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Brexit — what do San Diego analysts think?

And what will it do to us?

Populism is billowing throughout the world.
Populism is billowing throughout the world.

Throughout Britain in the month of June, anti-Brexit propaganda was ubiquitous. Brexit, the vote on Britain dropping out of the European Union, or EU, “was dismissed, mocked and ridiculed. It was for lunatics and madmen,” wrote Daniel Greenfield of frontpagemag.com. “Anyone who wanted to leave was a fascist. Economists warned of total collapse if Britain left the EU.”

On June 24, the results of the vote were becoming clearer by the hour: Brexit and its madmen were going to win. They did. Was this a precursor of a swing to fascism? Hardly. It represented a widespread and growing commitment to populism, or a belief in the power of average people to have control over their government.

“Populist anger against the established political order had finally boiled over,” wrote the New York Times. The vote evinced “deepening public unease with the global economic order,” particularly globalization, seen to be stealing jobs from citizens.

Populism is billowing throughout the world: Donald Trump and Bernie Sanders have wowed the United States public. A growing number of Scots want out of the United Kingdom. Catalonia may get a divorce from Spain, although the potential secessions of Scotland and Catalonia have been on the table for a long time. Italy may be next to leave the European Union. Other countries may leave.

Some economists see a recession — or worse — ahead. The dollar has risen in value, particularly against the pound, driving oil prices down just as some were hoping those prices were on a recovery path.

Ross Starr

Some of the Brexit-related fears are justified. A threat to free trade, which Brexit could become, is a worry.

“Economists for 250 years have [been] in favor of free trade,” says Ross Starr, professor of economics at the University of California San Diego.

Kelly Cunningham

If further economic woes are restricted to the United Kingdom or Europe, San Diego should not suffer — directly, anyway. Kelly Cunningham, economist for the National University System, notes that the United Kingdom represents a minuscule 0.4 percent of San Diego’s trade (Mexico is 85.7 percent). Europe accounts for only 6.1 percent of San Diego’s trade.

The United Kingdom represents a minuscule 0.4 percent of San Diego’s trade.

The British pound will remain weak. That means fewer visitors from the United Kingdom will come to San Diego. Three years ago, 96,000 British people came, 1.7 percent of the local tourism business. That percentage will drop, “but the overall impact [on tourism] will likely be slight,” says Cunningham. While fewer British come here, more San Diegans will likely tour Great Britain as long as the pound remains weak against the dollar.

But one has to take a broader look. London is Europe’s financial center. The rest of Europe needs it. The European Union has been plagued with bureaucratic sclerosis for decades. Britain wisely did not convert to the euro in the late 1990s, says Starr. That’s one reason “Britain is relatively prosperous” compared to the rest of Europe. “Britain is a far better place to look for a job,” and that’s why it has had a flood of immigrants, riling longtime residents who displayed their pique by voting for Brexit.

Britain now has two years to set up new trade agreements — tariffs, regulation, migration, for example — with those countries left in the European Union, says Starr. This doesn’t have to be as gnarly a process as some expect. Britain’s departure from the European Union “need not be a calamity,” says Starr.

Arthur Lipper

Entrepreneur Arthur Lipper, Del Mar–based scion of a famous Wall Street family, says, “The European Union has always been, in my opinion, a flawed concept. Beneficiaries of the EU have been the politician/managers of the bureaucracy. It was simply a means of the more-efficient members [such as Germany] supporting the less-efficient members [such as Greece]. The idea of a united states of Europe is a nonstarter.”

Mike Stolper

It’s hard to argue with that point of view. But populism and antiestablishment thinking are spreading throughout the world. I caught up with Mike Stolper of San Diego’s Stolper & Co. investment and consulting firm in a bar in Copenhagen. People were told they would have to put up with pain in the early days of globalization, says Stolper, but “the benefits would be in the future.” However, “the benefits have not arrived. The people were sold a dogma” and they feel double-crossed.

“This is a revolution, a big deal,” says Stolper. Brexit is symptomatic of widespread unease. “If I was a betting man, I would bet Trump will be elected. He has tapped into the gestalt” burrowing its way into human psyches worldwide. There will be a negative effect on economies, “but I am not sure I see an impact on global markets. Stock markets are driven by corporate earnings,” and a wave of populism may not affect profits to any significant degree, he says. However, “we have had a long bull market and stock prices have gotten ahead of themselves,” so a bear market only marginally related to a cultural revolution is possible.

“I am bearish for the EU and America and bullish for China and Asia,” says Lipper, but he doesn’t blame creeping populism. “Education is the only answer, and we have failed in our elementary and secondary education efforts. The failure is due to both the policies of the teacher unions and the parents for allowing the supervisory boards to be generally ineffective.”

Lipper doesn’t see a dangerous creeping populism. Rather, he thinks the internet has “allowed for greater expressions of disappointment and criticism of those in authority.”

Cunningham believes the European economy will weaken further. “Losing the UK worsens existing tensions within the EU and weakens their free-market tendencies and makes the contrast even more obvious between the wealthy north and struggling south.”

Even though Great Britain is a small part of the San Diego economy, Cunningham is worried. He looks for a recession in Europe and Asia “and in the U.S. as well. I do not see San Diego avoiding the U.S. recession, which I think is likely to hit next year,” and it may have hit already this year, says Cunningham. “San Diego has been mostly tracking U.S. economic growth, slightly exceeding relative job growth and matching the unemployment rate. The military, which bolstered San Diego in times past, such as the previous decade, will not help now and [may actually] slow economic momentum as we absorb cutbacks in spending.”

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Populism is billowing throughout the world.
Populism is billowing throughout the world.

Throughout Britain in the month of June, anti-Brexit propaganda was ubiquitous. Brexit, the vote on Britain dropping out of the European Union, or EU, “was dismissed, mocked and ridiculed. It was for lunatics and madmen,” wrote Daniel Greenfield of frontpagemag.com. “Anyone who wanted to leave was a fascist. Economists warned of total collapse if Britain left the EU.”

On June 24, the results of the vote were becoming clearer by the hour: Brexit and its madmen were going to win. They did. Was this a precursor of a swing to fascism? Hardly. It represented a widespread and growing commitment to populism, or a belief in the power of average people to have control over their government.

“Populist anger against the established political order had finally boiled over,” wrote the New York Times. The vote evinced “deepening public unease with the global economic order,” particularly globalization, seen to be stealing jobs from citizens.

Populism is billowing throughout the world: Donald Trump and Bernie Sanders have wowed the United States public. A growing number of Scots want out of the United Kingdom. Catalonia may get a divorce from Spain, although the potential secessions of Scotland and Catalonia have been on the table for a long time. Italy may be next to leave the European Union. Other countries may leave.

Some economists see a recession — or worse — ahead. The dollar has risen in value, particularly against the pound, driving oil prices down just as some were hoping those prices were on a recovery path.

Ross Starr

Some of the Brexit-related fears are justified. A threat to free trade, which Brexit could become, is a worry.

“Economists for 250 years have [been] in favor of free trade,” says Ross Starr, professor of economics at the University of California San Diego.

Kelly Cunningham

If further economic woes are restricted to the United Kingdom or Europe, San Diego should not suffer — directly, anyway. Kelly Cunningham, economist for the National University System, notes that the United Kingdom represents a minuscule 0.4 percent of San Diego’s trade (Mexico is 85.7 percent). Europe accounts for only 6.1 percent of San Diego’s trade.

The United Kingdom represents a minuscule 0.4 percent of San Diego’s trade.

The British pound will remain weak. That means fewer visitors from the United Kingdom will come to San Diego. Three years ago, 96,000 British people came, 1.7 percent of the local tourism business. That percentage will drop, “but the overall impact [on tourism] will likely be slight,” says Cunningham. While fewer British come here, more San Diegans will likely tour Great Britain as long as the pound remains weak against the dollar.

But one has to take a broader look. London is Europe’s financial center. The rest of Europe needs it. The European Union has been plagued with bureaucratic sclerosis for decades. Britain wisely did not convert to the euro in the late 1990s, says Starr. That’s one reason “Britain is relatively prosperous” compared to the rest of Europe. “Britain is a far better place to look for a job,” and that’s why it has had a flood of immigrants, riling longtime residents who displayed their pique by voting for Brexit.

Britain now has two years to set up new trade agreements — tariffs, regulation, migration, for example — with those countries left in the European Union, says Starr. This doesn’t have to be as gnarly a process as some expect. Britain’s departure from the European Union “need not be a calamity,” says Starr.

Arthur Lipper

Entrepreneur Arthur Lipper, Del Mar–based scion of a famous Wall Street family, says, “The European Union has always been, in my opinion, a flawed concept. Beneficiaries of the EU have been the politician/managers of the bureaucracy. It was simply a means of the more-efficient members [such as Germany] supporting the less-efficient members [such as Greece]. The idea of a united states of Europe is a nonstarter.”

Mike Stolper

It’s hard to argue with that point of view. But populism and antiestablishment thinking are spreading throughout the world. I caught up with Mike Stolper of San Diego’s Stolper & Co. investment and consulting firm in a bar in Copenhagen. People were told they would have to put up with pain in the early days of globalization, says Stolper, but “the benefits would be in the future.” However, “the benefits have not arrived. The people were sold a dogma” and they feel double-crossed.

“This is a revolution, a big deal,” says Stolper. Brexit is symptomatic of widespread unease. “If I was a betting man, I would bet Trump will be elected. He has tapped into the gestalt” burrowing its way into human psyches worldwide. There will be a negative effect on economies, “but I am not sure I see an impact on global markets. Stock markets are driven by corporate earnings,” and a wave of populism may not affect profits to any significant degree, he says. However, “we have had a long bull market and stock prices have gotten ahead of themselves,” so a bear market only marginally related to a cultural revolution is possible.

“I am bearish for the EU and America and bullish for China and Asia,” says Lipper, but he doesn’t blame creeping populism. “Education is the only answer, and we have failed in our elementary and secondary education efforts. The failure is due to both the policies of the teacher unions and the parents for allowing the supervisory boards to be generally ineffective.”

Lipper doesn’t see a dangerous creeping populism. Rather, he thinks the internet has “allowed for greater expressions of disappointment and criticism of those in authority.”

Cunningham believes the European economy will weaken further. “Losing the UK worsens existing tensions within the EU and weakens their free-market tendencies and makes the contrast even more obvious between the wealthy north and struggling south.”

Even though Great Britain is a small part of the San Diego economy, Cunningham is worried. He looks for a recession in Europe and Asia “and in the U.S. as well. I do not see San Diego avoiding the U.S. recession, which I think is likely to hit next year,” and it may have hit already this year, says Cunningham. “San Diego has been mostly tracking U.S. economic growth, slightly exceeding relative job growth and matching the unemployment rate. The military, which bolstered San Diego in times past, such as the previous decade, will not help now and [may actually] slow economic momentum as we absorb cutbacks in spending.”

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Comments
42

So... Is it finally time for California to secede from the US?

In this election year we see that United States political powers have long ago left the desires of the ordinary citizen out of their equations. We see that the economic powers have done the same.

Our local governments and state legislators are usually more responsive to the public interest. Our commercial activity is more likely to be considerate of the environment and their customers/employees' overall welfare.

Is it possible that a self-governing California could become an oasis of democracy with prosperity for all? Is it likely that we could set a good example for the countries of the world to emulate?

July 13, 2016

swell: I don't hear talk of California seceding. What if the state seceded and the federal government then eliminated all aerospace-defense spending in California? Ouch!

Some in Texas, including Gov. Rick Perry, talk about seceding. But what if the federal government then cut off all aerospace-defense there, as well as all NASA spending? It would serve Texas right.

At one time, the area around Susanville was talking about seceding from California. I don't know what happened to that plan. Best, Don Bauder

July 13, 2016

Porn is profitable. Let's strip.

July 13, 2016

You first, Shirley.

lol

July 13, 2016

SalULloyd: Shirleyberan will try anything once. Best, Don Bauder

July 13, 2016

shirleyberan: Is that an invitation to me? I would hate to disappoint you. Best, Don Bauder

July 13, 2016

"Is it possible that a self-governing California could become an oasis of democracy with prosperity for all? Is it likely that we could set a good example for the countries of the world to emulate?"

Hahahahahahahahahahahahahahahahahahahahahahahah! (Oh let me catch my breath)...Hahahahahahahahahahahahahhaha.

Are you high? You do realize CA is typically used as an example of what NOT to do for the rest of the country? Everything the state government touches is ruined. WHY would you want to give it MORE power? Furthermore it's far from democratic. There is only one political party ruling the entire state (and it shows). Any time the public votes through props to change something the ruling party kills it through the courts.

July 13, 2016

sue17: California doesn't officially have a one-party system. But people keep voting for it. Best, Don Bauder

July 13, 2016

The GOP is a mess in CA. However, I think ultimately Kevin Faulconer will make a better governor than the last few we've had. Which isn't saying much.

July 15, 2016

ImJustABill: Faulconer's"take no positions" political style may not fly. Best, Don Bauder

July 20, 2016

I can imagine a few states (don't ask me exactly which ones) that could become beacons of democracy and participative good government if they were independent. But this one isn't it, and not by a long shot. Much of this goofball stuff goes back decades, but as population grew in the state, the number of utterly uninformed and brain-dead voters grew massively. Not only cannot it get better, it is sure to worsen. The economy outside a few big cities will decline. Then even those centers of activity, such as Silicon Valley, the Peninsula, and other high tech hotspots, will cool down.

July 13, 2016

Visduh: With the cost of living so high in the major coastal California cities, and with factors such as the drought hurting agricultural areas, California may have seen its best days. But it will continue to be more enticing than other states unless global warming boils it. Best, Don Bauder

July 13, 2016

"“I am bearish for the EU and America and bullish for China and Asia,” says Lipper, but he doesn’t blame creeping populism. “Education is the only answer, and we have failed in our elementary and secondary education efforts. The failure is due to both the policies of the teacher unions and the parents for allowing the supervisory boards to be generally ineffective.”

LOL typical corporatist view. He wants the education, but he doesn't want to pay the taxes.

July 13, 2016

SalULloyd: I don't think Lipper has a corporatist view. He didn't say anything about taxes, for example. He says education is the answer, and who can argue with that? Best, Don Bauder

July 13, 2016

Joseph Oppenheim: Agreed. It's not just globalization. It's also digitization. You could be right that we are in a second renaissance. Best, Don Bauder

July 13, 2016

Although most people agree that immigration is good for many reasons, it can be argued that too much immigration – too quickly – is not good. Britons have been welcoming immigrants from their former colonies for decades. However, the recent wave of refugees and the diametric culture they embrace rather than assimilate, has taken its toll. The Brits are tired of bureaucrats in Brussels dictating how many asylum seekers the U.K. must accept. Economics aside, a lot of what Brexit was about is not trade, but controlling borders and immigration.

July 13, 2016

Ponzi: I remember when NAFTA was under discussion in the early 1990s. At a couple of speeches, I became the skunk at the garden party by telling people that free trade meant free borders. The current wave of immigrants is having profound social consequences -- profound enough that it is already leading to big changes, such as Brexit. Best, Don Bauder

July 13, 2016

And in the USA, it is leading to big changes, such as Trump.

July 13, 2016

Visduh: Yes, NAFTA in some respects contributed to the success of Trump and Bernie Sanders. Best, Don Bauder

July 13, 2016

Dave Siccardi: If Trump will do or say anything to get his way, isn't he then just a little bit evil -- or maybe thoroughly evil? He is the most narcissistic person I have seen in politics for some years -- maybe since Joe McCarthy. Best, Don Bauder

July 13, 2016

Don - I won't try just anything even once, but I've known people. Now that you made me think about geriatric porn we should stick to other lines of income.

July 14, 2016

shirleyberan: I have gouges most of the way down my chest, and down the inside of both legs, as a result of two heart bypass surgeries. I don't expect to be hired to pose for geriatric porn. Best, Don Bauder

July 14, 2016

Recent news interview shows Al Assari of Syrian Dicktatorship not concerned.

July 14, 2016

shirleyberan: What should he be concerned about, other than mayhem? Best, Don Bauder

July 14, 2016

Bashar al Assad - oops - still a mass murderer.

July 14, 2016

shirleyberan: Mass murder is a way of life in those areas of the world. Best, Don Bauder

July 14, 2016

Who Putin and Trump want as pals.

July 14, 2016

shirleyberan: They both want all the power they can amass. Best, Don Bauder

July 14, 2016

And when Ginsberg said we'd need to go to New Zealand if we had a Trump I was already thinking.

July 14, 2016

shirleyberan: I dislike seeing someone back down from intelligent statements. Best, Don Bauder

July 14, 2016

I think it was innapropriate (sp?) for RBR to comment on an upcoming political election. She has to attempt to maintain impartiality.

July 15, 2016

He's an ignorant pig so why should she apologize ?

July 14, 2016

shirleyberan: Supreme Court members are held to higher standards, although some, such as the late Scalia and Clarence Thomas, break them at will. Best, Don Bauder

July 14, 2016

"The current wave of immigrants is having profound social consequences -- profound enough that it is already leading to big changes, such as Brexit."

Not sure what kind of changes you had in mind Don. But I had the daily terrorist stuff in mind when I suggested the UK wanted control of migration.

After Nice, I wonder if France will exit too. Or is their "problem" too baked into their society?

July 14, 2016

Ponzi: Brexit is a big change. So are the murders in the European countries -- France (Paris) and Belgium. Best, Don Bauder

July 14, 2016

France has a big problem. They have a large population of immigrants - largely African Muslims who have not assimilated into French society for various reasons. I'm not sure how they move forward from here. I think they somehow need to become more welcoming to the African Muslim immigrant community while at the same time increasing investigation and scrutiny of the immigrant community to search for potential terrorists.

July 15, 2016

ImJustABill: Being more welcoming to African Muslims while at the same time scrutinizing the immigrant community more carefully is a difficult order. Best, Don Bauder

July 16, 2016

Yes, as I say France has a difficult problem.

July 16, 2016

ImJustABill: What country does not have a difficult problem? Best, Don Bauder

July 20, 2016

There is almost no policy choice which is good for everyone. The establishment holds that global free trade is good and unchecked legal (and illegal) immigration are good. Well maybe they're good for society as a whole, maybe they're noble goals to attain - I don't know. But I do know they are not good for EVERYONE. Every policy choice has winners and losers.

The winners from globalism - free trade and unlimited immigration - seem to be shocked that the losers of globalism don't embrace policies that favor the winners.

Win-win is (almost) always a lie.

July 16, 2016

ImJustABill: I agree that the establishment is surprised at the public reaction to free trade and open borders. The establishment should have seen this coming. Best, Don Bauder

July 20, 2016

Bob Hudson: Most politicians will say or do almost anything to continue getting elected. You are correct in that. But I can think of no politicians in my lifetime who have been so staggeringly narcissistic and sociopathic as Trump. Even Joe McCarthy couldn't top Trump. Best, Don Bauder

July 20, 2016

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