is that it will take at least two years for Great Britain to extricate itself from the EU.  Can you remember what dire, earth shattering crisis was facing the world two years ago?  Didn’t think so. 

There have been lots of vague and general references to what faces all of us because England wanted out, but specifics are either missing or filled with a string of “ifs.”  The Chairman of the Fed, Janet Yellen, has opined that Britain’s exit would be bad for the US, but she sites only the temporary chaos in the financial markets.  Other, equally prestigious economists, have offered other views:

a.      There is going to be turmoil in the stock, bond and commodity markets with the amount of activity seen in descending order respectively.  This will be temporary, and if you have investment money available, now is your chance to buy low.  Personally, I expect an uncertain market through October, and stability by the first quarter of 2017. 

b.      In times of uncertainty, investors look for safe harbors.  The United States is a notoriously safe place.  [Why do you think some 122 foreign countries house their national gold supplies in the basement of the New York Federal Reserve Bank?  Yes, it actually is there; I’ve seen it.]  This country will probably see an influx of foreign investment dollars as the rest of the world shakes things out. 

c.       There is some thought that the rest of the EU may try to punish the British by limiting or refusing their free trade (there is something amusing about the bankrupt Greeks trying to put some smack on Great Britain, but that is not the point of this discussion).  That means Great Britain will have to look for someone else to buy their products (us) and the rest of Europe will have to find someone to sell them what they won’t get from GB (again, us).  And while we are on the subject of trade agreements.  Our clueless asterisk-in-chief went to England and threatened them with no more United States trade deals if they didn’t vote to stay in the EU.   Well that is just what the undecided voters needed to hear wasn’t it?  Nobody wants a snooty little no-it-all telling you how to run your own house. 

d.      Finally, while there may be some—even many—multi-national companies that will relocate away from London, that can do nothing but enhance New York City as a hub of world finance.  What is more, when the dust finally settles (and two years is a pretty good shake down time for dust) will these companies really want to bet on a European nation that is bogged down with the debt, socialism and unproductive policies of its weakest members, or stay with a free, independent Great Britain that has only one goal—building itself up. 

  The English are going it alone, a sovereign country again and at last.  I wish them well and hope they keep the faith.