Thoughts on "Brexit"

[fecurtis]

Originally Posted by Flying Ace

dude... NAFTA is not even close to an economic integration that is the EU. The comparison is irrelevant.

My assertion is that all the "issues" from the EU is due to a single cause...the inability for the ECB to govern each country's debt load and economic planning.

Here's where I get caught up, yes the ECB is pretty inept at it, but why is the Federal Reserve seemingly better at the ECB at being a functional central bank? Is it because although we have 50 states, they don't wildly vary in culture and economy than the countries in the EU?

[Fundguy1]

US economy is more homogeneous and conducive to a central bank.

[90c4]

Just make sure you have a portion of your portfolio in assets uncorrelated to capital markets and things like Brexit won't bother you

[ASAP]

Here is the deal, if the free trade thing was the only part of the Union with limitations, then I doubt there would be any massive issues... however if every part of your currency, banking policy, economic, agricultural, transportation, immigration is tied in and you have 25 different cultures and many different languages all in countries of much different economic standing, you will have an issue.

[fecurtis]

Originally Posted by ASAP

Here is the deal, if the free trade thing was the only part of the Union with limitations, then I doubt there would be any massive issues... however if every part of your currency, banking policy, economic, agricultural, transportation, immigration is tied in and you have 25 different cultures and many different languages all in countries of much different economic standing, you will have an issue.

Oh yeah I totally get that, the EU is far from perfect, just seems like a drastic decision that wasn't fully vetted before it was made.

In the long run everyone will be fine, just curious as what the short term hiccups will be and how long it'll take for everything to settle down.

[Flying Ace]

Originally Posted by fecurtis

Here's where I get caught up, yes the ECB is pretty inept at it, but why is the Federal Reserve seemingly better at the ECB at being a functional central bank? Is it because although we have 50 states, they don't wildly vary in culture and economy than the countries in the EU?

The answer is simple.

ECB is a central bank operating with/against other EU ministries of finance. That is the big distinction.

Each EU country still operates their own budgets and the ECB does not provide funding on the level of the Federal funding that is provided here in US. For example, social security, medicare and medicaide is a US federal program. They are funded mostly by the federal government with state matching.

In the EU, their equivalent of social security is a country-by-country program and mostly funded from within each country. Therefore if one country mismanaged their social security program, they need to run central government deficits to fund it. Same with defense, same with other social programs that use tax revenue to pay for service.

The problem arises when the ECB, can't control the amount of government spending as a % of gdp for each country in the context of managing growth and inflation.
here's a simple summary of how sovereign debt isn't controlled by the ECB, hence the system is broken.

https://en.wikipedia.org/wiki/European_debt_crisis

FRB works here in the US (in the context of state finances, b/c the US states revenues are mostly generate from sales and property taxes and only account for spending on the "nice to haves" in each state. States run their own budgets, but most state law forces each state to balance their budgets over a certain period of time. However, the federal government provide the vast majority of funding for many programs in each state. Therefore state budgets have almost no impact on overall FRB decisions and even US Treasury federal debt loads.

To simplify, go back to US History 101, the US States is federalized republic, i.e., the federal government runs the show. States have certain rights, but are limited. Federal government provides for most of everything in terms of scale and scope.

EU is completely different. Each country is its own federalized entity and ECB services to manage interest rates, inflation and growth of many federal entities' budgets, which is currently uncontrolled.

[Flying Ace]

Originally Posted by ASAP

Here is the deal, if the free trade thing was the only part of the Union with limitations, then I doubt there would be any massive issues... however if every part of your currency, banking policy, economic, agricultural, transportation, immigration is tied in and you have 25 different cultures and many different languages all in countries of much different economic standing, you will have an issue.

the issue is, the resistance to give up historical ideas of "sovereignty". I assure you if every European sees themselves as one entity before their national or ethnic identity, we wouldn't be in this mess.

[ASAP]

Originally Posted by Flying Ace

the issue is, the resistance to give up historical ideas of "sovereignty". I assure you if every European sees themselves as one entity before their national or ethnic identity, we wouldn't be in this mess.

This is about the most absurd statement that I have ever heard in my life... who the hell wants to do that? While we are it, lets go ahead and integrate the middle east along with the US, make isis our friends and pat each others backs... this is why the Union cannot be a long lasting entity, the whole concept wasn't thought through...

[KingOfJericho]

Shocked that not a single Brit has chimed in yet.

[kprocivic]

Originally Posted by KingOfJericho

Shocked that not a single Brit has chimed in yet.

They're rejoicing.

[jtodd_fl]

Originally Posted by kprocivic

They're rejoicing.

Well, statistically, the older ones are. The younger ones are drowning their sorrows.

[Flying Ace]

Originally Posted by ASAP

This is about the most absurd statement that I have ever heard in my life... who the hell wants to do that? While we are it, lets go ahead and integrate the middle east along with the US, make isis our friends and pat each others backs... this is why the Union cannot be a long lasting entity, the whole concept wasn't thought through...

once again xenophobia shows... Who said make middle east part of the US or EU? The reality is, greater Europe has more in common financially, culturally and economically than any other country in the world. That's a fact based on centuries of history. Race, political and ethnic ties should have nothing to do with the common goal of an economic free trade union, with common legislature, judicial and economic policies.

In other words, convert EU into what the US is. Each member state is simply a water down semi-autonomous "state" with smaller budgets and programs to manage. But great federal authority rests within the EU body. Of course, as I mentioned, race, ethnicity, cultural history and the fear of others will prevent that from ever happening.

EU will be always this delicate balance of sovereignty vs economic integration.

[grimlock]

Originally Posted by TheHouseWon

https://en.m.wikipedia.org/wiki/Comparative_advantage

http://www.investopedia.com/terms/s/...employment.asp

We design, they build. Businesses win...at the cost of less work for domestic people in the short to medium term (structural unemployment) . We've done ok since NAFTA, in my opinion as we've grown infinitely stronger in other industries that more than made up for the manufacturing job losses.

It all starts with education, the higher the quality of the education the more the country as a whole benefits.

there's no need to understand anything..

[RickFLM4]

Originally Posted by KingOfJericho

Shocked that not a single Brit has chimed in yet.

Might be because they have their own thread about it. Or maybe they think the opinions of Americans are based mostly on media reports and propaganda so they don't see the point in chiming in.

[Fundguy1]

Love it.

[Fundguy1]

Love that too

[wdb]

Originally Posted by TheHouseWon

We don't want manufacturing jobs that are currently in Mexico. Better to create silicone [sic] valley type jobs.

Originally Posted by Delta0311

That can employ a few hundred techies.. Versus manufacturing, which was the back bone of America, that can employee thousands of blue collar workers.. There by helping to build up a failing middle class and increase consumer spending.

I recommend you watch a few episodes of "How It's Made". Manufacturing is not the job creator it used to be, not by a long shot. Fewer and fewer humans are on the production floor alongside more and more robots. That trend is accelerating. The real jobs are skilled jobs; building, maintaining and training the robots.

Originally Posted by Fundguy1

US economy is more homogeneous and conducive to a central bank.

Only after 150 years or so of contentious wrangling among the states, starting with George Washington sending troops to quash the Whiskey Rebellion.

[Templar]

Originally Posted by KingOfJericho

Shocked that not a single Brit has chimed in yet.

More shocked that no one has said this "is all because racism" yet. Because if you watch the news, that's what Brexit was ALLLLLLL ABOUT!

[fecurtis]

Originally Posted by wdb

I recommend you watch a few episodes of "How It's Made". Manufacturing is not the job creator it used to be, not by a long shot. Fewer and fewer humans are on the production floor alongside more and more robots. That trend is accelerating. The real jobs are skilled jobs; building, maintaining and training the robots.

[Fundguy1]

Originally Posted by Templar

More shocked that no one has said this "is all because racism" yet. Because if you watch the news, that's what Brexit was ALLLLLLL ABOUT!

Um no. That's a PC notion. Not wanting to be forced to grant citizenship to people who hate you, who won't assimilate, who create areas where their laws and not British law applies, who are unskilled, who want to change your country to be like their country, etc etc etc. That's stupidity. Every country should have the right to protect its borders and admit who they want. If a foreign government wants to allow anyone into their country, why should your country be forced to admit them too, and at the same time forced not to admit others worthy of citizenship like Americans, Australians, indians, etc. Now England can admit each individual based on their individual merit. I fail to see how that's racist. That was a stupid and ignorant argument from the left trying to force PC thought on everyone which is also stupid. PC is fine as long as it is preceded but intelligence. It isn't here.

[David70]

Originally Posted by ASAP

Anything can be non existant because anything can be outsourced, why does no one understand this? We cant build a solid vaccum cleaner in this nation that doesnt fall apart teo days later because we dont manufacture any quality items anymore... when shit fails, and china has the strongest manufacturing capacity in the world? Do you think we will fight them with our it services? lol

It can only be outsourced if the positives outweigh the negatives. If someone with the same education/expertise can do the same quality job as you, the time zone, language issues can be overcome or don't matter and they will do this same level of work for a low enough amount of money that it makes sense.

This is true when a manufacturing company moves to a lower cost area of the country or world or if your company figures out that the job you do can be replaced by a new employee that can do the same quality of work you do for a much smaller amount of money.

In the end you have to provide enough value to the employer in your part of the world to make it worth it for him to keep you. No government policy unless a handout will get you past this issue long term.

Originally Posted by Eriphill

I love how many Americans are critical of Brexit. Do you think the U.S would be ok with a foreign parliament dictating domestic policy? Say a NAFTA parliament in Mexico City. Of course not. There would be a second revolution yet so many are against Brexit. The irony is amusing.

I think many think the downsides will outweigh the upsides and basically economically they will be worse off for what they have voted. If they decide that having complete control is worth the economic downsides then more power to them. Long term the U.S. won't be affected enough to matter much. Also it passed 52% to 48%, I think many in the UK are also critical of the vote.

I always thought the downfall in the EU would have been the inability to control how individual countries run deficits and spend their money (Greece, Spain, others). Like living with 5 people where one can never afford the rent and the others have to cover him until they get tired enough of it and kick him out.

[Eriphill]

Originally Posted by fecurtis

No, many of us think you cut off your own nose to spite your own face with that one.

Seems like a lot of folks over there didn't really understand the economic ramifications and while the poor overwhelming voted to leave, they're the ones who stand to suffer the most. Oh well, we Americans are used to convincing the poor to act against their best interests too.

You can be as snotty and self righteous about it as you want, but that doesn't make it true. You also happen to be ignorant of the bigger picture, but oh well that's your mother's problem not mine.