1 Post-Brexit financial world remains uncertain
(Nils Pratley in The Guardian) This post-Brexit financial world will require a
lot of untangling. If a UK recession, however mild or brief, lies ahead, banks
will see more loans turn sour while consumers’ appetite for fresh debt will
shrink. Worse for the banks, the whiff of any medium-term rise in interest
rates in the UK has disappeared.
The fear of recession also undermined the
housebuilding sector, where most stocks fell by a quarter. Mortgages may remain
extraordinarily cheap in the new world, but confidence in house prices is suddenly
anybody’s guess.
What happens next? It’s easy to imagine how
financial waves from the upheaval in currency markets could spread around the
world. Even as things stand, the strong US dollar is creating severe pressures
in China, where Beijing’s softly-softly attempt to loosen the renminbi’s peg
with the US currency upset markets at the start of this year.
Dominic Rossi of fund manager Fidelity International
expects lower growth across the UK and the rest of Europe, but thinks the political
shock from the UK referendum will be greater than the economic one.
The good(ish) news was delivered by Mark Carney,
governor of the Bank of England: the financial system is far stronger than it
was in 2008 and banks’ capital requirements have been stressed against
“scenarios more severe than the country currently faces”. There is no reason to
doubt that statement. But financial markets’ medium-term adjustment to the
post-Brexit world remains deeply uncertain.
2 Soros warns of EU disintegration (BBC) Billionaire
investor George Soros has warned that Britain's vote to leave the European
Union makes the disintegration of the bloc "practically
irreversible". However, he called for thorough reconstruction of the EU in
an attempt to save it.
Before Thursday's UK referendum, Mr Soros had warned
of financial meltdown if Britain voted to leave. "Britain eventually may
or may not be relatively better off than other countries by leaving the EU, but
its economy and people stand to suffer significantly in the short- to medium
term," he wrote after the referendum.
He said the consequences for the economy would be
comparable to the financial crisis of 2007-2008. "After Brexit, all of us
who believe in the values and principles that the EU was designed to uphold
must band together to save it by thoroughly reconstructing it," he wrote.
3 Democracy’s woes (Anjum Altaf in Dawn) Over 2,000
years ago, Plato was sceptical of democracy because he felt that voters, even
though restricted to property-owning male citizens, were swayed easily by the
rhetoric of politicians.
Democracy disappeared for over 1,500 years following
its demise in Athens and it was only then that its slow evolution began in
England and spread to other parts of the world. During colonialism it was
asserted that natives were not ready for democracy. Similar reservations
regarding the developing world persisted beyond the end of colonialism.
The intellectual challenge to democracy was
unaddressed — after all Hitler was popularly elected and voters have often
elected leaders who they themselves condemn as thieves and rascals. The revival
of this debate is due to the turmoil in the democratic homeland — governmental
gridlock, the surge in extremist sentiment in Europe, and the emergence of
Trump as a presidential candidate in the US.
Reservations about democratic decision-making have
been expressed more recently by Richard Dawkins with reference to the UK
referendum on EU membership. Dawkins asks: “You want your surgeon to know
anatomy… Why would you entrust your country’s economic and political future to
know-nothing voters like me?”
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