Traders, investors, speculators — they all adjusted their medications over the weekend.
They went to bed on Thursday last week confident that Brexit would fail.
Breathing in and out
‘Economies breathe in and breathe out,’ we told Bonner & Partners Editor Chris Lowe on Friday.
‘Sometimes they are expansive…open…and optimistic. They reach out for new ideas, new markets, and new customers. Other times they are contracting, closed, and fearful. They put up barriers, and try to protect themselves from the outside world.’
‘We’re in a period of contraction,’ we concluded (in a sweeping gesture that linked practically every dot in the whole matrix). ‘That’s what Brexit, Trump, negative yields, sluggish growth, and the Fed’s policies are all about.’
As Chris reported last week, the bookmakers’ odds had the probability of a Brexit at just 1-in-4.
But in the actual event, the Leave camp won 52% of the vote…a solid victory.
British prime minister David Cameron, who campaigned against Brexit, has resigned. Although he’ll remain in office until October.
Nigel Farage, the head of the United Kingdom Independence Party, which spearheaded the Leave campaign, has declared ‘Independence Day’ for Britain.
Meanwhile, the British pound has tumbled by about 10%, to a 31-year low. Britain’s main stock market benchmark, the FTSE 100, tumbled about 8% with the first few minutes of trading. The euro crashed the most since it was launched in 1999. Commodities plunged. And oil is back under $48 a barrel.
Traders around the world scuttled out of risky stocks and into safe haven gold and bonds. Yields on US Treasury securities and German Bunds have tumbled as prices have soared.
In Austria, a Trumpish anti-immigration candidate, Norbert Hofer, came within a hair (just 30,000 votes) of winning the presidency.
In Italy, the establishment parties lost Rome and Turin to the populist, Eurosceptic Five Star Movement, led by comedian (no kidding) Beppe Grillo and Virginia Raggi…an attractive young woman who just became the first female mayor of Rome.
In France, the head of the far-right National Front party, Marine Le Pen, has vowed to force a vote on leaving the EU in France, too.
Meanwhile, in the US, ‘Both candidates are deeply flawed,’ say the commentators.
But that is like saying a piece of broken glass is a flawed diamond. Neither Hillary nor The Donald should be allowed anywhere near the White House.
In a better world, neither would be.
But we do not live in a better world. We live in a bubble…waiting for a pin.
Reckless and ruthless
We remember being told in grade school that any one of us could grow up to be president.
We thought the teacher was exaggerating to coax the bigmouth bully in the back and the suck-up prisspot in the front row to learn the basics of the US Constitution.
And yet here we are, a half-century later, and we find our teacher was right. Now Clinton and Trump are our candidates for president…and neither has any apparent knowledge of the US Constitution.
The whole idea of the constitution was to limit the power of the federal government. The 10th Amendment made it clear: ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.’
Of course, neither Trump nor Clinton has any interest in remembering the 10th Amendment. A mob might sooner pause to recall a city ordinance against littering.
After more than two centuries, the feds can get away with almost anything. Which is why today’s candidates for the top job are perhaps the most reckless and ruthless we have ever seen. There’s so much more at stake.
Incoherent and foolish
We were asked recently on a radio show why we so rarely criticise Hillary.
Are we some kind of closet Democrat, the host wanted to know?
Not at all. There is just nothing to criticise. We know what she is; we know what she will do.
She will give us more of the same.
More Clinton, more Bush, more Obama…more Deep State, more crony deals, more wars, more regulations, more rules…and more smarmy blather — ‘The government is all of us’… ‘America is already great’… ‘It takes a village.’
Stop, we’re feeling sick…
‘The Donald’ is more entertaining. He says what is on his mind…such as it is.
Both candidates are scallywags. Both are flawed. But they are flawed in different ways.
One represents the international Deep State elite, desperate to hold on to its power, wealth and privileges. The other promises an American ‘Brexit’…an escape.
Like Howard Stern, Trump gives voice to many things other people think. He has drilled into the American psyche and hit a rich deposit of angst, envy, and confusion.
He says things so dumb, so politically incorrect, so incoherent, and so foolish you rarely hear them in public. And he’s occasionally right.
Let’s see, is the Mexican-American judge prejudiced against him?
Yes, he could be!
Is Hillary crooked? Is she a ‘world-class liar’? Yes, of course she is!
Is US foreign policy really a ‘disastrous mess’?
Sometimes it takes a fool…
Under normal conditions, you would be happy to go to a restaurant where Mr Trump was the maître d’, or to a rural auto repair shop with a big neon sign that shouted ‘DONNIE’S’.
He would be full of commercial bonhomie, feigned warmth, and acceptable competence. You might even lend him money; though you wouldn’t expect to see it again.
As for the White House, in our lifetime we have never seen someone with so little dignity in the oval office; it’s hard to imagine him there.
That’s what makes it so much fun. Trump must be the biggest numbskull ever to win the Republican Party nomination…perhaps after George Bush.
But it is a sign of the state of US politics that such a boorish clown could actually be the better candidate!
On the stage, it is sometimes the fool who speaks the truth. Others are too careful or too wise. Sometimes, it takes a village idiot, in other words. Or another sharp object to pop the bubble.
For Markets and Money, Australia
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