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Big Ideas Fall Apart

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The dust continues to settle after the Brexit earthquake. US markets stabilized today, but it appears to be a “dead cat bounce” or a technical upturn as short positions are covered. It comes from the saying that even a dead cat will bounce up one story after falling off a ten story building. It certainly feels like that kind of week, especially if you think about whatever dead animals might account for the ridiculous hair of Donald Trump and/or Boris Johnson.

Then again, it hasn’t been a week yet.

For all the comparisons between this vote and the Trump phenom, they still don’t do this situation justice. People all over the world are recoiling from opening up markets and generally moving closer together. The threat to the EU is far from done as “euroskeptics” on the continent will certainly be emboldened – as will globalskeptics around the world. What has gone wrong?

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Brexit Blowup

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The vote went for Brexit. The hounds of chaos have been unleashed. Is this a harbinger of a Trump victory in November? Political trends in the US have first shown in the UK before, with Margaret Thatcher predating Ronald Reagan and Tony Blair arriving before Bill Clinton. More importantly, the polls were as wrong on Brexit as they were on Cameron’s big win in the last Parliamentary elections. Is this a sign?

The short answer is “Yes”, but the long answer is “No”. This has a long way to play out before the US votes, and we don’t yet know what will happen. There will be a lot more anarchy in the UK and the final lesson is far from written.

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About this EU Thing …

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I’m sitting here watching the BBC site as the results of the Brexit referendum pour in. It’s not looking good for the EU right now, and that has to give us all pause. The EU is absolutely essential, in some form, but the bureaucratic mess that has resulted isn’t necessarily helping anyone. The UK never went all in, keeping the Pound, so their view has always been a bit askance.

For far too many, it comes down to an interesting revelation. Did Germany actually “win” after all? Signs point to yes, they did. But how? What does this mean to other industrialized nations? Is there something we should all learn? Is Britain right for possibly wanting to go it alone?

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Risk Aversion

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The economic news out of most of the world points to a continued, if not new, slowdown. Japan is going nowhere, Europe may be shrinking, China is bleeding capital, and the rest of the world is hanging on. The only place there is good news is here in the US where … there was a net slowdown in the number of jobs gained in May. None of this looks good.

For everyone outside the US, it doesn’t. But most of that money from China is coming to the US – or, more accurately, coming back. Why aren’t things looking up?

Global instability doesn’t help anyone, which is why the Fed stopped raising rates. We can’t go it alone anymore, not in this inter-connected world. It spooks everyone to see this much risk. Yet there is still reason to believe that the US, alone, will see a period of higher growth by the end of the year. It’s all about that money coming back – and when it gets put to use.

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Neoliberalism: Oversold? (Yes)

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Has economic freedom been oversold? That was the question asked (and ultimately answered) in a new paper by the research arm of the International Monetary Fund (IMF). The agency is the international “central bank to central banks” which swoops in and provides cash to bail out entire nations – for a price, of course. That price has always been a little bit of austerity for the government and de-regulation all around.

The guiding philosophy goes by a handle which may seem off to many in the United States – Neoliberalism. It was a response to the failure of classical Liberalism, or reduction of state power in favor of free markets, which failed in the last Depression. This depression seems to have been about as kind to the general concept for many of the same reasons.

As always it’s worth talking about in the sense that we are again confronted with the possibility that “everything the experts know is wrong” – a feeling certainly stirred up elections throughout the developed world lately.

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