David Haggith, "Brexit: Brits Lead Anti-Establishment Rebellion in European Departure", © The Great Recession Blog (24 June 2016)
Regardless of the extent to which global fear mongers are right about the economic catastrophe that will hit every shore of the world after the Brexit, the most significant fact of the Brexit will be that the UK was the first nation to start the inevitable break-up of the EU. I have said since its beginning it cannot and will not hold together.
The Brexit vote is clearly the most massive anti-establishment groundswell in decades. We can thank the Brits for having a stiffer upper lip than the Greeks when it comes to risking the pain that will come from this life-changing, nation-changing international divorce. And, of course, there will be pain and lots of it from such a major but vital course correction, just as there will be a lot of pain when the entire global economy meets its inevitable collapse.
Already, that pain is arriving in torrents around the world, just as the rain poured down on England on Brexit voting day, so it is not as if the fear mongers were wrong. One has to expect that a section of the European continent falling off politically will create tsunamis.
PAIN OF THE BREXIT ALREADY FELT EVERYWHERE
One of the biggest fears is that Brexit will create waves of similar break-offs from the already deeply fractured Europe. And overnight the run-up of market crashes on foreign shores looks a lot like 2008. Before the day began in most of the US, Bloomberg reported the following list of major tidal changes around the world: (Here’s an abridged version.)
The British pound’s plunge is its greatest one-day loss ever. The largest prior to that was the 1992 drop of 4.1 percent. That’s when the pound was pressured out of Europe’s exchange-rate mechanism. The euro’s fall overnight was its worst since it was introduced in 1999.The E-Mini Dow fell about 700 points upon the news as of midnight. London’s stock market plunged 8%.Standard and Poor’s has already stated that Britain may lose its AAA credit rating as a result of the Brexit vote.The financial seismic shift is so great that Bloomberg also reported the following overnight results from the surprise 52-48 vote in favor of the Brexit:
Clearly, most pollsters were wrong, as almost all were predicting the Brexit vote would end with the UK remaining in the European Union. Markets around the world aligned themselves with those polls to be ready for the outcome. That makes the overnight financial disasters hard to assess in terms of how severe all of this is for the longer-term, as clearly there were a lot of positions being hastily corrected. Cooler heads may prevail in a couple of days after the dust settles.
Of course, I’ve been pointing out for a long time that many massive negative forces have been stacking up in the global economy. I’ve pointed out that, as more of those possibilities — like a Grexit or Chinese crash or a Japanese crash … or the Brexit — pile up, the number of actual assaults against a failing global economy will increase. It’s a simple matter of great odds stacking up against the global economy, which is deeply flawed at a structural level. It was always a matter of which orbiting bolide would hit the earth first.
ANTI-ESTABLISHMENT FERVOR BEHIND BREXIT VOTE SEIZED THE REINS OF POWER
Many politicians pointed to the anti-establishment nature of the vote, which had a lot of dedication behind it. Voter turnout was the highest it’s been since 1992 with 72% of the voting populous making it to the polls in spite of severe rainstorms and flooding. Many thought those who wanted to leave the EU were stronger in their desire to leave, while those wanting to stay may have tended to be little softer and less apt to brave the inclement weather. Even before the polls closed, talk was that the bad weather would tend to help the cause of the more stalwart “leave” voters; but that speaks only of the passion for leaving and lack of passion for remaining.
The weather and how it would differently effect voters of different passion could be why the final vote turned out so much different from what pollsters had predicted. Only Scotland and London voted decisively in favor of remaining in the EU with London voting 60-40 in favor of staying in the European Union. The rest of the UK turned out a landslide vote for leaving the EU with some regions voting as high as 60% in favor of leaving the EU. That was a much stronger run for the exit than anyone (even the “leave” campaigners) expected.
One can safely say that London is the establishment, just as Washington is the establishment in the US. So, the establishment went solidly with Europe, while the rest of the country went solidly against the establishment.
The vote in Scotland could presage more troubles between Scotland and the rest of the UK as Scotland has long threatened its own exodus from the UK. Those feelings of leaving in order to stay with the EU may now be heightened.
" Scotland’s First Minister Nicola Sturgeon has said that the EU vote “makes clear that the people of Scotland see their future as part of the European Union.” (BBC)
Obviously, the majority of Brits didn’t care what establishment politicians Obama or Hillary had to say. Both had cautioned strongly against a Brexit, as had the International Monetary Fund. Donald Trump, on the other hand, supported the campaign to leave. It would appear that the same groundswell that is rising behind Donald Trump in the US is rising to even greater heights in the UK, willing to take on far more severe risks in order to escape the clutches of the European establishment.
It would appear Trump has more foreign-policy credibility than Obama because, while in Scotland, Trump said:
He seems more in synch with the British people.
Perhaps no one is more qualified to say what the British exit vote was all about than its lead campaigner, British politician Nigel Farage:
Notice how closely these issues parallel Trump’s.
The opposition more or less agreed with the anti-establishment nature of the Brexit vote and showed that the vote has the establishment’s attention:
Even though the Labour party was expected to vote 2/3 in favor of remaining,
So, an enormous change happened in a single day because people finally got so sick of the establishment that they would bear any risk and all the pain that will likely come from their decision in order to break from the status quo. The price to the European establishment for running its undemocratic course for forty years is a complete break away by one of its major nations and most vital economies.
And the cost to the one politician who was the leading champion of remaining in the EU — Prime Minister David Cameron — is that he resigned this morning.
But, of course, the European establishment is also shell-shocked, revealing the depth of establishment blindness toward the problems the establishment is creating: