“You say you want a revolution
Well, you know, we all want to change the world”
— John Lennon
My verdict on the so-called “Brexit” vote is that in a globalized world dominated by central bankers, it is far more profitable to sing about a revolution than to actually foment one.
Less than a week after a majority of voters in the United Kingdom upended global markets by electing to leave the European Union, there is mass confusion about who is in charge of the British government, what Britain and Europe will look like in the future and whether an EU exit is feasible at all.
As Sung Won Sohn of CSU Channel Islands points out, the EU exit vote victory gave a boost to populist movements in the U.S. and elsewhere. It was a protest vote against an onslaught of rules and regulations stemming from Brussels (as well as Washington and Sacramento) that sometimes seems to suck at the marrow of entrepreneurship.
But a quick move to the exits for Britain is unlikely, perhaps impossible. No prime minister will want to be at the helm of the government if Scotland votes to rejoin the European Union and the United Kingdom is no more.
The scarier prospect is the rise of populists whose promises of revolutionary change and instant wealth are one of the great political Ponzi schemes of all time.
In the case of Brexit, the “Leave” campaign promised to repatriate millions of pounds a day that are going to Brussels without ever contemplating the facts that British farmers would lose huge subsidies and that Britain might have to pay a hefty exit charge, plus, like Norway, ongoing fees for the EU benefits it now gets as part of its membership.
Whether it is Bernie Sanders on the left or Donald Trump on the right, the U.S. populists are making similar exaggerated claims about free tuition, a wall that “Mexico will pay for” or other perks that will require big tax hikes or big deficits. The shocking victory for populism has been accompanied by a sudden “walking back” of populist campaign promises — something to watch as the U.S. heads into the full onset of the presidential election season.
Finally, do not doubt the influence of central bankers. Their low interest rate policies have punished savers and provoked a lot of anger but the financial system has proved, at least so far, that it can absorb a sudden shock.
The Fed may not raise interest rates again until 2017 or even 2018, according to some experts. And European and Japanese experiments with negative interest rates will continue. Imagine getting paid to take out a mortgage.
Closer to home, large area companies with business ties to the U.K. — Haas Automation, Limoneira, Amgen, Deckers and others — are getting plenty of time to sort out next steps. And California real estate will look more and more attractive to overseas investors who were thinking about Britain or Europe as an alternative.
This may be the summer of voter discontent but the collective case of buyer’s remorse in the wake of the Brexit victory suggests we’re not ready for revolution. Not just yet.
SLO airport lands flights to Seattle
Facing a deep recession and a looming pilot shortage, regional flights to and from the Central Coast have taken a nosedive.
That is until this year. San Luis Obispo officials announced June 29 the landing of a rare new route as service to Seattle is expected to begin in April 2017.
Earlier this year, Santa Barbara Municipal Airport landed a new flight to Dallas on American Airlines.
Santa Maria and Ventura County’s airport in Oxnard continue to look for new flights.
The pilot shortage is real and could ultimately thwart efforts to garner new service — flights to San Jose and more competition on United’s Denver-Santa Barbara route would be welcome.
But for now, any additional flights from the Central Coast are a healthy sign for the region.
• Reach Editor Henry Dubroff at [email protected]