Robert Pringle on Brexit & The Future of the EU

Robert Pringle alerted me to this new article on his blog which laments the Brexit vote and suggests that British citizens were mislead leading up to the vote. Also, Mr. Pringle pointed me to this article in his Central Banking journal by Otmar Issing which calls into question the sustainability of the EU itself (picked up by the UK Telegraph here). Below are some excerpts from each article and then a few added comments.

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From the concluding section of the Brexit article:

"So why did they (we) do it (vote for Brexit)?

What led the British to vote against their own interests?

Powerful anti-European interests include the popular media and sections of the main political parties representing traditional political elites – the conservative right as well as Labour interventionists.  Libertarians of the Institute of Economic Affairs school and economists committed to floating exchange rates, as well as those who favoured activist fiscal and monetary policies, provided intellectual ammunition. They feared that membership might spell the end of their influence on British policy. Britain’s governing classes feared loss of control.

That is why they played up the theme that the EU was evolving into a “superstate”. There is in fact no possibility of European political union.  The British elites understand that. But it suited their case to lie. They knew the British masses would never tolerate  being run by a European superstate.

For generations British children have been brought up to glorify the UK’s role in two world wars. Anti-German feelings have deep roots. As past German ambassadors to London have commented, the popular media’s views of Germany bear no relation to the modern country. As Germany’s weight in the EU has grown, so it became easier to arouse British fears.

Meanwhile, it has been common for British governments and, sadly, governors of the central bank (not the present one) to cite the poor economic performance of the eurozone as contributing to Britain’s difficulties.

Successive British governments opened the doors wide to EU  immigrants when it suited them for political or economic reasons  without thought of the difficulties they might cause in the longer term. Thus during the referendum campaign anti-EU spokesmen could play on fears of millions of “Turkish immigrants” being let loose on the UK, swamping its fragile national health service.

The British have never been able properly to monitor immigrants because they do not have and will never tolerate a national identity card system.

When confronted with mass resentment at the failure of British economic policy  – failure to apportion the costs of the financial crisis fairly, resort to policies that made inequality worse,  failure to reform banking – these traditional elites were able to deflect popular anger from the British to the European level.  The mass media were complicit

The answer: the British have been betrayed by their governing classes.

To save their skin, the British elites used Europe as the scapegoat.

The masses followed. They were tricked. Now they will pay a heavy price.

What will they do when they find out the truth?"

Please click here to read the full article

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Otmar Issing article in Central Banking (from UK Telegraph review):

"The European Central Bank is becoming dangerously over-extended and the whole euro project is unworkable in its current form, the founding architect of the monetary union has warned.

"One day, the house of cards will collapse,” said Professor Otmar Issing, the ECB's first chief economist and a towering figure in the construction of the single currency."

. . . .

“Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly," he told the journal Central Banking in a remarkable deconstruction of the project."

Click here to read the full UK Telegraph article

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My added comments: Regarding the first article on Brexit, Robert Pringle adds this PS at the end of the article:

"PS Note to readers: You may wonder why this post belongs in The Money Trap website. My reason is that the Brexit decision reflected the consequences of the failure of governments, regulators and central bankers to lead the UK out of the financial crisis in a way acceptable to public opinion. The institutions and policies that led to the crisis remain in place. The lack of reform, the failure to hold anybody accountable, has stoked popular anger."  -- Robert Pringle

I had a chance to offer some comments to Mr. Pringle and I told him I thought his PS note to readers was right on target. 

In regards to the second article, Mr. Pringle told me Mr. Issing is a highly respected voice concerning the EU and the Euro and we would be wise to listen to his concerns and take them seriously.

All of this further illustrates why these issues are important and why we need to stay alert and informed. For most people, it is hard to see how these kinds of issues might impact their daily lives. But anything that adds to instability in the basic monetary system people are using to conduct business most certainly can impact them directly whether they realize it or not. Waiting until a system fully destabilizes into a full blown crisis to become informed is not a wise choice and why this blog encourages people to learn as much as they can.