Brexit

Xstatic3333 · June 2016

I couldn't believe the news I woke up to from Great Britain this morning! Macroeconomics is not my strong suit, but what kind of impact, if any, do you think could this have on our economy at home? On a more small-scale note, it also seems like this could help the value of the pound and euro for those with upcoming trips to Europe. Let's discuss.

jtmh2012 · June 2016

I haven't read into most of the details, but my feeling is that most of the economic effects will be driven by the media who likes to predict doom and gloom because it drives ratings and the stock market speculators who will probably start a sell off before any potential losses show up.

hoffse · June 2016

The market is probably in for a wild ride, at least for a little bit. I'm going to be buying! The pound lost like 30 cents yesterday and hit lows it hasn't seen since the mid-80's.

I think it's going to drive the dollar and euro up though (boo for the euro). We'll see. We are leaving tomorrow, so I'll probably have it open at work all day long. Right now the euro hasn't budged much compared to the dollar, and I'm hoping it stays that way for the next week!

The problem with Brexit is that it will likely inhibit trade and the free movement of people. The currency thing will right itself (UK has never needed the euro, and they basically invented modern finance), but it's going to isolate the UK from a trade perspective, and now you will have people in power who may tighten the borders.

One of the hallmarks of the EU is that you can get on a train in Paris or Brussels and arrive in London 2 hours later without having to get a visa or go through any sort of immigration. The EU has zone-wide immigration procedures set up so that you don't get stopped every time you cross a border internally.

I think there's going to be a fight between Brussels and London. Assuming the UK wants to continue to trade with the EU, I think Brussels will demand some pretty big things. They have to stop any other countries from exiting. If you had a country like Germany leave... suddenly one of your largest economies that helps prop up the value of the euro is gone, and that would send financial markets into a tailspin.

As an aside, I hope this is a wake-up call to the media (though I doubt it will be). The sentiments that drove Brexit are similar to the ones that are going to secure Trump the Republican nomination. The media dismisses the people who feel this way as fringe... but they have proven twice now that they show up to vote and can produce results that seemed unimaginable just 6 or 8 months ago.

csuave · June 2016

That was some big news this morning. I think the markets will fall in the US today; hopefully I'm wrong on that.
Since the UK stayed on the pound they were never all in with the EU. Hopefully the side effects are minimal.

Xstatic3333 · June 2016

I completely agree about the parallels to the Trump situation, @hoffse. I hope it also serves as a wake up call to the voting public, particularly if there remains any outside chance for the Republican Party to select a different nominee. I find Trump very scary, to the point that I'm rooting for this to happen even though I lean liberal and pretty much any other Republican nominee is likely to win the presidency. It does seem to me that to maintain free trade, London will have to keep many of the perceived "cons" of EU membership while giving up the advantages. Regarding travel, the only country I've travelled to from Britain is Ireland, but I thought the UK was already outside of the Schengen zone. I'll admit as a tourist I find the open borders a bit disconcerting. It was strange to me that I travelled from Amsterdam to Brussels on the Thalys and back without showing my passport or walking through a metal detector on the day of a major terrorism raid in Brussels. I do understand that it carries economic advantages, of course. On a happier note, have an amazing trip @hoffse! Also, sorry my paragraphs were eaten.

smerka · June 2016

Chuck Todd made the point about the media this morning. His disdain for Trump's pointless Scotland trip was palpable. He pointed out that Trump was just calling out Clinton for using her political position for personal gain and Trump is doing that exact thing in Scotland. Politically, I think this might break up the UK because Scotland might not want out of the EU. Financially, I think it will be a tough day, but it should probably even out next week. Interest rates will stay stupidly low for the foreseeable future

hoffse · June 2016

I completely agree about the parallels to the Trump situation, @hoffse. I hope it also serves as a wake up call to the voting public, particularly if there remains any outside chance for the Republican Party to select a different nominee. I find Trump very scary, to the point that I'm rooting for this to happen even though I lean liberal and pretty much any other Republican nominee is likely to win the presidency. It does seem to me that to maintain free trade, London will have to keep many of the perceived "cons" of EU membership while giving up the advantages. Regarding travel, the only country I've travelled to from Britain is Ireland, but I thought the UK was already outside of the Schengen zone. I'll admit as a tourist I find the open borders a bit disconcerting. It was strange to me that I travelled from Amsterdam to Brussels on the Thalys and back without showing my passport or walking through a metal detector on the day of a major terrorism raid in Brussels. I do understand that it carries economic advantages, of course. On a happier note, have an amazing trip @hoffse! Also, sorry my paragraphs were eaten.

*************SIB********************

Yeah the UK is legally outside of Schengen, but they have maintained similar free-movement policies that work on conjunction with Schengen. They've always had the ability to lock their borders, but they really haven't done so. With David Cameron resigning, that might very well change.

vlagrl35 · June 2016

I have no idea about any of this and just read an article about it this morning. I know a lot of people see this as a bad thing but apparently a majority of the british saw it as a great thing because it was voted in. Time will tell I guess. I too see the parallels of Trump in this situation as well. Although I think he is the only Republican that could beat hilary because did anyone watch his speech a couple days ago? No other GOP candidate would have done that. I currently think our system is rigged though and Hilary will be the next president. I'm just beyond sick of our government and maybe that's how the british felt.

hoffse · June 2016

Honestly though, I think a lot of voters voted from fear and didn't think it through. What this is is terrorism winning.

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Imagine if you had to go through immigration or massive red tape every time you crossed into another state or moved jobs in another state. That's kind of what this is.

hoffse · June 2016

Also, this:

https://www.washingtonpost.com/news/the-switch/wp/2016/06/24/the-british-are-frantically-googling-what-the-eu-is-hours-after-voting-to-leave-it/

Xstatic3333 · June 2016

hoffse said:

Honestly though, I think a lot of voters voted from fear and didn't think it through. What this is is terrorism winning.

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Imagine if you had to go through immigration or massive red tape every time you crossed into another state or moved jobs in another state. That's kind of what this is.

Agreed, they did not think through what it would really mean. John Oliver the other night did a great job explaining so many of the cons, and why many of the arguments the Leave group was advancing aren't really going to pan out well.

smerka · June 2016

hoffse said:

Also, this:

https://www.washingtonpost.com/news/the-switch/wp/2016/06/24/the-british-are-frantically-googling-what-the-eu-is-hours-after-voting-to-leave-it/

Wow. I mean that's head shake worthy.

LillibetteV · June 2016

Xstatic3333 said:

hoffse said:

Honestly though, I think a lot of voters voted from fear and didn't think it through. What this is is terrorism winning.

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Imagine if you had to go through immigration or massive red tape every time you crossed into another state or moved jobs in another state. That's kind of what this is.

Agreed, they did not think through what it would really mean. John Oliver the other night did a great job explaining so many of the cons, and why many of the arguments the Leave group was advancing aren't really going to pan out well.

Except that impartiality regulations kept that from being aired in the UK until after the vote...

Xstatic3333 · June 2016

LillibetteV said:

Xstatic3333 said:

hoffse said:

Honestly though, I think a lot of voters voted from fear and didn't think it through. What this is is terrorism winning.

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Imagine if you had to go through immigration or massive red tape every time you crossed into another state or moved jobs in another state. That's kind of what this is.

Agreed, they did not think through what it would really mean. John Oliver the other night did a great job explaining so many of the cons, and why many of the arguments the Leave group was advancing aren't really going to pan out well.

Except that impartiality regulations kept that from being aired in the UK until after the vote...

Oh wow. That's crazy. I didn't know he aired there at all. Something tells me it wouldn't have swayed many in the Leave camp anyway, but it was very useful in terms of understanding the various scenarios.

hoffse · June 2016

A more humorous look at the situation:

https://www.buzzfeed.com/robinedds/brexit-tweets-guaranteed-to-make-brits-laugh-cry-or-both?bffbmain&utm_term=4ldqpgp#4ldqpgp

hoffse · June 2016

Aaaaand I just broke my promise to my husband and checked the market.

***Reaches for heartburn meds***

On the bright side, pretty sure I got a 401(k) contribution today that should clear tonight...

LillibetteV · June 2016

hoffse said:

Aaaaand I just broke my promise to my husband and checked the market.

***Reaches for heartburn meds***

On the bright side, pretty sure I got a 401(k) contribution today that should clear tonight...

My husband woke me up to tell me the news and then discussed how much we planned to buy for cheap today!

jtmh2012 · June 2016

hoffse said:

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Sadly, the reverse of that is also true. When you open the borders to outside labor, companies have a habit for shopping around for who is cheaper. So yeah, your husband can go all over Europe looking for work. Also means the companies can go looking around for cheaper labor. Sorry if you have a standard of living you were hoping to keep up with or didn't want to move for a new job.

hoffse · June 2016

jtmh2012 said:

hoffse said:

Here's a great example - jobs. As a citizen of an EU country you can work anywhere in the EU with minimal paperwork and immigration issues. My H is a Belgian citizen and could work in France if he wanted, or Italy. We could move there tomorrow. The idea is you expand the physical boundaries of the job market, and that lets people go where they are most suited, highest and best use, etc.

Sadly, the reverse of that is also true. When you open the borders to outside labor, companies have a habit for shopping around for who is cheaper. So yeah, your husband can go all over Europe looking for work. Also means the companies can go looking around for cheaper labor. Sorry if you have a standard of living you were hoping to keep up with or didn't want to move for a new job.

That's true as well. But this doesn't necessarily solve the issue, at least in the short-term. Their borders have been open for so long the cheaper labor is in the UK already. What they have done is made it harder to get out.

In terms of service-sector jobs, it also lowers the likelihood of businesses entering the UK. Some still will of course, but it increases red tape and organizational costs if you aren't all playing by the same rules.

Most of the people who voted to leave are older and retirement age or approaching retirement age anyway. The job thing wouldn't really affect them at this point. The working-age population largely voted to stay in the EU and keep the borders open.

jtmh2012 · June 2016

hoffse said:

Aaaaand I just broke my promise to my husband and checked the market.

***Reaches for heartburn meds***

On the bright side, pretty sure I got a 401(k) contribution today that should clear tonight...

I'm down about 5.5%. Time to pass around the wine again I think.

vlagrl35 · June 2016

jtmh2012 said:

hoffse said:

Aaaaand I just broke my promise to my husband and checked the market.

***Reaches for heartburn meds***

On the bright side, pretty sure I got a 401(k) contribution today that should clear tonight...

I'm down about 5.5%. Time to pass around the wine again I think.

It will correct itself soon - I'm not concerned. We are in it for the long run right?

jtmh2012 · June 2016

vlagrl35 said:

jtmh2012 said:

hoffse said:

Aaaaand I just broke my promise to my husband and checked the market.

***Reaches for heartburn meds***

On the bright side, pretty sure I got a 401(k) contribution today that should clear tonight...

I'm down about 5.5%. Time to pass around the wine again I think.

It will correct itself soon - I'm not concerned. We are in it for the long run right?

Oh I know. I'm still going to cry over it though. I do find it irritating how things react sometimes.

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