Monday, June 27, 2016

EU exit vote by Britain could be a big deal

At the moment, the thought here is that the financial market's negative reaction to the British vote will mitigate soon, and we will settle down into value trading.  Growth trading will not be prevalent soon.  There has been much investor chatter about the monetary and fiscal implications of this vote, but briefly here are three that are most interesting here.

--- The most frightening aspect is what it does to the alliance that pretends to keep Vladmir Putin in check.  Most don't read about it, but the Russian backed push into Ukraine continues even today. Given the disarray in the European Union and Obama's aloof attitude, some would say lame attitude, toward any foreign policy action(note what is said is "action", is not words).  Is this the time for Putin to push further into Ukraine and make some inroads into the Baltic states that the EU will make excuses for(retaking real Russian citizens for example).

---What will Scotland do?  Their vote suggested that they want no part of separation from the EU. Will this lead to a break up of the U.K.(not to mention Northern Ireland's same thoughts and votes).
While dated now, I traveled to Edinburgh at least twice a year from the mid-1980's to the early 2000's, and know that it is a completely different culture from England, especially London where business often required my body four or five times each year.  From a financial point of view London was and now continues to be a financial hub of global trading.  Edinburgh and Glasgow were always viewed as havens for long term investment, pensions funds, and private trusts.  They were always a pleasure to visit although the long term historians there at dinners could overwhelm this less historically experienced calling investment analyst easily.  The conclusions of those types almost always were wrong, but everyone was so polite there despite that. Golf and sitting by a hotel fireplace talking with others with a glass of precious single malt in hand was also an attraction.

London was a place that required work to get into an accepted space.  For me, that was at least five years, with some firms as long as ten.  There was an arrogance that was not hidden in the least by those London Brits.  Some were so smart that they could pull it off and deserved to do so, but many were just phony, barely financially literate snobs of their realm.

If the financial relationship between London and Scotland breaks, this will be a huge financial event, an opinion here.  They complemented each other in a complex way, but they were part of one calling universe and it was a real trip to do both places one after the other.  Truthfully, the Brits and the Scots knew their roles and what was going on, even as they competed royally.  Rarely did a Scot ever move to a Brit firm, and vice versa. At this moment there is not one instance of that can be remembered here.

---So now what about London?  After the next two years of dealing with this vote, could it simply, of course not so simply, divorce itself from the U.K., and become a Monaco, Zurich, or Geneva.  Many of their banks most innovative trading types come from the best university in France.  Everyone likes living in London, but could that change for financial reasons.  If government mandates reflecting Brexit voters become dominant, will London's leading global financial liquidity be questioned, or damaged?

There is much more to come.   These are thoughts here that have not necessarily been given enough attention yet, as the dwindling white middle class of England, much like that of this country, sits on their couches in the evenings watching television, while knowing that they will somehow be taken care of, minimal literate study required.


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