dexfarkin: (me)
[personal profile] dexfarkin
My phone blew up about 8 this morning with people texting me about the results of the Brexit referendum in the UK. Seems my friends are well aware that my free time consists largely of watching other countries political systems like it was some kind of World Cup qualifier. However, especially at it relates to a number of trends happening worldwide, I have been following it closely.

Brexit is a fairly unique situation, far more akin to politics of a hundred years ago. The drivers have nothing to do with the actual issues at hand. Much like, say, the Tea Party in the United States, the Leave supporters are predominately older, rural, and are driven by a sense of lost power which they blame immigration and multiculturalism for. It is not a political position as opposed to a populist or even tribal one. The basic arguments to leave the EU are largely fictional; that EU immigration is taking jobs from UK workers and their benefits are displacing benefits for real (white) Britons; that the UK is struggling because they are losing money net to the EU to shore up struggling east European economies; and that the EU has limited the self determination of the people of the UK.

All of these are demonstrably false. No, seriously, all of these arguments can be disproven in a handful of graphs and statements. So why have they been accepted as gospel by such a large group?

In short, it is a protest vote. It's been driven by a lot of ugly elements like racism, ignorance and envy, but at the core, there is the basic underlying understanding that multinational coalitions have been weighted to support business concerns ahead of citizens. Which is a fair point. At the bottom of most Western cultures right now, there is a simmering dissatisfaction that the last thirty years have resulted in tremendous gains for a small group and an increasingly difficult life for the majority. The trouble is that dissatisfaction can find all kinds of unrelated release valves and when pumped through existing preconceptions and prejudices, it expresses itself through the ugliest forms of populism. In many 'Leave' voting regions, it is already reporting dismay at the outcome of the vote, as voters never thought that leaving was possible, but wanted to express their anger. In a way, people assumed because the mass of business and finance wanted to remain that they could somehow rig the vote in their favour in any case. This wasn't so much a vote against the EU as it was a show of anger at the underlying inequitable systems that they represent or support. Unfortunately, the true victims of the vote will be the very supporters of it.

Here's my initial takeaways and predictions.

1. The Millennials and GenX generations of Britons just got fucked. This is the group that is widely dispersed working through the EU, who have crafted their professional lives around the access that they've always had and have been required to do so in order to deal with the mountain of debt they've been straddled with. The 'Leave' side is overwhelming 50+. I would not be surprised to see a huge backlash against the older generation, especially as formerly successful mobile workers return to an economically depressed country to fight for one of the fewer and lower paying jobs, just as the aging boom hits the NHS en masse for care. Logan's Run isn't necessarily sci-fi.

2. The days of the United Kingdom are numbered. This will trigger a second Scottish referendum, which will vote to separate in order to remain in the EU. Scotland was the most heavily 'Remain' weighted region in the UK. The dissolution of the UK badly undermines British strength in diplomacy and economic leverage, which will lead to being forced to adopt one-sided agreements just to access existing markets.

3. The sterling fell through the floor today. Full on collapse of value. In addition, London just lost its position as the financial centre of the EU. Expect a massive transfer of jobs out of the city, which will depress values heavily, and lead to more foreign investment into their real estate market as the prices drop. Normally investment is a good thing, but in this case, it will be more like a garage sale; people picking up undervalued materials to hold on to. Real estate value in a market is only positive when the investment is an active player; some one buys a house, a family moves in, they join the local economy, etc. Passive real estate investment, holding properties against future valuation can actually depress economies, taking units out of the limited ones available without the additional tertiary value of adding people.

4. Expect Greece to hold another referendum. With the UK opting out, Greece can see the mechanisms in place for themselves. Considered how disastrous the state is, their single best option is to return to the drachma, devalue the hell out of it, and restructure. They've been forced into a zero-sum game right now of being forced to sell off their economic underpinnings wholesale to foreign investment to make small single point payments which undermines any possible recovery.

5. At this moment, the UK has lost over 100B sterling in investment value. The oldest generation that voted to 'Leave' also just destroyed their savings and pension portfolios. When that sinks in, there's going to be a very ugly response.

An ugly time for the UK indeed today.
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