Britain entered uncharted waters Friday after the country voted to leave the European Union.
And Steve Forbes predicts that the Brexit vote is everything you’ve feared and more. He predicts the side effects will literally go from bad to worse.
“The Brexit Vote is a disaster, political and economically,” he wrote for
Forbes.com.
“After the initial shock wears off there will be happy talk that maybe it won’t all be so bad. Don’t believe it,” warned the two-time Republican presidential candidate.
“The vote will intensify the centrifugal forces tearing apart the EU. The whole thrust of post-WWII diplomacy has been to bring the European nations together in order to avoid the disasters that plagued Europe and the world during the first half of the 20th century. The EU has made a series of major mistakes, in particular creating a massive, corrupt bureaucracy that has spewed out an avalanche of petty regulations (what the shape of a banana should be),” he wrote.
“The uncertainty created by the Brexit will hurt economically. New trade agreements take time to work out and enact, and the negotiations for this divorce will be extremely contentious,” wrote Forbes, chairman and editor-in-chief of Forbes Media.
What should the U.S. response be?
“We must make it explicitly clear to Moscow that it should forget any moves on the Baltic countries by sending an armored brigade to that region. While we’re at it, we should send another one to Poland,” he wrote.
“We should also offer to negotiate British membership in NAFTA, a true free-trade zone without an EU-type bureaucracy,” he wrote. “Our next President—with a supply-side agenda, it’s to be hoped—should urge London to be far more pro-growth in the tax area. Britain is going to need it.”
To be sure, Britain's vote to leave the European Union adds a heavy dose of uncertainty to a world economy that is still struggling to reach full speed years after the global financial crisis, the
Associated Press reported.
"The most immediate pain will be felt in Britain. But economists say the ripples could be felt much farther afield," the AP reported.
"Companies will wonder whether to invest or locate in Britain during the years-long negotiations to define new trade conditions with the EU, its biggest business partner," it said. "Across Europe, trade and immigration may lose ground to nationalism and protectionism."
The EU itself, minus market-oriented Britain, may turn to more government intervention and regulation. Other countries may eventually seek to leave the bloc.
Meanwhile, hours after Britain’s decision to leave the European Union sparked mayhem across global financial markets, a handful of prescient investors began to emerge as big winners,
Bloomberg reported.
Hedge fund manager Crispin Odey, an advocate of a British exit, gained more than 15 percent in his flagship fund on Friday, according to a person familiar with the situation.
Several hedge funds that use computers to follow trends, including David Harding’s Winton Capital Management, also reported gains.
"They were among the few -- or, at least, the known few -- who profited as the pound plunged to the lowest since 1985, global stocks tumbled and bonds and gold rallied," Bloomberg reported.
George Soros, the billionaire who forged his reputation by making a billion-dollar score in a 1992 bet that the U.K. would devalue the pound, had warned Britons days before the vote that they were underestimating the true cost of a Brexit and that the only winners would be speculative forces seeking to exploit such a decision.
(Newsmax wire services contributed to this report).
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