#Brexit

Today Great Britain votes on Brexit.  I saw some stuff on “how to insulate your portfolio from Brexit”.  Truth be told, there is no way to do that.  It’s a binary event that will probably cause a quick market move, but not a sustainable one either way.  It reminds me of Y2K.

Should they stay in the EU or not?   As a person who is a big free trader, I am for cooperation when it comes to lowering tariffs and trade barriers.  Ideally, the only cost associated with trade ought to be to get the goods from here to there.

Free trade is good for all people.  It makes goods and services cheaper.  Having tariffs and duties hurts poor people and the middle class.

That being said, I also dislike government bureaucratic solutions to problems.  I think the EU experiment is a total disaster.  The EU is not like a confederation of states like the US.  There is no common army or Constitution.  That means no discipline when it comes to programs and government spending.  Every country in the EU is broke except for Germany.

My friend Yra Harris is an expert on these sorts of things.  He has traded Forex for 40 years.  Yra concludes that leaving is the right thing for Britain.

When I started thinking a little more critically about what I would do if I were an Englishman I thought about why England needs certain EU countries.  The only one that’s productive is Germany.  The opportunity cost versus cost of remaining given the state the rest of them are in is probably too high a price to pay.  Ceding my sovereignty to Brussels bureaucrats won’t be good for me.  I’d vote to leave as well.

I don’t think the horrors that the STAY crowd are saying will come to pass.  I also don’t think many of the arguments that the LEAVE people are saying will come to pass either.  I do know that when we think about the principles of free markets, when individuals are free to maximize their own utility, markets become more efficient.  The trick in the Brexit issue is transaction costs.  How high are they going to be?

The only comparison I could think of was the US voting to cede sovereignty to the UN.  No way would I do that.  The UN is a dead weight loss on just about everything.