Friday, June 24, 2016

Elites Feeling Queasy This Morning: Brexit Triumphs by a Million-Plus Votes

Markets are down but not breathtakingly so in response to the triumph of Brexit at the polls yesterday. The Leave campaign ended up winning 52% to 48% -- more than a million votes -- over the Remain campaign. Cameron has announced his resignation effective in 90 days.

As Yves Smith makes clear in her flinty, dour post, "Brexit: The Crisis Begins," jockeying to shape the separation of the UK from Brussels will commence immediately. Cameron will be distracted by leadership battles among his Tories. Smith dusts off a post by Willem Buiter from 2008, "How likely is a sterling crisis or: is London really Reykjavik-on-Thames?," to sketch a worst-case scenario for Britain, which she then takes global in the final two paragraphs of her post:
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.
I would like to accentuate the positive. With the Brexit vote people showed, as they did in Rome on Sunday, that they are not the zombies who inhabit the leadership level of political-economic class. The majority is willing to cast aside the bankrupt zombified neoliberal consensus and strike out in a new direction, even if it is not clear exactly where it will lead. This is cause for great hope.

For decades we have been told that "There Is No Alternative!" And things have steadily worsened. Now we have proof that, after forty years, people are willing to scrap the neoliberal paradigm and begin anew.

The future is no longer foreclosed.

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