The vote was expected to be close, but the pro-EU elites expected to eke out a win. It didn't help that EU officials were threatening how hard they would make it on the UK to leave. Now financial markets are in full panic mode, with the Euro down 3.58% and the British Pound down 11%, as the everyone tries to get their money out of both the UK and the EU.
Now the United Kingdom faces the fact that Scotland and Northern Ireland voted to stay in the EU while England and Wales voted to leave. Does that mean Scotland and Northern Ireland will leave the United Kingdom? Does the European Union even want them? Will other countries want to leave the EU? Might some countries be kicked out?
I was in London in 1991 for about 10 days at the time when the European Union was first being hyped. I remember a young grad student from Germany going on and on a little too enthusiastically about how great it was going to be.
Update: The stock markets across the world were generally down Friday following the Brexit vote but took some curious bounces:
| Country | Index | Change |
|---|---|---|
| World | Global DOW | -5.41% |
| United Kingdom | FTSE 100 | -3.15% |
| United Kingdom | FTSE 250 | -7.19% |
| France | CAC 40 | -8.04% |
| Germany | DAX | -6.82% |
| Netherlands | AEX | -5.70% |
| Spain | IBEX 35 | -12.35% |
| Italy | FTSE MIB | -12.48% |
| Switzerland | Swiss Market | -3.44% |
| Russia | RTS Index | -3.04% |
| United States | DJIA | -3.39% |
| Canada | S & P/TSX Comp | -1.69% |
| Mexico | IPC All-Share | -2.73% |
| Japan | Nikkei 300 | -7.38% |
| China | Dow Jones China 88 | -1.34% |
| India | S & P BSE Sensex | -2.24% |
In the United Kingdom, the largest companies fared better than average but medium-sized companies were clobbered. Germany, France, and Netherlands got clobbered worse than the big companies in the United Kingdom (better to be the jilter than the jilted, I guess). Spain and Italy got hit even worse, suggesting people think they're next (probably to be kicked out of the EU). Switzerland and Russia, which are in Europe but not in the EU, fared better than average, as did the U.S., Canada and Mexico fared better than average. In Asia, Japan got clobbered but China and India got off light.
How much money was lost Friday? $2.08 trillion globally according to S&P. In real terms, zero. The stock markets reflect investor confidence about the future which is essentially a figment of the collective imagination. When rich people panic, they sell, and other rich people who aren't so panicked buy. When the rich people get over their panic, or events prove them wrong, stock prices go back up.
We'll see what happens Monday, but right now this looks at most like a six to twelve month setback, as compared to the ten year hole that was dug in 2008.
Update: Here in the U.S., at least, the stock market has recovered from the Brexit slump after just a week.
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