MONEY 99 - BREXIT

THIS IS MY 99^TH BLOG ON UNDERSTANDING MONEY TOOLS

With Britain’s exit from the European Union I thought I would write this blog including a few facts about the European Union, and render some of my very opinionated feelings in regard to the mess.  Let’s start out with the bottom line first.  I think in the long run it will prove beneficial for Britain that they exited; short-term volatility is going to be the baseline, along with a drop in the Pound Sterling.

The old expression that “things are never as good, nor as bad as they seem” I think is in line here.  To begin with let’s start by looking at this misconceived idea for a Union.  There were 28 countries in the European Union, now 27.  There are a few good things that simplified life with this Union. There are two distinct benefits, one a common currency so one does not need to exchange currencies with each trade or crossing borders.  The second would be business and trading of goods without varying taxations and trade agreements with each country.  Trading priorities between Union countries first and foremost.

The most obvious reason for the failures occurring today with the Union is the financial imbalances of the countries that have always existed.  You have very strong countries like England, Germany and several Scandinavian countries holding it together supporting weak countries like Greece.  As we all know Greece was financially bailed out in 2015 with severe financial disciplines placed into the agreement.   Then, you have the ever-growing financial problems of Italy, Spain, France and others, and it will only be a matter of time before they default on debt.

Another problem that exists but only now is really surfacing is control over individuality and nationalism/varying cultures.  In the US we have 50 states that seem to work together pretty well, but have many commonalities. Perhaps our biggest difference with the states still exists a bit between the North and South, but we have similar cultures, religions, backgrounds, etc. and a common language.  The European Union does not have these commonalities.

Britain’s exit was mainly voted on by people outside of London, and an older population. The young people of London like many places have a different baseline; they don’t remember the Gulf Wars let alone the damage done from WWII.  Let’s draw a bit from history.  The Desert Storm War with Iraq caused by Saddam Hussein reaching across the border into Kuwait cost billions of dollars for Britain, the US and other nations.  Then, along comes 9/11 and President George W. Bush decides to enter Iraq even though no one from Iraq was involved in 9/11. The attack was financed by Saudi Arabia and Syria, and Iraq was totally contained on the ground and in the air. They were no problems and Saddam Hussein hated Bin Laden and saw him as a threat.  We talked Britain and the Prime Minister, Tony Blair, along with other countries into joining us in the war and it cost Britain billions along with the loss of life of many troops.  In the long term it cost Tony Blair his nice job!  The English don’t forget and I think many countries want to distance themselves from the control and influence of the USA.

Where am I going with this?  War makes billionaires. The Iraq War was no different.  People like Vice-president Dick Cheney personally made well over $100 million with Halliburton stock options (please read commentary and writings by ex-Secretary of the Treasury, Paul O’Neill, on Dick Cheney/Halliburton and the Iraq War.  Cheney was drooling out of one side of his mouth over the oil in Iraq, while on the morning news in the USA stating that debt did not matter to our economy).  We tried to over-turn other countries including Afghanistan, then Syria, Libya and turmoil in Ukraine. Cause and effect. Our hegemony and imperialistic actions have caused most of the immigrations to Europe and Britain is one of the first countries to say enough is enough, this is taking us down and we want out.  Now, several other countries are also becoming outspoken and may leave the European Union, all with good justification.

The world leaders like President Obama and Chancellor Merkel are all in favor of immigration and globalization.  Globalization has started and really can’t be stopped. Let’s take a look at it.  In this country profound action toward Globalization was taken by President George Bush designing the NAFTA Agreement between 1988-1992.  Then President Clinton pushed it through Congress during his tenure.  Lately another step in similar direction is the Pacific Trade Agreement passed recently by President Obama.  Who is really behind these agreements are the wealthy and large corporations that want cheaper labor, trade agreements, the ability to get US taxpayers to assist in paying for factories and plants in foreign countries and the ability to set up legal financial off-shore trusts so that profits can be held off-shore thus avoiding US taxes.  Great for the American people?!  You purchase things at Walmart and Target for less money, but little is made here in the USA anymore.  Raise the standard of living in third world countries and lower our standard of living.  Donald Trump says he will bring jobs back.  Can’t be done. Yes, we could penalize for off-shore business and set up tarrifs but if manufacturing comes back here it will be robotic, not needing human labor to any degree.

Similarities arise in Britain and the European Union. All these countries have high unemployment, and immigration is just a further drag. I will only touch upon the next topic that is probably Europe’s biggest problem and that is immigration from Middle East and Northern African countries with totally different cultures and health standards. As reported we now have tuberculosis,  measles and HIV, to name only three diseases popping up from immigrants in Europe as well as the USA.  With immigration these people are bringing in their standards in the form of morality, ethics and traditions.  This includes the abuse and rape of women, as women are considered possessions.  A prime example of this is Malmo, Sweden.  Malmo is the third largest city in Sweden and now the “rape capitol” of the world because of immigrants!

Okay, so I think the Brexit is not going to be harmful long term, and I hope better for England preserving their heritage.  Things to watch here are other countries wanting out of the Euro and this is picking up the attention in Brussels and Chancellor Merkel; good at long last!  Keep an eye out for Scotland again and Northern Ireland.  Britain may have been an “eye” for Israel watching Germany and the Arabs; that may have weakened.  Also, I am surprised how our government has kept the huge multi-billion in losses the major banks took on speculative investments like derivatives and currency arbitrage thinking the British Pound Sterling would go higher assuming England’s vote would be to stay in the European Union.  I’m sure George Soros was perfectly hedged, then upon news of vote count instantly pulled his long position, shorting the Pound thus making a fortune.

In the USA we had more and better employment before NAFTA when we had various trade agreements with various countries.  Now, all countries are ever manipulating. Lately China just devalued the Yuan again, our US dollar just rose, and interest rates are reaching zero and negative in some countries. To weaken our dollar do we print more money again for dilution?  What a mess.   Most people are blind to the effect.  Our older population can’t retire, we have no savings and what little we have returns nothing.  In 2000 we had 4.2 million Americans age 65 and older working.  Today, we have 9 million Americans over 65 working and most need to work to financially survive (PEW Research Center).  Hard to tell me things are better from what we have accomplished.  The wealthy have become wealthier, the biggest corporations bigger.