In the words of the immortal Janis Joplin…
“Freedom is just another word for nothing left to lose.”
The following note was in my email inbox yesterday, via one of the many financial industry newsletters I receive on a daily basis. I’m sure most of you received and read a lot of content regarding the Brexit vote yesterday like I did. Some of it was quite interesting, some of it not so much. There was one particular piece of commentary that I read that was just so ridiculous, I had to reply back to them. So I thought I’d share both sides of the commentary (theirs and mine) here.
Here is what they wrote (my response follows):
We hope this Brexit commentary, from June 6th, provides you with the antidote to conventional wisdom:
They are just fed up. And why shouldn’t they be? Britain is a sovereign nation. Its people are supposed to be able to make political decisions for themselves, through a democratic system. But now many decisions the British people consider important are made by unelected European bureaucrats. Transient parliamentary majorities are not supposed to be able to delegate decision-making authority to foreign capitals, just like they can’t install a dictator. The decision itself negates democracy.
And you don’t have to disagree with the EU on policy issues to take this position. International trade is generally freer because of the EU and that’s a good thing. But it’s not necessary to trade sovereignty for freer trade. Immigration and what welfare benefits immigrants can get, if any, are clearly sovereign decisions…
Great Britain runs consistent trade deficits with the rest of Europe… No way will they allow one of their biggest export markets to become more distant. They will beg the UK to sign a free trade deal. In addition, and this is actually great economic news, it would free the US and UK to sign a free trade deal that the EU is now holding up.
Any market volatility would be short-lived and any swing to the downside would be a buying opportunity. Brexit is not a reason to sell. In fact, freedom is a good thing.
Here is my reply:
Unfortunately, “freedom” has a cost and the current declines are only the beginning of the bills that will come in! Any trade barrier, reduction in immigration and reduction in financial flows is bad. If companies like Morgan Stanley and Nissan start moving people offshore from Britain, sovereignty will have become more expensive. If you take their argument to its natural conclusion, every state in the US should be its own sovereign nation. That would not be good for stocks.
What are your thoughts about the Brexit vote and or my reaction to the commentary included above? Please remember to keep in mind Janice Joplin’s words in mind.