It’s Friday, June 24, 2016.
Well, the cranky old man on the train in “A Hard Day’s Night” won after all.
I didn’t think Brexit would happen. I didn’t think the English people – let’s distinguish who actually did this from the Scots and the Irish – wanted to play down to the stereotype of being closed-minded, stuck-in-the-past bigots.
But they did.
I have some quick thoughts:
1. Just 13-1/2 months ago, David Cameron won big time. The Conservatives romped over divided opposition and formed a government completely without the Liberal Democrats they need five years earlier.
Now, he’s headed out of 10 Downing Street. He received an unusual “no confidence” vote – from the people, not his fellow members of Parliament. And, as happens when your power relies on people agreeing with you all the time, you lose the authority to lead.
Hard cheese, as they say over there, because tough luck is too obvious.
2. As everyone predicted, world financial markets took a body blow from the British vote. The Dow fell more than 600 points. Stocks tumbled more than 3% in London, nearly 7% in Frankfurt and 8% in Paris.
Paul Krugman in The Times isn’t worried about the impact of the financial markets as much as he’s worried about the economic effect on the U.K., which will now have outsider status in its trade dealings with its biggest partner.
But here’s the thing about the impact on financial markets:
Yes, they’re resilient. The money that dropped from everyone’s 401(k)s during the 2008 crisis came back and then some. So, even though I’m a retiree who’s counting on my savings for food and medicine at some point, I’m not calling my broker and screaming at him to save me.
But, days like today do nothing to inspire confidence in financial markets. People remember the big hits, and – even though they’re likely to get the money back – they don’t like the nausea they get watching their portfolio’s value diminish.
It’ll be another grievance that feeds the kind of dissatisfaction that led to yesterday’s vote.
3. Here’s a message to Trump supporters: Today is a mere annoyance next to what will happen to markets if you commit political suicide and elect that maroon.
One of the things that’s happen in today’s market is that investors are fleeing to the safety of U.S. currency and government debt.
That’s the blessing of the world’s most stable economy. That’s what’s meant by the full faith and credit.
That’s what Trump doesn’t understand.
He sees debt as something you negotiate, or just get out of all together. He has said that it doesn’t matter, because the government prints money.
So if that debt isn’t worth what we say it is, people will flee from rather than to it. A world that already has few safe havens would lose what everybody thinks is the safest.
It’s a bad day when investors think China, with a government that always seems to be guessing what to do, is more stable than the United States. And that bad day would be Nov. 9 if the election goes the wrong way.