After Brexit: The System Cannot Hold

Tyler Durden's picture

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Well, they did it. A majority of Britons made clear they’re so fed up with David Cameron and everything he says or does, including promoting the EU, that they voted against that EU. They detest Cameron much more than they like Nigel Farage or Boris Johnson. It seems that everyone has underestimated that.

Cameron just announced he’s stepping down. And that points to a very large hole in the ground somewhere in London town. Because going through a list of potential leaders, you get the strong impression there are none left. Not to run the country, and not to negotiate anything with Brussels. Which has a deep leadership -credibility- hole of itself, even though the incumbents are completely blind to that.

But first Britain. The Leave victory was as much a vote against Chancellor George Osborne as it was against Cameron. So Osborne is out as potential leader of the Conservatives. Boris Johnson? Not nearly enough people like him, and he fumbled his side of the Leave campaign so badly his credibility, though perhaps not being fully shot, is far too much of an uncertainty for the Tories to enter the upcoming inevitable general elections with.

Who else is there? Michael Gove? Absolute suicide. Likeability factor of zero Kelvin. That bus these guys drove around which proclaimed they could get £350 million extra a year for the NHS health care system in case of a Brexit will come back to haunt all of them. Just about the first thing Farage said earlier when the win became clear, was that the £350 million was a mistake.

I guess you could mention Theresa May, who apparently wants the post, but she’s an integral part of the Cameron clique and can’t be presented as the fresh start the party so badly needs.

Talking about Farage, who’s not Tory, but Ukip, he’s done what he set out to do, and that means the end of the line for him. He could, and will, call for a national unity government, but there is no such unity. He got voted out of a job today -he is/was a member of the European Parliament- and Ukip has only one seat in the British parliament, so he’s a bit tragic today. There is no place nor need for a UK Independence Party when the UK is already independent.

Then there’s Labour, who failed to reach their own constituency, which subsequently voted with Farage et al, and who stood right alongside Cameron for Remain, with ‘leader’ Jeremy Corbyn reduced to the role of a curiously mumbling movie extra. So Corbyn is out.

Shadow finance minister John McDonnell has aspirations, but he’s a firm Remain guy as well, and that happens to have been voted down. Labour has failed in a terrible fashion, and they better acknowledge it or else. But they already had a very hard time just coming up with Corbyn last time around, and the next twist won’t be any easier.

Cameron, Osborne, Corbyn, they have all failed to connect with their people. This is not some recent development. Nor is it a British phenomenon, support for traditional parties is crumbling away everywhere in the western world.

The main reason for this is a fast fading economy, which all politicians just try to hide from their people, but which those same people get hit by every single day.

A second reason is that politicians of traditional parties are not perceived as standing up for either their people nor their societies, but as a class in themselves.

In Britain, there now seems to be a unique opportunity to organize a movement like (Unidos) Podemos in Spain, the European Union’s next big headache coming up in a few days. Podemos is proof that this can be done fast, and there’s a big gaping hole to fill.

Much of what’s next in politics may be pre-empted in the markets. Though it’s hard to say where it all leads, this morning there’s obviously a lot of panic, short covering etc going on, fact is that as I write this, Germany’s DAX index loses 6% (-16.3% YoY), France’s CAC is down 7.7% (-18.5%) and Spain’s IBEX no less than 10.3% (-30%). Ironically, the losses in Britain’s FTSE are ‘only’ 4.5% (-11%).

These are numbers that can move entire societies, countries and political systems. But we’ll see. Currency moves are already abating, and on the 22nd floor of a well-protected building in Basel, all of the relevant central bankers in the world are conspiring to buy whatever they can get their hands on. Losses will be big but can perhaps be contained up to a point, and tomorrow is Saturday.

By the way, from a purely legal point of view, Cameron et al could try and push aside the referendum, which is not legally binding. I got only one thing on that: please let them try.

As an aside, wouldn’t it be a great irony if the England soccer (football) team now go on to win the Euro Cup? Or even Wales, which voted massively against the EU?

Finally, this was of course not a vote about the -perhaps not so- United Kingdom, it was a vote about the EU. But the only thing we can expect from Brussels and all the 27 remaining capitals is damage control and more high handedness. It’s all the Junckers and Tusks and Schäubles and Dijsselbloems are capable of anymore.

But it’s they, as much as David Cameron, who were voted down today. And they too should draw their conclusions, or this becomes not even so much about credibility as it becomes about sheer relevance.

Even well before there will be negotiations with whoever represents Britain by the time it happens, the Brussels court circle will be confronted with a whole slew of calls for referendums in other member states. The cat is out of Pandora’s bag, and the genie out of her bottle.

Many of the calls will come from the far-right, but it’s Brussels itself that created the space for these people to operate in. I’ve said it before, the EU does not prevent the next battle in Europe, it will create it. EC head Donald Tusk’s statement earlier today was about strengthening the union with the remaining 27 nations. As if Britain were the only place where people want out…

Holland, France, Denmark, Italy, Spain, Hungary, they will all have calls for referendums. Greece already had one a year ago. The center cannot hold. Nor can the system. If referendums were held in all remaining 27 EU member states, the union would be a lot smaller the next morning. The Unholy Union depends on people not getting a say.

The overwhelming underlying principle that we see at work here is that centralization is dead, because the economy has perished. Or at least the growth of the economy has, which is the same in a system that relies on perpetual growth to ‘function’.

But that is something we can be sure no politician or bureaucrat or economist is willing to acknowledge. They’re all going to continue to claim that their specific theories and plans are capable of regenerating the growth the system depends on. Only to see them fail.

It’s high time for something completely different, because we’re in a dead end street. If the Brexit vote shows us one thing, it’s that. But that is not what people -wish to- see.

Unfortunately, the kinds of wholesale changes needed now hardly ever take place in a peaceful manner. I guess that’s my main preoccupation right now.

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jun 24, 2016 3:00 PM

The only question is who's next.  EU is toast

MisterMousePotato's picture

Just watch: In about a week, we'll all be back here talking about Bruce Gender using the girls' room, and waiting for something - anything - to happen.

Citxmech's picture

"The overwhelming underlying principle that we see at work here is that centralization is dead, because the economy has perished. Or at least the growth of the economy has, which is the same in a system that relies on perpetual growth to ‘function’."

This  ^

Shemp 4 Victory's picture

Inthemix96 for Prime Minister!

OverTheHedge's picture

Fuck, yes!

(Do you see what I did there?)

ShrNfr's picture

Where is the bloody milk for me tea and a tin of marmalade for me friggin biscuits?


And get that marmalite out of here NOW!

UndroppedClanger's picture

Biscuits and marmalade? Are you MAD? It would fall off when you dunk the biscuit in your tea. I don't know what marmalite is but I bet the blokes at Marmite are wanting to have a serious word with it.

Ralph Spoilsport's picture

It's morning again in Great Britain and there's nothing quite as good as an English breakfast. Without Marmite.

divingengineer's picture

Here, here, that talk is all sixes and sevens, right?

wildbad's picture

i think that writing farage off is dead wrong.  he has gained mountains of credibility via Brexit and a repurpoe of UKIP aint that big of a deal.

Autonomous's picture

Agreed, Farage is now more relevant than ever. Someone needs to take the helm and steer the UK out of the EU, to disentangle from all the counterproductive and harmful links with the EU while restructuring and creating direct relations with the member nations.

Rubicon727's picture

Given the dictatorship of the EU, don't be surprised if the knives come out and try to destroy the UK economy; labor pensions, and every means of UK folks simply trying to make a living.

This article is far more insightful than the BBC idiot automatrons who point out how Scotland and Northern Ireland are the smart class who think ties with the EU is their safest bet. In point of fact, the Scottish, N. Ireland folks despise/d the Cameron elitists who never gave a damn about them or anyone else save for their own ilk. Thusly, they voted accordingly.

Blankone's picture

Cameron said he would resign to delay any leaving and even said it was an issue for the next person.  This is all to buy time for a revote or to shelve the issue for years.  They have a plan to circumvent the people.

Pumpkin's picture

Farage is now more relevant than ever.


The author writes him off because he accomplished what he set out to do??  That is some f'd up logic there.  Seems maybe that is what the author set out to do.

ajk24455's picture

I could not agree more.

markovchainey's picture

And strumpets?  Yes, please!


Burnt crumpets with butter, yum.

Kirk2NCC1701's picture

"The EU is toast" -ZH

Translates into...


"EU è Biscotti" -Italy

"De EU is Zwieback" -Nederland

"L'EU est le toast" - France

"Die EU ist Toast" -Germany

   "Verdammte Scheisse! Englische Schweinhunde!" - Merkel

"Unia Europejska jest tosty" -Poland

"LOL" -Russia

   "ROTF, LMAO" -Putin

"ROR.  You leave! You leave, Now!" -China

Trubador's picture

Well, this morning key figures in France, the Netherlands, and Italy all vocalized their intent to put forward their own referendums on exiting the EU. And, given that a poll (one month prior to the Brexit vote) had Italians wanting that referendum vote to occur at 58%, with 48% voting "yes"... and after France has been dealing with terrorist attacks, infiltrations, and arrests... I'm guessing that both Italy and France will be next. I then expect Greece to either exit on their own or be forced out due to their heavy debt issues. It'll be a slow process, but the dominos are already starting to tumble on that side of the pond. 

cougar_w's picture

What is falling apart is the "growth" narrative. You can only grow and sustain these gigantic, inefficient systems through the profligate use of an abundance of free energy. There is nothing else underpinning anything anyone currently knows. The only thing comes close is debt. You can pretend to levitate things via debt that masks the ongoing contraction, but that won't stop the actual contraction taking place.

We are destined to become organized smaller and increasingly frugal. The only way the global Ponzi can keep going is to enslave everyone below the 1% class to use their labor for free, but I don't think they will be able to pull that off. It's too late.

Nero_Hedge's picture

Until cold fusion- then unlimited energy, first contact, Star Trek

Big Whoop's picture

With our luck, first contact will be with the Borg.

AE911Truth's picture

Over the last 20 years, there have been more than 3,000 peer reviewed, published confirmations that LENR, aka Cold Fusion is a real excess energy phenomena. The best overview I have read is by Eugene Mallove. His videos on YouTube are compelling. He had proof of scientific fraud on the part of the CF deniers, and intended to prosecute, which is why he was murdered.

SHRAGS's picture

Entropy guarantees centralization will eventually run out of slaves, as fuel to feed the growth of the system itself.  We appear to be at that point after a century and a half of abundent oil.  You could argue that oil was the ultimate enabling factor of centralization.

farmerunder's picture

Well said, i would add to that the true cost of food. Using GDP as a measure of economic strength when in reality it is largely based on borrowing from the future (debt) into unproductive assets is fraud, problem is none of these tee vee banker economists mention that.    




malek's picture

You have swallowed one key point of TPTB's narrative - hook, line, and sinker.

farmerunder's picture

as most of the worlds money is created as debt isnt there an upper limit to that if it is privately held? if it is publicly held by sovereign govts with their own currency (ie deficits) thats a different matter.

malek's picture

I was referring to the alleged need of an abundance of free energy.

In it's absoluteness that statement is utter bullshit, and accepting it makes you a stooge for TPTB to "force people into doing things, only for their own good of course."

farmerunder's picture

Do u really think if the true price for energy was discovered that we would have the growth we have had? its like food, HFT and futures markets completely rig the price so who knows what it really is? one thing for sure is life comes to an end pretty quick without oil (fertilisers, clothing, fuel) and food, we are yet to see if they are more needed than iphones and new cars, but my guess is that the price of energy has been supressed to give the illusion of wealth and consumerism.

malek's picture

I did not state that energy is of low importance or meaningless, I only emphasized we don't need eternal abundance to get growth.

Tell me how would one suppress the price of energy, medium to longer term?
If energy is cheap -manipulated or not-, how would a possibly ensuing wealth and consumerism be an illusion? At worst, the permanence of such could be an illusion.

Looking at the USA why do TPTB make/keep energy so cheap, compared to the entire rest of the world, a few sheikdoms notwithstanding?
Is that what you would expect a psychopathic power-at-all-cost elite to do??

farmerunder's picture

Futures markets disort the price, with algo trading who knows what the real price is?while ever they control the markets direction. As money is not spent on food and oil it is freed up and directed into less productive spending such as i listed. without this spending into these items our society does not have the money that these businesses depend on and employ so many of todays society. Ie the prices are kept low for food and oil to free up spending on the rest of society. Further to that, why are the wars in the middle east so hardly fought? to control the oil supply and its pricing in US dollars. Add together a society fuelled by debt and the suppression of real prices of oil/food and u have a ticking time bomb, completely controlled by central bankers, govts and corrupt markets.

farmerunder's picture

Is not the very existence of a futures/derivatives market a distortion of the true market price? how much of the futures market in oil and wheat involves physical delivery of these items between a seller and a buyer? if markets allow the true amount of stock to be altered thru digital/paper representation, is supply and demand true?

LibertarianMenace's picture

"Do u really think if the true price for energy was discovered that we would have the growth we have had?"

Maybe not, but we'd likely be more wealthy. They're not necessarily related. Take for example, any farmhouse constructed in the period before oil production and consider the financial resources that have to be summoned today to build something equivalent. Our 'growth' has come at the cost of extreme debt and monetization, it's certainly not a demonstration of returns to wealth. I prefer wealth, not debt fueled, nor price distorted, growth.

farmerunder's picture

The IMF recently said "There are also a number of central banks in more advanced economies—including the European Central Bank, the U.S. Federal Reserve, the Bank of Japan, and the Swiss National Bank—that have adopted many of the main elements of inflation targeting, and several others are moving toward it." - By keeping the pathways for oil open and its price relatively stable, central bonkers have allowed record low interest rates as pretty much every part of society comes off the oil price. What would happen if we had a 70s oil crisis today with the debt these economies have and inflation targeting? all that consumer related spending would evaporate with higher interest rates and the money supply would come to a grinding halt as new debt is the way we fund our current spending and previous debt obligations. Do u still believe there is no relationship between suppressed inflation and record debt consumption?

LibertarianMenace's picture

You:"What would happen if we had a 70s oil crisis today with the debt these economies have and inflation targeting? all that consumer related spending would evaporate with higher interest rates and the money supply would come to a grinding halt as new debt is the way we fund our current spending and previous debt obligations. Do u still believe there is no relationship between suppressed inflation and record debt consumption?"

Me:"Our 'growth' has come at the cost of extreme debt and monetization, it's certainly not a demonstration of returns to wealth."


What's the problem? I said growth and wealth are not necessarily related. If the growth (like ours) is a result of monetization and debt, the absence of such growth also means no more monetization and debt. Our wealth however, is not necessarily harmed. Who is in better financial shape at this point, Russia or the U.S.? What civilization has the better financial position, the one where any nondescript farmer can construct his own stone home or the one where cosmopolitan banking execs are the only clientele that can afford to build one?

Me: I prefer wealth, not debt fueled, nor price distorted, growth.

The loss of that type of growth does not necessarily mean the end of the world, just the bankers part of it.

Billy Ray Valentine:"Yeah. You know, it occurs to me that the best way you hurt rich people is by turning them into poor people."

farmerunder's picture

I said "Do u really think if the true price for energy was discovered that we would have the growth we have had?"

u said "Maybe not, but we'd likely be more wealthy. They're not necessarily related".


My understanding of what u were saying is that true price discovery (of oil and food) is not necessarily related to growth? yes it is growth in debt but that was not the point i was making. My point was that the markets manipulate the price and facilitate growth in other areas of our economy as a result. If people were spending more on their food and oil would they have been able to buy those iphones etc? or if volatility in supply chains for oil was more common and the market not so stable would central bankers have been able to use inflation targets as such blunt instruments for growth?

alexcojones's picture

I'll not believe anything has changed in Great Britain until they bring back the shilling, the pence and the farthing.

C'mon: How much real SILVER is in their (paper) Sterling?

Phuk u's picture

Its LSD Alex, Pounds, shillings and pence.

ToSoft4Truth's picture

Muslims toppled the capital, London, let's wait for Britain to recapture that.

Chupacabra-322's picture

Problem, reaction, solution. Order Out Of Chaos. The it was All done by Design, all done by Agenda. These Pure Evil Psychopaths are systematically Collapsing the Global Economy & restructuring it. Nothing happens by accident.

SeattleBruce's picture

Not sure Brexit was part of the plan, as they seem to prefer centralized power.  But they were ready for it.  People like Soros hedged their bets, and that's what TPTB are able to do easily, that most of the rest cannot.  So yes, chaos theory, or creative destruction but with preferred outcomes, and certainly always a view toward maintaining power into the inevitable reset.

Panic Mode's picture

Let me get it clear. Not every Brexit voters are nationalists. 

I can see the EU is a Titantic heading to a big iceberg and I want to grab a raft while I still can. Only the EU lovers still singing and dancing in the main hall.