EconVue Weekly Spotlight: Brexit Special Edition

posted by Lyric Hughes Hale on June 22, 2016 - 10:19am

With a story as big as Brexit, with both market and historic implications, it is easy to become overwhelmed by oceans of mediocre or partisan commentary.  Wading  through scores of articles this past week, I have discovered some wonderfully illuminating discussions about a known unknown that  no one can predict.  Below please find my selection of original and provocative articles that go beyond Thursday’s vote,  offering deeper analysis of the EU writ large, and perspective from other countries and regions.

To round out the discussion I am including some terrific charts, my review of James Galbraith’s  book on the Grexit, and reaction by EconVue expert  Robert Madsen to Peter Tasker’s article on Asia and Brexit. 

Stories in our Spotlight This Week  

1.   Economists Are Divided Over Brexit
Lynn Parramore 6/19/16 Institute For New Economic Thinking

“Economic arguments, of course, can and should be made about likely outcomes, building narratives drawing on analysis of history, institutions, etc., as well as theory and data. But there needs to be more modesty, not least about quantification.”

2. Brexit's Impact on The World Economy
Anatole Kaletsky  6/17/16 Project Syndicate

Anatole Kaletsky lists the best arguments for #Remain.

3. Brexit Vote Is About The Supremacy Of Parliament And Nothing Else: Why I Am Voting To Leave The EU
Ambrose Evans-Pritchard  6/13/16 Telegraph UK

And Ambrose Evans-Pritchard presents the other side.

4.  Vote Brexit, Profit From Lower Pound
Brian Reading 6/15/16

The redoubtable Brian Reading says that Brexit or no, a sterling devaluation is the only way to balance the UK current account deficit.  This is a policy tool that is available because Britain did not join the currency union, and it should be employed. At the moment the pound is strengthening see the reasons for this in the chart below.

5.  Brexit Is Getting The Blame
Alasdair Macleod 6/19/16 SeekingAlpha 

Will Italy, with non-performing loans at 20% of GDP, be the first to leave the EU? Many fear that systemic risks within the EU mean that there are many points of failure. "Whatever the outcome of the Brexit referendum next week, it would appear that nothing can stop a systemic crisis developing in Europe. The two issues are unrelated, though Brexit could be blamed as a trigger. Brexit will come and go, but a European banking failure will remain with us, whatever happens on June 23rd."

6.  'Brexit Earthquake': EU Fatcats' Fears As Swedish MEP Suggests 'UK-Nordic Trading Bloc'
 Marco Giannangeli 6/20/16 Express UK

An alternative to the EU. "The 90 million people of Sweden, Denmark, Norway, Finland, Iceland and the UK would harness a combined GDP of nearly £3trillion, representing considerable clout when it comes to forming new trading deals with the EU." It is not just about Brexit. The entire enterprise has lost its political support, and will.

7.  Switzerland Withdraws Application To Join EU: "Only Lunatics May Want To Join Now"
Tyler Durden 6/17/16 ZeroHedge .com

Wins the most unsurprising news of the month award.

8.  How Will Brexit Affect NYC Real Estate?
MaryAnn Peters 6/13/16 LG Fairmont

Even New York realtors are getting into the act, hoping for an inflow of European buyers.

Brexit Charts

Brexit Build-up To A Referendum   The Economist

Brexit In Seven Graphs. Why Pound Strengthening As Remain Gains Upper Hand.    Biz News

EconVue Research and Insights

If Grexit Meets Brexit   Lyric Hughes Hale

If Britain leaves, it would be ironic if Greece's membership outlasted the UK's.

The View From Asia On Brexit    Robert Madsen

"The political, economic and financial problems that led to the secessionist movement, after all, remain unresolved both in the United Kingdom and more generally.  Over the longer term today’s Eurozone is almost certainly too unwieldy to survive."