Brexit: The Crisis Begins

British voters delivered a stunning repudiation to their political and economic elites by voting to leave the European Union by a margin of 52 to 48. The fallout has already started. The pound is down by over 11%, and some experts anticipate that it could ultimately fall to as low as 1.05 to the dollar, its low in the early 1980s sterling crisis. British bank stock prices have fallen by roughly 25%. Safe haven investments have spiked: gold is up 6% and the yen has traded through 100 to the dollar. The Nikkei fell by 8% and US stock futures suggest that the Dow could open down by 600 points.

But Brexit represents something much bigger than an economic or political crisis. Although UKIP played shamelessly on the anti-immigration fears, many of the Leave campaigners argued for national sovereignity and self-determination. And the Northern areas that came in strongly for Leave have been left behind as London and environs prospered. It is simplistic, although it will nevertheless be a popular stance among the elites, to depict the Leave vote as yet another proof that technocrats should be in charge. In fact, the very reason that so many UK citizens rejected the dire warnings of what was in store for them if they dared press the red Leave button was that those experts devised and implemented the neoliberal policies that have increased inequality, reduced their economic stability and accelerated political and social change.

Brexit is a crippling blow to the neoliberal order of unfettered trade and capital flows, and citizens being reduced to being consumers who have to fend for themselves in markets, and worse, increasingly isolated worker who are at the mercy of capitalists who are ever more determined to reduce labor costs and hoard the benefits of productivity gains for themselves. Whether they recognize it or not, and we’ll find out over the coming months and years how well different Leave voters saw the choice they made, they have chosen a lower standard of living as a price worth paying for a hope of more control over their destinies. Sadly, these voters are likely to realize the first part of that equation rather than the second.

What happens next is very much in play. In a radical departure from a failed prime minister stepping down immediately, Cameron plans to remain for 90 days to sort out party leadership. That sounds like a misguided set of priorities, and could possibly serve as cover for a rearguard effort to extract some concessions from the EU and try to schedule another referendum. Even if that is part of the plan, it seems unlikely to succeed, given that Cameron got almost nothing from his pre-referendum negotiations to extract waivers, and the German insistence that the British must be made to suffer as much as possible for this vote pour decourager les autres.

Cameron intends to use those 90 days of his extended departure to sort out some of the elements of this messy separation; his successor would decide when to trigger the formal Article 50 separation process. The Financial Times points out other routes are possible, although they seem implausibly difficult to achieve in practice:

Lawyers in Whitehall and Brussels see two distinct tracks. The first is under Article 50 of the EU treaties — the so-called “exit clause” — which lays down a two-year renewable deadline for a country to leave.

A second track makes arrangements for future relations, from trade to co-operation on security or law enforcement. This is a more complex negotiation and, once agreed, harder to ratify. It requires unanimity and approval by more than 30 European, national and regional parliaments, possibly after national referendums.

There are alternatives. One is to attempt a divorce on British terms. The Leave campaign has outlined plans to legislate in the House of Commons to repeal some EU obligations immediately, while holding-off on invoking the Article 50 divorce clause to deprive the EU of leverage on timing.

Any unilateral steps would seriously raise tensions with the EU. Brussels is looking at options to retaliate, including suspending the privileges enjoyed by British companies under the single market. Sir Andrew Cahn, a former head of UK Trade and Investment, Britain’s trade promotion body, said: “Acting unilaterally would throw the law of the land into uncertainty, and risk a tit-for-tat response from others. It could be a slippery slope to real chaos.”

A major complicating factor is that while unwinding the EU arrangements is comparatively easy (and that still means the process would take roughly two years), negotiating new trade relations is a far more time consuming process, and experts estimate it would take a minimum of five years and still could fail. Again from the Financial Times:

A hard landing would mean that Britain would be left relying on basic World Trade Organisation trading terms, with no privileged access to European markets for UK companies. A softer transition could be arranged, but it would require agreement among all the remaining 27 members.

If, for instance, EU member states rapidly agree a trade deal, it could be provisionally applied while the lengthy and unpredictable process of ratification begins at national level.

Another option is to temporarily revert to an established model — such as that for Norway — to give Britain full access to the single market while its new trade deal is pushed through. That may be impossible for a Brexit government; for several years it would live by EU rules it cannot influence, pay EU budget dues and accept free movement of workers — just the things many voters rejected in the referendum.

The Wall Street Journal gives a flavor of some of the practical implications:

This leaves banks, insurers and fund managers operating in a cloud of huge uncertainty. They are all reliant to some degree on passport agreements that allow their services to be sold across Europe from the U.K. Anyone actually buying and selling securities—the banks’ trading desks—are definitely affected and many may need to move to the Continent. People who travel to perform their work, such as advisers for mergers and acquisitions or capital raising, may be able to stay based in the U.K.

Fund managers’ products would have to be re-registered elsewhere in Europe if the U.K. loses its passports. Many funds already are registered in Luxembourg or Dublin. Some groups are hopeful that the portfolio managers themselves and much of their support staff might be able to remain in the U.K. if the exit negotiations proceed in a constructive way. That is a big if…

For the time it takes to negotiate and exit, the U.K. and its financial sector remains subject to all European rules and agreements. That is one thing that can be said for sure. The other is that this hugely important sector faces great upheaval and high costs as it works out where and how it can continue to pursue its businesses.

Not to be unduly alarmist, but let us not forget former central banker Willem Buiter’s warning from November 2008, How likely is a sterling crisis or: is London really Reykjavik-on-Thames? From his post:

With the pound sterling dropping like a stone against most other currencies and credit default swap rates on long-term UK sovereign debt beginning to edge up, this is a good time to revisit a suggestion I made earlier on a number of occasions (e.g. here, here and here), that there is a non-trivial risk of the UK becoming the next Iceland.

The risk of a triple crisis – a banking crisis, a currency crisis and a sovereign debt default crisis – is always there for countries that are afflicted with the inconsistent quartet identified by Anne Sibert and myself in our work on Iceland: (1) a small country with (2) a large internationally exposed banking sector, (3) a currency that is not a global reserve currency and (4) limited fiscal capacity.

The argument is simple. First consider the case where the banking sector is fundamentally solvent, in the sense that its assets, if held to maturity, would cover its liabilities. Iceland’s banks were supposed to have been in that position, although I have seen no verifiable information on the quality of the three formerly internationally active banks. There is no such thing as a safe bank, even if the bank is sound. Without an explicit or implicit government guarantee, there is always the risk of a bank run (a withdrawal of deposits or a refusal to renew maturing credit and to roll over maturing debt) or a sudden market seizure or ‘strike’ in the markets for the bank’s assets bringing down a fundamentally sound bank.

British banking assets then as now are rougly 450% of GDP. However, the flip side is that the UK has vastly less fiscal and monetary capacity to contend with a crisis than it did then. I suggest you read his carefully reasoned post in full. It discusses in detail the options and constraints faced by countries in this position, and walks through the UK’s exposure then. It’s a good framework for analyzing that that hazard now.

In the meantime, there are immediate consequences and risks. The Transatlantic Trade and Investment Partnership is probably dead. The sterling crisis and the less dramatic fall in the euro are likely to leave some UK and Eurozone financial institutions with large losses on net dollar and other foreign currency positions. While the British banks, given the magnitude of the sterling plunge, are the obvious focus of concern, many Eurobanks are undercapitalized. Worse, the Eurozone in theory will use a bank bail-in if any institution becomes impaired. We’ve warned that this is a prescription for bank runs. And it’s not just banks that are exposed; operating businesses may have foreign currency commitments they will struggle to meet.

The British government is likely to lose its AAA rating, which also means higher funding costs for its banks, since their borrowing rates are at a premium to the local currency risk-free rate. A recession is almost certain, since the UK exports services and imports goods and many of its imports don’t have ready substitutes, while the US and European banks will be doing everything they can to poach both British bankers and their clients, denting the UK balance of trade even more. Richard Smith also points out that a Brexit could imperil Ireland’s ability to operate as a tax haven. And that raises the issue that both Scotland and Ireland supported Remain. Is a UK breakup in the offing?

Will the US live up to its threat to punish the UK for a Brexit? Politico notes:

Regardless, Obama, and his successor, will face a difficult choice: Do they carry through on Obama’s warning in April that a Brexit would put the United Kingdom “at the back of the queue” for a new U.S. trade deal? Or do they cut a deal with the United Kingdom, as some Republicans have suggested in recent days?

Obama traveled to London in April at Cameron’s request to urge the Brits to vote “Remain” and argued that Britain is more influential inside the EU, and a more valuable partner for the United States. Now, administration officials and congressional leaders will be forced to reconsider, again, whether the U.S.-UK special relationship is as important as it once was.

And with the US growth sputtering, our economy will feel the effects. Roughly 25% of S&P earnings come from Europe. The strong dollar will weigh on exporters. Europe is a major export market for China, and China may allow the renminbi to slide. Earlier this year, a devaluation of the renmibi was also seen as having the potential to trigger major upheaval. A flagging US economy going into the election hurts Clinton and Democrats generally. And this vote will embolden other separatist movements, most important, Le Front National.

No matter how this plays out, the UK and EU will have to blaze a difficult path. And this rupture is taking place when advanced economies almost without exception have singularly weak leaders. We are in for a rough ride, and the portents suggest it will be much rougher than it needs to be.

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  1. Bill Smith

    Scotland will vote to leave the UK and join / remain in the EU. Sinn Fein has asked for a vote in Northern Ireland to join Ireland.

    1. Disturbed Voter

      Freedom means choices, but choices means responsibility for mistakes. A Celtic move to stay in the EU, to stay with Big Brother, who has done so much harm (via London) to Ireland, is a reactionary step in the perpetual war against London … it will end in ashes. The proper reaction of the Celtic peoples, would be to seek freedom from the EU and London, by taking the Iceland route.

      On the other hand, it is believed by some, that the Brexit vote will never be implemented, same as what happened to the Greeks just last Summer.

      1. margaret

        this is what I’ve been wondering…..would the will of voters once again be subverted?

        1. Emma

          This is wrong. Ann Pettifor correctly summed it up well tweeting Brexit is “a revolt against neoliberal wet dream: unfettered markets in money, trade & labor”. The Brits have just done ‘a modern day Robin Hood and band of Merry Men’. They’ve put an arrow through arrogance. The arrogance of wage suppression and social safety net removal.
          When there’s nothing left of left-wing politics, when “History Made” is ‘Hollowwood’, people then more easily view the right-wing ‘kind’ instead. It’s not essentially about racism. UKIP, in its’ own right, doesn’t have more than 50%, or even 25% backing of eligible voters in the UK, does it? Just as Europeans are unhappy with the free-flow of labor, money and trade, as somewhat personified in both poor and rich migrant types to the UK, Americans wouldn’t be pleased with a borderless free-flow of Mexicans and Guatemalans into the US. The Trumps, Le Pens and Wilders will now simply look to capitalize on what has already been capitalized….neoliberalized as it were……

          1. LapsedLawyer

            It amazes me that people who can be seen railing against NAFTA, WTO, TPP, and TTIP as global corporate finance capital anti-democratic takeovers can love the EU which is the same as, and part and parcel of, the neoliberal project that brought us those trade regimes.

            1. Emma

              Fair comment – the message of ‘Peace’ was originally manipulated in 1950 all the while Franco-German trade was established to advance the energy sector….’monnet then, money now!’

            2. jrs

              Well I think the EU has some labor protections unlike those trade agreements which really don’t. I’m not saying they are worth that much, as afterall the neoliberal disease gets worse everywhere, but the trade agreements are a much purer distillation of all rights to capital, none to labor.

              1. Emma

                True JRS – Neoliberalism seems to be in advance mode everywhere. It’s not just Europe with a democratic deficit, is it?! And given there are always unidentified variables in predicting the future, it’s unclear just how much a Brexit or even Grexit helps either the UK or Greece. Besides, without EU membership, would nationalistic sentiment actually increase? Would pro-union parties hostile to both wage & job suppression decisively win elections for a change? Would a Greek default work out well? I suspect when it comes to those neoliberal elites, they’ll still do very nicely, no matter which way the wind blows…

            3. John

              It’s because the discourse in regards to the EU has been framed entirely in social terms: either you believe that Europe is a unified continent with a unified people, or you’re a xenophobic nationalist. No one on the left wants to be considered the latter.

        2. Plenue

          Does he have any evidence for these claims? I don’t even particularly like the English in the abstract (Perfidious Albion), but this rant is completely devoid of substance. I see the vote as a long overdue rebellion against neoliberal consensus and technocratic rule. Does racism, at least against immigrants, factor in? Undoubtedly. But I see no evidence that it is the driving force behind the rejection of undemocratic EU rule.

          And I expect the exact opposite of him when it comes to media coverage of the vote: I expect there will be a lot of handwringing about racism and little talk of economic issues. Exactly like the coverage of Trump in the US. Even now, after a blatant rejection of neoliberalism, the media cannot be allowed to give the unwashed masses any indication of how bad things actually are, or the utter moral failure of its neo-classical economics overlords.

          Brexit is a triumph for Trumpism? Seriously? I see he doesn’t understand Trump and his rise very well either.

          1. lin1

            Those accusing the Leave camp of rampant racism, can make a good point against UKIP and Murdoch et al, but the sorry record of the EU didn’t make an attractive alternative.Thousands of refugees drowned in the Med is racist.Herding refugees into barbed wire camps is racist. Making cash payments to the Turkish dictator to impound humans beings in camps there …is racist. Brutally enforced quotas and deportations are racist.Calais, was racist…The EU representing the main instruments of global capital,NATO, Obama, The IMF, the World Bank, etc., were and are the most powerful and therefore dangerous antagonists working class Britons face – NOT Borris Johnson or Nigel Farrage and many of them who voted leave,were able to discern that.Whatever it will mean for them going forward, it was their only chance to strike back within a notoriously democracy deficient system, the EU.

            1. JTFaraday

              Let’s back up a bit. Believe that EU was not adequately integrating non-western immigrants as illustrated by protests and rioting in the banlieus in France c. 2005, for example. So, it’s true Europe already doesn’t have a great record here even in a non-crisis situation and is in no position to point fingers at Britain.

              However, it seems to me that the current migrant crisis situation to which you refer, along with increasing problems with terrorist attacks in Europe, is substantially a byproduct of a neo-conservative US government– with the help of anti-Islamic European (including British) ideologues– turning the Arab middle east into a massive dumpster fire.

              This kind of potential chaos is well beyond anything that can be described as “democratically deficient,” as well as anything that can be remedied by better parliamentary procedures on the part of the EU bureaucracy, or by Keynesian jobs programs, or liberal trade policies, or any variety of economic theoretical nonsense people like to argue over.

              The British “working class” may or may not be able to better protect its interests by leaving the EU and sending back its cheap Polish plumbers (and whoever else), but no one should be pointing fingers solely at Europe for not being prepared to absorb the new shit storm a neo-conservative US and its ideological enablers have stirred up in Europe’s backyard.

              With respect to the real migrant crisis in Europe, what British leadership really should have done, and maybe should still do– but probably won’t– is lead Europe in telling a war fomenting US and its ideological enablers to stop engulfing it in WWIII.

              If Europe ends up engulfed in WWIII, we’ll see what kind of a firewall the British can put up against that. And don’t think that neo-conservatives don’t know the history of Europe and are therefore simply ignorant of what they’re doing. And it’s not like they’re not already working on multiple fronts.

      2. visitor

        On the other hand, it is believed by some, that the Brexit vote will never be implemented

        That is my thought, too. The upheaval described in the post by Yves Smith and in the articles she refers to indicate that life will become more difficult for the UK, and that the EU has plenty of leverage to make it even more unpleasant.

        I suspect the outcome of separation negotiations will be a leonine divorce agreement with the following stipulations:

        1) a full-fledged separation procedure with conditions most onerous for the UK (both the French and Germans had, before the vote, made clear their intention to “make the UK pay dearly” for a brexit);

        2) a paragraph stating that if the UK does not agree to the aforementioned conditions, it can nevertheless remain in the EU and the brexit decision is then viewed as void and null (possibly with a few symbolic concession from the EU and some symbolic atonement from the UK).

        Then the agreement will be put to vote in the Parliament, which will “reasonably” reject it and go for (2), i.e. remain in the EU. I doubt there will ever be another referendum; just like the French and Greek governments, the British government has learned its lesson — never, ever ask the populace for its opinion, for it might well really give it.

        1. moneta

          It will probably depend on whether or not the UK negotiators are treated like Varoufakis.

          1. visitor

            The UK negotiators will act like Tsipras; they actually do not want to leave the EU, so they will happily take part in the charade leading to the invalidation of the brexit.

            Which will not be that difficult since this referendum was only a consultative one; formally, the Parliament is not bound by it…

            Anyway, when the Dutch and French voted “no” in 2005, the EU bypassed their decision. When the Irish voted “no”, they were forced to re-vote till they gave the “correct” solution. When the Greeks attempted to organized a vote in 2011, they were pummeled into submission. When they nevertheless voted in 2015, the result was openly, loudly ignored (with the active complicity of Greek politicians). When the Dutch again voted “no” in May 2016, the result was quietly ignored.

            So I actually expect the British vote to end up on the ever growing pile of European democratic refuse.

            1. moneta

              I see this as moving a rock in my garden… I realize that words don’t move rocks so then I start pushing… only after a few pushes do I see the rock somewhat moving…

            2. drb48

              You’ve just given the exact reason – the anti-democratic nature of the EU – why I would have voted for Brexit, had I been a UK citizen. And why the UK people should remain firm in their insistence on getting out.

            3. John k

              I assume the eurosceptics will run the negotiations and Boris likely will be pm.
              They are serious about Brexit.

              1. Disturbed Voter

                Unfortunately for Germany, all of their victories are Pyrrhic, starting with humbling Denmark, Austria and France in 1866- 1870. Unfortunately, as the post above lists, the Germans don’t take no for an answer. Their arrogance back then, and now, will create enemies, and dismay their allies. Bankers are the velvet glove over the iron gauntlet … in the past they didn’t bother covering up.

                My boss, when I was still a teen, told me that if W and E Germany ever got together again, then world war would result.

                1. animalogic

                  The problem Germany and the EU have, re “punishment” is that they have almost as much to lose in any Brexit negotiations as the UK. Nor is Britain Greece: it’s the 2ND largest economy in the EU and can’t be bullied and humiliated as Greece was. The EU needs take care (to coin a phrase) it doesn’t cut off it’s nose to spite it’s face

            4. Susan Hall

              I have to agree. It seems that Germany has somehow usurped the EU in order to gain European domination via the ‘back-door’. Were they ever mandated to do so? German manipulation and bullying was my reason for voting Brexit. It’s a pity that some used it for covert xenophobia – but we live in a democracy here in the UK and I am proud that Britain stood up for it.

          2. PlutoniumKun

            Even before this, UK negotiators in Europe were almost universally despised by their European counterparts. The UK government never ‘got’ Europe, so always sent out their people to cause havoc to get whatever the PM of the time wanted. I suspect lots of old scores will be settled.

        2. Tom

          Nonsense. The French and Germans talk big about punishment but would cripple their own economies should they try it. Germany’s DB is the most leveraged balance sheet on the planet and France’s banks have long been known to be shaky. It’s generally best that people in glass houses do not throw stones.

          1. visitor

            It is not nonsense; you must realize that those threats are just a ploy to give an excuse to mendacious British politicians for invalidating the brexit.

            It is all theater, but the goal for the French, German, British, etc, elites is not: keep the UK within the EU.

          2. Yves Smith Post author

            Huh? Have you not paid any attention to what is going on in the Continent? Germany has been cutting off its nose to spite its face for years, all in the name of conforming to rules. The French leadership is determined to do anything it can to prevent Marine Le Pen from taking office, since they regard Frexit as a disastrous outcome. In their view, the cost of punishing Britain pales compared to the dislocation of a Frexit, since unlike the UK, they would also have to re-introduce the franc. As we described at considerable length, the IT requirements are massive (and extend across numerous, fragmented service providers) which means it would take a bare minimum of three years to implement, and IT experts think probably longer.

            1. Error404

              1. Germany has not been ‘cutting off its nose to spite its face for years, all in the name of conforming with rules’. Germany has been cutting off Greek, Italian and French noses to save its banks and maintain the momentum behind its economic dominion over Europe.

              2. If the French and German governments want to play ‘hardball’, Merkel and Hollande can expect some testy calls from their masters at BMW, Daimler-Benz, EDF et al. – all of which have a lot to lose in a handbag fight, by virtue of the British neoliberal proclivity for giving away the crown jewels to foreigners.

              3. There is little doubt that people on the Remain side will be ‘bad sports’ – there’s already a petition doing the rounds for a second vote. However, the bigger question is whether the British electorate as a whole will stand for shenanigans as readily as the French, Irish, and Greek electorates did. The dislike of the EU is visceral amongst many Brexiteers, whilst the Remain side were energised primarily by Project Fear. Once ‘punishments’ are unleashed upon us by our erstwhile ‘friends’ in Europe, there won’t be much left to fear.

              4. Perhaps the most important point, which this site continuously underestimates, is the extent to which the British elite is itself divided on the issue. There are many, many people I know personally in ‘the establishment’ (political, economic, and legal) who are passionate about leaving. And like them or loathe them, Johnson and Gove cannot be tarred as Le pen or Wilders look-alikes and dismissed as extremists. They have far wider popular appeal than any ‘Remain-ders’, especially with Cameron gone.

              Troubled times ahead for sure, and uncertain outcomes, but this country has stood up to German and French bullying before and will, if necessary, do so again. Hopefully, saner heads than Juncker, Merkel, and Hollande will ultimately prevail and it won’t be necessary.

              1. Yves Smith Post author

                You are missing how the Germans and French and most important, the EU technocrats do not want to do anything that would help Marine Le Pen. A Frexit would be vastly more destructive than a Brexit because it would rip apart the Eurozone.

                Overriding the vote would confirm her powerful talking point about the EU/Eurozone being undemocratic.

                And no one tells Schauble what to do. He has enormous sway with the German media and the Bundestag. Merkel could barely keep him in line during the Greek negotiations last year and she is much weaker now than then, by having pushed to take in a lot of Syrian refugees when the German public is overwhelmingly opposed to that.

                And per other people on this thread, the UK is not Greece. Ignoring a real referendum run on a real issue (as opposed to a sham issue in Greece, the referendum there was on a proposal that had already expired plus the way the referendum was held was procedurally irregular in many respects) is not going to be tolerated by British voters.

                1. animalogic

                  I suspect a Frexit (absent any new variables) is highly unlikely.
                  The French have. always been far more pro-Europe than the UK. And as has been consistently pointed out, leaving the Euro is fraught, bordering on nightmarish economically & administratively. Further, I also suspect that Le Pen etc have had their electoral appeal somewhat exaggerated.

                2. Fiver

                  I don’t think are going to let this one get that far. I found Cameron’s resignation speech too well delivered to be novel and his solution of not resigning until October so he can guide the country through this crisis, now ‘committed’ to leading the Brexit as a ‘matter of responsibility’, well, a lot less than completely convincing. The analysis you presented was great, but my take is elite power now just breaks whatever important rules or procedures or standards or whatever it takes to ‘fix’ these things in the shortest term possible.

                3. Barry Fay

                  Yves – you seem to think that people really care about some abstract concept like “democracy”. If they really did, the devolution of decision making to the “European Council” would never have taken place. And as for a “real referendum” being overturned, you don´t have to look much further than the “first” Irish vote on the Lisbon Treaty! With new elections coming up there will be every possibility of a party, say the Conservatives, after the “proper” amount of time has passed of course, running on a platform that rejects “Leave” and, by winning, taking that as a mandate to overthrow the Brexit results. The propaganda being spewed by the whole of the European media since the vote has reached “Trump proportions” (the US media revealing their obeisance to the elites!). In the face of such a concerted effort, Brexit can be overturned – unless you think Trump has any chance of beating Hillary!

              2. visitor

                Germany has not been ‘cutting off its nose to spite its face for years, all in the name of conforming with rules’.

                Oh yes, it has.

                If you read German, then make a search for “Deutschland spart sich kaputt” or “deutsche Kommunen/Länder sparen sich kaputt”. It is a recurrent discussion item there.

                Basically, it refers to the country/states/municipalities “economizing to death”. Infrastructure is increasingly not being replaced or maintained, and services like police dismantled.

                It is not because Germany or its regional entities are on the verge of bankruptcy (like Detroit). It is just because they are implementing the rule (present in German constitution and laws) that they are not allowed to increase their debt levels. Even when interests on their debt are negative…

            2. A Dim View

              All the British politicians have to do is draw negotiations until the French elections and see Le Pen become President. The Dutch are also extremely restless & momentum could easily build to an EU fracturing as the internal EU divisions come to the fore. And that’s not counting the likely spanner int he works that Podemos is about to throw into the political calculations.

              The British politicians are playing with a huge fire if they try & steamroller the UK electorate after this vote. UK is not Greece.

        3. James McFadden

          Jack Rasmus wrote about this in counterpunch a couple days ago. It’s about false empowerment. There will b no exit.

    2. Tom

      Scotland have already been told “no deal”. If they split from the UK they have to negotiate their own entry into the EU to be signed off by the 27 other states. Best of luck with their tiny economy getting a good deal there.

      1. PlutoniumKun

        Scotland don’t have to negotiate their own entry to the EU, they are already in it. If they split from the UK before the 2 year Article 50 period is over, they simply carry on as before.

      2. fds

        That SNP is a Tory/Labour party in sheeps clothing. It isn’t a Nordic version of UK, but more of a sophisticated of Ireland, politically. What would Scottland get out of joining the EU–it gets much tax transferance and economic clout from being part of the union. I understand SNP would get to rule the roost in such a leave situation, but that’s like saying the break-up of the CCCP was good because it gave Yeltsin total control…

      1. PlutoniumKun

        The Welsh situation is complicated by the Brexit vote in Wales (smaller than in England, but still a majority). PC wouldn’t have a mandate to split and leave. However, if the Welsh people suddenly find themselves part of a Scotlandless Britain, facing permanent government by Conservatives and UKIPers, they may well change their mind.

    3. Matthew Saroff

      Northern Ireland won’t vote to join Ireland because it is majority Anglican, and until the privileged position of the Catholic Church, and the ban on Abortions, are repealed, they will not vote for union.

      1. M Quinlan

        Less than 14% are Anglican, the religious divide is roughly 50/50. The North has the most restricted abortion laws in the UK and many fundamental Christian Unionists would ban it if they could. They will not vote for union with the rest of Ireland but for more complex reasons than you’ve stated, mostly rooted in history, culture and economics.

    4. fds

      Other than transitory skittering markets, what is the downside of this vote? Any benefit people got from low taxation on bank profits into the wellfare system was diminished by mass immigration. We live in a free trade world. EU benefitted more from UK than vice versa, as far as taxation, trade, etc.

      Really, what is the downside here?

    5. Alex morfesis

      Sein Finn can only pull that off if they offer the orangemen a gerrymandered special status, with a carve out of votes and turning the northern provinces into a type of Canary Islands, Cayman, Gibraltar, Bermuda special economic status, allowing the orangemen effective control of the economy and superior vote rights to the orangemen…giving them an offer only an idiot would refuse…but will Uachtaran Adams be able to keep the peanut gallery together to run thru the opening off the shoulder of the left tackle or will the ghosts of Meath/cuige insist on a power sweep and lose the opportunity 4 peace & prosperity ?

    6. Robert Rowley

      A fracturing of the European Union will affect far more than the value of its currency. It will affect military aid, economic development, health services, financing, and all associated issues between all members of the United Nations and their ability to address agressive actions by China, Russia, and North Korea resulting in a global destabilisation of the region and increasing the threat to security of North America as a whole as well as once again driving manmy national economies back to the brink of collapse. Consider the following.

      European Union Foreign relations of the European Union
      Bilateral relations
      Africa & the Middle East
      Bahrain Cape Verde Iran Iraq Israel Jordan Lebanon Morocco Palestine† South Africa Syria Yemen
      Argentina Brazil Canada Cuba Greenland Mexico United States
      Australia China (People’s Republic of) India Indonesia Japan Kazakhstan Malaysia Nepal North Korea Pakistan Philippines South Korea
      Albania Andorra Armenia Azerbaijan Belarus Bosnia and Herzegovina Faroe Islands Georgia Iceland Kosovo† Liechtenstein Macedonia‡ Moldova Monaco Montenegro Northern Cyprus (Turkish Republic of)† Norway Russia San Marino Serbia Switzerland Turkey Ukraine Vatican City
      Members’ overseas territories Largest trading partners Association Agreements Free trade agreements
      †= Disputed state, may not be recognised as an independent state by some or all European Union members. ‡= Name disputed by Greece, EU recognises the Republic of Macedonia as the former Yugoslav Republic of Macedonia.

      Multilateral relations and initiatives
      Arab League ASEAN Commonwealth of Nations ECHR G8 ICC United Nations
      African, Caribbean and Pacific Group of States Asia–Europe Meeting CARIFORUM Customs Union Eastern Partnership Energy Community Euro-Latin American Parliamentary Assembly European Common Aviation Area European Economic Area Euro-Mediterranean free trade area Euro-Mediterranean Partnership Euronest Economic Partnership Agreements EU CBRN Risk Mitigation CoE Initiative Neighbourhood Policy Northern Dimension Mediterranean Union Stabilisation and Association Process

      Andministration and policies
      Common Foreign and Security Policy European Security Strategy Economic Relations Everything but Arms Security and Defence Policy Enlargement
      Humanitarian Aid and Civil Protection Department Directorate-General for International Cooperation and Development External Action Service Foreign Affairs Council High Representative (Federica Mogherini) Parliamentary Foreign Affairs Committee Foreign Policy Instruments Service Diplomatic missions of the EU (ambassadors) / to the EU Special Representatives

      Military and security
      Defence Initiative Synchronised Armed Forces Defence Procurement Petersberg tasks Helsinki Headline Goal
      Political and Security Committee Military Committee Military Staff Operations Centre Security & Defence College Defence Agency Institute for Security Studies Satellite Centre Joint Situation Centre
      Eurofor Eurocorps EU Battlegroup EU Gendarmerie Force EU Maritime Force Deployments

      Relations of the United Nations with its member states
      Brazil Canada Mexico Trinidad and Tobago United States
      China India Indonesia Israel and Palestine Japan Korea Lebanon Malaysia Pakistan Philippines Singapore
      France Germany Luxembourg Russia United Kingdom
      Australia Fiji Marshall Islands Micronesia New Zealand Tuvalu Vanuatu
      Holy See European Union
      Former members
      Republic of China German Democratic Republic Soviet Union

      1. a different chris

        >to address agressive actions by China, Russia, and North Korea

        Such as? China took a couple of crap islands, big deal, ever hear of Puerto Rico? Not sure what to make of Russia/Ukraine but it’s a lot more complicated than our MIC wants us to think. And North Korea somehow getting all-powerful because the EU disintegrates back into separate nations, give me a break.

        PS: aggressive has two “g”s

    7. Sy Krass

      Yeah but Scotland should wait to see whether the bigger Titanic is the EU or Britian, and then jump to the smaller sinking ship. Literally rearranging the deck chairs on the Titanic.

  2. Christopher Fay

    I hope that Brexit also throws a monkey wrench into Hillary’s desire for more war, including nuclear war, so that is one potential positive along with scuttling ttip

    1. Disturbed Voter

      If we have passed “peak centralization” in political economics … that is a good thing at least in the short run … which is all the time I have left anyway ;-) The dream of Alexander has passed its ‘expire by’ date. Now if we can just survive the dream of Shi Huang Di!

    2. James Levy

      OK, now you’ve done it. There is no evidence that Clinton wants to start a nuclear war. None. It’s passed along as an hysterical axiom around here but some but it’s just fear and loathing metastasized. Like Reagan, she will push and pull along the margins of Russia’s sphere of influence and propagandize like a fool, but this notion that she’s just itching to push the button is a vast rationalization for thinking it’s a good thing to vote for Trump.

      There is solid evidence that Clinton is an aggressive, militaristic neocon. But even when the neocons held total sway under Cheney and Rumsfeld no one was throwing ICBMs around. They are not likely to be under Clinton, either.

      1. Code Name D

        Odd, Clinton has accused Trump as wanting to push the button. There is no proof he would either. Did you object then? And Clinton does have a war record and has even been accused of extra-judicial killings which has become all the rage these days. Is it really that much of a stretch she would consider using nukes?

        1. James Levy

          Absolutely, just as I object when people call Trump a fascist–it’s stupid.

          And yes, it is a stretch, as extra-judicial killing has been SOP for US foreign policy for decades (think Patrice Lamumba et al.). Obama commits these crimes all the time, as did Bush and Company. Neither Bush nor Obama has used nuclear weapons. No one has since 1945. Even Mao and Stalin didn’t. So clean Clinton’s clock on the illegal, immoral and stupid things she’s done, but let’s keep the hysteria for the hysterics (like the people who think Trump is Hitler).

          1. craazyboy

            Obama just signed a $trillion spending bill to “modernize” our nuclear arsenal. If we don’t need it, wouldn’t you say that’s a waste of money? Shouldn’t we be negotiating down the nuke count in the world??? Save a few bucks? Spend it on US infrastructure for a change?

            Bush was not antagonizing Russia either. NATO was not building up forces in Eastern Europe. The US wasn’t involved in what should be regarded as possibly civil wars or coups in border countries of Russia.

            The military industrial complex will now also use Russia as an excuse to increase conventional arms spending.

            Why shouldn’t we worry about the Cold War 2, WW3, and nukes????

            You’re not saying it’s all just very expensive kafabe, are you?

            1. craazyboy

              Also, my biggest worry about Trump is he gets sucked into the same insane mindset we have in Washington DC.

            2. James Levy

              Bush did not antagonize Russia? How about unilaterally withdrawing from the ABM Treaty and putting in train plans to put anti-ballistic missiles in Eastern Europe? Ot did you miss that one?

              1. craazyboy

                Yeah, that was later in his term. So, Neo-cons?

                Actually, I have followed our anti-ballistic missile development on and off over the last almost 20 years. I have a friend of a friend working on them – so I get bits of news now and then.

                If you recall, Bush had the Axis of Evil to deal with. At the time we were at least rationalizing we needed them to counter future threats from N. Korea and protect Europe/Israel from Iran. I do recall some arguing eventually between Bush and Putin. Putin thought the planned placement of the missiles seemed to be closer to Russia than Iran.

                And once again, it was a Bush plan. I love how you fast forward over 8 years of Obama.Hillary.Neocons whom didn’t stop the Bush plan, but escalated it.

                When will they ever be held accountable for anything???

      2. Liberal

        Don’t be an idiot. Clinton of course doesn’t want nuclear war. The problem is the possibility of us getting involved somewhere, followed by a series of escalations, ending in a nuclear exchange. It’s perhaps not likely, but if you think it’s almost impossible, you don’t know history.

        Speaking of Reagan, the Soviets almost launched a nuclear war based on a history of US sabre rattling started by Ronnie, culminating in a very aggressive, realistic war game. It appears we were saved from annihilation through the action of a single Russian who decided some data on his screen was perhaps an artifact, not a US launch.

        1. Binky

          Tactical nukes and devices doped for neutron emission and emp. The people in power have them and want to use them; they haven’t had to deal with the reality since 1945; and North Korea is getting uppity.

          J. Frank Parnell will tell you.

        2. Binky

          Tactical nukes and devices doped for neutron emission and emp. The people in power have them and want to use them; they haven’t had to deal with the reality since 1945; and North Korea is getting uppity.

          J. Frank Parnell will tell you.

      3. Jason

        As someone who loathes Trump with passion, fears about Clinton starting a nuclear war (probably with Russia) aren’t that far-fetched. It’s because she will “push and pull along the margins of Russia’s sphere of influence” while at the same time empowering neocons like Nuland, while the whole crew from Clinton on down remain nearly as egotistical and clueless as Trump himself.

        While she deliberately and knowingly start a nuclear war? No.

        Does she appear bound and determined to pursue courses of action that will bring us close to, if not into one? Yes.

        And Trump is no better, just differently worse. I’m not particularly libertarian, but I find I’m hoping Johnson surges, somehow. Trump vs. Clinton is no choice at all.

        1. Jim

          As far as relations with Russia, Trump is clearly far less hostile to Russia than Clinton. Trump has very clearly stated that he would prefer to work with Russia not against them. It’s obvious that Putin and Trump are much more likely to have a less adversarial relationship than Putin and Clinton.

        2. craazyboy

          It’s because she will “push and pull along the margins of Russia’s sphere of influence” while at the same time empowering neocons like Nuland, while the whole crew from Clinton on down remain nearly as egotistical and clueless as Trump himself.


          And one might ask, “So what’s the point of it all?”

          1. Jim

            Whatever Trump’s faults it is obvious that he is less belligerant in foreign affairs than Clinton ( I came, I saw, I killed Khadafi). The risk of blundering into a war with Russia is clearly less with a Trump presidency than with Clinton.

            Trump has made a clear break with the past Republican policy of military intervention.
            I doubt that Trump gives a flying fuck who rules over the Crimea or Donetsk.

        3. Matthew Saroff

          The term for that foreign policy is “Brinksmanship”, and it is a disaster waiting to happen.

      4. Carolinian

        Your usual straw man. What some of us have said is that is that Hillary will be risking nuclear war with the looney neocon scheme to challenge Russia on its own borders in order to intimidate them into getting rid of Putin. Nobody has ever suggested that HIllary is like Curtis LeMay who wanted to wipe the commies out and get it over with.

        In fact if memory serves in past comments you have agreed with this very notion yourself.

          1. Brooklin Bridge

            To expand, she will be gambling that her constant goads will not provoke Putin into a reaction that spirals out of control. Kind of like the European Union gambling that no amount of austerity and suffering will ever be challenged by something so fool hardy as a Brexit.

            1. Christopher Fay

              Putin has already said how stupid are we? In a war Russia will be shooting down our F16s F18s left and right. United States military doctrine is to nuke first. Russia responds.

        1. James Levy

          the quote about which I was commenting on directly stated that Clinton wants to start a nuclear war. Or did you read that? or do you just reflexively attack me because I don’t share your delusions about Trump?

          1. Christopher Fay

            Putin, the adult in the room, said that war with a nuclear power is nuclear war. United States war policy is to first strike. What are you unclear about?

          2. Carolinian

            I’m responding to “passed around here as hysterical axiom.” Sounds to me like you are talking about more than the original comment (which in any case likely didn’t mean what you think it meant but is just hastily worded).

            As to “delusions about Trump”…. another straw man. I’ve made it clear that I view Trump only as an alternative to the more dangerous (in my opinion of course) Hillary.

        2. Optimader

          The biggest risk is creating turmoil, a nuclear exchange between us russia china will be more likely the result of a mistake rather than intent. Other players, who knows?
          Bottom line, which people in leadership positions potentiate the most chaos in the world?

        3. Ping

          Agreed. Clinton is a risk to stumble into a nuclear situation by incremental escalation and provocation and her alignment with sociopath war criminals like Henry Kissenger.

      5. vidimi

        i agree with you. clinton doesn’t want nuclear war. she’s just more likely to instigate a war that ends in mushroom clouds that nobody wanted.

      6. Don Cafferty

        I have been reading here on this site for years and this is my first comment that I recall. James Levy, I disagree. The war with Russia has already started notwithstanding that war has not been declared openly. The line in confrontation with Russia has been crossed. Putin said so. The last straw was building the US/Nato base in Romania and the plan to initiate construction of another in Poland. Putin said that Romania and Poland are now in the “crosshairs”. He said that there will be no warning. When Russia makes its response, what will stop the “regular” war from becoming a nuclear war? The “aggressive, militaristic neocon[s]” are gambling that Russia backs down. Evidently, the “aggressive, militaristic neocon[s]” have not read history and are morons. Russia will not back down.

      7. timbers

        Jams Levy, IMO you miss the point. Her polices are all about war and nuclear war could easily happen from unplanned events from her constant relentless militarism towards Russia. Just because she does not say she wants to pull the nuclear trigger does not mean that is what her policies tell us they may lead to. Neoliberals don’t SAY they want to transfer wealth from workers to the ultra rich, but that is what they do.

        The Western media has paid little attention to Putin comparing Obama’s troop build up on Russia’s borders to that of Hitlers.

        A doctor who prescribes unrelenting blood letting treatment from a patient can be said not to be advocating the patient’s death. But do you accept that?

        1. James Levy

          So were those of Bush, Trump and Cheney–guess what, no nuclear war.

          The nuclear war meme is a scare tactic designed to get people to overlook the horror show that a Trump presidency promises to be. It’s like screaming Nazi, Fascist, and Hitler at Trump–a far-fetched scenario presented as fact to coerce people into voting the other way.

          1. ThePanzer

            But those three men didn’t cross Russia’s red lines by staging a coup in Ukraine and turning their defense in depth strategy into a lot less depth. Not to mention the very aggressive moves by NATO, the ongoing trade resitrictions, the constant demonization of both Russia and Putin as the second coming of the 3rd Reich. Not to mention Turkey shooting down a Russian jet, wars have been started for less.

            WWI was a comedy of errors in the events that led up to losing a generation or more of young men. The difference this time is the west is actively provoking a fight that could lead to a great power conflict, content in the belief that the Russians will back down, roll over, and subjugate to a Boris Yeltsin style economic vivisection. That is not going to happen. So the friction points are hot and getting hotter, and Hillary has all but promised with her aggressive foreign policy history and statements on Russia and Putin to escalate it even further.

            Given all the issues listed above the chances of an accident leading to a snowball escalation, or of Hillary deciding that “limited strikes with controlled escalation” is an option could put us in a hot war very quickly.

            It takes a certain level of determined blindness to continue ignoring the risks here.

            1. sd

              Add to your list NATOs war games on Russia’s border. Fears of a deliberate, antagonistic, and provocative military escalation that could lead to nuclear war should Clinton become POTUS are very very real. It is not hyperbole.

              Nato countries begin largest war game in eastern Europe since cold war

              The exercise, which US and Polish officials formally launched near Warsaw, is billed as a test of cooperation between allied commands and troops in responding to military, chemical and cyber threats.


              It comes within weeks of the US switching on a powerful ballistic missile shield at Deveselu in Romania, as part of a “defence umbrella” that Washington says will stretch from Greenland to the Azores.

              Then there is Clintons advisor….

              Eastern Europe needs permanent Nato troops, say ex-US policymakers

              Just weeks ahead of a Nato summit in Warsaw, Nicholas Burns, a former US ambassador to the organisation, and Gen James Jones, a former supreme allied commander for Europe, have called for permanent air, sea and ground troops to be based in the Baltic States, Poland, Romania and Bulgaria. […]

              Burns, an adviser to the US presidential candidate Hillary Clinton, said a “small but symbolic” permanent troop presence would show the Russian president that Nato is serious about collective defence. “We are not talking about massing troops on the border, but sufficient strength so that [Vladimir] Putin and the Russian leadership will understand we are going to protect the Baltic states and Poland.”

          2. timbers

            The nuclear war meme preceded Trump because Hillary’s and Obama’s targeting Russia preceded Trump, so that does not make sense. Also neither Bush, Trump, or Cheney have targeted Russia as Hillary does, but Bush and Cheney did market Iraq. And guess what – we attached Iraq.

            IMO Clinton is far more right wing/facist/bad than Trump.

            And Trump is calling for friendly relations with Russia so why do you lump him in with Bush/Cheney?.

            1. Optimader

              Tump for all his issues would have never survived the RE development business and whatever the heck else he does without being able to organize successful nrgotiations.
              I am unaware of HRC ever truly negotiating anything, let alone negotiating anything successfully.

              She has all the hallmarks of what I call the masters of failed Win-Lose negotiations

            1. Optimader

              Well that was a ham fisted proxy war to manipulate control of energy resources. These sort of initatives always have their derivative objectives and consequences.
              The objectives failed and the consequence was a less safe world

          3. redleg

            NATO nations and Russia agreed not to expand NATO as part of the German reunification agreement.
            Bill Clinton expanded NATO in violation of that agreement.
            GW Bush further expanded NATO in violation of that agreement.
            Obama has also expanded NATO in violation of that agreement, instigated a coup in Ukraine (led by HRC’s crony Nuland, wife of Robert Kagan), has deployed combat units on Russia’s borders.

            Neoliberal Dems are the ones ratcheting threats to Russia.

            ANY armed conflict between Russia and the US will end up nuclear. This was doctrine during my time in the military and appears to have been forgotten (or never learned in the first place) by the corporate masters of the universe that fund the neoliberal Dems. Shooting down airplanes used to be enormous strategic risks, but it takes two parties to negotiate and the US action in Ukraine demonstrates that the US is not listening.
            Clinton continues to call for a no-fly zone in Syria. The only combat missions going on there are Russian, so this would affect Russia almost exclusively.
            NATO recently called the hacking of DNC computers an attack. Someone has itchy trigger fingers and it isn’t Russia.
            Obama is upgrading the nuclear arsenal. Where are those warheads aimed?

            Add it up, and the Russians are preparing for war with the US again, and rightfully view Clinton as a threat to their existence.

          4. different clue

            Someone is going to become President. Either the R nominee or the D nominee will become President. There is no avoiding that fact. It seems likely for now that the Big Two brand name Nominees will be Trump and Clinton. If those are the nominees, then either Trump or Clinton is going to be President.

            If they both end up seeming equally dangerous ( even if in different ways), then the Sophie’s Choice of “which one” is no real choice at all. And all kinds of other choices become reasonable.

            But if one of the Big Two is a deadly danger, and the other one is much less deadly and much less dangerous, then some of us will surrender the pleasures of brilliant intellectual argumentational showing-off. We will make our best survival choice, even if you display your brilliant intellectual superiority by sneering and poo-pooing every analysis that anyone offers about either Big Two candidate, just to show that you can.

            1. aab

              This. And if someone could provide a factually-based argument that Clinton was the actual lesser evil, even though I am terrified of her gaining power, I’d listen to it. But no one — particularly not Clinton herself — seems capable of doing that. The argument always devolves down to some version of “Trump is racist/crazy/violent” which is unpersuasive, given both that Clinton’s demonstrably as bad or worse in those areas, except for crazy — and Trump clearly isn’t crazy; that’s just an empty ad hominem attack. And this line usually falls back on mainstream media propaganda, rather than actual facts. Hank Paulson’s endorsement today came out and stated that his objection to Trump is that Trump is disinclined to cut entitlements. That makes Trump sound better and Clinton worse to me. How serious must Clinton be to cut entitlements that she’s allowing these guys to trumpet this in her pre-nomination endorsements?

              I do not look forward with any pleasure to a Donald Trump administration. If you have real evidence that he’s more dangerous than Hillary Clinton would be as President, please share it.

              I am very weary of reading the the condescension of the immorally incompetent and their hangers-on berating the victims of neoliberalism for not being perfect victims and doing exactly what would be most optimal to gain the sympathy of their oppressors — particularly since it is quite clear that nothing other than quiet submission would be adequate. I realize that is not directly on point, but it’s related. People will vote for Trump, for the most part, because he is the only alternative they have to the rulers they correctly identify as having stolen from them while sneering at them. Calling them stupid, old, racist, or privileged, male (as if being male is an actual insult), dreamers (again, why is that an insult?) — none of those terms are more or less accurate than for the voters of the approved neoliberal candidate or course.

              Perhaps if Cameron hadn’t been trying to take a wrecking ball to NHS, older people wouldn’t have been so keen to leave. I don’t follow British politics that closely, but wasn’t he claiming there was no money for the NHS because of those damn furriners? But yes, let’s blame the voters.

              Working class whites embraced Sanders whenever they had a chance to hear about him. But yes, let’s call them all stupid racists for backing a candidate who apparently sat in front of them and said, “I understand your pain. I want to do something about it. I want to get you your jobs back. I want to get you your dignity back.” Is there a better way to reach out to those voters, and to achieve the goals they desire? Yes, and that candidate and those goals were treated with even more dishonesty and disdain by the establishment. At least Trump got air time. For a while there. While it was convenient for Clinton.

              People stomping around now pontificating about what a short-fingered vulgarian Trump is may enjoy it, but they’re either being tools of the establishment or propagandizers on its behalf. Nobody paying attention who has any decency is enjoying this spectacle. It’s horrifying. And for the record, I think the looming war with Russia will be a catastrophe whether or not it goes nuclear. I’m tired of voters being shamed, and I’m tired of shame and insult-based arguments about voting decision-making. It is our establishment that should be ashamed, to have broken the world the way it has, to be so transparently incompetent, corrupt and greedy, and to have the gall to put up an obviously unfit criminal on one side, and on the other, a trickster winner of a mud-wrestling side show for billionaires.

              Bring me facts, or leave me be.

      8. Jim

        It’s not a matter of Clinton wanting a nuclear war with Russia. I’m sure she doesn’t want that. In July of 1914 nobody in Europe wanted a massive war.

        1. Vteodorescu

          The Austrians did want war in 1914, they thought it would improve the cohesiveness of the empire… Read “Ring of Steel” by Alexander Watson – gripping stuff!

        2. Christopher Fay

          Of course Hillary wants to enjoy her billions and tens of billions and see her grands enjoy their 100s of billions

      9. YankeeFrank

        And yet she may walk us into one all the same. Remember that during the first neocon administration Russia was not our enemy. Thanks to Clinton, Nuland and their Ukraine aspirations, they now are. And with US plans to put missile defense systems in Romania and Poland, moves which Putin has indicated are seen as direct threats to Russia, she certainly feels all too comfortable playing war games with a major nuclear power.

        1. RabidGandhi

          Remember when Romney said Russia was the US’s main enemy and Team Blue guffawed? My new theory is all Democrat policies actually emmanate from the Mind of Mitt (eg, Obamacare).

      10. Harry

        Absurd strawmaning. The point isn’t that Clinton wants nuclear war. The point is that she thinks you can bully the Russians still further to give up even more of what they think it’s their national interest. That is risk loving behavior. Similarly, pursuing missile defense when the Russians have such imperfect over the horizon systems is asking for trouble. We are asking them to trust us while at the same time conducting military manuvres on our doorstep.

      11. openvista

        She may not want to start a war. But her grossly irresponsible and provocative actions could lead to war. Any war with Russia is likely to become nuclear rather quickly as NATO would not fare well in a conventional war with Russia (and it knows it).

        In March, Hillary publicly compared Russia to Nazi Germany (that would make Putin… guess who). She’s made other bellicose statements about Putin and Russia which seem solely designed to “other-ize” them and create an enemy in the public’s mind.

        Russia has said that the appointment of Victoria Nuland, one of architects of the Ukrainian coup, as Secretary of State would be viewed as a hostile act. Guess who Clinton is said to be favoring for that post?

        NATO just wrapped up a war exercise on Russia’s western border that amounted to the largest troop buildup there since 1941 (right before Germany invaded Russia).

        Dangerous games like this have a way of escaping the handlers, much like a show dog can poop or bite at the worst possible time. Wars throughout history have been started over less.

        I agree that the Brexit does lessen the chance that the UK (and possibly Europe too given the upheaval to come) will go along with the American Empire’s wars. That alone could be the greatest outcome of this vote (if, indeed, it is honored by the politicians).

        1. NotTimothyGeithner

          Whoa now, Hillary said Putin was worse than Hitler. When you consider the dead as a result of Putin’s policies compared to Hillary’s and consider this statement, the only sensible conclusion I can draw is Hillary aspires to the WWII body count and wants everyone to know Putin is way behind.

      12. Ishmael

        But even when the neocons held total sway under Cheney and Rumsfeld no one was throwing ICBMs around.
        Okay partially true but Rumsfeld was all for developing new nuclear weapons and there was even talk of an H-bomb based “bunker buster!” When you start going from the unthinkable to tactical it is very scary to me.

        As far as Clinton, maybe she does not talk about nuclear weapons but she started the Ukraine conflict with Nuland and Obama has been surrounding Russia with the military. Putin has made it quite clear that his response will be asymmetric including nuclear. Before you know it one step over the line (such as the assassination of Arch Duke Ferdinand) to far and the next thing you know you will have an exchange of nuclear weapons.

        1. tegnost

          I think there’s some parsing going on, there’s not much difference between hillary’s and gwb’s adventurism. Bush started in iraq, and installed oil majors, financiers and utilities in iraq, hillary in that same spirit went after libya, and no one has mentioned syria, where the pipeline from russia is the possible casus belli that justifies our actions there, impose our oil majors, our bankers, our utilities or we bomb you back to the stone age. Russia should trust us why? Globalism requires all countries on the planet to submit to the global cartel that both the neeoliberals and neo cons aspire to, and brexit is a problem for said cartel.

        2. Christopher Fay

          American war policy is to nuke first against Russia as they know we can’t defeat Russia on a close battle field, close meaning Ukraine to Berlin, or Paris. So we start nuking when Russia regularly bats down our F16s F18s. Russia responds against Boston to assure the Atlantic don’t mean nothing.

    3. Propertius

      Hillary’s desire for more war, including nuclear war

      I think that’s a ludicrous assertion.

  3. Clive

    Despite its promises, the Remain campaign degenerated into single — negative — issue. That issue was that the UK had to remain in the EU “because markets”. Mr. Market would have a big sad if the Leave campaign won. And indeed he has.

    Voters went into this with their eyes open. We knew that any failure to appease the market gods would be punished. But overall (the margin for Leave was small, but not minuscule) the electorate said “sod you, markets”.

    This is a turning point. Not the end. Not even the beginning of the end. But definitely the end of the beginning.

    1. Betina

      This is spot on, and I don’t get why people don’t understand this basic fact about the whole debate! Whose interests are the markets currently serving, especially if you have the City of London being responsible for so much of British GDP? Who are the markets for? Why is everybody an unwitting Thatcherite these days?

      The funny thing is, the EU actually provided funding to the cities most impoverished for this whole thing. In a way the reason why Cameron failed was because identifying the source of the resentment was admitting that his party had caused it.

      1. Uahsenaa

        I think the problem for many, and this is how it’s already being legislated in the media, is that in voting Leave, they make common cause with racists (Farage and Co.) and twits (The Right Horrible Boris Johnson). Like Clinton in the US, the Remainiks owned the identity politics on this one, and there’s no way around that. There are very good, straightforwardly Leftist reasons for voting Brexit, but they were never aired in the very right wing campaign for it, which was larded with all the usual dog whistles about immigrants and what not. And so, it’s hard to begin from that Leftist perspective, when you have to battle against the ammunition served up by idiots like Farage and Joshnson.

    2. Roger Smith

      When your argument is that you are/are not the other side, you don’t have a real position or foothold.

      Just look at Hillary Clinton. In the primaries her shtick was “I am Bernie Sanders…”. Now for the presumed general shit show election, “I am not Donald Trump…”

      Why people keep voting for faux stances I haven’t the slightest.

        1. Uahsenaa

          Indeed, you can’t compare a plebiscite in the UK, where ballot counts are open, public, and accountable, to the US, where rigging, spontaneous disenfranchisement, and outright fraud are the order of the day.

    3. abynormal

      “Voters went into this with their eyes open”…how could they? what are the UK banks holding? whatever it is it’s UGLY…created by the Neo’s that understood the ‘remain’.

      i’m ecstatic about the vote, it’s doable but at the cost of an already beaten youth. we need to get out behind them…do without (probably not by choice) and carve out a reality for generations to eek through. Communal, Underground, BlackMarket or whatever but don’t commit suicide or continue with our heads in the sky and focused on ourselves.

      none of us asked or imagined this…everyday the quagmire is larger and more inhumane. my heart & mental support goes to the People and All Global Citizens.

      1. Andy

        I was following last night, and couldn’t believe that finally, people actually said no to the status quo. All this talk about pitchforks, blah,blah,blah…Well this is what it really is to change direction.
        Thank You “Leave” voters. You just might have saved the world.

            1. vegeholic

              “If I didn’t have bad luck, I wouldn’t have no luck at all”
              – Booker T. Jones

              1. Tony Wright

                Yeah, Born Under A Bad Sign. Trouble is, the Brexit reminds me of the Iraq War – ” yay, we won! Oh Shit, what do we do now?”
                Having said that, the system is broken for those outside the financial elites, so in an overpopulated world some thing has to give. And reading the signs I think there is a whole lot more to come. We live in interesting times, which I believe is an old Chinese curse.

      2. Which is worse - bankers or terrorists

        “at the cost of an already beaten youth”

        Given the high percentage of youth vote for Remain, I tend to think that a result of this is that you will have a large portion of youth Brits emigrate to other countries than pay for this. The EU’s passporting rules will virtually guarantee that trading desks, for example, move to Dublin or Frankfurt. I also wonder what a place like Dubai would do to attract the former business from London.

          1. ira

            Depends what side you´re on:

            If they move to Dubai, then you can take out banksters and jihadis with one missile.

            As someone once said, ´make my day, please.´

        1. Christopher Fay

          Frankfurt Germany, baby, dull dull dull. Dubai? You gotta be kidding me, not safe for drinking and debauchary.

          1. Donald Leake

            “Frankfurt Germany, baby, dull dull dull. Dubai? You gotta be kidding me, not safe for drinking and debauchary.”

            I live in Dubai. There is really an awesome amount of debauchery here. You are invited any time to help me hold up the bar. Have lived in Los Angeles and South Florida and this is much more of a wet slip and slide for adults.

      3. Which is worse - bankers or terrorists

        “at the cost of an already beaten youth”

        Given the high percentage of youth vote for Remain, I tend to think that a result of this is that you will have a large portion of youth Brits emigrate to other countries than pay for this. The EU’s passporting rules will virtually guarantee that trading desks, for example, move to Dublin or Frankfurt; with the banking industry will go a decent portion of London’s upper class elsewhere. I also wonder what a place like Dubai would do to attract the former business from London, given its popularity with young Brits and their love for sunshine.

    4. Skippy

      Gillian Tett made an interesting observation on CNBC w/ Steve Liesman…. too paraphrase … the – Market – got it wrong, traders got it wrong, punters got it wrong and economists ultimately got it wrong, and with it the notion that such devices process information better is now battered and bruised…

      She then had nerve to suggest that maybe some might ask an historian, social psychologist or anthropologist about what happened…

      Disheveled Marsupial…. Blasphemy !!!!!

      1. oho

        “traders got it wrong, punters got it wrong and economists ultimate”

        punters got it right. “Leave” bets outnumbered “remain” bets. But the average “remain” bet was ~400+ USD v. ~100 USD for “leave.” (see )

        The 1% thought they’d cash in on some presumed riskless profit.

        but ya, the chattering class and the morons on CNBC got it wrong as usual.

        I’d rather get my punditry to 20 random Naked Cap commenters

        1. Skippy

          Ladbrokes…. sigh… EMH…

          Disheveled Marsupial…. Hows those algos too condition people to gamble more going… seems its not unrewarded…

      2. Clive

        Yeah, I’ve been watching the TV coverage to get my fill of MSM reaction. And what you say of Tett is typical of what Lambert rightly labels the credentialed class — that 5% (some would put it higher at 10 or even 20% but I think the real paid-up members of the credentialed class are in that bracket) who explain to the proletariat what the elites are doing and Why It Really Is In Your Best Interests — they are simply struck dumb. There’s something you don’t see every day.

        But why the Remain campaign thought we’d be swooning and rushing to the polling booths to vote to stay in the EU because bank shill Stephanie Flanders said it would be jolly unpleasant if we didn’t and there’d be no jam sandwiches before bedtime if we disobeyed our overlords, goodness only knows.

        Still, at least we now know all there is to know about the “Australian Points Based Immigration System”. The Lucky Country lights the way for the rest of us ! (sighs).

        1. Deep Thought

          hey are simply struck dumb. There’s something you don’t see every day.

          No one saw last year’s General Election result coming either. At least this time the polls were heavily confused, rather than just plain wrong. My interpretation of the whole lot together is that the UK is becoming too heavily polarised to accurately average out the punters responses.

          1. PlutoniumKun

            I think a key problem is that many assumed that last minute voters would fall for the ‘default’ safe vote as so often happens in referendums. The problem is, that for many voters, Brexit is the default vote, they never felt part of Europe, so saw nothing wrong with leaving it.

          2. RabidGandhi

            My own take: since Labour shat the can in the 70s leading to the rise of Thatcher, most people have rightly checked out of politics, since the ballot box did very little to improve their lot in life.
            Pollsters (on both sides of the pond) have gotten used to making predictions based on Labour/Tory horseraces that no longer apply (LibDem kayfabe notwithstanding). The difference in this referendum was turnout: the issue galvanised people who stayed home in the predicatble general/bi-elections of the past, and the pollsters have no clue how to count them.

        2. Skippy

          Understand whom Tett is as a talking head, albeit I was referencing her acknowledgement wrt systemic risk failure and then ” ask an historian, social psychologist or anthropologist about what happened…”

          To add I would offer a reply from another blog MB to the same….

          “The biggest cock up in all this is not the people of Britain but the global financial system and its much vaunted (up until 2008) ability to price risk.

          And if they could coq up US housing, if they could coq up Lehman brothers and the counterparty confidence issue if they could coq up Greece to the point Economic scorched earth needs to be visited upon them, if they could cock up Cypriot banks to the point where it was necessary to do a bank raid on savers, if they could cock up the probability of Brexit and its implications, how much certainty should we be allocating them?” – Gunna

          Disheveled Marsupial…. its like going to the same mechanic that screws up your car… every time…

    5. JustAnObserver

      Maybe true Clive but the Leave campaign has also succeeded in resurrecting the shrieking ghost of Enoch Powell. It was their only real weapon and they used it shamelessly, flaunted it really. It will be difficult, probably impossible, to undo this. There was a case to be made to exit the anti-democratic neoliberal-on-steroids EU on both political and economic grounds but the the Leave campaign rarely made it. Instead we got UKIP and the Sun. The enemy of my enemy is my friend ?

      What will we see in 2 years time. Long queues of EU citizens being expelled from the UK piling onto Channel tunnel trains ? … and yes that image is deliberate ‘cos its what Leave has convinced a large swathe of the UK electorate that they can deliver.

      1. Clive

        Oh, I agree. And I agree with the editorial piece and the headline — a crisis, or the very real risk of a crisis, will be impossible to avoid. There are so many flashpoints and the potential for utter stupidity like forced deportation.

        The sensible thing to do would be to say something like everyone who is resident in UK now from the EU can stay and be granted automatically UK citizenship. And then have some cut off date after which you can immigrate but have no automatic right to remain.

        Even then, you risk a last-minute rush as the deadline looms. But better that than incendiary steps like chucking people out the country.

        There’s going to be a lot of similar omelettes which will need to be turned back into eggs.

        1. JustAnObserver

          Seems that Leave has sold a lot of people on the idea that omelettes can spontaneously turn back into eggs. Brexit considered as the refutation of the 2nd Law of Thermodynamics ? Does seem over the years that the UK’s relationship to “the continent” has become a Perpetual Emotion Machine.

          Given that the omlettes/eggs metaphor has already appeared several times on this comment thread I’d love to do a count of its occurrence in “media” more generally as a metric of “waking up to reality”.

  4. Deep Though

    Brexit is a crippling blow to the neoliberal order of unfettered trade and capital flows, and citizens being reduced to being consumers who have to fend for themselves in markets, and worse, increasingly isolated worker who are at the mercy of capitalists who are ever more determined to reduce labor costs and hoard the benefits of productivity gains for themselves.

    Except that the people at the head of the Leave campaign are committed free-trade neoliberals who think that a fundamental problem of the EU is respect for worker’s rights. If they gain power, which now seems likely, they will push the UK even further down the neoliberal road.

    It is a blow for the political status quo, I give you that. But above all it is a blow for logic and reason which have long evaporated from the UK’s political discourse. Nothing about this referendum has made any sense from the start, and it’s only going to get worse now.

    1. moneta

      It was going to get worse anyway… why do you think there was a referendum in the first place?

      The big difference is that the referendum gave color to the elephant in the room.

      1. abynormal

        i can only hope the People remain United…turning on each other will exasperate the exposure(s) that will be deep & swift…at least they won’t be alone. We’re All Brits Now!

        1. moneta

          If you unite and stay united around a common goal… making sure the youth get employment for example.

          Revert to me, myself and I and it won’t be pretty.

        2. Brooklin Bridge

          This is such a complex issue that it doesn’t seem as though there was much “unity” even now though I’m perhaps being picky with your meaning. Both liberals and conservatives are already on both sides of leave or remain and while there does seem to be a common underlying theme against externally imposed austerity for the working class, that theme also seems terribly fragile given the interests of the leave-conservatives who have very different ideas from the worker about what sovereignty means.

          While the ultimate outcome of this extraordinary event may be hugely beneficial across a spectrum of complex interests, getting there is anything but clear and a frequent question (frequently exploited) will be who am I in solidarity with?

    2. fds

      There can be overlap. The vast majority of the Leave group were concerned about the destruction of their retirement, job opportunities, and culture stemming from Neoliberal immigration strategies. The Right-wing Leave people were concerned about sovereignty. I’m not sure what the downside is here. Will the EU punish Britain by locking out any trade ability, notwithstanding we live in a free trade era? Given that the EU is a banking/free trade cabal, I doubt it will be significant.

  5. PlutoniumKun

    The immediate short term impact will be from the collapse in sterling. This puts hundreds of thousands of British pensioners and others dependent on Uk earnings living in France and Spain in a very difficult position. Ireland will suffer greatly from a newly disadvantaged trading position. German and French carmakers are likely to be very upset at newly cheap British made cars (mostly Japanese and Indian owed marques.

    1. Jim A

      Not to mention the difficulty that those expat retirees may have if they need visas to remain abroad. I predict a dramatic drop in the value of real estate in those retirement enclaves until things become clearer.

      1. Which is worse - bankers or terrorists

        “Not to mention the difficulty that those expat retirees may have if they need visas to remain abroad. ”

        Lots of expat Brit retirees in Dubai and Kenya. You could see that opening up a bit.

        1. Peter Pan

          Most importantly, will I be able to get a new Bentley or Rolls Royce at a reduced price in the USA because the sterling got pounded? What will happen with the value of luxury property prices in London (and the balance sheet of their current foreign owners)? Will I now be able to buy luxury property prices in London on the cheap with my $USD?

    2. vidimi

      I think Ireland stands to be the big winner from a brexit.

      If the EU imposes restrictions on UK banks, many will hop over to Dublin (unless Ireland gets stripped of its tax haven status but then, why not also luxembourg?). Moreover, reunification with NI is all of a sudden possible.

      1. PlutoniumKun

        No way is Ireland a big winner. The UK is by far Ireland’s biggest trade partner and a weaker sterling is disastrous for the Irish agriculture, tourism and manufacturing sector. It is also highly destabilising for the northern Ireland peace process.

        Ireland would hope to benefit as a secondary financial market, but most likely it will just be used as a copperplate address for UK companies. There are very few upsides.

      1. Jim A.

        Of course the degree of that is going to depend on how high the tariffs set by the EU are going to be.

        1. John k

          U.K. Is a net importer… Trade barriers would hurt the eu more than the Brits… Actually, Europe should be fearful of barriers in Britain.

          1. PlutoniumKun

            Britain is a big importer from the EU, but many sectors in Europe would be relishing setting up borders, especially if a reduced sterling makes it harder to export there anyway. The Germans and French will relish the opportunity to force the Japanese and Indian car makers based in the UK out, and in particular, they will enjoy putting up barriers to London as a financial market. The British have no choice about many of the other imports from Europe, most notably food.

            1. notabanker

              Spitballing here, but why wouldn’t you immediately negotiate with Ire and the other PIGS. The euro is a disaster. The Sterling is a valuable sovereign currency. It’s really about Germany and France being obstinate.

              The UK banks have been fleeing euro assets as quickly as the can sell them, partly regulatory driven. BOE is much stronger than ECB.

              I also think that is a big barrier for Scotland as well. Leaving the pound for the euro is a big mistake.

              1. PlutoniumKun

                First off, EU rules will make independent negotiations with the UK impossible. All separate agreements have to be agreed with Brussels. And all the weaker EU countries much prefer to be within the European umbrella than subject to the whims of a badly weakened British government. Quite the contrary, there would be a lot of jostling (Ireland has already started it) for pole position to attract investors fleeing the UK.

                What all those people cheerleading Brexit forget is that the EU is very popular in smaller European countries (even Greece!) for precisely the reason that it allows them to escape the shadow of larger neighbours.

                As for sterling, as Philip Pilkingtons article (above) points out, its a currency heavily dependent on capital flows, and very vulnerable to runs. Bad and all as the Euro is, sterling will be worse.

  6. Free Market Apologist

    “European banks will be doing everything they can to poach both British bankers and their clients”

    Given the significant cutbacks in the finance industry in the UK, I think the population of bankers being poached is going to be minimal (i.e., this will be a problem of luxury for the gifted and mobile, and a problem of unemployment for the middle-tier and less mobile). The clients will certainly be up for grabs though.

    1. vidimi

      a great many “british” bankers are EU bankers. French, Germans, Italians, Spanish…some of the London banks are actually EU banks: BNPP, SG, Santander, BBVA, DB…
      EU governments may be obliged to repatriate some of those banking jobs.

      1. abynormal

        and Vampire Squids…i also thought about this last night. dicey waters will be a dream.

  7. Roger Smith

    One of the most amazing parts about this to me is other countries willingness to punish the UK for trying to leave. I have equated our Neo-liberal Democratic party here in the U.S. several times in the past month and I am seeing the same thing here with the EU projections and the Obama/the U.S. response.

    “You want to leave Martha? *SMACK* STILL WANT TO LEAVE??”

    I understand Brexit makes things difficult all around but this antagonism for a decision democratically voted on by the people of a nation is unwarranted. The people made a choice and any legitimate and uncorrupt government (hah) would respect those citizens regardless of transition difficulty.

    Don’t want to play ball with the “natrual-god” forces of globalization? Then we will torture you for your folly. Don’t you know these forces are natural and true!?

    1. Jim A.

      OTOH, that doesn’t surprise me at all. Those who voted to leave did so on more emotional grounds despite ample indications that at least in the short term it would be to their economic disadvantage. “You (the elites) have not shared the benefits of European integration with me, so I will punish all of us by voting to leave.” The people who will be in charge of negotiating for the EU to determine the future between the EU and the UK are seeing THEIR dream of a united Europe being at least hindered, and possibly destroyed by the leave vote. When you destroy somebody’s dream, they tend to get very angry whether that dream was realistic or not. In the same way that people will get angry at YOU when you point out that they’re never going to get that money that they were promised by that Nigerian prince….And angry people are perfectly willing to punish themselves so long as they are to make you suffer along with them.

      Don’t fall for the illusion that Brussels is full of coldly logical, calculating technocrats that like Spock will always do the logical thing. The wish to punish the UK isn’t just about scaring others away from leaving. It’s also about petty revenge as well.

      1. Which is worse - bankers or terrorists

        No kidding. Greece’s punishment is nothing compared to what the UK will get. It’s payback time for all of those nighttime bombing raids 70 years ago.

    2. Tom

      The thing is, the Remain campaign was actually getting some momentum and then who else but old Junker came out and said “there will be no more renegotiation, you have your deal and that is it” or words to that effect. Bet he wishes he kept his big mouth shut now.

  8. m-ga

    The referendum result is non-binding. So, a Brexit isn’t certain. However, avoiding Brexit is politically fraught.

    I can think of one way the UK government could avoid Brexit. This would be transitioning to a federal UK. The federal UK would be set up over a 5-10 year timespan, during which the UK remains in the EU. A federal UK would be set up in such a way its constituents (England, Wales, Scotland, Northern Ireland) could make individual choices to exit the EU, and/or the UK, more elegantly.

    This could work because in the referendum Scotland and NI voted to remain, whereas Wales and England (London excepted) voted to leave. The government could argue that it can only “respect” (Cameron’s phrase) the wishes of voters by acting on a country-by-country basis. I think this is a perfectly valid interpretation of the referendum result, especially given other recent patterns in Scottish voting. And, given that a sudden (~2yr) EU exit would have a massive negative effect on the UK, it is also the responsible thing for a government to do.

    In this plan, Westminster would grant powers, equivalent to or greater than those belonging to Scotland, to Wales and Northern Ireland. England would have a second parliament, outside Westminster (the North of England would be a good location). The current Westminster parliament becomes the seat of UK federal government.

    In this scenario, the Conservatives retain England (which is where their power base has always been) and retain more influence elsewhere than they would by triggering Article 50. Labour is irrelevant for at least a while, although perhaps not in Wales. The UK remains united, albeit under a federal system, and remains in Europe. The transition to a federal UK would be planned over 5-10 years, with certainty over that period and a detailed roadmap which should calm markets and investors. All constituent UK countries retain sterling as a currency.

    Sometime in the 2020s, the constituent parts of the UK would be able to hold EU in-out referendums. England would have to do so, given that it has just now voted to leave. But I think it’s highly unlikely that leave would be carried again. If it was carried, though, much of the groundwork for the splintering of the UK would have been prepared. This would be much better for all involved than triggering Article 50 in the next year or so, and waiting to see what happens.

    1. TimOfEngland

      It may not be binding but it would be political suicide for any party to try to override it. Unlike with the EU “gov.” the electorate would throw the gov. out and put in a gov. that would implement it.
      This is what he vote has really been about – accountability and control. Also worth noting is that the largest Leave areas were what are called “Labour Heartlands” the industrial north, east and west. It is the “workers” who have decided enough is enough. They want their jobs back or jobs with a livable wage back (wherther they get them is another matter).
      The UK or at least the Welsh and English have actually voted for giving our gov. their proper power back, the ability to DO THINGS right or wrong. They will be held responsible they no longer have an “It’s the EU Rules” Get out of jail free card.
      I believe that the out vote will return some pride to the avarage Brit (Including many immigrants who really do think of themselves as British). It will ease the social pressures in a few years, maybe sooner, with the result (I am hoping) that the finances work themselves out.
      Anyway, the sky is still up where it should be, the sun has been shining this morning, some people (including me) have lost some money temporarily. We’ll get over it.
      P.S. I don’t comment often but read the blog daily – thanks, it keeps me informed of life on the other side of the pond and the perspective that provides.

      1. m-ga

        You need to read what I wrote a bit more carefully.

        The wording of the referendum question is:

        Should the United Kingdom remain a member of the European Union or leave the European Union?

        Note that:

        1. There is no time scale for exit.
        2. If the United Kingdom ceases as an entity, the question is void.

        The United Kingdom, in its current form, is on life support. Scotland has already come very close to leaving (2015/16 elections even moreso than the 2014 referendum), and Sturgeon is now pushing for a referendum before the current UK exits the EU, which would allow Scotland to remain in the EU.

        A second referendum, to be held in the event of scenario which arose this morning, was a manifesto pledge for the SNP. On the current trajectory, it will almost certainly happen. This would be the end of the United Kingdom as referred to in the referendum question.

        What’s more, Northern Ireland would have great difficulty leaving the EU. This is due mainly to its land border with Southern Ireland – a cause of extensive armed struggle as recently as the 1990s. It is unlikely that many in Northern Ireland would relish the recreation of a militarised border. However, this is exactly what leaving the EU, but remaining in the UK, would require. Given that Northern Ireland voted for Remain, it is likely that Northern Ireland will also make moves to remain in the EU, and that they will do so urgently (i.e. they won’t want to leave in a couple of years, then seek readmission).

        This leaves just the rump UK – England and Wales. We are now a long way from what was posed in the referendum question. I don’t see any “political suicide” into taking care over setting up the transition such that whatever relationship the post-referendum former UK constituent countries will have to each other, and to the EU, can be more elegantly achieved. A federal UK would enable such a transition.

        Also, your idea that “the electorate would throw the gov out and put in a gov that would implement it” is plainly wrong. There isn’t another general election in the UK until 2020 (Cameron avoided a general election via vote of no confidence by resigning this morning). If there was a general election right now, it is unlikely that any party except UKIP would push for a Brexit within two years. This is because most of the Conservatives, and all the other parties except UKIP, are (1) pro-EU, and (2) will want to avoid any unnecessary economic damage.

        1. TimOfEngland

          Hi, I didn’t put a timetable on any of the events but your observations on the UK are correct. It may well bring about dividing the UK. So be it. It’s going to be tumultuous.
          We are at heart(for better or worse) and island people, we tried the “integration thing” It’s not working out too well.
          We have unlimited immigration, we have wages falling because of that, we have an overriding authority (EU law) that we often disagree with.We have massive “health tourism” so much so that many call our health service the WHS. There are not enough school places. When you get one 25% of the class is unlikely to speak any english another 25% only barely. You can go places where you will hear more Polish/urdu/arabic than english – want to be a market trader the learn to speak 8 languages. We can’t keep supporting families in every other EU outpost because one member came to the UK and couldn’t get a job or at least not one that pays enough. It is unsustainable for the UK and mostly of this hits England the hardest. So it has gone on and for many this really is the facts of life. It had to change. The European institutions didn’t listen to little old England, so they are reaping what they sowed. (forgive my typing I didn’t get much sleep last night).

          1. m-ga

            Tim, if the referendum question has been:

            Should Scotland and Northern Ireland remain in the United Kingdom, or leave the United Kingdom?

            Do you think the result would have been the same?

            1. TimOfEngland

              Sorry m-ga, too complicated. I simply don’t know. Persoanlly I would keep things as they are but given where we are with brexit it complicates it even more! The four countries are in some ways seperate anyway. Different laws, customs etc probabaly a bit like nieghbouring US States. Take “national” football/rugby/cricket teams, if you can even sort out the whys and wherfores there, you are better than me. There is actually no English Cricket team, it is the England and Wales cricket team officially.

              Try this for size it’s a bit tongue in cheek but failry accurate and you might get an idea why the UK is so complex :)

              1. m-ga

                I’d agree it was a mistake, from Britain’s perspective, not to join and lead the EEC immediately after WWII.

                Having to join later, and on less favourable terms, has never sat well with many in the country. In fact, many of those for whom Britain’s place in the EU didn’t sit well with in the 1970s, are likely to be the same over-60s who overwhelmingly voted out yesterday.

  9. TomDority

    The private bankers are a sqeemish, cowardly bunch…..seems their siren song is the sky is falling.

  10. vlade

    yves. the control of our destiny is always limited by the goodwill of those stronger than us. there’s not much goodwill in the world right now, and, for the better or worse, UK needs the world (and I would argue it needs it more than vice versa).

    I am afraid that the voters chosen a path that will make them poorer and in less control of their destiny.

    I will be very happy if proven wrong, but given the political representation pushing for brexit, and the general preferences of the areas that were strongly pro-brexit, I somewhat doubt it. There is discontent – a lot of it. But there is nothing that would look like people willing to act on it longer term. To go back to taking ones destiny in ones hands – even if the strong have the goodwill, it still takes more than just voting. I don’t see this in the uk, unlike say the Sanders movement in the US. The leave campaing was a disunited bag of interests, with no clear vision for ‘the day after’. If Cameron wanted to be really nasty to then, he would invoke Article 50 today or Monday – and he now has the mandte to do so.

    1. Synoia

      So the UK was caught between the devil and the deep….

      The good news is the challenge to the “One Ring to Control Them All” policies being enacted.

      The UK will survive, and shrug off this latest invasion, as it has other threats since 1066. The people will endure, too.

      Will austerity end? No, it is too good a mechanism to whip the peasants, control China and limit resource use. Is is a wonderful strategy for those ends, and will continue.

      The question of WW II driven by US ambition is now forefront – will the US push Europe over the brink of war in its efforts to avoid its terminal decline to the new superpowers in Asia?

      And finally, rising sea levels will end all these discussions. Much of eastern and southern England is low lying, and there is nowhere for the population to move.

  11. ThePanzer

    So did a war just happen that killed millions? No.

    Did a natural disaster occur that wiped out a significant amount of infrastructure? No.

    Did anything substantial in the “real” world just break, blow, up or cease to exist? No.

    Did the UK vote to leave a special country club? Yes.

    And that’s about it. Yes I know I’m grossly simplifying but at the end of the day all of the issues outlined above are manifestations of a VERY broken system composed primarily of BS, smoke, and mirrors.

    Perhaps a better question to ask is if leaving the special country club causes this kind of calamity what the hell kind of economic and political system have we backed ourselves into in the first place and why should we just keep adding duct tape to the rube-goldberg machine hoping it will lurch on for another year or two?

    Post-2008, and as you’ve been documenting pretty much ever since, our financial system is a house of cards that grows ever larger and with a storm blowing in around it. So it’s just a matter of time before Brexit or some other issue starts to wobble the structure.

    The EU has proven to be an undemocratic nightmare. A crack up was and is inevitable. So all the hand-wringing over Brexit seems a bit odd for a website devoted to outlining how broken our financial system is and how a correction is both inevitable and painful.

    Short to medium term hardship, you bet. But the only way the UK can ever hope to start steering a path away from the failed status quo is via this kind of change.

    Perhaps you should look at the bright side. The wailing and gnashing of teeth of the financial industry will be sweet, sweet candy for months to come. In the words of the wise sage Eric Cartman and in regards to wall street and London finance, I eat your tears, so sweet, I eat them up!!!

    1. moneta

      The thing is that a very large percentage of progressives believe change can come without pain.

      Many probably believe we just need better negotiators.

    2. Jamie G.


      There’s an excellent breakdown of how the votes were cast throughout the country in the Guardian:

      The charts on demographics, to my mind, show that the voting split very definitely along lines of class (with the exception of Scotland and Northern Ireland). Those whose aspirations have been crushed by the neoliberal project, the working class, voted overwhelmingly to exit. If this anger hadn’t been given a chance to air now, but was suppressed and ignored by the establishment for another decade, something a hell of a lot worse than Farage and Johnson would’ve come along to channel it.

      In the words of the Archdruid, collapse now and avoid the rush.

      1. econoclasm

        You still need to explain why it was the over-60s (the baby boomers) who overwhelmingly voted to leave

        Age breakdown on Brexit polls tells underlying story. Older generation voted for a future the younger don't want:— Murtaza Hussain (@MazMHussain) June 24, 2016

        Those under the age of 40 were overwhelmingly for remaining in the EU.

        1. Susan Hall

          Perhaps Baby Boomers just remember the tragedies of two World Wars and Germanys part in them and the shadow Germany now casts over the EU (without any mandate to take control of/manage/bully other EU members) and quite simply, youngsters don’t know/care ?

    3. moneta

      I still remember reading the story of the tailor who was happy with the 1929 crash… until he went under because his banker clients stopped buying suits.

      While the financial sector needs to get rightsized I doubt it will be sweet when it happens.

      1. abynormal

        and i remember a story of a pristine shoe maker on wall st. that lost everything with the 29′ crash, picked up his family and moved to the Midwest to resole boots for the rail workers. ugly, but the family survived on trade and eventually rebuilt.

    4. washunate

      Yes I know I’m grossly simplifying but at the end of the day all of the issues outlined above are manifestations of a VERY broken system composed primarily of BS, smoke, and mirrors.

      There has been great commentary all around, but I think this is the best succinct description anybody has had. Calling BS, looking past the smoke and mirrors, is one of the great taboos in our Anglo-American world.

  12. Thoughtful person

    Funny, I was listening to Npr and market place radio on and off while cooking up some dinner last night, eastern US time, and I could have sworn the commentators were pretty sure the remain had won. Quite a reversal!

    I do recall an article here that said any Brexit vote was advisory, it would still need to be approved by Parliament, which sounded not entirely a done deal?

    I think Yves is correct that the economic motivation for the Brexit vote the in the UK is similar to Frank argument about the US situation in Listen Liberal. As well as a seeing global rise in anti-establishment feeling amongst the populace.

    I’d add perhaps a limits to growth perspective in all this, resulting in loss of net worth amongst the majority of the population, coupled with neoliberal economics that does nothing to ameliorate the situation…

  13. edmondo

    I wonder how long it will take to schedule the next referendum on Remain? And the one after that? The pattern has been they keep voting until they get the outcome they want.

  14. timbers

    So far I see only good news – Amazon UK blu rays are much cheaper and Cameron is to resign. The Evil Establishment has been bloddied and a crazy psychopath is leaving office.

    1. grayslady

      I was thinking of sheepskin slippers. The best in the world come from the UK, but they have been pricey. Then there are the fabulous, soft-as-butter mohair throws. The bankers may be losers, but I could see some winners among manufacturers and retailers.

    2. JustAnObserver

      … to be replaced by Boris Johnson ? Michael Gove ? Nigel Farage after UKIP does a Trump and starts a hostile takeover of the Conservative party ?

      1. Art Vanderlay

        Nigel Farage isn’t a Member of Parliament. His party holds 1 seat in the House of Commons, and he’s not the one sitting in it.

        Johnson is a buffoon who has made many enemies in his parliamentary party. I doubt very much that either he or Gove will be the next PM.

  15. Nameful

    Richard Smith also points out that a Brexit could imperil Ireland’s ability to operate as a tax haven. And that raises the issue that both Scotland and Ireland supported Remain. Is a UK breakup in the offing?

    How exactly does that work, seeing that Ireland is a country distinct from UK? Remember, Northern Ireland (which is in UK and voted for Remain) is not the same as Ireland (not in UK, uses euro as currency, has a very low corporate tax rate, etc.)

  16. Sally

    I think you underestimate the growing anti EU feeling in other EU countries. I will predict you will see referendums in Denmark and Holland within two years. And if Le Pen wins in France next year she will hold a vote on leaving the EU. The UK is not in the Euro currency. We have been able to devalue our currency, and we have a central bank which has allowed us to print money which has meant the austerity here has been less than Greece or other parts of Europe. But it has still been bad for many many people. It’s much worse in Southern Europe in Spain and Italy. Expect to see major banking problems in those countries soon.

    The EU has taken for granted too many people will just continue to have laws imposed on them that effect their lives without any democratic control. Most Brits thought they were joining a grouping of individual states for the purpose of trade. They did not think it would lead to a single currency, a European parlimemt, an EU flag, and EU Anthem. The EU has been taking for itself the trappings of a state. A United States of Europe. The people never signed on to this and what happened yesterday was a rejection.

    Don’t think for one minute these frustrations don’t exist in other parts of the EU. We have a trade deficit with the EU of some £67 billon while having a trade surplus with the rest of the world of £31billon. We Inport far more from Europe than we sell to them. If they want to play dirty, it will also hurt than as well. We buy a million German cars every year. Does Merkel really want to make a point against us by hurting German car workers? She’s up for election next year, and Germans are non too pleased with all the people flooding in from the Middle East. She will be struggling to get re elected herself. So will the French President. Time for cooler heads, and a return to nation states with their own currencies and law makers held accountable by their own people.

  17. vidimi

    i had been supporting a brexit from the outside, primarily on the assumption that it would sink the TTIP, but the prognosis that the pound could sink to $1.05 or, worse, that the UK becomes the next Iceland has my head spinning. I have most of my savings in GBP and they are already getting decimated.

  18. Jim A

    My suspicion is that this will mean the end of the city as the financial centre for Europe. And this has the cosmopolitan elites in shock and disbelief. But for most of those who voted leave that is going to elicit a big “ho hum” because the derived little obvious benefit from it. When prosperity is not shared with the minority, it is often not lasting.

  19. Mark John

    The Neo-Liberal elite loves to use the notion of “identity justice” to divide those who would fight together for “economic justice”. As a member of a minority, I notice very well that my government is far more willing to fight for my civil rights than my economic rights.

    The English people were threatened and bullied–the line went that if one is for “leave” he is a xenophobe, etc. and financial catastrophe will rain on everyone’s heads. The English people still have their starch!! Unlike the Greeks, they stood up to the Neo-Liberal establishment and chose to go it on their own.

    I say bravo!! What a working class hero can do!!

  20. Brooklin Bridge

    In the meantime [before Willem Buiter’s warning(s) come into play], there are immediate consequences and risks. The Transatlantic Trade and Investment Partnership is probably dead.

    One of the (modern?) irony’s seems to be that odious laws, agreements, positions or even currencies can generate highly negative consequences if disturbed/thwarted/dismantled without careful consideration. The possible use of a national currency in Greece, replacing the Euro, to avoid being savaged by the Troika draconian harsh terms in the event of a default and/or Grexit comes to mind.

    Would loss of the TTIP trade agreement be in this category (an odious agreement with provisional benefits) for the average person in the UK or is this one of the aspects of Brexit, killing the TTIP, that is simply a benefit from stem to stern – a pure unalloyed sigh of relief (except for the .01% – meaning a doubly GREAT benefit for the rest of us)?

    1. sid_finster

      Kicking heroin also leads to a lot of short term pain and requires longer-term lifestyle changes to make it work.

      Doesn’t mean that I advocate remaining a junkie.

  21. econoclasm

    I’m afraid this reading is backwards. If Brexit was a vote against austerity, why were young people (the worst-affected by austerity) generally pro-remain? Why were Scotland and Northern Ireland pro-remain?

    The referendum was not a debate about austerity — it was a huge diversion from such a debate. Instead of the 99% vs the 1%, it’s now the 48% vs the 52%. Divide-and-rule continues apace.

    1. moneta

      Actually austerity would push the young to prefer open borders giving them the sense they have options.

    2. Sally

      It was certainly more complex than right vs left. Conservative politicains stood on the same platforms as labour politicians for both leave and remain. Young people were more pro becuase of things like free movement and travel. Maybe also they are not so worried about immigration.

      However a better way of looking at this is rather establishmemt vs the people outside the wealthy cosmopolitan cities like London. That’s not to say their were not elites on both sides. (One reason why the remains were not able to rigg the vote In my opinion was because there were powerful people on both sides.) For middle class people in expensive houses inLondon Europe is not a threat, cheap holidays, free movement and no need to worry about poor immigrants moving into their streets. They send their children to expensive private schools, and have company private health care. They don’t need to worry about state funded services which can’t cope with all the new people coming in. Also these people like cheap Polish plumbers, and Latvian nannys, and Romanian cleaners all working for low wages. It never seem to occur to them that this might piss of British born workers over time.

      But people do like to feel a sense of nationhood, and that they have an ability to kick out their politicians. Many people on the far right and the far left United behind democracy above economics. I don’t think most Americans realise how much law making power has been taken to the EU. No American politician would stand for it. Many Americans don’t even like the UN.

    3. Yves Smith Post author

      Look at the map. London and environs went for Remain. There are many young people who work in banking or for businesses that depend on the health of the City to prosper.

      And this isn’t 1% v. 99%. Austerity pits the capitalists and those whose fates are tied to the capitalists v. other workers. That again means the City, its many service providers (attorneys, accountants, retailers who serve their employees). The financial services industry so dominates the British economy that a big chunk of the population sees its fate tied up with that of the banks.

      The FT concurs:

      Mr Cameron had gambled his political future on the referendum but his hopes of securing a Remain vote evaporated as working-class voters turned out in huge numbers to deliver a stunning rebuke to the establishment and the status quo.

      The Scottish motivations are different. Edinburgh is a financial center. I hope Scots will pipe up, but I would assume another motivation is the same reason they voted against independence: they think Scotland is better off part of something bigger.

      1. econoclasm

        working-class voters turned out in huge numbers to deliver a stunning rebuke to the establishment and the status quo

        yes: on immigration. “Establishment” and “status quo” represents a whole complex of issues, not just our preferred issues of austerity, financialization and so forth. A move away from the establishment can be to the left or to the right. In this case, it’s a move to the right. You can interpret it how you want…. but most people are interpreting this in terms of anti-immigration, not anti-austerity.

        Look at the map in conjunction with the age breakdown

        Not all young people in Greater London work in finance. Plus, other cities like Liverpool voted remain.

        Regarding austerity, it’s unfortunately a fact that many services de-funded under UK government austerity now depend upon EU funds…

      2. Sally

        I would take with a large pinch of salt what the FT says. They peddle the Roschild propaganda of open boarders, pooled sovereignty with the long term goal of one world govt. They were wrong about the banking crises. They are constantly shrilling for paper fiat against gold.

        I find it slightly odd they are more worried about middle class young people not being able to travel in Europe, and yet have no concern about 50% unemployment levels of young people in Greece and Spain and Italy. All caused by the single currency disaster which they back.

        1. Yves Smith Post author

          No, I covered the runup to the financial crisis in great detail. The FT was far and away the best paper and the only one to consistently convey that credit spreads were far too tight and that there was a “wall of liquidity” sweeping through all asset classes. Gillian Tett as capital markets reporter was the only person to discern, very very early, how CDOs created spectacularly dangerous leverage. John Authers called the end of a 25 year credit cycle correctly, in May 2007. Willem Buiter described the cognitive capture of central bankers and also wrote about how the Fed was abusing its authority in acting as a quasi-fiscal agent of Treasury. Martin Wolf also did some excellent pieces in the runup to the crisis.

          The paper has become a neoliberal cheerleader in recent years. I can’t peg the exact time but I’d hazard around 2011.

          1. John k

            The comment is that the paper is neo-lib now.
            As are all of them, which is why I discount some of their moaning now as ranting from enraged bankers.
            Assuming sceptics are in charge of negotiations:
            They will be successful.
            There will be no retribution from Europe, they are too dependent on their trade surplus with Britain.
            The Brit financial sector will decline somewhat, as it should.
            Ditto London housing, affected by the pound.
            The pound will somewhat recover.
            Very good for marine Le pen. French will get their referendum, and will vote to leave… Spain will do whatever France does, and Italy will follow both.
            Dollar is only safe haven, and treasuries (still) pay interest! Get em before that changes! Imo Europeans will find them irrisistable beginning about now.
            High dollar takes us to recession, maybe already here. Worldwide? Certainly Europe, imagine getting the omelet back into their shells. Messy.
            World needs fiscal stimulus everywhere except China. Shill would tighten with grand bargain… Might need recession to keep shill out of office?

      3. Uahsenaa

        Scots will always have their own reasons for doing things, if my own family is any indication. The one major difference between Scotland and England is that immigration is not a massive bogeyman there the way it is in England. In fact, the SNP have for the past several years run on a platform of MORE immigration and argue they have been stifled in those efforts by Westminster. If you decouple the immigration question from class anxieties, Farage’s dog whistles fall on ears remarkably deaf to them. The Scots have rightly assessed that Westminster is responsible for zero hour contracts, austerity budgets, and bedroom taxes, not the EU, so they are less likely to direct their rage without. In fact, if the 2015 election is any indication, they are far more likely to direct it within.

        And Scotland voted against Independence in large part because Westminster promised them near total devolution in exchange for staying in the Union, and the Tories thereafter proceeded to renege on all those promises, another underlying motivation for punishing Labour in the 2015 election.

      4. AJ

        So, Yves I don’t understand your position on this. NC does a great job of asking questions about why banks were bailed out and why no one in the financial realm was held responsible for the 2008 collapse. But, now we have brexit and you’re all sad faced and saying…”but the banks….the financial sector…”

        1. Yves Smith Post author

          No I am not sad faced. This is your projection. But I see nothing to cheer about.

          While the bankers in London will probably take a hit, the struggling folks in the north and west will as well, and they are less well able to bear a reduction in their living standards. And depending on how in-fighitng among the Conservatives plays out, the winners could be the faction that saw Brexit as as way of getting rid of those pesky EU rules that protect workers. The need for the UK to be newly competitive would serve as the excuse for more squeezing of labor.

      5. sid_finster

        I think Scotland went remain because better the devil who lives down the way than the devil who is your next door neighbor.

      6. Robert

        London and environs voted to Remain. I think you just transposed the words Remain/Leave otherwise your comment makes no sense. Thanks for the great coverage!

    4. Kulantan

      I’m a young person who grew up in Britain and my facebook feed (ugh) is full of people rallying against the racism of the Leavers. I have a suspicion that for many young people who went to ethnically diverse schools and have grown up with the EU found the Leave scare campaign too openly racist to listen to the sovereignty arguments.

      Add to that everyone agreeing that there would be immediate economic pain. those who are already worst off may not have been willing to wait for jam tomorrow.

  22. Richard

    Mericuns who vote, will do the same in November by electing Trump and Hillary will be the major attraction-

  23. ProNewerDeal

    It feels for the first time in perhaps a decade+ an election outcome was against the desire of the Power Elite/PTB/Davos crowd.

    The PTB won in elections like Scotland 2014 & Sanders 2016 Primary, with the latter having much evidence of voter suppression & vote rigging. It seemed that at least in US PTB elections, it may be open to planned blatant rigging of the e-voting machines.

    With 0bama 2008, it initially seemed we 99%ers “won” in that 0bama was promising Public Option health insurance & at least mildly anti-war, but it turns out 0bama Regan Jr was a neoliberal PTB tool.

    Democratic socialist Syriza became the ruling party in Greece, running on anti-austerity policies. Syriza’s leader Tsipiras was a 42 yr old Civil Engineer, I was hopeful that a younger engineer might make a more earnest & effective public servant than the prototypical older lawyer politician type. In 2015, Greece passed an anti-austerity referendum. Perhaps Tsipiras himself was another 0bama PTB tool, or perhaps Tsipiras was coerced by Eurogarch PTB, but Tsipiras contradicted the referendum & implemented the Eurogarch austerity.

    Given this history, it feels good for one election to go against the PTB wishes. I write this noting that on the specific issue of Brexit is complex, & perhaps if I were a British citizen I would’ve been Undecided, needing to read more on the issue.

    BTW, Kudos to Britain for apparently having an authentic non-rigged voting process!

    1. vidimi

      the reason for this is that the elite was split. a lot of the old money wanted brexit to continue their heinous agenda uninhibited. this is not a victory for democratic britain, but i hope the rest of the EU will benefit from not having britain in.

    1. Clive

      Become? Become??!

      It was always a garbage bin. And for that I, for one, am eternally grateful. I was getting a little tired of all those pristine shiny gleaming ee-z-kleen outlets serving up polished pure saccharine for the mind. Please do remember that Fox News and the Daily Mail — oh, and yes, The Guardian too — are only a click away.

      1. Papa Bear

        As a conservative/libertarian (*ducks head*) I find this bin very much to my liking. There’s true thought happening here instead of the useless regurgitation of talking points in the mainstream blogs. I may not agree with everything, but I respect the logic and solid arguments. It’s also nice to see concerns about the middle class that aren’t just leftist patting of useful idiots heads (while the masters suck at the trough of crony capitalists).

    2. ThePanzer

      If only we could have the high quality comments discussions from say Zero Hedge. Or perhaps the respect for political diversity in the democratic party as Balloon Juice. Or the heated and healthy comments sections over at Digby…oh wait, never mind on that last one.

      1. Arizona Slim

        Digby doesn’t allow comments via computer. But you can comment via your smartphone.

  24. KurtisMayfield

    I understand that the UKIP is just more neoliberalism, but what did you expect the people to do? No one was told that globalism would be great for ~20% of you, and the rest will have to now compete with billions and deal with less of a cut of the GDP that you had before. People are waking up to that fact and are looking for some political outlet to scream their discontent. Brexit gave them that.

    Now comes the punishment. The people must learn that “democracy” was never in the plans for them. The economic beatings will commence.

  25. Starveling

    Good for the UK. I would have voted leave if I were in the UK. Does 30 still count as young in polling or no?

  26. Nemo

    This is an interesting and informative experiment. Brexit voters appear to have adopted a wrecking ball strategy. They are rejecting the status quo, without having a clearly defined alternative. They are just mad as hell, they’re not going to take it anymore, and they are willing to risk chaos, and whatever comes of it, rather than tolerate the way things are now. The perception appears to be that the system is broken – it cannot be fixed – it must be abandoned, and they must start from a new place. This is similar, in some ways, to the attitude of some Trump supporters on this site. I am anxious to see what comes of it.

  27. McWatt

    Some are talking about Boris Johnson being the next Prime Minister. I wonder what
    Max Keiser would say to that?

  28. NotTimothyGeithner

    Bye bye David. Hahaha. Sure Boric could win, but David resigning is one positive.

  29. Scott

    One thing that struck me about the vote was the oddity of the Scottish vote. My understanding is that a large part of the success of the SNP was a response to the neoliberal policies emanating from London and Labour’s embrace of such views. In many ways, Brexit always seemed to be a referendum on neoliberalism and the financialization of the economy, high immigration and hollowing of the middle and working classes. Yet the SNP seems to have embraced these policies as a way of obtaining their desired ends

    1. PlutoniumKun

      Nothing odd about it. The notion that the vote was against neo liberalism is a fantasy. It was overwhelmingly the right wing who supported it. Scotland, like most smaller nations has always seen the EU as a progressive alternative to rule from corrupt colonial capitals.

      1. paul

        My vote for leave was certainly motivated by that. Being seen as something is not the same as being something, the eu is an antidemocratic knocking shop that redistributes a few sweeties on a patronage basis.
        Anything that gives it a kick in the nuts is ok by me.

      2. Uahsenaa

        I already noted this above, but I’ll restate. The politics on the ground in Scotland are very different.

        1) Immigration – sentiment on the ground in S is PRO immigration, whereas in E it’s the other way around.
        2) Devolution – Westminster promised the sun and the moon for a No vote and promptly reneged on its promise.
        3) re: Right vs. Left – except the Scots took out their anger over the Indep. Ref. fallout on Labour, not the Tories. It’s not a right/left issue there (since the SNP is, in many ways, well to the left of Labour) so much as a matter of centralized vs. decentralized governance.

        Also, the SNP’s post Indep. Ref. plans specifically stated that they would try to remain in the EU. That hasn’t changed, and at that time it had more to do with the immediate economic difficulties an independent Scotland would face (i.e. going with an established monetary/market system vs. creating one from scratch). I would add, though, that they also wanted to stick with sterling, which would seem to go against the very idea of independence…

          1. paul

            they have one westminster mp, who as secretary of state for scotland, can pretty much veto any substantial changes the snp might want to make.
            proportional representation has given them 31 seats at holyrood (out of 123) with 20% of the vote, thought they only have 7 directly elected members.
            Though to watch the press and tv, you would be forgiven for thinking they were the largest, most wonderful party on earth.

          2. Uahsenaa

            In Westminster, yes, but there are more Tories in Holyrood than Labour party members, though, admittedly, that has more to do with how the SNP draws from former Labour constituencies far more than Conservative.

            So, no. You can never underestimate the Scottish tendency toward Calvinist self-loathing.

        1. Scott

          The centralization versus decentralization struck me as odd as well, wouldn’t Scotland leaving the UK for the EU just substitute London for Brussels. Would the EU allow them to have the Sterling but be in the EU or would they have to adopt the Euro, which would put them at the whims of Frankfort.

          1. Uahsenaa

            There were a number of things about the SNP’s post referendum plans that were completely bonkers, a self-contradictory and skeletal plan for the monetary system being among them. Also, the price of oil has tanked since then, so their primary means for funding everything with another country’s currency would have evaporated.

            But all in all, what the SNP were offering seemed better than a mixed bag, at least to my eyes: local control, a leadership well to the left of either the Tories or Labour down south, nuclear disarmament, a move away from consumption of fossil fuels (though they wanted to continue to profit from it–another contradiction), investment in education and the workforce, increased immigration, and other goodies on the progressive wishlist. If they had got the economics right, they might have had a more compelling case, yet that always seemed to be an afterthought.

            1. Arizona Slim

              The skeletal monetary system plan baffled me. Especially since I’m of Scottish descent. If there’s one thing we’re good at, it’s money.

      3. Yves Smith Post author

        This chart show how the voters voted, and immigration was not the top issue for either Labor or Conservative voters who backed Leave. It was about democratic control:

        1. EmilianoZ

          Sure, like the Southerners fought for States’ rights rather than the other thing.

        2. econoclasm

          Thanks for taking the time to reply.

          It’s an interesting chart, which should lead both of us to revise our views a bit.
          The chart does /not/ support your contention that Brexit was a referendum on austerity.

          The chart suggests rather that the main factor was a scapegoating of “bureaucrats in Brussels” for all the UK’s many problems. OK, if this were a less powerful country we were talking about, you could read it as a plucky stand for self-determination, in the nice sense. But this is the UK we’re talking about, not one of its beaten-down former colonial subjects. You can say “self-determination” if you want. But know that this is a euphemism for nationalism… and that, as in other countries in Europe, nationalism is not generally progressive (to put it euphemistically again) …. As the chart shows, xenophobia is following closely on the heels of that nationalism.

          “The principle that decisions about the UK should be taken in the UK” has been the standard rhetoric of the Eurosceptic right-wing of the Tory party for decades. Banging on about the “bureaucrats in Brussels”. It is rather sad that these old gits are now in the driving seat on UK politics. Here is the age breakdown of the Brexit vote:

          Age breakdown on Brexit polls tells underlying story. Older generation voted for a future the younger don't want:— Murtaza Hussain (@MazMHussain) June 24, 2016

  30. econoclasm

    Unfortunately, it wasn’t a referendum on neoliberalism and financialization. It was a referendum on immigration.

    The leaderships of both camps are pro-neoliberalism and pro-financialization. Those issues barely figured in the campaign literature or in the debates inside and outside the media.

    Read Sally’s comment above:
    The argument for Brexit is based around migration and national identity; whereas neoliberalism/financialization are not mentioned!

    1. Yves Smith Post author

      If you read the arguments made in the British press for and against Brexit, and what I was told of the televised debates, the Remain pitch was explicitly neoliberal: Leave and the market gods will throw you in a pit of brimstone. While UKIP did play heavily on immigration fears, there were many writers pumping for Brexit who 1. Said the Remain campaign was exaggerating the downside and 2. England had become too much of a subject nation to the EU. Even as an American not paying close attention to those arguments, I can cite factoids (60% of UK law is actually from Brussels and how much the UK sends every week to the EU). I was told the Leave debaters made a forceful pitch for greater self-determination.

      1. econoclasm

        Yes, the Cameron/Blairite Remain pitch was neoliberal. There was also a minority Remain pitch that was anti-austerity (Corbyn; Caroline Lucas of the Green Party).

        The main Leave pitch was UKIP, anti-immigration. The was also a minority Leave pitch that was anti-Troika, pro-Greece etc.

        Our disagreement is regarding whether or not it is a good idea, strategically, to join a /nationalist/ coalition based on economic policy concerns.

        1. econoclasm

          See also the Syriza/ANEL coalition in Greece. ANEL (who have links to the far right) have been enjoying access to the machinery of government (Kammenos is head of the Defense Ministry!)

        2. econoclasm

          The EU referendum choice was /very/ similar to a Trump-v-Hillary decision. Bigotry-versus-Neoliberalism.

          Now, if I were American, I guess I would vote for Jill Stein. But there is no 3rd option in a referendum.

          The difficulty with the EU referendum (just as with a potential Trump-vs-Hillary) is that you can read it either as a referendum for-or-against bigotry, OR as a referendum for-or-against neoliberalism.

          Infuriatingly, you don’t get an option to vote against bigotry AND against neoliberalism simultaneously. You have to pick one. That’s why this has been such a frustrating time in UK politics these last few months…. and elsewhere too (seeing the Sanders option being taken away).

        3. Yves Smith Post author

          I’m not taking a position on desirability. That is for the British to decide, as they have. Americans have no business telling the UK what to do.

          The costs of exit will be high. But it really results in more democratic control, many will still see it as the right tradeoff. We forget that people died to win the freedoms we now take for granted.

          1. John k

            But more than that…
            Near term pain of leaving now, but do you really think the EU has a long term future even if Britain stayed? If not, the cost of leaving now is almost certainly less than britain’s cost would be in the eventual breakup.
            It’s not even clear that Brexit advances EU breakup… Le pen might have managed on her own next year anyway. Now, of course, I would bet 2017 is the beginning of the end of an experiment gone terribly wrong.

      2. TimOfEngland

        Correct Yves. I wasn’t about immigration per se. You could say it was about control of immigration. But primarily self determination/preservation.

      3. michael tregaron


        Throughout the campaign the Neoliberal mantra was menacingly, ‘vote Remain or the puppy gets it!’

        Today, I’m pleased to advise that the puppy is alive and well.

  31. oh

    I wonder if there’s supposed to be links at the “here” references?:

    With the pound sterling dropping like a stone against most other currencies and credit default swap rates on long-term UK sovereign debt beginning to edge up, this is a good time to revisit a suggestion I made earlier on a number of occasions (e.g. here, here and here), that there is a non-trivial risk of the UK becoming the next Iceland.

    1. Which is worse - bankers or terrorists

      ” that there is a non-trivial risk of the UK becoming the next Iceland.”

      I am sort of interested in how this potentially intersects with Deutsche Bank’s declining fortunes. Talk about bad friggin’ timing.

  32. David

    FWIW Hollande was speaking this morning, sounding very conciliatory and statesmanlike. He effectively said that there were so many bilateral interests linking the UK and France, especially on security issues, that this vote would not change very much. I think this is true, and it’s also true of Germany. The European political elites have every interest in calming things to prevent their own anti-European parties making too much capital. This may be an occasion where Brussels is quietly taken to one side and told to shut up.

  33. Roger Smith

    Can anyone explain the pearl clutching about Cameron’s resignation? My brief impression of this conservative leader is that he was just that. A status quo conservative.

    Also, will this allow for public elections of a new PM?

    1. Yves Smith Post author

      Quite a few of the pro-Leave MPs don’t want Boris Johnson, the logical candidate, to be the new party leader. Analogous to the upset about Trump among the Republican establishment.

      1. PlutoniumKun

        I think the reason pro-Leave MP’s don’t want Boris Johnson is because they realise he is an unprincipled narcissist. He’s already said there is ‘no hurry’ to leave. Its pretty obvious that he thinks he can have his cake and eat it – take over as PM, and then try to negotiate some sort of deal with Europe (probably some sort of ‘stay in everything but name’ deal) that will make him a hero of the City and the right wing. He doesn’t care if he annoys either the Leave campaign or the establishment.

      2. m-ga

        The pro-remain Conservatives (i.e. the majority of the Conservatives) don’t want Johnson. Maybe some of the pro-leave Conservatives don’t want him either.

        In fact, no-one is likely to want Johnson. The EU exit negotiations will be complex, and Johnson is ill-equipped to handle them. Gove is unlikely to be much better.

        Most talk I’ve seen proposes Theresa May as the most likely candidate. She was on the Remain side, but kept a very low profile during the campaign.

    2. m-ga

      It’s unlikely. Cameron ensured that nothing will happen for 3-4 months by resigning this morning. If Cameron hadn’t resigned, he faced a vote of no confidence, and this would have been likely to trigger a general election.

      The next PM will be decided in the Conservative party leadership contest, and will continue until 2020. This is ensured by the fixed term parliament act which Cameron introduced in (IIRC) 2011.

      As things are now, the only way there could be a general election is if two thirds of parliament call for one. There would normally be no chance of that happening (the Conservatives enjoy a very slender majority). However, if Johnson or Gove are elected as new Conservative leader, it’s not impossible. If it does happen, it would follow the appointment of Johnson or Gove in September/October.

      1. William C

        I think it would require the Conservatives to pass a vote of no confidence in themselves which would be both amusing and apt.

        They might fail if they opposition voted on the other side.

        You could not make this stuff up.

  34. EoinW

    The Eagles said it best: “you can check out any time you like but you can never leave.”

    1. Roger Smith

      Not sure why I cannot edit but I’d also like to add:

      “They stab it with their Steely knives but the just can’t kill the beast.”

      1. tegnost

        I believe that if you try to edit, but another comment has been posted, that you can no longer edit, so if you need to edit, do it as soon as possible…

  35. OIFVet

    Well, this didn’t take long. After the Brexit vote, the new meme is that ‘leave’ voters are stupid, uninformed hicks. After Brexit, U.K. Residents Google ‘What Is The EU?’

    Hours after the United Kingdom voted to leave the European Union, its residents wondered, what is the EU, anyway?

    Yep, Brits must be stupid because Google Trends data said so. And there is no way Google manipulates anything…

    1. Brooklin Bridge

      The title sort of captures it; The Crisis Begins… What ever good comes out, it is gong to be messy!

    2. Carolinian

      Well what else can they do but sneer as they mount the tumbrels?

      You do have to wonder how many more shocks it will take before the Masters of the Universe finally get the message–the message being: they are the many, you are the few.

  36. EoinW

    The Northern Ireland comments above have puzzled me. Unless the Anglo-Irish have changed, their political philosophy continues to be Unionism – with the British Empire. Hell will freeze over before they stand for union with Dublin. After all, who won the Battle of the Boyne? They’ll call out the UVF and the Falls Road will bleed red long before there is a united Ireland.

    The EU is a non-issue in the province. It’s all tribal and the Anglo-Irish maintaining their political dominance over the six counties is all that matters. I’d say the remain vote in Northern Ireland was simply the Protestant majority supporting the status quo. Which is all they’ve ever done.

    Unless the Anglo-Irish have changed!!! Laughing at my own comment. People whose existence is so tied to their past never change. If the UK does break up NI will go independent.

    1. PlutoniumKun

      Its obvious from their public comments that the mainstream Unionist parties were very torn and confused about which way to go. They are natural allies of the right wing of the Tory party and UKIPpers. But they also know that there is a very high chance of Scotland leaving the UK, effectively breaking the UK up. And since many Presbyterian Northerners feel more affinity to Scotland than England, that could end up any way – either as a sort of weird rump of England, independent (there has always been a very small but significant element of Loyalism which has seen independence as a fallback), or even some sort of weird semi-independent link up with Scotland.

      The fact that the Unionist parties were calling for a Remain vote, but that it is apparent from the vote that many of their constituents voted Brexit, that they are very split on the issue.

  37. Katharine

    A lower standard of living is something a lot of people already developed in the past eight years. That’s surely part of the reason this vote went the way it did. Yes, it could get worse, but if people choose this could become an opportunity to think about what constitutes a good standard of living. Constantly buying all the latest kitschy crappy stuff? Really? Or having a stable base, a smaller carbon footprint, simpler better food, time with family and friends, deepening sense of connection…? Of course that’s not an easy reality to create, but the establishment shows no interest in even trying. It is the utter indifference of most so-called leaders to the vast majority of their people that elicits repudiation of their leadership.

  38. Which is worse - bankers or terrorists

    Yves Smith, once again btw, great job covering all of this.

    1. Brooklin Bridge

      When I make a meal and all I can hear are people eating, I know it was a success – definitely the case here with everyone busy commenting, but you are absolutely spot on and it IS worth pointing out.

      It’s a classic well considered careful but remarkably sensitive to nuances Yves Smith description of a remarkable event.

  39. ira

    History´s never over, sometimes it just takes long naps:

    “England should pay the price of years of imperialism and committing crimes against humanity. The people of Ireland, Scotland and others have the right to bring themselves out of the tyrannical rule of the [British] monarchy, the so-called Great Britain,”

    — Deputy chief of staff of Iran’s armed forces, Massoud Jazayeri

  40. Dave

    “Cameron resigns”

    Not good enough, I want to see him hanging under a bridge like the BCCC guy.

    1. JustAnObserver

      Correction: I think you mean the Banco Ambrosiano guy Roberto Calvi. Main Banco Ambrosiano shareholder = The Vatican Bank. So much murk and corruption around this story; The Clinton Foundation still has a lot to learn.

  41. Take the Fork

    “Benjamin was the only animal who did not side with either faction. He refused to believe either that food would become more plentiful or that the windmill would save work. Windmill or no windmill, he said, life would go on as it had always gone on– that is, badly.”

  42. craazyboy

    First, assume a solvent banking system.

    London. hahahahahaha

    But anywho, glad to see they still allow Brits to vote.

    1. RBHoughton

      We’d have to call back our mercenaries from Middle East and North Africa before the City could intervene with any prospect of success – payment in paper of course – but totally agree.

      It has been a shock.

      There has been a consistent process of elevating the merchants and depressing democracy until I was beguiled into a certainty there would be nothing else …… and then this!

  43. William C

    The problem I see now is that the Brexiteers managed to put together a coaltion of those who want more ‘neo-liberalism’ ( for whom the EU is an obstacle) and those who want less (which they thought voting for Brexit will deliver). As a basis for ongoing government this is, shall we say, less than ideal.

    Someone I think quite aptly compared what has happened to the execution of Charles I in 1649. Having united in opposition to the Crown the Parliamentarians fell out among themselves and ultimately the solution was of course to invite Charles II to take over. It could be that matters play themselves out in a similar fashion but it will probably be a bumpy ride and take a long time. Be careful what you wish for.

    Apart from the possibility of Scotland and Northern Ireland spinning off, the real tragedy for the UK, I think, is the divide between the young and the old, as the old appear to have voted to deprive the young of the future the young wanted for themselves. And the old will be looking to the young to look after them when they need help. Hardly a recipe for intergenerational harmony.

    So basically, you have a divided, unhappy country, in the UK, which may well disintegrate and really has no idea where it is going.

  44. Take the Fork

    Meanwhile, back at the ranch…

    The rhetoric coming from Trump and that coming from the HRC media complex is strikingly different. Trump is trying to strike a Churchillian tone. Meanwhile, HRC deigns to signal her “respect” for another country’s decision, while the Occupied Media seems to be in Let’s-Change-The-Subject mode.

    I can’t help but consider how the scare-and-smear tactics employed by the Remainders compares with the Occupied Media’s Trump=Auschwitz theme. Ditto with the Leaver’s unabashed appeal to nationalism and Trump’s America First.

    HRC is essentially running a defensive campaign – which is almost necessary when she’s campaigning for what is essentially a third Obama term. Her pitch is basically fear of the unknown.

    Trump, in essence, offers anger, pride, hope and change (two deadly sins, one virtue, plus boilerplate).

    I’d say Clinton has the tougher sell job.

    Does the Occupied Media actually believe that spending the next 136 days bleating Trump-is-Hitler while issuing poll after fraudulent poll will work? The implication, of course, is that his supporters are Nazis. I just can’t see this as a viable way to win, but who know?

  45. xenomusikos

    I’m a long-time admirer of this site but the tone of this peice is wildly wrong. It appears to be attempting to shoe-horn the outcome into the idea that this was some kind of leftist popular rejection of neo-liberalism that is inacurrate in so many ways it’s difficult to know where to start.

    Where the effect of free movement of labour on wage suppresion has been greatest (in the cities) the voters rejected the Brexit argument. The Leave side ran an openly xenophobic campaign but areas with the highest net migration levels voted overwhelmingly to remain and those with the least net migration (some with zero or -ve migration) voted overwhelmingly to leave. This rejection of Brexit included almost every major city where net miration is highest. It should be noted that access to the EEA (the single market) a la Norway and Switzerland requires total acceptance of free movement of people and capital. Norway’s net migration is double the UK’s. Several prominent Brexit campaigners have already admitted the outcome will have no effect on migration at all.

    The idea that the voters made a considered judgment to remove the influence of faceless Brussels bureaucrats ruining their lives doesn’t work either. In the UK almost all monies are redistributed from central funds so any pain people are feeling due to lack of government investment locally is because of central government. The EU plays no part in this process. If the school is crumbling or social housing isn’t being built this has nothing to do with the EU. Conversely the EU redistributes some of the fee the UK pays for membership directly to deprived areas in the UK. Leaving aside the financial, the infuence of EU activity on most people in the UK would be judged positive on almost any analysis, from binding workers’ rights to cleaner environments to consumer protections. The right-wing press demonises the EU (and Europeans) but that’s just their MO. The idea that the EU is a malevolent neo-liberal force compared to the usual right-wing Conservative government the UK has had to endure since membership is laughable.

    This was a brutal shameless campaign by the UK’s VERY OWN neo-liberals who co-opted some left-leaning useful idiots along the way. The few campaigners from the left were spouting BS about “taking back control..” whilst the campaign proper played the all too expected xenophobe card as a means to label centerists as part of the problem. The poor haven’t thrown off any shakles and will of course bear the brunt of the shakeout. Bait and switch at it’s finest.

    1. Yves Smith Post author

      I never said it was a considered repudiation of neoliberalism. That is your projection.

      London has prospered while the rest of the country has been left behind. Thatcherite policies have led to greater inequality and greater job instability. People are insecure and upset about the pace of change. The immigration scare-mongering played into that, very specifically with some people (as in they don’t want more immigrants) but you are acting as if all the people see “immigranats” as Muslim, when it’s more complex that that.

      Put it another way: the people I know who thought the undecideds would vote overwhelmingly for Remain assumed that, as with the Scottish independence vote, when they got to the voting booth, they’d vote for the status quo. They didn’t. That is a huge repudiation.

      And to your point about who calls the shots (as in what is really EU policy as opposed to UK policy) actually supports my contention. It was never the intent, but for enough voters, this vote became about “is this country going in the direction I think it should go and do I have a voice?” I can’t prove it, but I believe what was called the “small Englander” vote was a desire to roll the clock back a long way (not to the days of the Empire, everyone knows that is gone). That means preferring an England that was poorer but where the impact of neoliberalism was less far along than now. This was a gut vote, a vote against what the UK has become and the trajectory it is on (and yes, that also means that upset about the management of the post-crisis period was projected onto this vote).

      For instance, I got this e-mail today:

      I spoke to the Northern Irish foreman of the workers doing some home renovation in London. A lovely, cheerful, hard-working guy, his mood turned suddenly rancorous when discussing the work crew on a similar project next door, all Polish workers. At that point, I told my wife to prepare for Brexit.

      In other words, even though most people in London are in the financial services industry, or see their fate as tied to it and therefore voted Remain, your assumption that people who were affected by competition from immigrants don’t get is questionable. I’m told the reason Corbyn was so lackluster in his campaign for Remain was that (among other things) he recognized that this wasn’t an easy sell to a lot of his party’s voters.

      I got another e-mail along those lines:

      Polish migrant worker factor much bigger than anyone acknowledges. Muslims much smaller factor—most Muslims in Britain are from the Empire/South Asia anyway, not refugees from MENA wars.

      1. Robert Dudek

        This begs the question, how much of the anti-immigrant sentiment is racism. As some have pointed out, most EU immigrants to Britain are Caucasian, whereas there is massive “non-Cauacasian” immigration from the former colonies in South Asia. If is it mostly racism, then the nativist Brits have nothing to worry about: all those Poles will either go home, or raise families in Britain and their grandchildren will be as British as Boris Johnson.

        1. OIFVet

          We Slavs might as well be black as far as some anglo-saxons are concerned. While I don’t completely discount the racist component of the ‘leave’ campaign, the EU migrant workers ars indeed a large factor in the ‘leave’ vote. They have been used to depress wages (which is the charitable way to say that great many Eastern Europeans are being exploited in their desperation), and this is particularly the case in the building trades and in agriculture. Many of my Bulgarian classmates have made it to GB, and they view their willingness to work the dirty jobs for below subsistence pay as some perverse badge of honor, while mocking Brit unwillingness to work for such pay. Just like Latinos in the US, these Bulgarians can only work for such low wages (particularly in London) by having 8-12 people share a small flat. It boggles my mind to find the honor in living this way while being exploited, but it certainly helps me to understand while working class Brits are feeling shafted

  46. Bunk McNulty

    From Hilary Mantel’s “Bring Up The Bodies:”

    “It is better not to try people, not to force them to desperation. Make them prosper; out of superfluity, they will be generous. Full bellies breed gentle manners. The pinch of famine makes monsters.”

    The London Elite took greed to levels rarely seen. This is their reward.

  47. grayslady

    I have great confidence in the Brits to pull this off successfully–mainly because the Brits do have a distinct national character, just as most other European countries have distinct national characters. British manufacturing is superb, when it is allowed to flourish. There is an excellent climate for agriculture. There is no reason not to become more self-sufficient–just as we, in the U.S., should become more self-sufficient. That doesn’t mean trade ceases. Countries that are islands, and smaller countries generally, trade out of necessity. The Brits and the Dutch have always been relentless traders, and I don’t expect that to change. The real question is whether the British government will develop a policy to fund endeavors that favor the British economy in the long term instead of favoring casino finance.

    1. Sally

      As a proud Brit can I just say thank you for that? I voted for BREXIT and I did so because there are about 200 countrys in the world who are not in the EU. Iceland, Norway, New Zealand, Australia, South Korea, Singapore. Most with smaller population than us. They survive. We have conections with many country’s in the world through our old Empire. India, Africa, New Zealand, Canada etc etc. We can’t negotiate a trade deal with any of them because we have to do it thought the EU. Yet many of these country’s speak English and have legal systems nearer are own.

      I don’t think it will all be plain sailing, but we will have the right to make our own laws and boot oit the politicians if we don’t like them. Is this perfect? No. There are no perfect systems. I also think some EU counties will follows out the trap door as well. You many one day see a confederation of nation states in some form of free trade area, but with their own govts and laws. That is what most Brits of my parents generation thought they were signing up to 45 years ago.

  48. David

    I wonder if we haven’t reached a tipping point of some kind, where the fear-based politics of the last generation (“the other lot are worse”) no longer work as well. Who knows, politicians might actually have to offer positive reasons for voting for them. (“we will do X….”).

  49. Gutyu

    Would have liked if NC covered here the fact that Brexit’s going to be handled by a conservative government, who has been destroying the UK left right and centre since they came into power. This is just another aspect of it. What’s the point of this referendum if people end up from the hands of faceless bureaucrats of the EU to the ruthless elitism of the tory government? IMO, they need to vote the tories out and bring a government that’s on the people’s side.

  50. RabidGandhi

    In even bigger global financial news, I (finally) added “Brexit” to my spellchecker. The Office of Tony Blair has yet to comment on this earthshattering news.

  51. FortyYearsInThe UniversitySystem

    I haven’t read through the comments yet, but right off the top I have to say that 52% is not anything like a “stunning victory”. The globalists will simply ignore it. 75% would be a stunning victory, impossible to ignore. I see that the stay-ites are already mounting a re-vote campaign. Shades of the Irish vote in respect to joining. The PTB will merely keep forcing votes until they get their way and declare the issue done once and for all. The British people are trapped in a system that was originally envisioned by Nazis (literally) and they will likely never escape. Hitler wins finally. Sad that.

    1. Yves Smith Post author

      Please read more carefully. We never said “stunning victory” We said “stunning repudiation.”. The UK voted for Brexit despite months of economists and the leadership of both major political parties screaming at the top of their lungs that voting Leave would be an economic train wreck, and would have consequences like having housing prices drop by 20%.

      We also said in earlier posts that the authorities would have strong incentives to try to go back to voters. But what you airbrush out is that every referendum in which the question was put a second time, the government had gotten concessions from the EU. Ireland got several, including on abortions.

      By contrast, Cameron had tried getting concessions BEFORE the Brexit vote and came back with almost nothing. Some key EU leaders, most importantly Schauble, have said they will not cut the UK any slack. Many in France (and the EU is basically an German-French bloc, other countries almost fall into line when they agree) and some Eurocrats are also opposed either out of concern of letting the EU slide towards dis-integration by letting every country get waivers when it has a hissy fit, or because opposing the voters’ will plays into the hands of Marine Le Pen. Keeping her from becoming Prime Minister is seen as of paramount importance.

    2. gordon

      On TV last night I heard an interview with a UKIP member of the Euro. Parlt., one Mr. Finch, who remarked that the EU is “…a 1950s solution to a 1940s problem”.

      Maybe not the entire truth about the EU, but enough truth to make it telling.

  52. Ivy

    Envision 40,000 (40,000!) scrambling bureaucrats in Brussels now wondering about the end of their sinecures. There are significant costs to maintenance of the EU neo-liberal regime and the Brexit vote was another example of the demos exercising democracy.

    Too bad that the fallout will hit so many that were just trying to make a living, whether in Brussels, Strasbourg or any number of other European cities. The continent is in for a rough adjustment.

    This just in: fog in channel, continent socked in.

  53. dingusansich

    A vote with many issues and motives, and the result is—a decisive muddle. Was the referendum about immigration? neoliberalism? elites in London? elites in Brussels? a strong center? an independent periphery? austerity? largesse? free movement of labor? of capital? the weather? The framing was so reductive—remain or leave, pick one, globally, for every motive and issue—that it’s no easy matter to say what the public voted for or against. The only exactitude is in—the vote number.

    That’s a massive bug, a structural problem for accurate reflection of public preferences in representative democracies. Unless it’s a feature.

    Some think the vote was an indirect repudiation of unanswerable, unelected central authority of the corporate, banking, and bureaucratic elites that dominate the EU. For them a vote to leave was largely, if not exclusively, about just that. Yet that was not the question put. Consequently a xenophobic leave vote gets lumped in with a call for integrative reform of the EU because the referendum offered the only means available to express it electorally.

    Yves writes:

    [Leave voters] have chosen a lower standard of living as a price worth paying for a hope of more control over their destinies. Sadly, these voters are likely to realize the first part of that equation rather than the second.

    That may be so. The leave voters may be trading domination by neoliberal Brussels for domination by neoliberal London, with disintegration of the U.K. and a lower standard of living to boot. But even so, their answer to this version of “There is no alternative,” whatever the motives or clarity of their analysis, seems to be, “Yes, there is no alternative—and we are taking it.” History only rhymes, and this isn’t a choice between Churchill and Chamberlain, but for some it is perhaps an act, however risky or desperate, of defiance and hope.

    1. Jessie G

      “Unless it’s a feature.” Bingo- an unintended one, but definitely one the media is leveraging. Most of the discussions on this have reduced people who supported leaving as racists, plain and simple. Americans disappointment in it is largely driven by that, and by the romance of the idea of moving freely between countries for work. If the media had framed it to ‘Muricans as a group of unelected people in another country dictating Britain’s laws to them, I suspect there would have been a different reaction.

    1. grayslady

      Thanks for the link. As usual, Mark Blyth knows how to cut through the marketing slogans and focus on the essentials. His comment on the Scots was outstanding.

  54. Sally

    One little tit bit from last night which I found rather interesting, and might interest some Americans. Daniel Hannon Conservative MEP and one of the big leave campaigners tweeted a picture of himself at the leave headquarters in London with non other than American Neo con John Bolton. I was surprised to see a Neo con supporting the leave side.

    I thought they wanted us all stuck in the EU system because if The EU breaks up so might NATO.

  55. Tim

    I’m going to call up my Jaguar Land Rover dealer and ask when they plan on passing through the lower costs on delivery’s from the UK as a result of the massive devaluing of the pound.

    The change in currency values will be diluted though. Labor will get raises, imported commodities will be more expensive, and shareholders will hold on to as much profits as the market will bear, and the foreign consumer will just get what’s left of the corporations decision to balance profits and revenue.

  56. Gaylord

    This little shakeup is paltry compared to the Big One that’s coming our way — Climate Change and mass extinction. But we can’t change the trajectory of civilization, because we are stuck in our ways.

  57. Alex morfesis

    Alex goes foilee $$ schaeuble is smiling from ear 2 ear $$
    curupira that he be $$ lebensraum/septemberprogramm

    Over ask and accept “humbly” defeat…tada $$$

    This is the man who was able to exile karl-t zu guttenberg with some nonsense about his doctorate…how silly were the german scribes to fall for that ??

    The economic control of the lebensraum is all the kyffhauser crowd ever wanted…why shoot people when you can can take it with bribes, blackmail and americans paying for their “hessians” to be rented out dirt cheap as NATO cannon fodder…

    at least the bauer family was smart enough to write the contracts between freddie 2 & his german nephew running the kingdom to insure “disabilty” a$ well as life “insurance” payments…although there may be some question of freddie 2 not willing to allow a large enough “factoring” discount (after gw & his rabble avenged the death of crispus) and ended up being sent off to never never land on Halloween…rumerhazyt…

    Out with the yookistani, out with the “gaul”, as spain and italy can not grow to compete…france has just basically the sahara french african franc & the dry ink on sykes-picot while italy used to have libya…but Berlusconi and $odaffy never finished up on that reparations agreement, since the global economy went all silly over the cov-lite requests/demands of kkr & the rest of their minions in May of 2007…

    England still has economic control of most of its former colonies, now “commonwealth” & schauble has done to greece what the french and british have done to their former colonies when they do not “adhere” to the long term “approved” plans of the sykes-picot union…

    Passporting will only matter if for reason the EU/ESMA rejects the Cayman application for eu passporting, which is due to be publicly approved this week…since there are many american entities tied to that passporting into eu, it is hard to imagine it not being stamped as approved by july 1…

    As w.c.
    (jerome, fields or water closet ?) i$ purported to have proclaimed…he did not become the first minister to warch the embalming of the empire…

    frat boyz pissing on each others legs with computer screen capitalism….

    Long live the queen…

    1. oho

      probably DOA. (but don’t celebrate yet)

      Obama is a figurehead president now. everything’s going to be on-hold until November sorts things out.

    2. Jim A

      My guess is that they are dead for the foreseeable future… Everybody is going to be too busy spending their political capital trying to make the conditions of Brexit to their liking to worry too much about pushing through TTIP. When the kitchen is on fire, work on building the new addition grinds to a halt…

      1. William C

        The UK might want to sign up speedily to TTIP on US terms to show that it can make ‘trade agreements’ rapidly post-Brexit.

        Give up national sovereignty as soon as the politicians have ‘reclaimed’ it? Why of course, you did not think they really meant what they said, did you? Come on, they are politicians…..

    3. Yves Smith Post author

      It probably kills the TTIP.

      No idea re the TPP. I’m sure Obama will try to find a way to argue that Brexit makes it more desirable. Not sure anyone will buy it. He’s now pushing for a lame duck session vote and a lot will happen between now and then.

  58. readerOfTeaLeaves

    ‘Morning Joe’ discussion of ‘Brexit’ where the neoliberal structure of EU and its impacts on labor are never discussed. Bling leading the blind 8^\

    Meanwhile, David Cameron, an Oxbridge toff whose wealth derives from tax havenry, didn’t see Brexit coming. Karma.

  59. Dale

    I do wonder what the political fallout will be in the U.S. and which candidate will benefit the most from the majority Leave vote. Trump has already begun to announce parallels to his own rebel campaign. I’ve yet to see anything from the Clinton camp.

  60. JustAnObserver

    Brexit: Time to go long fainting couches (*) & pearls (clutching, for the use of) ?

    (*) For Brit readers John Lewis does a good line in these.

    1. Yves Smith Post author

      There is nothing in that link that is inconsistent with the post. We were one of the few to say pre-Brexit that a Leave vote might not actually produce a Brexit, while virtually every other economics site was focusing on “which new trade arrangement will the UK have post Brexit and what are the implications?”

  61. Irrational

    A number of comments mention “he undemocratic EU”.
    Well, the European Commission is like the civil service in a country and generally not subject to election in any European country. This civil service can make legislative proposals, but these have to be passed by the European Parliament and the Council of Ministers (with some exceptions).
    The European Parliament has been elected by European voters since 1979 – sadly, these same voters show little interest in said election.
    That leaves the Council of Ministers made of of various compositions of the 28 member states’ ministers.
    This body is undemocratic in the sense that it is not elected, but the representatives are the representatives of the governments elected by each Member State. The lack of democracy arises because these representatives get a proper negotiation mandate from their national parliaments in most cases (e.g. Denmark being an exception).
    However, this is not a failure of the EU, but of each member state.
    However, as long as governments mislead their voters about how decisions are made in Brussels and their part in them, there will be votes like this.

  62. KnotRP

    This is a poor choice of words, Yves:

    > they have chosen a lower standard of living as a price worth
    > paying for a hope of more control over their destinies

    The lower standard of living is not a choice, it is an inevitability,
    brexit or no brexit. The only choice to be made is whether societal
    control should be local (and corrupt) or far away (and corrupt).

    1. RBHoughton

      There is an aspect that none of us has really mentioned yet so far as I am aware.

      The best way to gauge a society is to see how it treats the weak and vulnerable.

      The EU failed this test. Wealth is more important to it than the lives of refugees.

  63. J

    Anyone want to take a crack at describing the reaction of German newspapers and politicians?

    1. oho

      if you’re cynical (like me), Germany is pooping its lederhosen because

      (a) UK was a net financial contributor to the EU, so now Germany for all practical purposes has to pick up its slack but
      (b) Germany has its hands full with 1 MM+ refugees who need every basics from housing to education when
      (c) EU-Turkey are negotiating a potential visa-free travel deal for Turkish citizens and the EU and
      (d) the EU is also dangling EU membership to uber kleptocracy Ukraine.

      Now way will the German taxpayer stand for this over the long-term.

      Merkel has gotten a HUGE pass from the German electorate due to a German sense of duty and acceptance of one’s superiors.

      The AfD party is smashing that mold with the help of stagnant living standards for the German bottom 90% and German foreboding at the disappearnce of Gemütlich (German sense of brotherhood).

  64. RBHoughton

    The inflexibility of the EC was a big factor in my feelings about membership of the EU. Look what happened to Greece! Remember what the EC said to Portugal – “elections are one thing but we have rules” – indicating Maastricht outweighs democracy. Recall the way the democratic Italian Prime Minister was simply found unsuitable and replaced in an act of power.

    Note the EU’s drift into war with Russia, upon which country Europe relies for its energy supplies. Note the economic damage (to France and Italy particularly) of sanctions against Russia. These are NATO requirements from Washington but Europe has approved them for another six months.

    With Britain’s disproportionate military now outside the EU there may be added impetus on Europe to become more warlike as pressed by Washington. 2% of EU GDP may not be sufficient to perform all the duties that the US requires against Russia. This increased tax on Europeans generally might influence their willingness to sacrifice their continent to American hegemony.

    I wonder if it is not time to call a halt to this petty national squabbling, settle our differences equitably and make a start on the real dangers that face our species.

    1. Robert Dudek

      Or the Europeans could wise up and start to move away from the US and towards better relations with a more natural ally: Russia. And please, don’t come at me with the notion that “democratic” Europe can’t work with “authoritarian Russia”: the US has no problem maintaining a solid relationship with one of the most brutal regimes in the world (KSA, of course).

  65. gordon

    Two remarks:

    First, Britons may realise that they have more to fear from their own ruling class than from the trade effects of Brexit. Prof. Krugman, for example, has long lamented the bad effects of UK Govt. austerity policies. Couple that with a domestic regime which encourages tax avoidance and actively works to repress labour, and you could easily conclude that the real risks to more general British prosperity aren’t related to the EU at all.

    Second, when the UK joined the EU (EEC as it then was), the EU was much smaller. Today’s EU is almost unrecognisable in terms of the EEC of those days in the 1970s. Not only is it vastly bigger, but there has been the introduction of the single currency and the disgracefully sly and underhand introduction of undemocratic European central authority via the Lisbon Treaty after the failed referenda on the European Constitution. Britons may well feel that they ordered a hamburger but got a pizza, and they don’t like pizza.

  66. Robert Dudek

    Wide-ranging musings on Brexit by Timothy Garton Ash:

    Garton Ash is a Varoufakis-style pan-European optimist. He ties together many of the factors at play, but can’t help but demonise his enemies (the populist/nationalists like Farage, Le Pen, and Kaczynski among them). I can’t quite agree that these people are as dangerous as he supposes. There is a good deal more pragmatism in that group than is generally supposed by their critics. Yes, I understand and accept that what unites them is a basic xenophobic world-view. However, I think that politically, what they are after is a firm halt to European “integration” and a return to something closer to the original intent of earlier versions of the EU: a group of nation-states, closely cooperating with an eye for mutual prosperity.

  67. equote

    Yves, anyone … what role, if any, has ISIL’s creation of large numbers of refugees played in Europe’s troubles?

    1. Yves Smith Post author

      Despite UKIP making a lot of noise about Muslims, the bigger driver of the Leave vote seems to have been the impact on wages of Eastern European immigrants.

  68. Pat

    A musing on the American demonization of the Brexit vote, or at least one aspect of it. The news last night had a huge section on the DOW crash and the loss to 401ks. I admit to being tired enough that I didn’t process that for what it was. Did 401ks loss value? Of course. Was it necessary? No. But a whole lot of financial “experts” aka investors aka gamblers panicked and with little or no real knowledge of the overall effect this will have decided to Sell, Sell,Sell!
    Brexit was the trigger, yes, but the reason people lost money in supposed long term investments was gamblers being spooked. But God forbid we say THAT.

  69. David

    This is an unheard-of situation where the British political elite does not want to leave and the European political elites want Britain to stay. The latter, certainly, don’t want a long period of neither-or, but given the choice there’s no doubt which option they prefer. If you add to that the media, financial and business elites want Britain to stay, there’s a common interest in playing it long and nothing substantive ever happening. I don’t think such an option would produce pitchfork-waving in the street, either: most of those who voted leave have made their point about the government and about Europe and would probably be persuaded that it’s time to renew normal service. If European elites calm down, and stop hurling patronizing slogans about racialism and stupidity around, then they can probably get what they want.

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