BREXIT or BREMAIN the NEVERENDUMS Will Continue in Europe
“Should I Stay or Should I Go? That Answer Is Self Evident…”
A Global Macro perspective from Debt Market Veteran..Music by Clash, Comments by Quigley
Below excerpt courtesy of 22 June edition of “Quigley’s Corner”, the industry award-winning debt capital market commentary from Ron Quigley, Managing Director of boutique investment bank / institutional brokerage Mischler Financial Group, the financial industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans
Everyone is now saying how anxious the markets are to get the U.K. referendum vote out of the way. It’s been like a dark cloud hovering over the financial services industry. However, they are also increasingly pointing out that even with a vote to BREXIT, the actual impact will be much less severe than first anticipated. So, without further ado and since the potential impact has been overplayed these last several weeks, I need to chime in here with one day left to voice why the U.K. should want to part from the EU.
Over the last several days British PM David Cameron’s rally cry has been “Brits Don’t Quit” which from my perspective is akin to saying “Brits are followers not leaders.” The U.K. has a long history of doing the right thing at the right time. I point no further than its involvement in both chapters of World War II. That right there is foundational to the people of the U.K. – doing things for the greater good in defense of Britain and our allies Staying in the EU would be doing the wrong thing that will hurt Britain. But I know you want more meat on this bone so let’s get to it:
As I’ve said from the get go, Britain left the EEC – the precursor to the EU – in 1982 in a special referendum vote in which the “leave” vote garnered 52% to the “stay” vote’s 48%. Sound familiar? The U.K. also never adopted the single currency and the Schengen Agreement has no place because the U.K is an island nation. Still the Euro and Schengen are the foundational building blocks for a successful EU. The continent is now into negative rates, there are far too many cultures, borders, nationalities, customs, histories and languages to virtually have doomed the EU from the start. That’s why the U.K. was never part of the EU’s core thesis.
Unemployment will not rise in the U.K. on a BREXIT rather it will hammer out a UK/EU trade agreement to maintain continued healthy trade with the European continent.
For those EU chiefs threatening “if there’s a BREXIT, the U.K. will NEVER rejoin the EU again!” here’s what I have to say on the subject : Advocates to BREMAIN claim that the U.K. maintains a balance of power in Europe that has preserved peace following World Wars I & II. First, I state that WW I & II were actually one VERY long war with a pregnant pause between them. Europe could not keep itself together. History shows that is true. So, follow the logic – if the U.K. leaves and Europe heads toward the cusp of war, don’t you think the continent would do everything in its power to avoid another catastrophe? Europe would obviously welcome Britain with open arms! Not that the U.K. would then chose to jump back onboard.
For those of you not sure, however, let’s take Greece as an example. Greece has been bailed out three times by the EU. They are in every aspect of the term a laggard economy and society. I have nothing against Greece or Greeks but the word AUSTERITY is not in their vocabulary! ………Hold on a moment, as I need to check that with some phone calls. Oops, sorry folks, in my ambition to get the details right I stand corrected. The word for “austerity” in Greek is “λιτότητα.” So, it does actually exist but the rest of the world can’t seem to decipher those characters – quite literally. Having said that austerity is not embraced by Greek society. They are all about enjoying life and taking it easy. That’s why the average lifespan for a male is 78.6 years and a female is 83.9 years. The average is 81.3 years ranking it 20th in the world. Conversely, we here in the U.S., we rank 26th and at the end of the day isn’t life what it’s all about. So, that’s my concession to Greece, a longer life span because they’re obviously not stressed what with everyone else paying the freight and carrying their load. The point here is that if the EU bailed out that laggard nation THREE TIMES do you really think the idle threat to the U.K. of never being invited back into the EU has any remote credibility with Brits at all? I mean c’mon, get real. Europe is dismantling faster and faster with each month. Britain should want no part of it.
The EU’s Lisbon Treaty specifically states that the EU is obliged/mandated, as in “has to” offer a trade agreement to any nation that leaves it. If that’s not good enough the World Trade Organization also stipulates that. Didn’t know that did you? Well, this is just for starters folks in preparation so that you’re not surprised by the BREXIT should it happen.
What will become of Britain should it leave the EU? Well, for one, the U.K. ranks as the world’s 5th largest economy. It’s also a G8 and G20 member. It has a permanent seat on the World Trade Organization or WTO as well as the IMF and the UN Security Council, the latter which only has five members! Britain is also a world top 5 manufacturing nation. Leave the EU and fall on its face? Think again folks. It’s the EU that’s scared and threatened NOT Britain.
Let’s move on to the all-important FDI component. FDI stands for Foreign Direct Investment. According the Central Intelligence Agency’s World Fact Book (always have one folks it’s great), the U.K. ranks second in the world behind ……the ole U.S.A.
Another benefit of the independence and more self-reliance that comes with a BREXIT is the concept of lower taxes. After all, Brits won’t have to pay for the sins of Greece and other similar laggard nations. Germans are already tired of sustaining the quality of life in France! Not to mention the tremendous reduction in regulation that comes with answering and taking directives from Brussels, etc. Case in point – the British Prime Minister earns £142,500 per year. That’s his salary. Get this…….no less than 10,000 Brussels bureaucrats earn more than the British PM!! Are you beginning to see a trend here? Because you should.
Did you ever stop to realize that “Europe” has a total of 47 nations? See the stuff you learn in the “QC?” Well, the formal EU is actually comprised of only 28 of those 48 nations. That’s one hell of a Union eh? It’s a far cry from the United States of Europe. Imagine that – including only 58% of the cumulative total of countries in it. You can all take a pause here to digest that thought.
Britain was not been the sole peacekeeper in Europe post-World War II. In fact, NATO – supremely dominated by the United States – was the enforcer and defense arm of Europe. Our new world order has somehow given way to a U.S.A. that has somehow stepped back and failed to live up to its “beacon of freedom” reputation under our current Commander. How many of you remember Yugoslavia? Over 100,000 deaths resulted from Europe’s involvement. Uncle Sam and NATO stepped in to provide law and order……..not Europe. Readers, stop and think about neighboring Italy which has had over 65 different governments since 1945! The average Italian government lasts 1.09 years! Are you getting this? And this is not supposed to be stand-up comedy. Currently the Communists are gaining ground in Italia!
When I lived in Europe – France to be exact – from 1973 thru 1977 the European Union equivalent percentage of GDP was 37%. It’s GDP is forecast to be 22% by 2025. Growth you say?