The British people powerfully repudiated their political and business elites last week by voting in favor of Britain exiting the deeply flawed European Union (E.U.).
As the Wall Street Journal pointed out, 52% of British voters gave a collective middle finger to all five major political parties, more than 1200 corporate CEOs, and even American President Barack Obama who told them that it would be a terrible mistake to leave the death-clutch of the European bureaucratic state.
This was not only a victory for democracy but a resounding rejection of dismal economic and political leadership that has led the world to the brink of another global financial crisis.
But there’s so much more happening beyond the United Kingdom…
Big Losses Are the Price of Complacency
Markets were blindsided by the Brexit vote because investors have lost the ability to think for themselves. Instead of exercising independent judgment and common sense, they listen to corrupt and conflicted advice from Wall Street, politicians and the mainstream press.
They are told that central bankers are doing the right thing by lowering interest rates to zero (or below) and buying back trillions of dollars of government debt (and in the case of Japan, equities).
In fact, these policies are destroying the world.
Furthermore, they are told that if they just keep their mouths shut and allow these catastrophically bad policies to persist, everything will be alright.
Thankfully the British people are no fools and realized that remaining a part of a failing economic and political regime is the path to nowhere.
The sooner investors question the current policy regime rather than rewarding it with near-record stock market prices, the better off the entire world will be.
There will no doubt be disruption and dislocation as the world transitions to a more sustainable path, but delaying the transition will only increase the ultimate pain.
Markets got smashed on Friday after the vote but only after rallying strongly into the vote. On the week, the damage was minimal.
