Imagine the European Union as a Titanic Ship, and BREXIT event is like Titanic hitting the iceberg.
1. EU - Titanic
2. BREXIT - Titanic hitting the iceberg
Here's Alan Greenspan stating the same:
— MarketWatch (@MarketWatch) June 26, 2016
I know, people will dismiss this as fear mongering. Now remember the scene from movie Titanic - when all the experts and captain get together to assess the damage post ship hitting the iceberg and how they all come to the conclusion - The Ship will sink. I think we are at that moment. Here're modern day experts...
George Soros on EU disintegration -
George Soros says Brexit will lead to the end of the EU https://t.co/l9tpiaYfa0
— The Independent (@Independent) June 27, 2016
Alan Greenspan -
Larry Summers -
All the above folks do not have a habit of making random statements. They understand what they are talking about and they are sharing legitimate fear. They are really worried that BREXIT is going to open pandora's box. The end of EU will not be a pretty event for Global economy.
Am I not exaggerating...How a small BREXIT can bring down EU....Watch this scene from movie Loafer...how a harmless old man brings down the powerful corrupt politician..
Never underestimate how a very small thing can take a form of powerful trend. Sometimes it is for good like in the above movie and sometimes it is for worse. History has shown that the political trends found in one country can quickly become global in nature.
I have seen many articles explaining how EU has no choice and it will deal with the independent UK. What people don't understand - it's the politician that takes the decision and not the nation. The politicians always look at their interest first.
Now - Let us take how pro BREXIT British politicians reacted to the event -
It's like somebody treating divorce as an engagement party. Hey we just got engaged - "What's the rush" whereas reaction of EU member countries completely different. They are not in party mode -
Oh Noes. Germany, France & Italy have agreed not to hold informal talks with UK till it triggers Article 50 to leavehttps://t.co/yU81XyY21t
— Saif Rahman (@SaifRRahman) June 27, 2016
THE DIVORCE will be messy
It's not the economic interest but the political interest that will drive the exit negotiation. Now remember, Angela Merkel of Germany, Hollande of France are political leaders. They have to get re-elected. Now if BREXIT succeeds, how will they convince their voters that EU is a great idea and one should stick together. It is in their political interest to make sure BREXIT leads to a severe crisis in UK, otherwise fringe right wing parties in their countries will come back to power and do the same. It is this conflict that will break the EU apart. You see here - there will be no winner. There is never one cockroach. The exercise is going to be messy and ugly. I think this referendum is going to make life difficult for everybody in EU.
The Problem: The end of EU will be a major economic disruption and it will be disastrous for the world that is hungry for growth. You cannot grow by closing borders and becoming protectionist. The World can survive cyclical recession but the issue here: Will there be structural change in the way Global trade happens
Brexit is not the end of the world, but the beginning of a new future. The only problem: We don't know much about that future. Right now, it looks messy and horrible. I still believe the best option: Cool off time and then some softer form of BREXIT which makes everyone look good
“A vote for Brexit is a vote against globalization, against the free mobility of people and goods” ~ Bank of America Merrill Lynch
I am not making any forecast about future. This is my personal view. Please do not make any financial decision based on the above article. Please feel free to comment. My Twitter id is @smarket.