Brexit Ramifications

[Allabord4Jah]

This story was in the Korean Times/July 1, 2016 News on Internet:

 

Deglobalization looming large

 

Protectionism to threaten Korean economy slowly, silently

By Kim Jae-kyoung

SINGAPORE ― The most profound question the Britain's exit from the EU is posing is what will come in the coming decades. For Korea, a small, open economy vulnerable to external shocks, the Britain's historic decision has bigger implications.

Market analysts said that UK's vote to leave the 28-member bloc should be seen as the beginning of a shift from decades-long globalization toward "deglobalization" and "protectionism."

In other words, the UK's divorce from the EU is not an isolated problem in Europe but part of a global phenomenon ― the process of diminishing interdependence and integration.

"Brexit is the first step in deglobalization. The short term impact is limited to financial markets, especially the ones in a bubble state. All the bubbles will blow up," independent economist Andy Xie told The Korea Times. He is a former Morgan Stanley economist.

"Popular uprisings (against globalization) are inevitable. The Brexit is the first step. The U.S. presidential election is more important. If Donald Trump is elected, globalization is basically finished."

It will take many years for the world to crystallize what Brexit will look like eventually but it is obvious that uncertainty created by the event will linger long, destabilizing financial markets and thus leaving the global economy in the lurch.

Niall Ferguson, a world-renowned British historian from Scotland, said that the 2008 global financial crisis was the harbinger of deglobalization, expecting Brexit will provide the impetus for accelerating the development.

"Deglobalization has been underway since September 2008 ― measured by volumes of trade as well as by political commitment to globalization," Ferguson said via email.

"This is just the biggest step down since then," added Ferguson who is a history professor at Harvard University specializing in international economic and financial history.

U.S. Republican presidential candidate Donald Trump's popularity can also be explained in this context.

Sick and tired of soaring immigrants and U.S.'s growing role in international conflicts, more Americans are being attracted to Trump who has vowed to place a top priority on protecting U.S. interests.

On Wednesday, Trump pledged to rip up international trade deals, describing the Trans Pacific Partnership (TPP) trade deal as a "rape of the country."

According to the latest report released by Nomura, the demographic profile of Brexit supporters is found to be strikingly similar to that of American Trump supporters.

The report said that the UK polls showed the Brexit and Bremain camps to be close to neck and neck going into the referendum, as are the U.S. polls on the two main U.S. presidential candidates, Trump and Hilary Clinton.

Silent threat

Shin Jang-sup, an economics professor at the National University of Singapore, said that this phenomenon can be understood in the context of deglobalization ― the result of anger and outrage against globalization and capitalism.

"If you look at economic data from 1950s and 1980s when globalization had yet to begin in earnest, there was a strong middle class and they lived in better conditions than now," Shin said.

"Globalization gained momentum in 1990s with financial capitalism taking center stage in the global economy. Total global output has since increased but wealth has not been distributed fairly, which is shrinking the middle class," he said. "More people have come to believe that they are worse off due to globalization."

Once deglobalization materializes it is likely to deal a blow to Korea. What makes the situation more demanding is that it won't be easy to see the threat coming because it comes very slowly and silently.

"Korea is export oriented. It ultimately depends on trade. When globalization unwinds, the economy will suffer. It will be a prolonged process. It doesn't feel much in the short term. But, in ten years, we will find a big difference," Xie said.

Taking this long but slow process of global shift into consideration, Korea should take a two-pronged strategy in order to survive in a post-Brexit era.

In the short term, the country must deploy all policy tools ― fiscal and monetary ― to stabilize financial markets and keep the economy afloat.

In the longer term, the government should develop its economic model into a more sustainable one through structural reforms to better respond to changes triggered by deglobalization and protectionism.

"There's still some buffer for Asia to hold up growth. But there isn't enough ammo to go into a prolonged battle," Frederic Neumann, co-head of Asian economics research at HSBC, wrote in a report titled "Brexit Ripples."

"What the region really needs, therefore, is a more sustainable growth model. And that will not come until structural reforms are tackled."

[seagull]

On 01/07/2016 at 7:25 PM, Shawnster said:

All the news here (well, all I listen to is NPR...) is nothing but doom and gloom, how this is the worst mistake UK could ever make, even though it was a majority most don't want to leave, etc... 

 

Somebody thought it was a good idea.  Enough people thought it was a good idea and in the UK's best interests for it to even be put to vote.  The fact that the EU is worried other countries may follow indicates that some in these other countries might likewise think it's a good thing to leave.

 

In fairness, I'd like to hear their side of the story.  

 

The reason the idea of putting membership of the EU to a referendum was because David Cameron wanted to secure a victory at the last General Election.  The Conservative Party (aka "Tory", politically analogous to the Republican Party in the US) has always been divided on the nature of the UK's relationship with the rest of Europe.  This was simply an internal party issue for many years however over the past 10 years or the political landscape has changed and made the whole issue one of more national interest.

 

For years we have had freedom of movement across the EU but due to the generally similar levels of economic status migration of people between EU countries and the UK was fairly low.  However, in the early half of the 2000's EU membership was opened up to parts of Eastern Europe and this drove much larger migration from those countries into the UK since people could earn more here than in their home country.  There are now around 1,000,000 Polish people here for example, that's about 1 in  65 of the population.

 

For years there have been fringe parties on the right wing advocating the repatriation of immigrants.  They have never gained traction as they are basically white racists.  The widening of the EU, however, allowed the development of parties, especially the UK Independence Party (UKIP), who changed tack away from racial immigration to a new a target - the EU bureaucracy.  They built up an argument that Britain was sending huge amounts of money to the EU and only getting a raft of petty and stupid laws back (e.g. how straight or bent a banana must be).  They expanded that argument to suggest that the free movement of people was opening the UK up to unfettered immigration and thereby putting ridiculous strain on things like health services, schools, housing, transport etc.

 

This argument has gained traction over the past few years and we have seen several examples of formally bi-partisan voters (either Tory or Labour) voting for UKIP at local government elections in order to give the ruling parties a kick up the backside.  The whole message of "it's not racist to ask questions about immigration, it's not racist to want to ensure the power to make the rules lies with the UK government" etc. etc. etc. has resonated with ordinary people fed up with the problems they face on a day to day basis.  Of course the real reason for those problems has not really been the EU or immigration but it's suited UKIP to make the link as it supports their agenda.

 

In the lead up the last General Election in May 2015 it was obvious to the Tory party that they risked (a) losing a number of their own voters to UKIP and (b) seeing voters for other parties going to UKIP which would prevent them getting a majority government.  They'd already spent 5 years in coalition with the Liberal Democrat party and Cameron wanted sole power in government.

 

So he took a risk.  He said that, if elected, (a) he would go to the EU and negotiate a better deal on some aspects of things like immigrants being able to claim benefits and then, once the deal was negotiated, (b) put the UK's membership of the EU to a referendum. 

 

The Tories got elected.  Cameron trotted off to Brussels and got a deal.  He set a date for a referendum and we ended up in the situation where he lost the bet.  The people were not convinced by the argument to remain.   People were told that by leaving then the UK could regain control of our borders.  They were told that we send £350m a week to the EU and this could be used to directly fund services like the National Health Service.  They were told that the loss of free trade would be easily renegotiated as the rest of the EU needs UK trade more than we need them.  They were told the country would get back it's sovereignty.

 

Of course, most of this was exaggeration or even outright lies.  The problem was that the people were not given an alternative that sounded better.  Many of those that wanted to remain were clear about why they wanted to remain.  There were those on the leave side that had strong views as to why they wanted to vote that way.  There was a massive middle ground of people who simply did not really know.  Few of them were given sufficient information to make an informed choice.  They did not see through the lies and exaggerated claims of either side.  So what they did was think "well, the Government is telling me we will be better off in the EU but I'm not better off.  I don't have a good job, I can't get an appointment at the doctors, my kid's school is overflowing.  So much for being part of the EU.  I'm voting to get control back.  It can't be any worse...."

 

Other countries in the EU are worried since the same issues that the UK has are evident in other Western European countries.  There are parties similar to UKIP elsewhere in Europe.  If the UK is seen to be getting on OK outside of the EU mechanism then these parties will gain traction.  The problem with that is that no only does it threaten the existence of the EU but it also allows right wing extremism to resurface.  There already has been lots of evidence that people are more prepared to come out with racist nonsense and abuse since the referendum result.

 

[hatcheckgirl]

6 minutes ago, seagull said:

The problem with that is that no only does it threaten the existence of the EU but it also allows right wing extremism to resurface.  There already has been lots of evidence that people are more prepared to come out with racist nonsense and abuse since the referendum result.

Well explained, Jez, to all of us watching on, even from far away on the other side of the earth.  Australia too had elections last Saturday, and we have yet another hung result.  Tomorrow they will probably tell us the Liberals (who are our "tories/conservatives") may have just scrapped through.  But it does seem that these fringe parties, the ones who are now emboldened to sprout racist policies disguised as immigration as their main agenda, are gaining more of a following here too.  It does seem that in all countries there is a wide swing towards insular protectionist policies.  Things are all heading in the same direction worldwide.

[Tbs77]

Last week one radical USA talk show host stated that Angela Merkel has the power Adolf Hitler dreamed of... Without firing a shot.

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[Tbs77]

Fog of Brexit clouds outlook for central banks seeking clarity

http://mobile.reuters.com/article/idUSKCN0ZN0BN?il=0

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[Tbs77]

Obama urges NATO to stand firm vs. Russia despite Brexit fallout

"The special relationship between the US and the UK will endure. I have no doubt that the UK will remain one of NATO’s most capable members," he said, adding that the vote raised significant questions about the future of EU integration.

http://mobile.reuters.com/article/idUSKCN0ZN2NL

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[retroHelen]

Just watched the BBC News and Obama and Cameron were at a meeting shaking hands and the News commentator reported that UK is sending another 650 troops to the borders between Europe and Russia to protect the borders from any further incursions of Russia after what they did in Ukraine/Crimea. Cameron reiterated that leaving the EU trading market had nothing to do with NATO and protection of Europe's borders.

 

For the sake of fairness/hearing the 'other side's opinion', the BBC interviewed the Russian ambassador and he was scoffing at these manoeuvres, more or less saying: "What has Europe got to fear from Russia?!", yet also implying that Europe, UK&USA were being a bit aggressive towards Russia and they did not approve of that.

http://www.dailymail.co.uk/news/article-3680030/PM-pledges-650-troops-Nato-curb-threat-Putin-Cameron-tell-leaders-Britain-global-force-despite-Brexit-summit-Warsaw.html

[thegreenjudy]

Not sure if we have any EU Nationals in this forum living in the UK? I don't have British Citizenship and hubby has UK Passport as well as Irish. So technically we could go anywhere if push came to shove (I am not really that worried anyway but there are many Poilish brothers living here). The Home Office implied that by the time we have left the EU, most EU Nationals would have automatically received residency and it would be legally impossible to send them back - and the rest would likely be given amnesty. On the other hand, the Government is trying to use EU Nationals as bargaining chips for the negotiations. Gonna be interesting.

[Bluebell]

31 minutes ago, thegreenjudy said:

Not sure if we have any EU Nationals in this forum living in the UK? I don't have British Citizenship and hubby has UK Passport as well as Irish. So technically we could go anywhere if push came to shove (I am not really that worried anyway but there are many Poilish brothers living here). The Home Office implied that by the time we have left the EU, most EU Nationals would have automatically received residency and it would be legally impossible to send them back - and the rest would likely be given amnesty. On the other hand, the Government is trying to use EU Nationals as bargaining chips for the negotiations. Gonna be interesting.

I am German and my husband is British........as long my husband is alive I should be fine,

but we are a little bit worried what happen if.....

thinking about getting a British passport, if there would be not the expensive fees...

 

At the moment we hope the end is coming before.....but need to keep our options open....

Proverbs 22:3   

[thegreenjudy]

Yes same situation here - I am German. But I am not panicking (yet..lol). I don't see why I should spend so much money on a passport - it is so expensive. They either want me here or not. Besides, since you are married and have established a family here, I doubt that they will kick you out - even if the worst thing happens I guess you have lived her for longer than 5 years? And do you have children?

[Bluebell]

48 minutes ago, thegreenjudy said:

Yes same situation here - I am German. But I am not panicking (yet..lol). I don't see why I should spend so much money on a passport - it is so expensive. They either want me here or not. Besides, since you are married and have established a family here, I doubt that they will kick you out - even if the worst thing happens I guess you have lived her for longer than 5 years? And do you have children?

Moved back to England in 2002......... children are all married (Germany and Ireland)...

only one  grandson is living with us....he is German too....

Not that I think they will kick me out.....but what about if you have rely on benefits?

Anyway.....wait until it comes our way......

[thegreenjudy]

40 minutes ago, Samira said:

Moved back to England in 2002......... children are all married (Germany and Ireland)...

only one  grandson is living with us....he is German too....

Not that I think they will kick me out.....but what about if you have rely on benefits?

Anyway.....wait until it comes our way......

 

Ah I see what you mean

 

Do you own a house, have life savings or insurance? I think if you have been able to support yourself for such a long time and now have your roots here, you would be eligible for benefits. Also, Jehovah is in the picture too 

 

I am more worried about having to move AGAIN..argh..

[Bluebell]

9 minutes ago, thegreenjudy said:

 

Ah I see what you mean

 

Do you own a house, have life savings or insurance? I think if you have been able to support yourself for such a long time and now have your roots here, you would be eligible for benefits. Also, Jehovah is in the picture too 

 

I am more worried about having to move AGAIN..argh..

we sold our house few years ago....interests mortgage only...to downsize

and renting since...so no savings, no insurance either.....

Living from my husbands small pension .....we are fine..

no financial worries at all...

In 5 years I should get my German pension.....but what will be in 5 years?  Hopefully the new world..

[thegreenjudy]

10 minutes ago, Samira said:

we sold our house few years ago....interests mortgage only...to downsize

and renting since...so no savings, no insurance either.....

Living from my husbands small pension .....we are fine..

no financial worries at all...

In 5 years I should get my German pension.....but what will be in 5 years?  Hopefully the new world..

Oh yes!!