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For some speculation as to what the immediate consequence of a Brexit might be, read this.  Personally I think trying to predict market reactions is a bit of a mugs game.  Interestingly, however, the author speculates that the Franco-German response will be to push for a deeper integration of the Eurozone - something I have fleshed out in more specific detail above.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 03:40:40 PM EST
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My brokerage sent me a letter: "there may be some market turbulence ahead because of the vote."

There is the idea that this will finally deliver the shock that EU leaders need to get back on track and fulfill the dreams of the United States of Europe. That is delusional. It will not be a tonic but a serious blow that will politically 'prove' that the EU has overstretched itself. There is no real narrative left to drive such a project forward. The Exiters have a positive narrative about taking back control. The Remainers sometimes look like the people who wanted to prevent Jeremy Corbyn and people are very much tired of being told what to do.

Schäuble said in a recent interview that even if the UK votes to remain with a slim majority it wouldn't be cause for pushing for deeper integration - because then the political class would have to stop and think about how things could have come so far. But another cabinet member (von der Leyen) said something like "if the goal is not the United States of Europe then the EU doesnt make sense". IMO the EU does make a lot of sense without grandiose dreams. An ever closer union would only be possible with a small core constituency but that's impossible now with 28 (27) members. Where's the realism? Instead, we keep on hearing people whine about how this was not what they dreamt of, how they want more than just a free trade zone, how they want a united Europe with universal European values as a positive world power. Forget it! The current crises have shown that values that were once deemed universal arent so universal. They were not even accepted or known to some people. It's almost a category error to envision the USoE as manifest destiny.

Another side to this rant: You can partially blaim Merkel for this mess, not just for making a hash out of the Euro crisis but also for unilaterally blowing up Dublin/Schengen. That really consolidated an anti-EU atmosphere. Last year I predicted her actions would make a Brexit more probable. Unfortunately, I was right. The EU will limp on, fray at the edges. Same old m.o. in Merkel's 'deflate the earthquakes' world.

Schengen is toast!

by epochepoque on Wed Jun 15th, 2016 at 09:51:04 PM EST
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