That is his prescription for short term impact of Brexit, the European project and the Great Britain.
"So calm down about the short-run macroeconomics; grieve for Europe, but you should have been doing that already; worry about Britain."
http://krugman.blogs.nytimes.com/2016/06/24/brexit-the-morning-after/?
"I think that's about right. He's probably right about the short term macro effects though as I'm a Brit abroad with savings in the UK meant to be dispersed soon, I can't but worry about the huge drop in the pound."
He isn't too worried about the pound:
"It’s true that the pound has fallen by a lot compared with normal daily fluctuations. But for those of us who cut our teeth on emerging-market crises, the fall isn’t that big – in fact, it’s not that big compared with British historical episodes. The pound fell by a third during the 70s crisis; it fell by a quarter during Britain’s exit from the Exchange Rate Mechanism in 1992; it’s down about 8 percent as I write this."
http://krugman.blogs.nytimes.com/2016/06/24/brexit-the-morning-after/?
Of course, his concern is different than mine. I need to know that the pound doesn't drop sharply from where it is now in the next month or two-obviously such assurances are not to be found.
As he also says, the future of the European project is not looking good.
"It seems clear that the European project – the whole effort to promote peace and growing political union through economic integration – is in deep, deep trouble. Brexit is probably just the beginning, as populist/separatist/xenophobic movements gain influence across the continent. Add to this the underlying weakness of the European economy, which is a prime candidate for “secular stagnation” – persistent low-grade depression driven by things like demographic decline that deters investment. Lots of people are now very pessimistic about Europe’s future, and I share their worries."
"But those worries wouldn’t have gone away even if Remain had won. The big mistakes were the adoption of the euro without careful thought about how a single currency would work without a unified government; the disastrous framing of the euro crisis as a morality play brought on by irresponsible southerners; the establishment of free labor mobility among culturally diverse countries with very different income levels, without careful thought about how that would work. Brexit is mainly a symptom of those problems, and the loss of official credibility that came with them. (That credibility loss is why the euro disaster played a role in Brexit even though Britain itself had the good sense to stay out.)"
I entirely agree with that.
In a comment today, Greg said this:
"That much of this vote was driven by xenophobia is unfortunate. I think many of the people made a correct decision for the wrong reasons. And the fact that young people want to stay in the EU shows how they want what the Euro professed to be able to do and they likely still believe the Euro can bring a more united Europe..... but they are wrong, in my view, that the current arrangement can or will do that. Im not sure its goals even were that. Its goals were always monetary and intended to use markets to discipline people. All the other talk was a sales pitch, never at the core of the project."
http://lastmenandovermen.blogspot.com/2016/06/what-leftist-populists-miss.html?showComment=1466863587695#c849824725472758968
In my opinion, that's way too negative about the European project. You have to disentangle the euro system and the European Union.
The euro has been an unmitigated disaster. Now everyone from Krugman to Milton Friedman had predicted as much in the late 90s, so this should not be a surprise.
The EU membership has a number of benefits to it in terms of open markets, etc. Now, the Brits will need a visa just to travel to Europe. There are literally hundreds of treaties that will have to be unwound.
I don't agree that the European idea began in bad faith. It stemmed from the rightful desire to never see Europe have another world war.
And it's been successful in this way. It's lead to peace on the continent. This doesn't mean there are no problems but at least we don't have 118 million people dying by war again.
There probably are pluses and minuses to being in the EU. But when you hear about the lengthy and arduous process for Brexit-it will take anywhere from 2 years at least to 10 years or more-it hardly seems worth the effort
https://next.ft.com/content/68c61094-3870-11e6-a780-b48ed7b6126f
On the other hand, I could endorse say France getting of the euro. The trouble is that Frexit will be led by Mary La Pen and will aim not just to get off the euro but the EU itself.
No question, however, that the Eurocratic elites have no one to blame but themselves for this mess.
Still, I think the kids were right to stay in the EU and I don't think it's because they believed an abstract sales pitch of how they thought the system would ideally run. I think they realized Yglesias' point that:
"That one group of establishment policymakers made bad policies is not a good reason to make new, even worse policies."
http://lastmenandovermen.blogspot.com/2016/06/what-leftist-populists-miss.html?showComment=1466863587695#c849824725472758968
Still, Krugman sees the long term for Britain as being worrisome.
"Where I think there has been real additional damage done, damage that wouldn’t have happened but for Cameron’s policy malfeasance, is within the UK itself. I am of course not an expert here, but it looks all too likely that the vote will both empower the worst elements in British political life and lead to the breakup of the UK itself. Prime Minister Boris looks a lot more likely than President Donald; but he may find himself Prime Minister of England – full stop."
Yes. Britain has voted not to be Britain anymore, but to become Little England again.
"So calm down about the short-run macroeconomics; grieve for Europe, but you should have been doing that already; worry about Britain."
http://krugman.blogs.nytimes.com/2016/06/24/brexit-the-morning-after/?
"I think that's about right. He's probably right about the short term macro effects though as I'm a Brit abroad with savings in the UK meant to be dispersed soon, I can't but worry about the huge drop in the pound."
He isn't too worried about the pound:
"It’s true that the pound has fallen by a lot compared with normal daily fluctuations. But for those of us who cut our teeth on emerging-market crises, the fall isn’t that big – in fact, it’s not that big compared with British historical episodes. The pound fell by a third during the 70s crisis; it fell by a quarter during Britain’s exit from the Exchange Rate Mechanism in 1992; it’s down about 8 percent as I write this."
http://krugman.blogs.nytimes.com/2016/06/24/brexit-the-morning-after/?
Of course, his concern is different than mine. I need to know that the pound doesn't drop sharply from where it is now in the next month or two-obviously such assurances are not to be found.
As he also says, the future of the European project is not looking good.
"It seems clear that the European project – the whole effort to promote peace and growing political union through economic integration – is in deep, deep trouble. Brexit is probably just the beginning, as populist/separatist/xenophobic movements gain influence across the continent. Add to this the underlying weakness of the European economy, which is a prime candidate for “secular stagnation” – persistent low-grade depression driven by things like demographic decline that deters investment. Lots of people are now very pessimistic about Europe’s future, and I share their worries."
"But those worries wouldn’t have gone away even if Remain had won. The big mistakes were the adoption of the euro without careful thought about how a single currency would work without a unified government; the disastrous framing of the euro crisis as a morality play brought on by irresponsible southerners; the establishment of free labor mobility among culturally diverse countries with very different income levels, without careful thought about how that would work. Brexit is mainly a symptom of those problems, and the loss of official credibility that came with them. (That credibility loss is why the euro disaster played a role in Brexit even though Britain itself had the good sense to stay out.)"
I entirely agree with that.
In a comment today, Greg said this:
"That much of this vote was driven by xenophobia is unfortunate. I think many of the people made a correct decision for the wrong reasons. And the fact that young people want to stay in the EU shows how they want what the Euro professed to be able to do and they likely still believe the Euro can bring a more united Europe..... but they are wrong, in my view, that the current arrangement can or will do that. Im not sure its goals even were that. Its goals were always monetary and intended to use markets to discipline people. All the other talk was a sales pitch, never at the core of the project."
http://lastmenandovermen.blogspot.com/2016/06/what-leftist-populists-miss.html?showComment=1466863587695#c849824725472758968
In my opinion, that's way too negative about the European project. You have to disentangle the euro system and the European Union.
The euro has been an unmitigated disaster. Now everyone from Krugman to Milton Friedman had predicted as much in the late 90s, so this should not be a surprise.
The EU membership has a number of benefits to it in terms of open markets, etc. Now, the Brits will need a visa just to travel to Europe. There are literally hundreds of treaties that will have to be unwound.
I don't agree that the European idea began in bad faith. It stemmed from the rightful desire to never see Europe have another world war.
And it's been successful in this way. It's lead to peace on the continent. This doesn't mean there are no problems but at least we don't have 118 million people dying by war again.
There probably are pluses and minuses to being in the EU. But when you hear about the lengthy and arduous process for Brexit-it will take anywhere from 2 years at least to 10 years or more-it hardly seems worth the effort
https://next.ft.com/content/68c61094-3870-11e6-a780-b48ed7b6126f
On the other hand, I could endorse say France getting of the euro. The trouble is that Frexit will be led by Mary La Pen and will aim not just to get off the euro but the EU itself.
No question, however, that the Eurocratic elites have no one to blame but themselves for this mess.
Still, I think the kids were right to stay in the EU and I don't think it's because they believed an abstract sales pitch of how they thought the system would ideally run. I think they realized Yglesias' point that:
"That one group of establishment policymakers made bad policies is not a good reason to make new, even worse policies."
http://lastmenandovermen.blogspot.com/2016/06/what-leftist-populists-miss.html?showComment=1466863587695#c849824725472758968
Still, Krugman sees the long term for Britain as being worrisome.
"Where I think there has been real additional damage done, damage that wouldn’t have happened but for Cameron’s policy malfeasance, is within the UK itself. I am of course not an expert here, but it looks all too likely that the vote will both empower the worst elements in British political life and lead to the breakup of the UK itself. Prime Minister Boris looks a lot more likely than President Donald; but he may find himself Prime Minister of England – full stop."
Yes. Britain has voted not to be Britain anymore, but to become Little England again.
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