Friday, June 24, 2016


Given my earlier posts from 2 years ago, an EU breakup is inevitable. The only surprise is that Britain, and not Germany, took the first step. Germany is Europe's ATM machine and if any country should have left first, it would have been her. Britain was less exposed by not being part of the currency union and less constrained by Brussels' rules and regulations. I won't rehash the arguments but the basic condition for a successful economic and currency union is fiscal discipline among its members. When Greece was included in the union, the seeds for breakup were already sown.  The immigration and cultural drivers for Brexit only became salient because of economic flaws in the system. Germany is next, in which case, we are back to multilateral treaties and smaller, more economically homogeneous blocs, like the Schengen. The impact may not be very severe given that global trade and freedom of movement is largely facilitated by technologies not available at the creation of the EU.

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