The Euro and British Pound, as well as stock futures, are higher this morning, as traders leap on another headline that the UK has come to an agreement with the EU on the UK’s orderly exit from the European Union. The ‘deal’ now goes to a vote in the UK parliament on Saturday. As we explained in our June 2016 client letter available here, the Brexit vote is one chapter in a much larger story.
Like China-US trade negotiations, BREXIT resolution has been a major hope of those dreaming about an endless economic expansion this cycle. But in many ways, both are just symptoms of a growing malaise around peak debt, credit contraction, aging demographics, rising protectionism, immigration fears, deglobalization and old industries and policies now in necessary transition.
Global resource constraints are growing and the ability to consume is shrinking in the west; agreements on how to divide what’s left will not change that. Improving prosperity now depends on greater efficiency, less waste, doing more with less.
Creative destruction is underway on a massive scale globally, and the process is messy and unsettling, even while it is understandable, essential, evolutionary and full of opportunity.
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