The United Kingdom Exits the European Union

Capital Markets Around the World Slammed as Uncertainty Reigns

It is 1:48 a.m., Central Standard Time here in Missouri.  I am sitting at the desk in the home study after a long day of working on launching the global asset management business (we’re in the process of evaluating advanced performance reporting platforms and client portals at the moment).  Aaron and I went out and walked a couple of miles earlier, talking about our thoughts on the various technology vendors.  When we got back, he finished his work and is now playing the original SNES Super Metroid game on Nintendo WiiU.

I’ve avoided speaking about the Brexit situation because I ultimately believe that it is not my place to tell British citizens how their country should be run even though I am a stakeholder in their success.  While there are what I could consider extraordinarily high probabilities that the decision to leave the European Union will lead to lower GDP, the fact remains that GDP isn’t everything.  Money, and the economy, exists to serve a civilization.  The current system has largely failed a meaningful percentage of men and women; created a sense of unfairness, perceived or otherwise, that the elite continually waive off as immaterial.  Even now, they seek to explain away their loss.  It’s nonsense.  No matter what opponents may argue, there are intelligent, moral reasons a British citizen might vote to divorce itself from the EU if he or she valued certain things above material comforts, accepting short-term pain for what they believed to be a superior long-term outcome.  If Great Britain wants to reclaim some of her sovereignty and independence, she’ll adapt.  While she does, she’ll certainly have the United States on her side.  We’re family, after all.

The markets did not anticipate this was a possibility.  Now that the news has hit the world, as we sit here in our pajamas about ready to turn in for the evening, British futures are down 10.55%, German futures are down 9.75%, French futures are down 11.82%, Dutch futures are down 10.53%, Spanish futures are down 16.90%, and the Japanese market was falling so fast that the circuit breaks were triggered, halting trading.

Moments like this are among the reasons I constantly, perhaps too frequently, talk about the importance of avoiding debt, paying cash for your securities, keeping enough liquidity around that you can never be forced to sell, and owning things that are of sufficiently high quality that you never lose sleep.  While there was definitely an intrinsic value shift for certain businesses, for most components in most intelligently constructed portfolios, this isn’t particularly meaningful over the coming decades in the sense that a lot of people think it is going to be. I have no idea what will occur when markets open – things could stabilize and no one remember it years from now or we experience a 1987-level event – but It’s not going to cause Nestlé any great hardship or stop Johnson & Johnson from doing its thing whether shares are slightly up or lose 25% of their quoted market value.  If anything, there are certain businesses that are likely to be caught up in the tide that a reasonable person with a business-like approach might want to consider acquiring.

All of this may amount to an ephemeral tempest in a teacup.  Or it could start a Global Depression.  On that front, your guess is as good as even the world’s best economists because we’re in uncharted territory.  What is certain is that you’ve run your estate wisely, it shouldn’t particularly matter to you or your family.  If you find yourself with half of your net worth gone on paper as the current ask and bid prices dance around all over the board, deal with it.  Get over it.  This right here – this experience – is the reason equities tend to shower their owners with wealth over multi-decade periods.  Such an event should cause you no emotional distress.  Great businesses bought at attractive prices and held for sufficient periods of time have historically been a dream combination.

If you’ll excuse me, I am going to go to bed.  I’d like to get some sleep.  Whatever world we wake up to tomorrow, know that I’ll probably be paying little attention to it except to figure out if there is anything I want to add to the balance sheet.  Neither I, nor anybody else, can predict the market.  What I can do is to do my best to value cash flows and assets, pay a reasonable price for them, and put them on the books in ways, and structures, that offer certain tax and asset protection advantages.  The rest, I’ve found, takes care of itself if you’re patient enough.

  • Mr.owenr

    Ahh good to see you’re ok Joshua! From a reader stand point it seemed like you just went quiet after the Florida shooting.

    It’s thrilling to see a post devoted to Super Metroid. I remember playing it as a child on the GBA, that version has an additional level to play after you beat the final boss of the original game.

    • I’ve sat down more than a dozen times, and written thousands of words, about Orlando. I can’t bring myself to publish it.

      • Steve Roberts

        I hope you end up sharing (when you are ready)

      • dave (nestle)

        Writing this reply from Orlando right now. It’s what actually led me to check in on your writings after more than two weeks. Was hoping for your thoughts. No problem though.
        In unrelated news, used the power of puts to make some income today, and used the power of fear to, most likely, make some wealth for my family in the undefined future.

      • Nathan

        I can understand that, but I would love to know your thoughts on Orlando.

      • undercover

        As someone who thinks we have a giant wolf in sheep clothing problem.

        I’m curious what your thoughts are about Orlando.

        Though if I had to guess it would cause a nasty blog split/complete political shit storm in the comment section?

        So if you even permit me to see your personal thoughts on the subject. I’m interested in seeing your take on it & much obliged if you sent a copy to starfox2017@outlook.com

      • Abe

        To echo the sentiment that’s already been vocalized, I too wish to hear your words. I always learn something from your writings, and I know I’m wiser because of them.

      • Mykrohan

        I can certainly sympathize with that. I hope you do eventually decide to share.

      • FratMan

        For what it’s worth, it has been my observation that you have received nearly 100% high-quality remarks on past articles that required some hesitancy before publication.

        It is extremely likely that there are dozens (hundreds, thousands?) of people who came across your post on the teenage years with Aaron and changed their position on gay marriage in response to your article.

        Based on your track record, the risk of alienating readers is smaller than you might think, and the people who have been alienated I’m not sure are really missed anyway.

        These “hesitant posts” have both improved people’s thinking and made people appreciate your blog more. The salutary effect is higher than you think, and the downside is not as much as you might think.

        • Gilvus

          I heartily agree with you on a purely rational basis, but the decision to publish/not publish is no mere rational decision. I believe it’s less about alienating readers as much as a natural aversion to exposing one’s vulnerabilities in a hostile environment. If the shooter had targeted a dim sum restaurant, a boba cafe, or a library and massacred 50 Asian-Americans, my reaction would also be to withdraw. To entrench. To perform a mountain of calculations and analyses behind my fortifications. To do otherwise would leave me feeling unbearably exposed to the hitherto-unseen adversary. This is not a rational fear, but can you blame me? No volume of wisdom, empirical data, or statistical analyses can cut through the dark veil of dread, just as I can’t reason away my hunger, sleepiness, thirst, lust, or grief.

          Joshua, if you decided to publish, I’ll drink in the words and glean as much wisdom as I can. If you choose to keep your silence, I won’t think any less of you.

      • Mr.owenr

        That’s great Joshua, as long as you’re ok. It was a very emotionally charged thing here in povertyville…but seriously, Metroid Prime for the Gamecube was awesome as well. It’s always amusing to hear that you’ve written words, like, what else would you write? “Behold mortals, I have written an empire.” but that’s not what you said so ummm bye.

  • Gilvus

    A Buffett chiasmus comes to mind: “Be fearful when others are greedy, and greedy when others are fearful.”

    I smell the latter.

  • Ang

    By the way, speaking of metroid, the speed run community does fundraising (recently for cancer prevention) twice a year, in the winter (AGDQ – Awesome Games Done Quick) and in the summer (SGDQ – Summer GDQ). They’re raising $1m-$1.5m each session recently, and a fair bit of the donations is a vote on whether to “save” or “kill” the animals at the end of Metroid (the idea is, if you’re a true speed runner, you want to save the 30 seconds it takes to save the animals, which brings up a pixel related moral dilemma of sorts).

    Here’s the video of the speedrun: https://www.youtube.com/watch?v=ndYcpuurNVY&index=151&list=PLC-lvO7aujzlffjQ2sGNN4RBwZEZVVXFc
    And here’s the donations – this year they voted to kill the animals: https://gamesdonequick.com/tracker/bid/3785

    Thought you and Aaron might enjoy – my favorite runs are the Zelda ones, the way they’ve broken Ocarina of Time is unbelievable (sub 18 minutes to beat the game from start to finish now)

  • Ang

    “The current system has largely failed a meaningful percentage of men and women; created a sense of unfairness, perceived or otherwise, that the elite continually waive off as not material”

    Any thoughts/expansion on this portion of the article? Morgan Housel came up with some statistics the other day that made a lot of sense in explaining why people have a perception gap (and reinforcing humans being egocentric), some excerpts:

    -The unemployment rate for Asian women age 34-44 is 2.9%. For African American men age 16-17, it’s 45.1%.
    -For those with a doctoral degree, unemployment is 1.7%. For those without a high school diploma, it’s 8%.
    -During the peak of the recession in 2009, the unemployment rate for those with a bachelor’s degree never topped 5.3%. For those without a high school diploma, unemployment hasn’t been below 5.3% in more than 30 years.
    -Inflation-adjusted wages for men with advance degrees have nearly doubled since the 1960s. They’ve declined for those without a high school diploma and barely budged for everyone else.
    -The labor force participation rate for men has declined in 48 of the last 67 years. For women, it’s increased in 51 of the last 67 years.
    -The richest 1% of Americans have a life expectancy 14.6 years longer than the poorest 1% of Americans, and that gap has increased over time.
    -The unemployment rate for men age 25 and up is 4.1%. For married men, it’s 2.7%.

    I’m uncomfortable that so many of the population focuses more on what they don’t have rather than how they can take the steps to get what they don’t have and want. However, it is very understandable that just because the population as a whole is getting richer and the level of wealth to be considered poverty keeps rising, it doesn’t ease the fact that many people get screwed in the process (lifetime manufacturing workers, or non-knowledge workers in general, for example). Probably the toughest social issue to solve is how to balance the widespread desire for equal results versus the better goal of equal opportunity

  • I find it quite an achievement for democratic ideals that we witness yet another peaceful overthrow of a government. The U.K. Prime minister resigns without any resistance once it was clear his plan to remain in the EU was not supported by his country. This is in such contrast to many totalitarian regimes around the world.

    It’s hard not to be amazed and grateful that we live in a part of the world that such change can occur peacefully. In 1776, such change led to a devastating war. In 2016, 240 years later, we see peaceful change.

    Economic considerations aside, the ability for a nation to express its sovereignty and follow will of the people speaks well for the future.

    • Jeff

      Well, peaceful except for one murder, but I see your point.

    • LordSquidworth

      This is a lousy example.

      Just a couple days and the politicians touting big promises are already back tracking saying they never said that.

      This is an example of individuals taking advantage of people’s emotions and playing into them to get a change.

      We spend over £300 million a week on the EU! That can all go to the healthcare system instead!

      Is now…

      I never said that. Yes we spend that much but much of it comes back into the country as subsidies from the EU.

      And now a bunch of farmers that voted in favor or leaving the EU are worried that means an end to the subsidy.

      Promise to drop six digit immigration to five digits? Back tracking on that too. The EU can easily have the UK maintain open borders similar to the current setup in exchange for continuing free trade.

      Boris Johnson is a charismatic brilliant politician. However he’s also a selfish human being that loves to look after his own self interests and can be very convincing to the masses that something is in their best interest.

      I still question as to whether a split from the EU actually occurs. With Scottland and Northern Ireland already talking about succession the Brits would be foolish to proceed as is. They’ve already got more than enough signatures to have Parliament take up discussion for another vote and maybe all the upset young people will vote. basically, not nearly enough thought and discussion that should have gone into this occurred.

  • Roundball

    TIF back near 52 week low. Hmmmm….

    • Derek

      Complete overreaction since the U.K. is only around 5% of revenue for the company, and all of Europe around 12%. Very tempted to add to my TIF stake today.

  • Jeff

    It’s so interesting. HSY and CLX are up, DEO hasn’t dropped back under 100 like it did right before the vote…. UL is nowhere near 52 week lows, and TIF just made a new low. Wacky.

    • Derek

      When I saw the news I was hoping maybe UL would fall off a cliff and I’d finally add it to my portfolio. Oh, well. Plenty of other great companies out there.

      • Stephen H

        UL is one of mine that I love. Keep slapping that Hellmans on folks, I won’t stop you!

        Such a great business.

        • Jeff

          I keep turning over classic American brand products and find the little UL. I want to buy more, but under 40.

        • Derek

          Indeed, a great business, but I can’t bring myself to pay the current price. I’m with Jeff in that I’m not really interested until it gets below 40.

    • Dustin

      I was able to pick up DEO for that brief moment it went under $100. Been waiting patiently to add it for quite a while. Bought a nice slug to add to the retirement portfolio. I also figured DEO and UL would drop a lot further. Definitely still could, we shall see how this plays out over the coming days, weeks and months ahead. I’ll be ready and willing should Mr. Market offer more opportunities at the right price. Almost picked up some TIF, but personally I’d be more interested in the $55-$58 range. Even at present price, risk/reward ratio is still great.

    • A

      Are you me? I looked at these exact same stocks earlier today.

      • Jeff

        Ha! If you are also a long time Joshua Kennon reader we probably have been similarly influenced. The interesting question becomes – For those of us heavily influenced by Joshua Kennon, what stocks are we looking to buy that he hasn’t mentioned so far?

        For me that would be: BR, CVS, EXPD, GWW, MDT, SHW

        • A

          Agreed! I have been reading Joshua’s work for a few years now so I always think “What would Josh do/say in this situation?” I have been focusing on Canadian/UK stocks recently because they have favorably taxed here in Canada. I have profited from buying energy and energy related stocks: ENF, SU, CWB, RDS.B and BNS. Been buying DEO too. I like your stock watchlist, but I am also looking at NKE and AXP. The next few months will be very interesting.

        • Steven

          Joshua probably just fell out of his chair when you replace Jesus with him in a WWJD sound bite!

    • Dustin

      HSY up 20% on Mondelez takeover offer. This better not go through. I don’t want HSY selling.

  • Pete DIC

    The current system has left many people behind, or did it? Here is how people voted on the EU referendum:

    http://www.telegraph.co.uk/news/2016/06/24/eu-referendum-how-the-results-compare-to-the-uks-educated-old-an/

    What is the strongest predictor for “Leave” votes? Being a UKIP supporter. Now, who are these UKIP supporters?

    http://www.huffingtonpost.co.uk/laurence-stellings/ukip-poll-voters_b_6631026.html

    Here’s a typical UKIP supporter portrait from the info: White male, ages 40 or older, poorly educated, of C2DE social class, socially conservative, living in the rural parts of the UK, and have very little assets (rely on social renting and other welfare).

    These voters definitely value their ideals above their material comforts, which they have very little to speak of. They do not care much about the economic consequences because they have little to lose (at least in their minds). Well, now that we know the Leave camp has a large amount of supporters from the right, what about the left?

    A huge portion of the C2DE social class of Labour supporters voted Leave. Keep in mind, the C2DE class are the ones receiving the most welfare from the government. So I am not so sure its the system that had failed them or that there are even much moral reasons behind this result. The reality is, the lower classes will always outnumber the middle and higher classes when it comes to asking for a bigger share of the pie. (While some middle to higher class members may be sympathetic to the lower class demands and side with them, one would expect very few lower class members to voluntarily asking for less “free” money.) The lower classes, regardless of the right or the left, simply had a scapegoat to blame so they banded together and gave the broader community a big “F*** You”.

    To quote Joshua Kennon himself:
    “Sometimes, I feel like human culture is a war between producers – good, honest men and women who love their job and work very hard being teachers, doctors, lawyers, accountants, business managers, and start-up founders, striving to better the world and create value – and entitled parasites, who think everything should be provided. These parasites seem to believe that simply by virtue of being born they are entitled to an income, to a secure retirement, to not have to compete.”

    — The Socialists Have Taken France. May 6, 2012

    So what should the UK do now? Heck, what should US do? Is this foreshadowing what will happen in November? Well, here is another quote

    “Entitlement is a cultural cancer. To paraphrase Aldous Huxley referencing his watershed work, Brave New Work [World?], freedom is the right to struggle. Freedom is the right to be broke if you make bad decisions. It is the right to be fat if you eat poorly. Freedom is the right to be miserable if you have no self-control. Freedom is the right to fail. Freedom is the right to die an abject loser.”

    — The Socialists Have Taken France. May 6, 2012

  • Matt

    “…I ultimately believe that it is not my place to tell British citizens how their country should be run even though I am a stakeholder in their success”

    I think this is an easy position to take and I see it often. I can understand that it is prefectly reasonable to refrain from commenting if you are not informed enough about the situation, but it seems that a lot of people don’t like discussing foreign affairs out of a fear that they will be perceived as a meddling imperialist/colonialist. Why is it that foreigners shouldn’t be allowed to comment on political affairs? It’s not like you are forcing the British citizens to listen to your opinion.

    In any case, while I agree that the ‘Leave’ voters have legitimate grievances, this masks a fundamental problem of governance. I’m concerned about the idea that decisions with such drastic (and difficult to reverse) consequences can be decided by a simple 50% + 1 vote. Especially if the people who are most harmed by the policy change will have to live with it the longest.

    https://pbs.twimg.com/media/Clq7LmNWkAQ5GA1.jpg

    This seems completely contrary to what I view as a benefit of the US judicial system where the courts are a line of defense against majoritarianism (especially in the context of civil rights) and seem to favor stability over surprises and sudden policy reversals. What happens in 5 years when the demographics of the electorate shift? If you were to hold a referendum at that time, would the results be different? Unfortunately – it would be too late at that point – the damage would have already been done.

    Referendums in general seem to be a poor way to govern a country. Of all of the ways to address the grievances of those who voted ‘Leave’, was a referendum really the best option? Couldn’t they have been compensated in some other way that wouldn’t result in what seems to be a large loss for the younger population? Why did the government resort to pushing the red button? Of course – part of the reason, as you alluded to, is the arrogance of the elite. They assumed that they would easily win the referendum, which would allow them to silence the opposition and carry on business as usual. On the other hand, part of the reason is growing sentiment that the EU is broken and cannot be reformed – therefore it should be scrapped. Unfortunately, given that the voting seemed to split itself on age, this argument doesn’t seem like it should hold as much weight.

    “The people have spoken” is a lazy way to end the debate. Referendums are actually quite dangerous – there’s a reason why dictators and politicians like them. Usually, you only call a referendum when public opinion is in your favor. And then you run an emotionally focused campaign in an attempt to manipulate the electorate. And since “the people have spoken”, it is very hard to challenge the legitimacy of the result (conversely the government can point to the referendum to avoid blame if the policy fails). So as long as you run your campaign carefully, you can pass policies via “the will of the people” even if the policies are oppresive, infringe on civil rights, or are simply bad policy supported by bad math.

    As an example – the use of referendums are a large part of why California is ungovernable. Simply put, giving voters a chance to vote on initiatives in isolation is bad for policy, for the same reason why you don’t want Bernie Sanders as president. “Do you want more services?” Yes! “Do you want lower taxes?” Yes! Of course the electorate will vote for both since they are presented each option in isolation and are not obligated to think about how each decision affects the system as a whole. Referendums simply exacerbate the problem that people simply want more benefits at no cost.

    Ultimately I see the whole referendum as a tragedy. Not so much because Leave won, but because referendums are fundamentally flawed as a policy tool and this whole situation probably could have been avoided. The situation seems to have been resolved in a way that will leave bitterness on all sides, as I’m not optimistic that Leave will get the ideal that they thought they were voting for. In any case, society is getting more and more polarized and this is yet another vote for change. People be getting angry!

    • Gilvus

      The best argument against democracy is a five-minute conversation with the average voter.
      – Often misattributed to Winston Churchill.

      Referenda are instruments of pure democracy, and the only thing separating democracy from mob rule is a thin veneer of positive or negative connotation. The Founding Fathers themselves didn’t trust the capricious wants and easily-manipulated fears of the masses; that’s why they opted for a representative democracy and why Senators were originally appointed by state legislatures (until the 17th Amendment).
      With the California comment, are you referring to the Economist article?

  • Mykrohan

    It’s good to know that virtually all of the people I take very seriously on matters on policy are in favor of not freaking out. I think I’ll do the same.

  • zpeti

    As a thirty year old small business owner, let me firstly say that the media and social media reaction to Brexit has been absolutely ridiculous, and basing your opinion of why Brexit happened on the narrative of what you read in the media will give you an extremely skewed view.

    First of all, almost all polling before the referendum showed that the number one issue influencing leavers is not immigration but democracy. The stand point of leavers for the past 1-2 years at least has always been that CONTROLLED IMMIGRATION is needed, and that Britain would be much better off getting controlled immigration from the whole world rather than uncontrolled from Europe. In fact there were plenty of leave voters who were commonwealth immigrants apparently.

    It was always remainers who tried to use immigration and racism arguments to character assassinate leavers, which of course didn’t work. They also had absolutely no valid response to the arguments of leavers.

    Secondly, the only explanation for what happened from remainers seems to be that leavers are stupid, old, racist bigots. Still, remainers are finding it completely impossible to counter the arguments of leaving, except for using straw man arguments of what a typical leaver is like. Maybe I am the exception to 17m other Brits, but I have a business that I built myself with 15 employees, I have a degree from the 3rd best university in the UK, and I was grammar school educated. And I voted to leave.

    But seriously, do remainers really think 17m britons are stupid racist bigots? Please think about this carefully about how realistic this is. Not to mention a lot of the conservative party voted to leave, who aren’t exactly lower middle class white racists.

    The remain campaign seems to think the leadership of leave scared the population into voting leave with lots of untrue facts. Even if this is so, please take a look at the insane scale of scaremongering that the remain camp did, culminating in George Osborne threatening a massive contractionary budget on top of a recession from Brexit. If he was actually serious he would be one of the worst chancellors in history, if not then it’s ridiculous scaremongering.

    Thirdly, there seems to be some sort of new EU dream now in the eye of remainers about how the EU is this wonderful organisation that we decided to leave, that was perfect for Britain. Please just look at what the EU is objectively. It is an organisation that has the power to create laws for any country within it, and these laws are created by an unelected commission. The parliament only has a right to reject or approve laws. It is an organisation where 28 members need to agree on anything, almost impossible usually. It has completely failed southern europe, and will soon be failing other places like Finland where the economy is tanking. It has completely failed to create decent workable policy around the refugee crisis. In fact, BRITAIN was the only country with a sensible solution to it, supporting refugee camps around the crisis areas, and accepting refugees from those camps, thereby discouraging the risky journey for immigrants.

    Obviously when your side loses it’s hard to process is psychologically, and the easiest way to cope with it is to dismiss the other side as idiots. But I’m pretty sure 52% of Britain are unlikely to be just stupid lower class idiots.

    • Pete DIC

      Hey, let’s have a discussion.

      1. “First of all, almost all polling before the referendum showed that the number one issue influencing leavers is not immigration but democracy. The stand point of leavers for the past 1-2 years at least has always been that CONTROLLED IMMIGRATION”

      I am not sure I understand, is the number one issue immigration or democracy? Or did you mean it was about controlled immigration until immediately before the referendum then the number one issue became democracy? And what is the issue with democracy?

      2. “In fact there were plenty of leave voters who were commonwealth immigrants apparently.”

      Source please? Could you show a link or pic that demonstrates the demographic you spoke of.

      3. “it was always remainers who tried to use immigration and racism arguments to character assassinate leavers, which of course didn’t work. They also had absolutely no valid response to the arguments of leavers.”

      Didn’t you just mention the stand point of leavers has always been controlled immigration? So if “Leave” is about controlled immigration, and the remainers talk about leavers opinions, it all the sudden becomes character assassination?
      Regarding valid response to the arguments of leavers, I suspect immigration is part of the access to the market package, at least that’s how people believe it, but may be that could change?

      4. “Secondly, the only explanation for what happened from remainers seems to be that leavers are stupid, old, racist bigots. Still, remainers are finding it completely impossible to counter the arguments of leaving, except for using straw man arguments of what a typical leaver is like. But seriously, do remainers really think 17m britons are stupid racist bigots? Please think about this carefully about how realistic this is. Not to mention a lot of the conservative party voted to leave, who aren’t exactly lower middle class white racists.”

      I really don’t know nor understand what arguments leavers had other than controlled immigration as was repeatedly mentioned here but the post-vote numbers don’t lie (much). I am not calling the leavers stupid racist bigots. The demographics of the Leave camp, on average, is indeed older, poorer, and less educated than the remainers (please refer to my post 5 days ago for links on the demographics). That being said, of course some people that voted leave are young, affluent, and well educated. Even so, the fact is, a huge majority of C2DE class, who are by definition, poorer and less educated, regardless from the right or the left, voted to leave (about 60 to 65% of all leave votes).

      5. “The remain campaign seems to think the leadership of leave scared the population into voting leave with lots of untrue facts. Even if this is so, please take a look at the insane scale of scaremongering that the remain camp did, culminating in George Osborne threatening a massive contractionary budget on top of a recession from Brexit. If he was actually serious he would be one of the worst chancellors in history, if not then it’s ridiculous scaremongering.”

      Not really sure if what the remain camp predicted was all scaremongering, the market, and the GBP did react adversely after the results came to light. I hop this is where the economic turbulence ends for the sake of all British people. But we will see. Cant comment on Osborne, I dont know enough.

      6. “Thirdly, there seems to be some sort of new EU dream now in the eye of remainers about how the EU is this wonderful organisation that we decided to leave, that was perfect for Britain. Please just look at what the EU is objectively. It is an organisation that has the power to create laws for any country within it, and these laws are created by an unelected commission. The parliament only has a right to reject or approve laws. It is an organisation where 28 members need to agree on anything, almost impossible usually. It has completely failed southern europe, and will soon be failing other places like Finland where the economy is tanking. It has completely failed to create decent workable policy around the refugee crisis. In fact, BRITAIN was the only country with a sensible solution to it, supporting refugee camps around the crisis areas, and accepting refugees from those camps, thereby discouraging the risky journey for immigrants.”

      Is this the “democracy issue” you were referring to in the beginning? My knowledge of EU commission is a bit hazy, but doesn’t the Lisbon treaty grants the EU parliament indirect right of legislative initiative via “asking the commission to submit a proposal”? In fact, it appears only a very small percentage of legislative proposals originated from within the commission, most of the proposals are requested by the member states (elected government) and the parliament (elected members).

      http://www.europarl.europa.eu/aboutparliament/en/20150201PVL00004/Legislative-powers

      And as you said, the members of the parliament, who are elected, can either reject or approve the laws. Combined together, this sounds like a representative democracy working as intended.

      Personally I think Southern Europe and Finland are struggling for many reasons, but if you want to blame the EU for it, be my guest. However, I am pretty sure you are confusing the issue between refugees and immigrants. Most immigrants that reside in the UK today are not from the refugee crisis you spoke of.

      I dont really have a side, just here for discussions, I look forward to hearing your thoughtful reply and/or arguments backed up by data.

      • suchan104

        Sorry I’m late to the discussion but I thought your points deserved a reply.

        1. Polls of Leave and Remain voters have been conducted by a number of polling agencies, particularly Lord Ashcroft Polling (lordashcroftpolls.com) and Sovereignty was the #1 issue for Leave voters (53%) with Immgration being the second most important issue (31%).

        2. While most immigrants voted Remain there were indeed a sizeable minority who voted Leave (https://www.theparliamentmagazine.eu/articles/news/brexit-referendum-voting-analysis)

        3. I think you have mis-represented the point made by zpeti. The Leave campaign talked about wanting controlled immigration, as is currently the case for every non-EU citizen wishing to enter the UK. Large parts of the Remain campaign and their supporters have deliberately mis-represented this to describe Leave voters as being anti-immigrant, xenophobic and even racist. While that description will sadly apply to a small minority who feel that way and would therefore be certain to vote Leave rather than Remain, the vast majority of Leave voters either didn’t consider it their primary reason for voting Leave or just want immigration controls to reduce the rate of immigration from current levels. There is also concern amongst many people who voted Leave that with Germany having thrown its borders open to take a large mass of refugees (ostensibly from Syria but economic migrants from elsewhere have also been found amongst the Syrian refugees) and Sweden having done the same this has resulted in a large increase in sexual assaults on women. Britain itself is currently reeling from a number of cases (in different towns and cities) of systematic grooming and gang-rape of under age girls by gangs of Muslim men (https://en.wikipedia.org/wiki/Rotherham_child_sexual_exploitation_scandal view the “See also” at the bottom for the nine cities). While I personally know plenty of Muslim men to know that making sweeping generalisations about all Muslims based on these crimes (or the Islamic extremism that is fomenting in European cities, including London) is unjustified there are plenty of people who see this and fear having swarms of male refugees who will soon have German or other European passports who then have the right to come and settle in the UK. The UK is also uniquely attractive as a destination for many EU immigrants because of the prevalence of English as a second language.

        4. You are correct about the demographics of Leave voters, but as I’ve already mentioned immigration was not the primary motivation for most Leave voters. Where it is a concern it is not an anti-immigration view but a desire for control. It’s somewhat ironic that we’re writing on Joshua’s excellent web site in the US, where immigration controls are in place (even if they are not always effective). As I travel around the world every nonEU nation has the same control over their borders, but when Leave voters say they want the same control then they are sneered at by the educated elite.

        5. In the referendum campaigns both sides made statements that were deliberately misleading. For example, Leave claimed we send £350m a week to the EU which is correct, except that the UK gets a rebate on its contribution and then receives some spending back from the EU. So our net contributions are nearer £155-165 million a week. Not a lie, but misleading. One thing that has not been appreciated (or maybe it’s been deliberately ignored) though is that the Leave campaign was not a party manifesto and the leaders of that campaign have no power. So saying that they are now breaking promises is absurd because they were not in any position to make any promise other than if the UK leaves the EU then the UK government can enact whatever policies it wants without EU interference.

        6. On the democracy issue: you didn’t provide any factual data, except for a link to the website of the European parliament. On that website you can find the Ordinary Legislative Procedure (http://www.europarl.europa.eu/aboutparliament/en/20150201PVL00004/Legislative-powers) which clearly shows that most EU legislation is initiated by the Commission. Being in a position to propose legislation puts you in a vastly more powerful position than those who are there to either reject or approve the proposal, because you get to decide what is going to be considered and what isn’t. That decision is made entirely by the Commission following so-called trilogues with the Council and Parliament. You are correct in that some modifications were made in the Lisbon Treaty but these include a Citizens’ initiative which requires 1 million signatures from citizens in at least 7 members states, or you can lobby your MEP who can ask the Commission to propose legislation, but only if it is needed to implement a Treaty, or raise a petition signed by half of the MEPs. These are rather difficult for any ordinary EU citizen to do and their only hope is to write to the Commission and hope to persuade them to initiate legislation. Having seen the replies from the European Commission to 5 UK citizens who have done that, I wouldn’t pay much attention to it as a democratic mechanism. So the EU has something that can be vaguely described as being democratic but there is a massive democratic deficit. The response of the Commission to any questioning is that nothing can disturb the “European project” and the answer to all crises is “more Europe” (i.e. more power for the Commission).

        Finally the whole construction of the Eurozone is responsible for the mess that is Southern Europe. From its inception the Euro has essentially been under-valued for the German economy and over-valued pretty much everybody else in the Eurozone. On top of that many countries who joined the Eurozone suddenly found themselves with interest rates that were backed by Germany’s economic strength, and so a massive debt-fuelled boom occurred. One result of this is that the peripheral countries used this cheap money to buy German-produced goods. So Germany has done very well out of the Euro but the Italians and Greeks really would be better off outside. The countries have 40-50% youth unemployment which is scandalous. While the UK and the US (to say nothing of nonEU Iceland and Switzerland) have recovered from the financial crisis (although they still have their weaknesses) the likes of Greece, Italy, Portugal, Spain and even France are struggling because the Euro is essentially being run for the benefit of Germany.

        One thing that has not been mentioned much is the fact that a vote to Remain would not have ensured the status quo but it would have been seized upon by the EU as a mandate for the UK being involved in deeper integration. I think some who might have been happy with the status quo may have voted Leave just to avoid the European Institutions being given a mandate to inflict anything they wanted upon the UK.

        The UK has now voted to Leave and I believe we should get on with it. There are always opportunities and I think if (and it is a big if) the UK governments make the correct policy choices then it could eventually work out well.

  • AC

    The Brexit is fantastic news, and reason to rejoice. Hopefully this is merely the beginning of a wave of sovereign self-determination.

    I have no illusions that the next several years will be easy. Or that there won’t be a very small negative long-term impact to the UK’s GDP. But in the end, is GDP the most important aspect of our quality of life? No, it is not. Shaving a few tenths of a percent in long-term GDP growth is a miniscule price to pay for border control and freedom from external regulation. Just imagine if U.S. Supreme Court decisions could be overturned by a court in a different country, with no chance of appeal. It’s totally an aburd notion.

    • Pedro Pinto

      You clearly don’t understand how things work in Europe… With all this Brexit b******* if something, UK are most likely to loose the little control they use to have over their borders! In the (unlike) case they actually leave the EU (yes, because they way things are moving probably no one is going anywhere), they will never leave the EEA, as that would be an economical suicide! In this situation they will have to join the Schengen zone, keep the free movement of EU citizens and totally suspend any passport/id control from travelers/citizens from the Schengen zone. In case you don’t know, UK always kept their borders even from inside EU. It’s true they couldn’t refuse entry to an EU citizen, but at least they would know/control who is going in/out. Joining the Schengen zone means the end of this control at all! Open you eyes… all this situation was a political move that went wrong! No one thought this would actually happen! Why do you think the “winners” are dropping like flies?

    • Pedro Pinto

      One more thing, as for the external regulations, they still need to comply with most of them! Europe is the UK biggest selling market, and will still be for many years! If you want to sell anything in Europe your product as to be compliant with EU regulations!
      As for the regulations that aren’t related with exportation, workers benefits for instance, I’m sure there isnt any Brit that want to loose all the benefits brought by EU and go back to a model similar to the one in USA…

  • Todd

    Bought my first bank stock 100 shares of WFC 46.125 I will enjoy the 3.00% + dividend over the next 50+ years Thanks to Brexit.

  • Peter

    The U.S. doesn’t seem to have suffered that badly…

    • Pete DIC

      My opinion is that we’ve benefited at the loss of average UK citizens. It’s as if they had voted to generously donate their life savings to us. Enjoy.

  • Pete DIC

    Thanks for the insight, sorry for the late reply.

  • Pedantique Wretch

    Most of my educated friends voted to stay – it’s a philosophical thing for me, I want to be inclusive not exclusive – but some of my older family members voted to leave. Like you I’m first gen university … “Only connect!” Is my favourite quotation (EM Forster).

  • TooMuchAlready

    I apologize if you don’t like people putting articles on your site but I think you’ll find this an interesting read.
    https://theintercept.com/2016/06/25/brexit-is-only-the-latest-proof-of-the-insularity-and-failure-of-western-establishment-institutions/

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