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BREXIT?


mullokintyre

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If I don't like the election outcome, how about we have another election next month ??

 

I suspect that some of the "Leavers" would be thinking "WTF have I done and can we try again" when they saw the Pound fall heavily along with their investments. The EU won't be out to do them any favours in future either.

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It is important to know however that the final outcome does not necessarily have to be as bad as the initial headlines have made out. What the UK was actually voting on was whether to remain a member of the European Union. Membership of the EU is, in economic terms, a non-event. What is far more important is access to the common market, a large free-trade area, larger in fact than the EU itself. Countries like Norway and Switzerland are part of the common market, but are not part of the EU. If the UK can maintain access to the common market, then the actual impact will be quite mild.

 

For an optimistic scenario this brief paper from the Adam Smith Institute is worth reading. In a world where cool heads prevail and a path towards a sensible new arrangement is set out soon, perhaps the country can avoid a tremendous mistake. With some hope I note that amidst all the anger from EU officials demanding a swift and punitive UK exit, Angela Merkel was quoted over the weekend as saying there was "no need to be nasty" in the negations and that she was not in favour of speedy talks.

 

http://www.adamsmith.org/blog/time-for-the-eea-option

 

Away from the hopeful "ifs" however, at a minimum there will be many months of great uncertainty hanging over European economies and this will clearly exert a cost on economic activity, both here in the UK and in the EU. Economists suggest that a UK recession is now likely while in the rest of the EU GDP growth could be lowered by c. 0.5%. The depth and severity of the economic impact to both the UK and the rest of EU will depend on how long negotiations last and what path they start to take. Nobody is going to be investing or hiring until there is a lot more clarity than there is today.

 

In terms of the potential future risks to financial markets, I believe these now hinge on how likely markets perceive a 'Brexit lite' vs 'Brexit full' outcome to be, as more information is made available over the coming weeks and months. Under a Brexit full path - i.e. a rapid enactment of article 50 and a strong likelihood of curtailed access to the single market, the areas that worry me greatly are the EU peripheral economies. It will be grim in the UK, with the county likely experiencing a recession and lower future trend GDP growth. But the UK is in far better shape than much of Europe. Currency depreciation, an independent central bank and full employment all provide the UK with at least some buffer. Outside of Germany, the EU is suffering from chronic unemployment, low or no growth and dangerously persistent deflation. For highly indebted EU economies this is a toxic mix and there is little or no buffer to fall back on. If, say, Italy, Spain or Portugal were to fall back into recession their outlook could start to become very worrying. The market is already moving to price these risks in. I believe it is noteworthy that while on Friday the UK share market, the FTSE index, fell by 3.1%, the pan European share market index, the EuroStoxx index, fell by 8.6% and the Spanish and Italian equity markets fell by 12.4% and 12.5% respectively. Indeed the FTSE was actually one of the best performing global equity markets on Friday, with the S&P500 off 3.6% and the Nikkei off 7.9%.

 

Probably more importantly than the equity market moves, the debt markets on Friday saw a significant widening in credit spreads between German bunds and peripheral yields. The 10 year German bond yield fell 14bp while Italian, Spanish and Portuguese 10 year yields rose 15bp, 16bp and 25bp respectively. The Greek 10 year yield rose 77bpÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ What I will be watching most closely going forward will be changes to the yield spread between German bunds and these peripheral economies. The spread has already increased significantly and future moves will hang on how the 'Brexit lite' vs 'Brexit full' future path unfolds.

Miles Staube - GVF
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Good to see the poms kicking own goals in soccer as well overnight. :rolleyes: (well not really, but what an absolute shocker of an effort). Always happy to see the poms embarrass themselves and they have been doing that in spades of late.

 

I also see that the UK has lost its last triple A rating, which should mean that it costs British based banks a little bit more to borrow money. If the City of London loses much of its banking and finance sector the whole country will be buggered.

 

(point of clarification: I differentiate between Brits, who I admire, and poms, and Boris the Buffoon and his mates are deadset poms to me).

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After the Brexit, the highest-trending Google search was reportedly "what is the EU?"

In other words, "We don't know what it is, but it's bad for us, so we don't want it." :lol:

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Statement from the foreign ministers of Belgium, France, Germany, Italy, Luxembourg, and the Netherlands, defining the future:

We will continue in our efforts to work for a stronger and more cohesive European Union of 27 based on common values and the rule of law. It is to that end that we shall also recognize different levels of ambition amongst Member States when it comes to the project of European integration.

 

While not stepping back from what we have achieved, we have to find better ways of dealing with these different levels of ambition so as to ensure that Europe delivers better on the expectation of all European statesÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦. However, we are aware that discontent with the functioning of the EU as it is today is manifest in parts of societies. We take this very seriously and are determined to make the EU work better for all our citizens.

The EU has 27 member states and, apparently, only six foreign ministers met and drafted this response. Poland wasn't there. Neither was Spain. Nor were 19 other members. The new "inclusionary" EU has met and promised to do something.

.. (a bit like 1938?)

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nip

 

That's a tad selective of you seeing there is a full summit of EU leaders happening today.

 

http://www.dw.com/en/eu-leaders-in-first-s...hock/a-19361183

 

As I suspect you know, leading into any such major chinwag there are heaps of clustering of minions to lay the groundwork for those at the main table to have something of substance to discuss and express opinions on. That the foreign ministers of six of the 28 members of the EU got together just prior to the summit and put out a view is entirely in line with how these things usually work. To insinuate that this is somehow evidence of any malfunction is either ignorant or mischievous imo.

 

The simple fact is that the English leaders who led the move to exit the EU were dumb for asking a question that they did not know the answer to. No one knows how this is expected to play out or even what the achievable objective is (other than world peace).

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But the indirect consequences could be substantial. After Britain voted out, the yuan suffered the biggest one-day drop since its devaluation last August. In the worst case, Brexit may act as a long-term drag on China's exports, increase its spare capacity, spur capital flight, impede foreign direct investment and generally weaken the forces that have sustained its growth over the past few decades.

http://www.bloomberg.com/view/articles/201...f-china-s-fears

====================

we saw many stupid people last few days, but this righter seems on the top of the list. :thumbdown::lol:

everyone knows that Brexit can lead to EU's demise ----if that happens chinese would laugh all the way to the moon

because they will dealing with 27 different europe countries and no one would dare to label china as" not a market economy"

and chinese unlikely to face "steel dumping tax duty" that sorta things. simply put, china can dealing with them one by one.

i saw a little media coverage of Agela Merkel visted china ninth time since she took the top job in our TV. they didn't even mention she took half of her cabinet with her just before the Brexit vote

she seems a well prepared and forward looking leader. she knows if Brexit happens she still can hold chinese market as their biggest export market.

USA will be happy to see eu demise as well. so a united europe union can fened off china usa eg......

still scratch my head as to why those pommies did what done!!!!????????????????? :o

to honest, i always think that pommies are arrogant, but smart and rational people. but they told me that i'm wrong last Friday!! :sadsmiley02:

 

 

 

 

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Another storm in a teacup,bought some more westpac on Monday morning and low and behold they have made money this week though it is another 6 months till div time I know.

 

Tough times ahead they always say but the tax I have to pay this year is disgusting, all I seem to do is pay for the deadbeats of this country though I wonder if they can afford to go fishing and catch big snapper,have a good weekend for those that have to work,mrbear

 

 

 

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http://www.massdevice.com/5-reasons-brexit-panic-overdone/

 

5 reasons the Brexit panic is overdone

 

Following link is good news for UK.

 

http://www.theguardian.com/politics/2016/j...ndon-properties

 

Major Singapore bank to suspend lending for London properties over EU leave vote

 

Their overheated property market especially in London should drop and it is healthy for their economy. Lower rent will benefit many businesses, students and those who want to work in London and other cities. In a way, they are going to escape from the property bubble. In that way, it is a smart move.

 

Pound had some volatility during last 10 years. Volatility in the currency market is not abnormal. If anything goes down below their value, they will go up again.

 

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