[Reddy Kilowatt]

Originally Posted by ossiblue

The instability we now see as a result of the referendum is due to the "unknown," not to any specific action taken by the UK or the EU. No nation has left the EU so nobody knows the consequence. Anytime the status quo receives a sudden shock, there will be instability and speculation.

Now, just what will happen next? It's all up for grabs, and speculation ranges from worst-case--complete break-up of the entire EU and UK--to reformation of the EU to accommodate concerns raised by the UK and other member nations as well. There are no rules now, so everybody's guess is valid. The situation is fluid, and will remain so for some time.

As for Scotland, there is a definite possibility of a split away from the UK. A referendum in Scotland to break from Britain was narrowly defeated a few years ago, in large part because those who opposed the break emphasized the benefits of Scotland's membership in the EU which would be guaranteed by staying part of the UK. Now, that guarantee is gone. Scotland voted solidly to remain in the EU, yet will now be forced to leave due to the referendum which was carried by the vote of non-urban England. You can bet a new independence for Scotland referendum will be on the horizon.

Interestingly, the "Leave" vote appears to have narrowly succeeded due to the better turn-out of its supporters. The "Remain" forces did not sell their position very well and their supporters were not as enthusiastic as the opposition's. It was a referendum for "status quo" (Remain) or "start again" (Leave)--establishment vs the people. Those who tended to support Brexit were the ones who felt left behind in the new global economy, who saw their way of life threatened, who felt they were losing control of their country, who had a deep distrust and anger at the established political and economic leadership, and who bought into the undefined and unknown future of the Brexit position. Listen to Nigel Farage, the leader of the Independence Party who championed the exit and is now the undisputed leader of the victory movement, and you will hear words very similar to what's happening in our own presidential election. No judgements here, this is not a PARF statement and I don't want to divert the thread to a political discussion. This is just an objective statement about the makeup of the British referendum and the emotions/politics behind it. Farage really didn't expect the referendum to succeed, and was as shocked as anyone when it did. Now, the ball is in his (and others who supported Brexit) court and they will have to create the policies and actions to deal with a political and economic future that has world-wide impact but no rules to follow. They made promises to the disenfranchised people that they will have to fulfill.

Regarding the underlined, the exit path seems destined to be long with many unknowns relative to tariffs and other elements yet to be negotiated. What are your thoughts on what seems like a years-long process of unwinding this? Will that uncertainty lead to turmoil, or will that turmoil be the new status quo resulting in some settling of the pound and of the markets?