Europe's Silver Lining in the Brexit Chaos

[shaunbhoy]

You're the ones that stole our oil and wasted the profits on illegal wars.

It was UK oil. The UK that most in Scotland voted to stay a part of.

HTH

[Mordac]

You're the ones that stole our oil and wasted the profits on illegal wars.

Almost as much as we wasted subsidising Scotland...

[Old Greg]

You're the ones that stole our oil and wasted the profits on illegal wars.

It's Shetland's oil, not Scotland's.

[scooterscot]

An oil-rich country with a wasteful socialist government. Are you sure you're not thinking of Scotland...?

You're the ones that stole our oil and wasted the profits on illegal wars.

[meridian]

A good number of Venezuelans are here already as they see it as an upgrade from Portugal.

Feature: Thousands of Venezuelans of Portuguese origin choose a slice of life in Madeira - Xinhua | English.news.cn

"Here"? They're in Madiera. They're of direct Portuguese descent, with many of them only a single generation away so entitled to Portuguese passports.

Interesting question though: although they were born in Venezuela, they were born there to parents that came from Portugal. Does that make them Venezuelans emigrating to Portugal, or Portuguese returning home?

[vetran]

It's already Venezuela like conditions in your Heathrow hotel room.

A good number of Venezuelans are here already as they see it as an upgrade from Portugal.

Feature: Thousands of Venezuelans of Portuguese origin choose a slice of life in Madeira - Xinhua | English.news.cn

[Mordac]

Spot on really, Europe will benefit from the chaos. Venezuela like conditions on the way to the UK, some might argue they've already arrived. Once that's a given it might be a good time to invest by 2035.

An oil-rich country with a wasteful socialist government. Are you sure you're not thinking of Scotland...?

[Old Greg]

Spot on really, Europe will benefit from the chaos. Venezuela like conditions on the way to the UK, some might argue they've already arrived. Once that's a given it might be a good time to invest by 2035.

It's already Venezuela like conditions in your Heathrow hotel room.

[scooterscot]

Spot on really, Europe will benefit from the chaos. Venezuela like conditions on the way to the UK, some might argue they've already arrived. Once that's a given it might be a good time to invest by 2035.

Britain is mired in chaos by the looming prospect of a “No Deal” Brexit. All of the options at this point are bad. British society is being torn asunder, and Britain's governing political party is at risk of tearing itself apart. The overall picture, no matter how you slice it, is awful.

But there is a silver lining for Europe here. When the chaos of Brexit is finally resolved, however that happens, investors are likely to breathe a sigh of relief that could boost European equities.


And the headline-grabbing pain of Brexit is a glaring red “CAUTION” sign for pro-separatist movements in Italy and France, which could help the EU hold itself together.


So, what is happening with Brexit, exactly?


We'll start with a metaphor. Imagine you find yourself a contestant on the game show “Deal or No Deal.” Except this is a nightmare version of the show, with highly dangerous twists and turns.


For instance, if you don't make a deal before the timer goes off, you don't just lose your chance at a prize. You get thrown into a pit with snakes and alligators.


But the players on your team can't agree which deal to make. You have the option of starting over — or quitting the game — but your team can't agree on that move either.


Your team members shout at each other as waves of anger, fear, and confusion wash over them. To make things worse, half of your team argues the snake-and-alligator pit might not be so bad. The other half considers this view insane.


There are entreaties to the game show host to change the rules. But the host doesn't budge.


There are cries to start over. But half the team refuses.


The clock ticks down toward zero, and the snake-and-alligator pit awaits.


The metaphor roughly describes what is happening inside British parliament, with the whole country along for the ride, as the United Kingdom threatens to crash out of the European Union in a No-Deal Brexit scenario.


A hard Brexit, or “No Deal” Brexit, is the default option now. If the British government cannot get its act together by March 29, trade ties with the European Union will be cut automatically, with no clear plan for what takes their place.


This could mean lines of idled trucks at UK points of entry that back up for miles. It could mean countrywide shortages of food and medicine, as shipments from Europe get blocked by customs or cease delivery in the first place. It could mean shops and stores closing for lack of supplies, and food rationing in severe instances.


(Stockpiling efforts have already begun, under advisement of the UK government, in case something like this happens.)


And a No-Deal Brexit could mean hundreds of plants and factories get shuttered, with various international businesses leaving the UK permanently (as British-made goods would be stranded without trade access to the European market).


The international business community is terrified by the prospect of a No-Deal Brexit. Those who see Brexit as an emotional issue, with an emphasis on the vague notion of sovereignty, overlook the fact that profit-and-jobs impacts could be catastrophic.


To give just two examples: Airbus, an airplane manufacturer with 25 plants in Britain, has said it could lose up to a billion euros a week in the aftermath of a No-Deal Brexit. Ford, the U.S. auto company, has estimated a No-Deal Brexit would cost the company $800 million in 2019 alone. And there are countless more such examples.


Various CEOs and industry association heads with assets and employees in Britain have stated, loudly and repeatedly, some version of: “You don't understand. This would be epically bad — for us and for the country, too.” Those who make goods in the UK for export to Europe have added: “We'll stop all new investments. We’ll move our factories and won't come back.”


It took more than two years of incompetence to take Britain to the edge of a No-Deal Brexit cliff.


In the summer of 2016, Britain voted in a countrywide referendum — the largest one ever — on whether to leave or remain in the European Union.


The “leave” side won by a slim margin, even in the face of credible warnings this would be a very bad move for Britain, in no small part because of deceptive campaigning (and the fact that many didn't understand what they were voting for).


The simplest explanation for why Brexit never made sense is that Britain is a hub, the European Union is a network, and Brexit is a hub leaving a network, a move virtually guaranteed to make the hub worse off — especially after four-plus decades of integration with Europe and London's status (destroyed by Brexit) as a financial center for all of Europe.