Brexit Effects on Global Economy ©Natalie Keshing
Once in a while you come acoss an article in the news that grabs your attention; especially after a major game changer like Brexit which rocked the global economy off it’s normal modus operandi. That particular way or method of doing daily business; characteristically of a well-established set of investor’s currency, investments and stocks maintaining our future investments for the golden years; our retirement. ©Natalie Keshing
Here’s the writing on the wall, “What makes Brexit so concerning is that it accentuates and deepens global forces that have been building for years.” How many of us thought, ‘Wow, the British are really sick and tired of being sick and tired’ with the same old ways of governing that are absolutely not helping the majority of normal middle income families. This is where the dissension and polarization distributions of inequality start to encompass and flag our internal instincts about our own financial incomes and woes. I thought I heard that the British were tired of the governing practices and they were also tired of people migrating into their now very independent country called England. This is where an evil organization like ISIS is tapping at the anxiety of people’s fears. ISIS calling themselves Islam while committing the most atrocious acts of violence and killing. Now also a part of this financial equation of prosperity. This in turn affecting most country’s tourism revenues. ©Natalie Keshing
There are comparative parallels between England and the United States. We the American people are tired of Congress not doing their jobs. Most of them are Dialing for Dollars the majority of their working day trying to raise enough funds for their re-election campaigns and the established party whether Republican or Democrat. So the dollar amount and worth is now really being devalued by our governing officials who are devoting more than half of their time raising money from the rich and greedy to push their ideas and hire lobbyist to continually affect our economy and well being as a nation and society. Most rich people or rich organizations are looking out for themselves, like the NRA preventing governing gun control laws that could prevent 32,000 deaths that occur due to a hand gun or automatic weapons. England has much stricter laws governing guns and automatic weapons. They’ve already decided to control that but everyone is dealing with the random acts of terrorism. ©Natalie Keshing
The article noted that these, “global forces have self-reinforcing, vicious-cycle dimensions that make it a particularly perilous time for the global economy, even though the type of full-scale panic that followed the collapse of Lehman Bros. in 2008 looks unlikely.” Well, I’m not ready to say that this global shift in the economy doesn’t have it’s own set of problems that haven’t quite trickled down to the normal person and consumer in most countries. Numbers and statistics are still reporting on the optimistic side while the shifting of the global domino effect hasn’t gained any real momentum. What happened in 2008 was well on it’s way for at least five years before the weight of Consolidated Debt Obligations grew into this behemoth financial avalanche that was ready to take down our whole economy and bring on a period of financial depression. Many many financial institutions, companies and the largest banks themselves had the opportunity to stop what happened in 2008. But no one did and no one was reprimanded or indicted to deter the criminal behavior of Wall Street, large banks, large company CEOs, CFOs, auditors, and accountants not taking the responsibility for completely jeopardizing the United States economy as a whole society. ©Natalie Keshing
This is the very reason we cannot elect someone to be President of the United States who didn’t uphold the national security laws of the United States as former Secretary of State; thereby committing a felony and has yet to be indicted for such willfully and purposely arrogant “I’ll Do As I Please” attitude working for four years on an unsecured and unprotected homebrew server. Now claiming the State Department was fully aware of her unsecured server. That takes a lot of nerve and cunning, secretive behavior while she was arranging deals with our adversaries against our national security in the form of one thousand and one hundred (1,100) foreign donations made to Giustra Enterprise Partnership, acting as a trust, then bundling these donations and depositing into the Clinton Foundation. The only secrets Hillary Clinton was protecting were her own. People like her and those who knew of the Consolidated Debt Obligations schemes are not being held accountable for their financial greed at the expense of the American people who continue to pay the Trillion dollar bailout for 2008 and now an open server containing most of our national security classified documents in the hands of hackers resulting in jeopardizing and compromising our country’s national security. ©Natalie Keshing
“Britain accounts for less than 4 percent of world GDP. Most people on Earth don’t have a rooting interest in the exact details of the nation’s trade relationship with the rest of Europe. But its decision to leave the European Union is making more powerful six interrelated forces that already weigh on the global economy:” Well now, they will have an interest in the “Gross Domestic Product”. The GDP is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.
“Low inflation. There is a glut of global commodities, particularly oil. There is a glut of labor, with elevated unemployment in much of the world. Inflation has been persistently below the 2 percent mark that major central banks aim for, and shows little sign of rising.” So far nothing to give us anxiety.
And since the Brexit decision, markets are signaling that those forces have become even more energized.
“The price of oil fell 7.5 percent from Thursday’s to Monday’s close, despite little reason to think that the British referendum will cause any major changes in, for example, the supply of oil from oil reserves the nation controls.”
“And bond markets are priced at levels that imply the years ahead will have lower inflation that was priced in before the Brexit news. While high inflation is often viewed as the greater threat, in the last few years economists have viewed too-low inflation — which can discourage spending and investment and make debts more onerous — as the more pressing concern.” OK here we have to take note and always save for the rainy day; as they say.
In the United States, bond market prices imply that investors now expect annual inflation of 1.37 percent a year through 2026, down from 1.55 percent on Thursday before the vote’s results, a drop of 0.18 of a percentage point; in Germany, the drop was 0.13 of a point and in Japan 0.10 of a point. (The one exception: Britain itself, which will almost certainly see much higher inflation in the coming years because of a drop in its currency.) This is being proactive instead of reactive.
— “Strong dollar. The U.S. dollar has been on a tear. The dollar index, measuring its value against six other major currencies, is up more than 20 percent in the last two years.” I give this a thumbs up.
Some of this reflects good health: The U.S. economy is reasonably strong, with steady growth since 2009 and a 4.7 percent unemployment rate. That has led the Federal Reserve to raise interest rates once and contemplate further moves. I’ll give this a plus.
“Some of the dollar rally reflects a more negative global outlook. The economies of Europe, Japan and many emerging markets have remained exceptionally weak, making the U.S. look comparatively fantastic. Factor in the United States’ traditional role as the beacon of stability in turbulent times and U.S. assets look more attractive than their underlying economics would suggest.” All right here’s another thumbs up.
“Most worrisome is that there are some feedback loops between the strong dollar and economic weakness abroad. Many international companies, especially in China and emerging markets, owe debt in dollars, so a stronger dollar makes their debts more onerous and creates spillover economic weakness. And the stronger dollar is undermining American exporters, slowing growth in the U.S.” This we should pay attention to.
Ah! Here’s the important part that is truly affecting the working American people of the United States in this Election, 2016. — “Political instability. All of this is creating a toxic political environment in much of the advanced world, driving greater polarization and the flocking of voters to candidates outside the mainstream.”–> Bernie Sanders and Donald Trump
And on that note I’ll close this article still with the hope of the people doing the right thing for this Election, 2016. The rest of this well informed article by Neil Irwin can be read here.‘Brexit’ strengthening the forces that are already haunting the global economy.
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©Natalie Keshing Editor-in-Chief of NatsWritings.com or NatalieKeshing.com