by patches70 on Fri Jun 24, 2016 9:21 pm
Ya'll be too negative about this Brexit. In the words of Master Chief- "It's going to be alright".
The reality. There will be a short period of time where GDP and trade is impacted, but it won't last long at all.
EU or not the whole world is already interconnected in trade. Take BMW for instance, you think of it as a German car but that's only by association. For a BMW, the steel comes from China or Brazil, the upholstery from the UK, the engine from France and the electronics from the US. The labor costs for production for a typical BMW is about 10% of the total cost for the unit and some of that labor is foreign labor. Then there are the profits made by BMW that don't go to the mechanic in Dusseldorf, those profits are sent to shareholders and bondholders. More of those profits go to Japanese hedge funds than the average German. That is the world we live in, this boat sailed a long time ago.
UK is going to participate in the World economy whether they are a member of the EU or not. Period. There is no question of whether the UK is going to trade mostly free with the rest of Europe, and the rest of Europe is going to continue to trade mostly free with the UK. Germany's second largest bilateral trade surplus is with the UK. Germany has no interest in starting a trade war with the UK, it'll be business as usual no matter what. Same goes with all the other EU countries despite, for instance, France's threat of a bloody exit if the UK voted to. No private interests in Europe or the UK are interested in starting a trade war either.
If the UK is worried about trade all she has to do is remove impediments to imports as imports are intractably linked to exports. The ability to buy is linked to the ability to sell and since no one is going to be willing to start a trade war, UK is all good. No need to freak out. When the UK can remove those impediments will be a lot easier without having to go through a huge trading bloc first, the UK can make those policy changes themselves without having to get the EU's permission!
Now the EU has reason to freak out, but f*ck em. The EU receives about 136 million pounds a week from the UK in revenue. Historically UK has paid more to the EU than received from it. Today, in dollars, the UK gives the EU about $18 billion a year and receives about $8 billion back. Hahah! That 8 billion is used to fund education, social programs, etc etc. Does anyone else see the problem with this math? If UK loses getting that 8billion, who cares? They got the 18 billion that they don't have to give out!
At the moment, the EU has about 19.6 billion pounds worth of unpaid bills it owes and without the UK it's going to be that much harder for her to make up the revenue shortfall. The EU has countries like Greece who contributes absolutely nothing since the money Greece gives to the EU is from the money the EU keeps lending her in the first place.
Then there is the actual scope of the "pain" that the UK is "supposed" to feel. There are two big losers in the UK's vote to exit, UK billionaires and the rest of Europe. The UK market took a dump, but rallied back a bit, but look at the other market dumps from the rest of the EU, talk about pain!
Of the UK billionaires, the absolute biggest loser (in terms of money lost) is Britain's richest person, Gerald Grosvenor who had about a billion pounds wiped out. Don't worry, he can afford it, trust me. In total, about 5.5 billion was lost by UK billionaires with Grosvenor the biggest loser. Grosvenor was also part of one of the two major parties pushing from the UK to not vote exit. The wealthy UK elite and the EU being the two parties.
As to whether or not the UK will lose power in the world because of the exit, think again. The UK spends more money on their military than any other European nation. If people think Germany can defend Europe, think again, the UK is vital to European defense and that ain't gonna change. The only Western nation that spends more on military than the UK is the US herself. Europe needs the UK more than the UK needs Europe. It doesn't matter if the UK is in the EU or not. It won't change the reality. The UK merely changed the dynamic a little bit, the EU won't be able to milk off the UK anymore, she'll have to just keep sucking at Germany's tit until Germany gets all milked out.
So let not your hearts be troubled UK, "It's going to be all right". Relax, take a breath and I promise, the world is going to keep on spinning, everyone will adapt as they need to and things are going to be (relatively speaking) pretty much the same as it's been. At least until WWIII and who gives a f*ck about that? It's not like any of this will matter at that point.
