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Weekend reading: One more rant in the aftermath of a wail of protest

Weekend reading

I’m depressed by the Brexit result and even more so by how it came about. Feel free to skip to the week’s good reads.

Some 25 years ago, I set off from the provinces for university in London.

My family waved me goodbye as the train began its journey through beautiful countryside that turned flatter, plainer, and more urban as I approached the South East.

Within hours I was in London – that vast city so near yet so faraway, which I had only visited two or three times in my lifetime and only then for a few brief hours.

I spent the first night walking around West London, astonished that seemingly every other person spoke a different language. Saw buildings from history books. Was amazed to find fabulously expensive cars that I’d only seen in TV adverts just parked out on the streets. Was bamboozled by one-bedroom flats in the estate agents’ windows at prices that now seem a bargain but back then – as I not-so-tactfully I informed my parents from a phone box a few days later – could have bought their semi ten-times over.

Give or take, I never left.

When Monday rolled around, it was time to become the first person in my family to go to university.

I learned two important things on that first day.

One was that they didn’t take a register of attendance, which I knew meant I would only be showing up when I felt like it.

The other I realized when I went to my first big lecture, alongside 150 or so other freshers on my course.

I entered the lecture hall and walked up the stairs towards the back, instinctively finding my level.

I kept going.

I sat down in the back row.

For the product of a 2,000-strong comprehensive school, the message of this seemingly trivial detail was clear.

I was the “hard kids” now. Nobody here was going to beat me up. Never again would I be fearful about the cast of violent, ill-tempered and stupid bullies that made each day at school a lottery as to whether you’d get a punch on the arm or worse – that forced anyone with a brain into unspoken alliances with robust friends, that made you laugh at the jokes of borderline psychopaths or accept the logic of a moron just because they were bigger than you.

I was free. Screw them all, I thought, as I remembered the yobs I’d left behind.

A design for life

Friday’s vote to leave the EU – and the sorts of places where most of those votes came from – was a punch in the guts that reminded me that you’re never really safe from the mob.

Of course, over the years my views towards the worst of my schoolmates softened.

As I began the typical thoughtful student’s grasping towards a political consciousness, I came to understand that to some extent it wasn’t their fault.

Most of even the dumb ones weren’t bad people. There were only a few monsters in each year group. They had almost certainly had terrible upbringings that I’d been lucky enough to avoid, and even if they hadn’t then perhaps they drew bad genes.

I also learned more about how economic changes had really hit hard the land where I grew up, and how even in the good times most of the profits had been siphoned off by owners who lived elsewhere.

I argued with girlfriends from the Home Counties who had no reason to know that not everyone grew up living next door to lawyers, newspaper editors, investment bankers, and directors at major pharmaceutical companies. That not every school was a safe place for learning. That not everyone was encouraged to be the best version of themselves.

Even after I cut my hair, gave up on true socialism, saw the reality of the workplace, and became the capitalist you know and tolerate today, I still tended to vote for Labour (though not exclusively).

In reality though, I’d become part of the metropolitan consensus that had everything to gain from global trade, open borders, and free markets, and saw very little to lose from the way the economy was headed.

I felt sorry for the marginalized, but I didn’t think their problems were my problems.

The second derivative

Perhaps this contrast between my past and my present was why I found a way to disagree with nearly everybody I spoke to in the run up to the Referendum – as I had for many years before that on some of the core issues that came to the fore.

Particularly on free movement.

As a Londoner who loves its polyglot diversity and all the cultural and economic benefits that accrue from it, I was all for it.

But I understand very clearly that not everybody feels the same way.

Some are flat out racists, and always will be.

But some are people who I can accept as wanting to preserve and be surrounded by a cultural identity they feel they belong to – John Major’s rosy vision of pasty-hued men playing cricket on the village green while their wives discuss kitchen extensions in the pavilion.

As I tried to explain to one of my innumerable London friends who cannot understand why not everyone wants to live surrounded by change and difference and colour, some people just find a universally frightening life more comfortable when they live near a pub where everyone they knew grew up with Fawlty Towers and The Spice Girls.

Are these people racist? I don’t think that’s the right word for it.

They have a cultural preference, just like me and my friends in London. I believe most of them would be happy enough in a workplace with (a minority of) colleagues from other cultures or races, although a good chunk probably wouldn’t ideally want their daughters to marry outside their ethnic roots. But even then, I think most are good enough people who would come to appreciate their new sons or daughters-in-law, given time to get to know them.

Rate of change is everything, always. Increase the UK population by three million in a decade and you’re going to have problems. I argued this again and again and we’ve just seen the results.

The same increase over 20 years? Not so much.

Then there are the security concerns. It is a tragedy – if not a coincidence, given that similar ideologues are involved in the backstory – that the refugee crisis on Europe’s borders has coincided with an existential battle against a new terrorist threat.

I don’t pretend to know exactly how Europe should have responded to the prospect of many millions of refugees arriving at the very same time when a large chunk of the population has rarely been so fearful of difference, but it’s abundantly clear – if only from all the subsequent backtracking, even by the Germans – that their first response was wrong.

Sometimes the perfect is the enemy of the good.

They’re not like us

UK politicians, European Union architects, and all the chattering classes should have been more pragmatic about the free movement of people long ago.

Clearly it’s core to the long-term project, but if there had been an honest appraisal of the fears it would provoke, then it might have been structured more sensitively.

Perhaps there should have been greater restrictions on the poorer Eastern European countries that joined the EU, or longer-lasting restrictions. Maybe there should have been a transitional process for new entrants that lasted 20 years or more, during which time Europe intervened to bring them up to speed. Clearly what curbs there were have not been enough to dampen the rate of change here.

I don’t know the solution, obviously. I don’t think anyone has good answers yet. But pretending it wasn’t a problem was never a solution.

Please understand that – as I’m forced to explain to friends who I have spent a decade warning about this bubbling resentment that was there to see for anyone who looked at it plainly – I myself am happy with the free movement rules of EU citizens as things stand, and even the consequent escalation of the UK population.

I can see the cultural benefits, the economic benefits, and the wider benefits for Europe of EU citizens going wherever they like.

And to return to a point raised in the previous section – I’ve fallen for women of all backgrounds over the years. (Sadly it hasn’t always been reciprocated!)

But I am not everybody. And you have to compromise.

There’s no point in me doing an amateurish rehash of all the arguments about this – you’ve heard it for weeks from better sources, and you can read more in the links below.

The bottom line is if you detoxify the perceived threat of immigration then you drain Leave of its pulling power.

Telling everybody that only racists fear migration isn’t detoxification.

The poor reason to vote Brexit

One reason it has been so hard to argue for free movement – and for the EU project in general – is because it is fundamentally a capitalist project.

Remove borders, remove tariffs, allow capital and labour and goods to move freely, and eventually most people across the Eurozone will be lifted up by the resultant greater prosperity.

You’re scoffing?

Exactly. Belief in capitalism has rarely been at a lower ebb.

You almost can’t blame the provinces for voting Leave, given that a chunk of them have seen their economic circumstances slide for generations.

And as an ardent believer in the good wrought by market systems, I’ve been warning for years that as a matter of self-preservation capitalists should be addressing income inequality as a top priority.

That really hasn’t happened, and Brexit is the first sign that there will be consequences for all of us, rich and poor.

I also blame my often lamented (if much-loved) left-wing friends and their Facebook posturing.

For years they’ve ranted that unemployment would soar to three million (employment is now at a record high) and that the NHS had been all but privatised and ruined (it hasn’t been and won’t be).

Rarely have they let the facts get in the way of their soundbites.

Well, now we see what happens when the other side picks up that particular ball and runs with it.

To Brussels without love

So the poor provincials get some of the blame. The rich elites also for their arrogance and indifference.

And the lefties played a part too, with their years of socially mediated scaremongering, and for telling the British people the country was corrupt and ruined for long enough that much of its population eventually believed it must be true.

Who else?

Obviously the Eurocrats. Jeremy Corbyn (who deserves a massive dollup of blame on a tactical level) famously said he was 70% for Remain. The well-argued gripes about Brussels put me at a similar level of conviction.

I never said Remain was an overwhelmingly slam dunk decision. Just that it was the right one.

To be sure, lots of the complaints about Eurozone bureaucracy are ridiculous. (It takes a massive organization and a big budget to administer to 340 million people in a dozen languages? Go figure.)

But the charges of aloofness and an anti-democratic impulse do ring true to me.

Again, I’m not smart enough to know how to address this, but surely we could have done more than we did.

In any event I don’t think the EU is sufficiently aloof, anti-democratic, and powerful enough to warrant pulling the pin. It has delivered economic gains for Europe as a whole, helped the rich get richer, and targeted money at the poor in places. It’s saved at least as much paperwork as it created.

And I’m happy to say it – it’s made violent conflict between or with Europe far, far less likely for decades. Not solely, but it played a role.

Seriously: How did we go from entering a partnership with the Germans just a couple of decades after they’d fought our relatives, murdered helpless millions and bombed our cities to smithereens to thinking the fact that they insisted fire alarms be fitted in all workplaces or that everyone should get a few paid days off a year1 was the source of whatever ails us?

The wartime generation really was wiser than us – once they’d lived through the evil education of the war.

Whatever the EU’s problems, it didn’t make our problems worse.

And we still had the pound, and our special opt-outs!

We had the best of both worlds and we might well have thrown it away.

Educated fools

The final group of people I blame is what I have called before the Grumpy Old Men brigade.

Well-educated, prosperous, ageing, and feeling themselves to be the owners of Pensieves recalling happier, better-educated, and even more prosperous times, I come across these people regularly in their guise as private investors.

In fact some of you fit right into this bracket.

Sure, we all have some wrong-headed views. However these guys are so pompous even as they’re so often wrong it’s not funny. Peak oil, the value of a manufacturing industry, the impact of women in the workplace, they get most things wrong and now they are on the wrong (albeit winning) side of the Referendum.

They are the supposedly financial savvy people who believe the poppycock money we pay into the European Union is an outrage, because they don’t understand it’s a force multiplier that delivers far greater economic returns.

At least the racists are right about one thing: Being in the EU surely means more foreigners in the UK.

The Grumpy Old Man brigade doesn’t even have that going for them. There is no economic argument for exiting the European Union. None.

Honestly, I almost wish London could enact the newly set-up petition to declare itself a City State just to leave these numbskulls to their dreams of returning ship-building to the Tyne and British-made bombers patrolling high above the channel.

I’d love to see how they got on without London’s smarts, its 21st Century business model, and its tax revenues.

Lies, damn lies, and the Leave campaign

Of course these grumpy men know better than the experts who have almost to a man and woman warned that Britain would be poorer in the event of a Brexit.

I certainly think we will be.

Perhaps not crippled, maybe we’ll even do quite well. But we would have been better off within – that’s been the case for the past 40 years, and it’s been abundantly so for the past 10 years. There was no reason why it wouldn’t have continued.

Britain has been, with Germany, the biggest winner in recent times from the project. London has boomed as hundreds of thousands of smart Europeans flocked to where the recovery was fastest and the prospects of getting a good job or setting up a new business was greatest.

London’s outward looking and increasingly digital economy thrived in a way that the regions should have striven to copy, not attempted to vote out of existence.

Everybody who knew anything said so – but who cares what the experts think?

This is surely the most worrying development, and many have already upgraded Donald Trump’s chances in the US on the same logic.

Politics has always been about exaggeration, and it’s true the Remain camp stretched some truths and forecasts to the limit.

But the Leave case was largely built upon fabrications and lies – not least evidenced by the fact that 24 hours after the win they’re recanting.

Boris Johnson – who was booed by the betrayed Londoners who made his political fortune as he headed off to deliver his victory speech on Friday – has already delivered a bewildering maiden speech, in which he explained immigration is a boon and that it will be business as usual under Brexit.

Let’s hope so, but that’s not what Leave said, nor what many of those who voted for Leave thought, Johnson.

Market madness

H.L. Mencken famously quipped, “No one ever went broke underestimating the intelligence of the American public.”

But many smart investors just lost a fortune by over-estimating the British people.

As skilled political animals, the likes of Johnson and Michael Gove have adroitly channeled the self-destructive mood of a huge swathe of the population to propel themselves within sight of the leadership role of a now-divided nation.

But for their part, global markets couldn’t believe we Brits would so dumbly vote against our own self-interest.

The resultant dislocations in the market on Friday morning were truly breathtaking.

Long-term readers will be aware of my active trading style that sits completely at odds with what this site in general and my co-blogger in particular strongly suggests you do. (In short, you should probably be a passive investor in index funds).

And the Referendum has been the most confounding event I’ve faced as an active investor.

I felt confident enough through the various Greek issues, the US fiscal cliff, the tumult earlier this year. Even the financial crisis felt logical, if sometimes terrifying.

But trying to figure out the best collection of assets to own in advance of and through the referendum was a mind-bender, and I changed my exposure many times.

While I tried to stay fairly balanced throughout, for weeks I was tilted more towards a Brexit. I sold out of much of my UK exposure, and at one point I had a pretty large wodge of gold.

A savvy friend in the finance industry didn’t see the need for this caution – like most in the City he thought the chances of Brexit were very low. Perhaps 8-10%, he estimated.

I was nothing like so confident, as I emailed back: “The danger is this is the mother of all protest votes.”

But with the horrible and pointless murder of MP Jo Cox, you could feel the market turn. (My first thought before I saw the news but felt the impact in prices was that Johnson had resigned from Leave, perhaps in disgust at Farage’s misleading migrant poster.)

As this shift continued, my current style meant I sought to reflect it in my positioning, and I sold the gold and upped exposure to some small cap UK cyclicals.

However I just couldn’t bring myself to the same sanguine position that everyone else evidently felt. And so my portfolio shed value daily as the anti-Brexit positions I held (mainly US stocks) wilted in sterling terms and the pound climbed.

All that changed on Friday night, as reality homed in. Before the markets opened, my portfolio notionally soared as the pound tanked. Stocks hadn’t yet had the chance to respond.

They got their chance at 8am.

My plan was basically to dump the less obvious positions I owned in UK exposed companies inside tax-sheltered ISAs and SIPPs, hopefully while the major funds and algorithms were concentrating on offloading the big blatant stuff like UK banks and major housebuilders.

I’d then reverse direction, buying certain blue chips they were throwing overboard in the panic, and hopefully the net result would be I’d get through the day fairly unscathed.

(Again, don’t try this at home!)

It half worked. I was able to get rid of a few UK positions, some in decent size, but for many I couldn’t get any sort of live quote.

I wasn’t prepared to buy “At Best” in a market in freefall, so my attempt to raise liquidity before the price rout took its full toll was only part-completed.

More surprising though was that I couldn’t even get a firm quote for the big companies I wanted to buy.

I was looking at huge banks down more than 30% and certain construction firms down over 75% in the early minutes of trade, and I just couldn’t buy them, at least not with any firm price guide.

The brokers at least stayed up-and-running – in the financial crisis you couldn’t log in at the worst times.

But they blundered, too, for example routing one of my orders into purgatory where it was neither executed nor could it be cancelled. (My fellow blogger Ermine saw his portfolio disappear for a while!)

By the time the US market opened, sanity had returned to UK trading – and then we were off on another rollercoaster.

At the end of the day, I’d achieved my aim; I’d lost less than 1% on what had become an all-equity portfolio.2

Sure, as Lars Kroijer noted to me later, it would have been far easier to hold a few index funds for a similar result, since most of the returns were down to currency swings. Home currencies often tank at the same time as home markets, he reminded me, which means overseas holdings in a diversified portfolio will see coincident gains. Another notch for his belief you should just own a global tracker.

From my point of view though, Friday was about survival in the chaos. I’ve done better by stock picking and trading over the long-term, and I hope to do so in the future.

I didn’t see the Brexit as a profit opportunity, but rather I had to negotiate a chasm of potential downside.

Young, less free, and singularly shafted

You’ll see more in the articles below about how the prospect of Brexit caused chaos in the global markets.

Glib comments to the effect that you shouldn’t care because your US shares went up 10% may well prove to be wide of the mark.

Uncertainty has massively increased, and Europe faces an existential threat.

Global growth will be without doubt slower than it might have been – simply because there is no mechanism by which this vote and this shock can increase it, though we can argue about the scale of the decline.

Yes, life will go on. The UK pound might even eventually rise as a haven, if the Euro goes to hell in a basket and even a stodgy, self-strangling UK economy looks like a better bet in comparison.

I have no doubt though that Britain is going to be poorer as a result of this vote. The extent to which whoever gains power in the aftermath implements the professed wishes of Leavers will determine exactly how much poorer.

It’s easy enough to paint apocalyptic scenarios – a run on the pound, soaring interest rates as we lose our triple-A status and foreigners refuse to finance our deficit. Maybe some localized violence.

However the truth will likely be more mundane, economically-speaking.

London will come off the boil, much global capital will head elsewhere. A few Northern exporters irrelevant in the grand scheme of things will sell a few more widgets to China and India. If immigration is massively curbed, then there’ll be fewer jobs but hourly wages for the crappest jobs might rise by a few pennies. But most things will be more expensive because labour costs will increase and for as long as the pound is weak we’ll import inflation. The poorer regions who voted for Brexit will see less money as tax revenues dwindle and growth slows.

Something like that.

But while I feel somewhat sorry for these poor and marginalized communities – and as I say I was concerned about them long before this vote – I save my greatest sympathy for the urban young.

The aging provincials voted in their imminent decline. The clever young overwhelmingly voted the other way.

As an FT comment that went viral on Twitter pointed out on Friday, young Britons may be about to lose their generation’s single biggest advantage.

They can’t see how they will ever afford a home of their own, job security and pensions are long gone, and they are crippled by student debts.

But free movement in Europe gave them the incredible opportunity to live elsewhere and to enjoy an entirely different life if they chose to.

That freedom, that potential – and all the living that would have gone with it – may just have been voted into oblivion, by old people.

In the worst versions of what happens next, the drawbridge goes up, those freedoms are lost entirely, and they’ll be stuck in the UK even as their bright young European peers drift home and their foolish parents who voted for Brexit wonder why it takes so long now to be served a coffee in Costa.

At its pre-Brexit best, Britain was a large cap version of thriving Estonia.

At worst, it’s now on the path to becoming a less socially ordered version of Japan.

Some Brexiteers are all for this, incidentally. On Friday I re-tweeted a comment by The Reformed Broker that sardonically congratulated the Brexiteers – they’d still have the immigrants, but now they’d have a whole lot less money, too.

One reply: “Good. To kill a tape worm you starve it out.”

Get poor and the immigrants go home. Genius.

Down with the revolution

I feel I haven’t said half of what I was going to say, but I doubt many people even read this far and I don’t blame you.

I avoided Brexit articles in the run-up to the vote, which I now slightly regret. It seemed a kindness to readers, but perhaps it might have swayed a few Leavers not to be so silly.

I know plenty of Monevator readers will agree with my sentiments – because about a quarter of this site’s readership hails from London.

We know London has its problems. Some persevere with it just for the salary. But others of us love the place as much as it has confounded and frustrated us, and know that this vote against the EU is as much a vote against our home.

They – and certainly many other Remainers around the country – will agree with a friend of mine on Facebook who wrote this morning:

Nigel Farage described the result of the referendum as a “victory for ordinary people, a victory for decent people”.

So I am now proud to be extraordinary and indecent.

Anyone with a passing knowledge of history should shiver when politicians with ugly views start championing the cause of the common man. True lasting progress nearly always happens slowly – populism virtually always end badly.

From the demise of the Roman republic to the rise of communism in Russia, even when (as so often) the populace had every right to be angry, they typically cut their nose off to spite their faces and uprisings made things worse.

Some of you disagree. Some of you – mainly grumpy, mainly old – voted for Brexit.

That was your right, just as it’s your right to be angry (and wrong) about what I’ve written today.

I hope soon enough we can talk about expense ratios and using your new ISA allowance. I don’t think you’re bad people.

But don’t look forward to a vibrant debate about the pros and cons of the Referendum to follow this article.

And I wouldn’t bother explaining your vote to Leave.

I am likely to delete all but the very most thoughtful pro-Brexit contributions. My site will not be another platform for the wail of stupidity that has led to this result.

I doubt any of my old school bullies or their like read this website. But do I know some Blimpish investors do.

Well, Monevator is not a democracy.

You had your vote. You can take your views elsewhere.

Brexit articles: Quarantine box

  • England just screwed us all – Felix Salmon
  • After the vote, chaos – The Economist
  • Brexit will reconfigure the UK economy [Search result]FT
  • Boris Johnson’s Pyrrhic victory – Guardian
  • Evan Davis loses it with one Brexit liar – Huffington Post
  • Petitions: For London to declare independence; for a 2nd referendum
  • The sky has not fallen, but we face years of hard labour – Telegraph
  • Owen Jones: The escalating culture wars have to stop – Guardian
  • Brexit is a wake up call: Save Europe – Guardian
  • Britain is not a rainy, fascist island – Guardian
  • World’s richest people lose $127 billion in Brexit chaos – Bloomberg
  • The golden generation leaves a tarnished legacy [Search result]FT
  • London just threw its race with New York – Bloomberg
  • So it’s Brexit. What next for shares? – The Motley Fool
  • Bag a bargain post-Brexit investment trust – Citywire
  • Star fund managers on Brexit’s impact on shares – ThisIsMoney
  • EU exit expected to end UK house price boom [Search result]FT
  • More: What does Brexit mean for UK house prices? – Guardian
  • Why Brexit is so bad for the global economy – The Atlantic
  • Europe makes Brexit-voting UK a safe haven [Search result]FT
  • Revenge would be the wrong E.U. response to Brexit – Bloomberg
  • My secret plan for surviving after Brexit – UK Value Investor
  • Voted Brexit? How to forgive yourself – Aeon

Have a good weekend.

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Products of the week: The Guardian rounds up a collection of financial services that come with freebies. Why not get a free iPad with your mortgage, or a free eye test with your insurance? Well, perhaps because such deals will rarely be the best all-rounders. These companies are targeting an old part of your brain – the primitive beast within you that seeks a short-term pleasure hit. Better to get back out into the field to till the earth and mull over what’s cheapest in the long-term.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.3

Passive investing

  • Mispricing underlies profitability premium – ETF.com

Active investing

  • Do experts know anything? – Bloomberg
  • High household equity in the US is bearish for the S&P – MarketWatch

A word from a broker

Other stuff worth reading

  • Top 10 destinations for Britons looking to work abroad – ThisIsMoney
  • Interest-only mortgages are back, for some – Guardian
  • The Forrest Gump of the Internet – The Atlantic

Book of the week: Fancy some topical reading in the aftermath of the Brexit vote? Why not pick up a copy of Edward Gibbon’s The History of the Decline and Fall of the Roman Empire. O Fortuna!

Like these links? Subscribe to get them every week!

  1. Or whatever, I can’t be bothered right now to look up the “red tape” that has supposedly crippled our growing economy. []
  2. I have a massive slug of cash and cash equivalents, but they sit outside my trading accounts and tracking, as they’re earmarked for a house purchase someday. []
  3. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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Comments on this entry are closed.

  • 101 PC June 26, 2016, 7:30 pm

    @barryM if that had been the leave case I could have voted for it .. but Farage took it in a whole different direction

  • 102 Mark June 26, 2016, 7:38 pm

    @Financial Samurai, Yes the Leave voters include a lot of people who don’t have a lot. But they differ from people in the US or UK who vote for more spending and bigger government because they want less of both, or more accurately to remove a layer of both (the EU).

    So they’re probably more like the Tea Party or Trump supporters – people who believe that a corrupt establishment, in hoc to the banks and multinationals, are to blame for their misfortunes.

    @Claudia, thanks for your insights. I think the observations that Ermine and I made are based on our observations of the interplay between the native working class and (EU) migrants in the UK’s post-industrial provinces, not London. I appreciate that in the capital, it’s difficult if not impossible for employers to find sufficient staff for lower-paid roles without heavy reliance on immigrants. In areas of higher employment, this isn’t the case, but immigrants are often preferred because they tend to be more skilled and motivated than the long-term unemployed.

    @The Investor, you’re right that something really important separates you from disadvantaged people in the provinces, namely that you left and they didn’t.

    There’s a wealth of good writing on this topic (check out Chris Dillow’s Stumbling and Mumbling blog and Malcolm Gladwell’s Outliers book) that suggests that people who’ve achieved success in life oversubscribe this to ability and hard work and underestimate the impact of luck, and external factors such as those contributed by the state, in their good fortune.

    While I don’t want to underplay your contribution to your present circumstances, consider for instance whether your move to London (I assume to work in financial services) would have been possible had your parents chosen to conceive you at a different time. Had your graduation coincided with a period of downsizing and recruitment freezes in your chosen industry, that form of mobility would not have been available to you. The son of a Home Counties professional might have dealt with this by taking a gap year or series of internships until the market recommenced hiring. I don’t know your family circumstances and how well placed your parents might have been to support you after university, but I know in my case these options were non-viable, and I suspect the same would apply to a bright young person from a similar background today, eyeing jobs in investment banks but seeing graduate programmes on hold due to Brexit.

    @Barry M, your comment about “the blind eyes looking away from highly questionable practices at the top of the financial institutions we provincials are dependent upon” resonates powerfully with me because one of the things I do now I’m freed from the pressures of 9 to 5 work is advocate on behalf of victims of misconduct (as the FCA euphemistically calls it – I prefer the word “criminality”) by the financial services industry.

    In this regard, one of the few chinks of daylight since Friday morning has been the resignation of Lord Hill, the man nominally responsible for ensuring that EU-wide financial services regulation serves consumers well but, in reality, a powerful advocate for City interests. Outside the Square Mile, he won’t be missed.

  • 103 Richard June 26, 2016, 7:56 pm

    Just coming out of hiding to say that I think it is a bit much to expect poor people from the provinces to move and live the rest of their lives in a tiny flat share in London they will never escape and to be grateful for it. Esp when they see old school ‘friends’ living the high life. It just drives the feeling of inequality. It also drives the feeling of a serious drop in living standards (esp if they were raised in a proper house in a proper neighbourhood etc).

    Of course if you have a degree and prospects of a grad scheme at an investment bank then moving to London is a no brainier and you would be stupid not to. I don’t think many of the provincial poor are in this position.

    Then again you could argue they had the same opportunities to get educated and didn’t take them and it is their own fault. This is probably the reason the government tried to get all Brits to go to uni, but don’t think the aim of that actually worked out in the end (Brits in the better jobs being ‘served’ by an immigrant workforce). I don’t think knowing that would make them suddenly start voting differently though.

  • 104 The Investor June 26, 2016, 8:07 pm

    Just coming out of hiding to say that I think it is a bit much to expect poor people from the provinces to move and live the rest of their lives in a tiny flat share in London […]

    @Richard — And yet that is exactly what many of those derided immigrants do, with knobs on.

    As a wicked smart friend of mine emailed me today (a friend who has seen firsthand professionally how EU redistribution makes a big difference, incidentally) in-between her crying and smashing things up over this result:

    I don’t understand how if my middle class 30-something professional friends in London can put up with house sharing, other areas of the country can claim there is a lack of housing stock. I don’t understand why young people in disenfranchised areas stay where they are and rage against ambitious and brave eastern Europeans risking everything to try to make a better life for themselves (and when I say everything, I mean often menial work at best, sex trafficking at worst). I understand that things are really awful in some places, but I don’t understand why the impulse was to blow up everything.

  • 105 Learner June 26, 2016, 8:18 pm

    > New Zealand, a country that combines high transparency and ease of doing business with self-sufficiency in food and water, plenty of natural resources

    .. and some of the world’s most expensive property, relative to wages. London look reasonable in comparison. Though if you are in FI and have the capital it is certainly appealing. Personally as a poor middle aged NZ+UK citizen expat, I’d be more inclined to move back to the UK – even in recession – than back to NZ.

    @david m
    > I’m sure for many leave voters sovereignty trumped all other considerations.

    I keep coming back to that point, though it’s a foreign concept to me. Theories that it was a protest against Westminster or austerity don’t add up when these same regions returned the Conservatives to power barely 1 year ago.

    @Barry M
    > My belief is that there should be less emphasis on the financial services industry and more on exploring the potential value of the rest of the U.K. work force. London appears to have raised the drawbridge and left us to contemplate our irrelevance.

    That would be a very positive outcome. I sincerely hope it comes to pass.

  • 106 The Investor June 26, 2016, 8:37 pm

    @Mark — Since I’ve made some of this about me and this whole weekend feels personal and a bit emotional, here’s a bit more detail than I usually share.

    For most of my working life I was a media freelance. I have quit three full-time jobs and in total had a regular job with a paycheck and paid holidays for roughly three years out of my 20-odd years of working life.

    Until 2010 or 2011 I’d only paid higher-rate tax once, in a particularly good year. The last 2-3 years though only SIPP contributions have prevented it, so I am earning more these days.

    My first job paid from memory £15K. I took a 25% pay cut after six months to do something more fun. In 2005 I co-founded a company, put a decent chunk of all my (house deposit) savings into it, earned £10K or so pro-rata for 18 or so months before extracting myself at cost. (I later made up for the lost earnings when I sold my residual shares that I’d retained at a higher level).

    I then didn’t work for 3-6 months and lived off the refunded Director’s Loan, before deciding this is no way to spend my days. (This experience taught me that — health willing — I have no aspiration to retire early.)

    I had a student grant and a loan through university. My parents would have put me up in their house back home, though by then they’d moved and I’d have had to share a room with a sister or sleep on the sofa. They’d have gladly fed me at the dinner table with my three siblings. But they had £0 spare to support me in London, or indeed support any sort of post-University life/spending.

    But you’re right, I was lucky. 🙂

    Chiefly I had wonderful parents who didn’t teach me to blame everything and everyone else and especially Thatcher for my problems.

    Instead they taught me to read books and learn and to make something of myself.

    My dad was smart but there was essentially no prospect of University; his very upstanding and solidly working class parents didn’t or couldn’t disagree. He did pretty well given all that, but could have done much more if he’d been born into exactly the same situation as me.

    I was born fairly smart. Not everyone is. That’s helped, as has discovering a love of investing.

    For most of my life I’ve been healthy, though the past few years have been a bit harder for reasons we don’t need to go into. Health is everything.

    I don’t need or expect much. I have porridge with soya milk most mornings for breakfast, and fancy toasted seeded bread with peanut butter and banana for lunch. I am happy enough on a spare fine evening to walk around my leafy-ish London suburb listening to a good podcast and nosy-ing about on the neighborhood. Not being very materialistic helps in innumerable ways.

    I have saved/grown my money enough that I could move back to the town I left on that train all those years ago, and never work again.

  • 107 Richard June 26, 2016, 8:54 pm

    @TI – in case there is any doubt, I did vote remain. Rather than get angry I am trying to understand why the vote went the way it did. To my mind, it is the (at least perception) of ever decreasing living standards among a large portion of the population. I think this was probably driven by the 2008 crisis that we have never really recovered from. Jobs feel insecure, pay is static or in some cases dropping, services are being cut, benefits are being cut, schools are over-subscribed, houses are unaffordable and the list goes on. Who gets the blame for this (typically)? Immigrants. Why? Because they are willing to put up with a much lower quality of life than many UK people expect when looking at their own upbringing and their parents lives. They are seen as putting strain on services and taking benefits. Then you have the rich, who obviously don’t pay any tax etc.

    Even the middle class professionals ‘put up’ with a flat share. But I would guess that they plan to get out of it at some point in time, and they expect their incomes to grow as they go into their 40s. The poor are unlikely to be able to do either.

    Whether it is right or wrong, this is the line I have read in the media for years and will have driven a lot of dissatisfaction. The EU wouldn’t budge on even a small confession and the result is what we now have. Of course I am probably overly simplifying it and am happy to hear contrary views to this.

    I do like your friends point around not seeing redistribution at work – but again this begs the question ‘why put it to a referendum?

  • 108 ABC123 June 26, 2016, 9:04 pm

    I haven’t got through the whole article yet – but like you, I always thought that the poorer eastern European countries should be “brought up to speed” over at least 20 years before given the same freedom of movement rights as the better off states of the EU. The eastern countries had a completely different economic (and political) history since becoming communist Soviet colonies after the second world war and it was wrong to assume they would not immediately take advantage of freedom of movement to seek a better (working) life in the richer parts of the EU.

    Saying that, I don’t believe the EU is responsible for as much of the immigration the Brexiters have blamed it for. More than half the immigration into the UK last year was from non-EU countries which the government has full control over regardless of the EU.

  • 109 Minikins June 26, 2016, 9:07 pm

    @TI Yes, your health is your wealth though it’s usually only the sick that realise this (or those that care for them.)

    You absolutely do not have to justify your family or any other background on here although it is your prerogative. Assumptions will always be made, I laugh when people get me wrong as they very often do, it just shows how genuinely uninterested people can be in others or they would surely have got to know eachother better.

    On a lighter note, I like your food routine! Rather like mine except I have half an avocado on fancy seeded toast for lunch. Supper of course is a much more exciting affair! 🙂

  • 110 Max June 26, 2016, 9:14 pm


    Could it have gone this way because the low income/education demographic knows they’ll genrally be rescued by social benefits provided these are not squandered by immigrants?

    However the knowledge that they’ll generally be rescued by social benefits also means that their motivation to get an education is not high.

    Leaving the EU therefore sounds attractive because on the surface, it appears to reduce immigrant competition for social support; but their lack of education means that they don’t fully understand that the economic consequences of Brexit will not give them what they want.

    Hence their Leave vote.

  • 111 Mark June 26, 2016, 9:24 pm

    @The Investor, Thanks for the personal information. It means a lot to me to understand more about you and your journey to financial independence.
    We have more in common than I suspected, as I too have worked in the media industry for a chunk of my career and have been self-employed and run small businesses for much of that time.
    I admire the fact that you’ve defined your good fortune in terms of the culture and expectations your parents bought you up with, rather than any monetary factors. For me, one of the sadnesses about economic disadvantage is that it often expresses itself through a lack of aspiration that parents have for their children, and poor examples that they set. To have had parents who were supportive and emphasised the importance of learning and hard work is one of the most valuable, but intangible, blessings any person can be born with.

  • 112 Richard June 26, 2016, 9:40 pm

    @Max – yes, I would say very much so. If I remember rightly one of David Cameron’s key asks when he was negotiating a better package was around limiting benefits to migrants (4 year rule). If it wasn’t in people’s minds before then, it most certainly was afterwards. Of course the EU ‘compromise’ on this point (something like if it hit a certain number they would debate allowing us to reduce benefits) was easily ripped apart as not being worth the paper it was written on by the leave team.

    I think David Cameron knew exactly where the risks were and what the EU needed to do to head them off. They just gave him nothing to work with. Of course they would say he was holding them to ransom by having the referendum in the first place and the U.K. got special treatment already so I don’t completely blame them. This game of Machiavellian politics has ultimately backfired on all of them.

  • 113 Mathmo June 26, 2016, 9:42 pm


    Work through them quickly, or at least ensure your portfolio is insulated from your moods and any possible fall-out.

    Thanks for posting, TI, I made it through. I shook my head at some of it, enjoyed the market bit and tutted at other bits. I’m not going to rehash old arguments here. We lost, and it’s unthinkable that we are going to go against the will of the people and not have unrest unless the EU comes up with a substantially better deal that can be put to a “u-turn” referendum. The public worked through Shock pretty quickly on Friday. Denial (we might never leave!) and Anger have been available to anyone with a facebook login. Name-calling and motivation questioning have been rife – how dare they put their X in the wrong box for the wrong reasons? They’ll be the worse for it! I might even have done some of it myself, and it’s not pretty. Negotiation (the petition, Holyrood will block it! etc etc) and soon the slow acceptance that we’re off unless the world changes.

    Is it going to be a disaster? Probably not. Not my first choice answer, but it has some things going for it. We’re a nation that thrives on immigration and a government that has the choice of letting in EU people or not paying for the NHS will fling the doors open just as wide. Is there a non-racist problem with immigration? Well there’s only two countries in the EU which speak the world’s most common second language, so London is a natural target for a disproportionate amount of immigration. Bring them on, I say, but there’s probably a limit. Will we continue to trade with Europe? We have for the last 2,000 years, mostly without the EU, so I imagine we’ll keep that up. And we do have a habit of trading well round the world. And the EU is clearly an imperfect organisation — we are mostly still of our country rather than of Europe, my Roumanian Uber driver admitted the other night. Would I really be as happy with Chinese and Indian drivers? Turns out racism cuts both ways. Historically we’ve negotiated an A1 ringside seat where we opt out of the really scary bits but still get to profit from them, but time change. Let’s move on.

    I too had a scary Friday morning. iii seemed better at getting firm quotes than TD waterhouse in my sample of two brokers. But then it turned out the apocalypse wasn’t as bad as I hoped. I cashed in my S&P500 at an all-time-high (Trump, interest rates, goodbye), hoping to nab some cheap FTSE, and the thing was so damn resilient it refused to get into bargain territory. At least I hadn’t sold my gold beforehand… This week might yet be interesting. Be nice if the Chancellor showed his face at some point…meanwhile there’s all this cash…

  • 114 Neverland June 26, 2016, 10:58 pm

    I think you all need to [section deleted by @TI because I want to preserve the generally friendly tone of this discourse] realise what just happened

    As far as the EU machine is concerned we left on Friday. Everything else is just details

    If you know any Europeans you work with they feel betrayed, scared and very pissed at you

    Their friends, relatives and their governments back home feels the same way

    Britain has no friends left in the governments that can control the EU

    At the very luckiest we might end up with a Norway style deal where accept every single EU rule (including free movement of people), have no say at making those rules and pay about 85% of our current EU budget contributions. I do not believe Norway has the ability export services into the EU

    At worst we won’t agree a trade deal and end up relying on World Trade Associations tariff schedules which will be detrimental to put it mildly

    In the two year interregnum meantime almost no major multinational corporation will embark on any new investment project in the UK

    The movement so far in sterling and the domestic stockmarket has been pretty muted

    There is still plenty of time to move investments out of the UK

    I am not particularly sure this window will be open for long

  • 115 Elef June 26, 2016, 11:03 pm

    Perhaps if TI is so kind he will allow me to share my story as well – and explain why I am so disappointed.

    I am deeply sceptical about the EU. As an economist by training, it is clear that there many differing interests in the EU, some of these are malevolent. It is also clear that the interests of the UK and other key people and groups (think Germany et. al.) are clearly dis-aligned. That leaves us two options as I see it: (i) fight for our interests within the group and run the risk of being marginalised; or (ii) leave and run the risk of being ignored. It’s not an easy decision – I was on the fence.

    What upsets me is that the vote to leave has been based on intolerance of our fellow man (our neighbours, friends and colleagues) and predicated on lies.

    I am a second generation immigrant of Cypriot origin. Many of my family fled their country because of war – they lost their homes, livelihoods and some of their family members. Moving to the UK was a great hope to them – just as it is to many western and eastern europeans. The Cypriots (as well as many other communities, African Indians, Jews, Turks – the list is endless) have become immensely successful. Both financially and culturally. We are a better country because of it.

    I am from Great Yarmouth (5th highest leave vote). This is a post-industrial town. Very few immigrants. Old population. No university level jobs. I left to move to London because there would be no jobs for me. The following is why.

    My father joined the second largest employer (manufacturing) in the town in the 80s. He started as lowly book-keeper. By the end of the 90s he had become the MD of the plant (most of the other managers had also worked up from shop floor). Over time things became very difficult for the plant. Mainly, local labour was expensive and unreliable. The same plant in Germany was twice as productive. Gradually, foreign labour became more common place – like most of the agricultural industry – locals just didn’t want to work the jobs and when they did, they did a poor level of work. This caused great resentment in the company. Following a great deal of internal politics (including the parent company refusing to invest further in a ‘dying plant’) my father and most of the management left. Less than 5 years later the plant shut and 100s lost their jobs. This wasn’t a one off – the same happened at all the major employers in the town.

    Great Yarmouth is now a post-productive town. The industry is gone. The people are either retired or unable or unwilling to work. They have been let down by the government who have consistently since the 70s (and the death of the North Sea) refused to invest in the town. In contrast, the EU has given hundreds of millions to the local area to develop, in particularly the tourism industry, in the town.

    The vote to leave is a vote against the ‘establishment’. This is a town that has been economically ruined over the last 50 years. But the people have been misled, rather than seeing the real problem – the malevolence of ‘Westminster’ against rebuilding our post-industrial towns – people have attached this to the (almost non-existent) immigrants and the EU. The immigrants (from eastern Europe but earlier from Portugal) are the ones that have kept our agricultural industry alive. The EU has kept our tourism and North Sea Oil/Gas industries alive. Make no mistake, the vote has been based on the lies and misinformation spread by people such as Boris Johnson and Rupert Murdoch. These individuals do not care for the well-being of Great Yarmouth (replace with Wales/Cornwall/NE/NW etc.) – they didn’t care 10/20/30 years ago, they don’t care now.

    So what dis-heartens me most is this vote has almost been to spite the most successful elements of our country. Namely, the wild-success of London built on the endeavours of people such as the numerous commentators. People from all walks of life with one goal – to better themselves and their society. It has also been to spite immigrants (such as my family) who have contributed so much to this country – both economically and in the tolerant and vibrant culture that we have helped to build. I can understand the bitterness that people in my home town feel – but nobody wins when envy and resentment overrides reasoned and rational analysis.

    To come back full circle, I could have accepted a win for leave if it had come down to reasoned and rational analysis. The IN / OUT question was a very difficult one – with a lot of unknowns. But the answer we got was not reached from the public weighing up this difficult question. It was from the siren call of manipulative compulsive liars. We can blame those liars as much as we like, but individuals must be responsible for the choices they make. I fear they will be.

  • 116 Dragon June 26, 2016, 11:28 pm

    An enjoyable read for the most part.

    Maybe its the quality of reader here, but its heartening to see people like e.g. Richard, whose view is “OK, not the result I personally would have wanted, but I want to understand why so many people did vote leave, and I’m not going to fall into the trap of automatically smearing them as racists / bigots / xenophones etc”.

    If only both sides could show such maturity.

    Some have alluded to it already, but fundamentally, Remain’s problem was twofold:-

    (a) all stick, no carrot (as someone said above, Leave offered hope, and hope sells), and

    (b) far too much personal attacks (people can see this happening, they are not stupid, and this turns a lot of people off politics).

    To all those who thought that we’d be better off “staying in and reforming it from within”, please look at Mr. Juncker’s comments on Wednesday evening I think it was, where he basically said

    “There’s no more reform, even if you vote to remain”.

    Intransigence by a well off bureaucrat does not play well with those who feel disenfrancised.

    He’s not from my side of the political spectrum, but Mr. Benn sums it up quite neatly:-

    “1. What power have you got?
    2. Where did you get it from?
    3. In whose interests do you exercise it?
    4. To whom are you accountable?
    5. And how can we get rid of you?
    If you cannot get rid of the people who govern you, you do not live in a democratic system.”

    The EU’s problem is that the perception, rightly or wrongly, is that it’s officers only cared about 1, and either didn’t think about or didn’t care about 2 – 5.

    Final thought: the EU’s democractic deficit.

    Let’s imagine a group of countries want to trade more easily with each other. They started a free trade area. Then, they realised that if you want a free trade area, it makes sense to have common rules and standards. Common rules and standards need someone to administer and enforce them. The administrators / enforcers need power to administer and enforce. The free trade group was doing well and more countries wanted to join it. Unfortunately, the club was getting a bit unwieldy now. Too many members, and too much bickering. So, they had to gradually start dispensing with democracy as otherwise, nothing would get done.

    Unfortunately, by the time things had got to that stage, you had a group of people at the top who were simply concerned with preserving their own position and a functionary class who did well out of administering the system.

    The road to hell is paved with good intentions…

  • 117 Mark June 26, 2016, 11:33 pm

    @Elef, I share your concern that Leave won by misleading the electorate, particularly the disadvantaged. It promised to cut immigration of low-skilled East Europeans and to contribute an extra £350m a week to the NHS. On Friday, Daniel Hannan said the former wouldn’t happen and Nigel Farage admitted the latter was a mistake. Today, Iain Duncan Smith described Leave’s pledges as ‘not promises but a range of possibilities’ and Philip Hammond, who is likely to play a major role in EU negotiations, confessed that we’ll have to choose between the single market and controlling freedom of movement. Naturally, being a Tory aligned with capital rather than labour, he favours the latter.

    None of them expressed any of these concerns during the campaign. Less than three days after the poll closed, the principal reason why many people supported Leave has been snatched away from them without consultation. And Westminster politicians wonder why people don’t bother voting and hold their elected representatives in contempt…

  • 118 Paul June 27, 2016, 12:28 am

    I’m well educated, socially liberal and financially comfortable. I’m a strong believer in capitalism. I’m also one of those who voted for Brexit. How does this add up? My reasoning is that I care about the people at the bottom of society who have been disenfranchised by post-democracy crony-capitalist globalism. The European Union is an outrage to democracy. EU laws are made in committee rooms of un-elected persons and these laws cannot be repealed by the so called European Parliament. This is unacceptable to me. I voted for Brexit on the principle that the UK should be a self-governing democracy. I also happen to believe that Brexit will be good for the UK economy in the long term because it frees us from costly red tape and trade barriers with the world outside Europe. The EU is a failing enterprise that needed to be shaken up if not broken up for the benefit of the UK and indeed the rest of Europe.

  • 119 Optimist June 27, 2016, 12:29 am

    TI Thank you for sharing. I’ve treated your post as therapy to try to deal with the anger, anguish and disbelief at this stupid decision. A decision, I believe, which is largely based on ignorance and sheer prejudice. I am new to thinking about money in a more sophisticated way and have learned a lot from this site. I visit often, but this time just had to comment.

    @Cathy, I think your views are spot on. BoJo has been blatantly careerist and no doubt thought he’d been very clever until the result. One fear is that there will be no one, with the possible exception of Theresa May, with anything like sufficient gravitas and negotiating ability to steer us though. We have almost non-existent opposition with Labour leadership. Corbyn going to fight for his job apparently, even though he couldn’t be bothered to fight for the country.
    @agranny – really?? I would have assumed your post was a spoof had I not heard the same ‘protest’ argument in real life today. If you want to protest, write a letter, vote MRLP in a GE or join a demo rather than irrevocably changing the course of history FFS. ‘Sorry’? so will future generations be.
    @Claudia – Well said.

  • 120 Mathmo June 27, 2016, 1:33 am

    @Paul EU laws are proposed by the commission (which is unelected — but is appointed by the heads of state of the member countries). But they have to be passed by both the Council of Ministers (portfolio ministers of each member country — mostly elected in their own countries) and the European Parliament (chamber of elected MEPs). Either can block it. It’s remarkably similar to most legislative processes.

    If you’d like to pursue the “undemocratic” argument, then a better approach is that Britain loses a lot of these votes (all democracies have losers) and so you might argue that it’s “not the right club for us”, or you can go down the sovereignty route where you say that only people in Britain can vote on British matters, rather than the peoples of Europe being able to vote on European matters. (Although that does leave problems with the Scots, and occasionally Londoners).

  • 121 Paul June 27, 2016, 2:31 am

    @Mathmo. I think the crucial democratic deficit in the EU is that whilst the EU parliament and council of ministers can block new laws they cannot repeal existing laws, correct? I’m not an expert on EU lawmaking but it is my understanding that only the unelected commission can repeal laws. If so then that smacks of a dictatorship to me.
    Regardless, my decision for Brexit was also about having a nimble low regulation UK economy outside the EU.

  • 122 Mathmo June 27, 2016, 8:33 am

    @Paul – The Commission typically proposes legislation but the European Parliament — the chamber of elected representatives has the both the power to ask it to initiate legislation (including that which would superced or repeal other acts) and it also has the power to dismiss the entire Commission. By the people, for the people etc etc.

    Again, your line of argument here is more that the bloc system within parliament makes it less effective (than say our own) so the Commission is allowed to run unchecked and the political hue of the elected parliament does not determine the hue of the leadership (which is effectively the European Council). You might look to the US and note that congress does not share the same hue as the President and note that perhaps we should have a directly elected EU President. Although the creation of a federal state that comes along with that election is usually something that’s not supported by sceptics.

    A better argument still might be that these people are just rubbish at their jobs. Juncker’s not upto the job, according to Cameron in 2014, his qualifications being running a country the size of a postage stamp, and the MEPs are the scrap heap of European Politics. Anyone good is off running their own country. Not so much an argument about the over-bearing state so much as a lament, but possibly a good reason to either be further in or further out.

  • 123 bob June 27, 2016, 9:49 am


    There’s a fundamental imbalance in your stance. You say you are deeply skeptical of the EU and sat on the fence before deciding to remain. You then go on to say:

    “I could have accepted a win for leave if it had come down to reasoned and rational analysis”

    Just because most of the debate wasn’t reasoned and rational doesn’t mean that those who landed on the other side of the fence didn’t apply reasoned and rational thought process.

    My only regret is that I shared a vote with racists.

  • 124 FI Warrior June 27, 2016, 10:31 am

    I know quite a few UK-based Europeans, mainly working in the Thames valley corridor, about half of whom are Poles. They are all saddened but not overly surprised by the xenophobia, they know the range of attitudes of the ‘genuine, normal people of this country’ who they deal with every day, so are aware they are scapegoated by many for all the ills of society.

    Those most settled, and/or with children who are now effectively of hybrid culture are most disturbed because their lives will be upended. The Poles aren’t too bothered because they can now work in Germany which is crying out for excellent skills, will pay much better and they would then be right next door to their families at home.

    Europeans and even Brits not in possession of a snowy complexion, as clearly depicted in Farage’s unending rivers of immigrants poster, are also nervous about their future. History has shown that once the bigots smell blood, removing one set of scapegoats only shifts the searchlights to the next. The cruellest blow will fall on the children of hybrid unions who will increasingly belong neither here nor ‘back to where they came from’, even if they were actually even born here. (due to the enlightenment of recent times there are millions of people now in this category)

    Because we quickly take things for granted, often you don’t know how much you valued something until you lose it. The subtler benefits of Europe will now be clearer, in a union of many parts for example, minorities are safer because it’s a given that not everyone is the same.

    As for the UK, if the Europeans are driven out or leave, the normal, decent people of this country will then be able to fully concentrate their grievances and intolerance on each other. It is polarising society as never before along US lines and bad-feeling is easy to start, while very hard to heal. Since when did we have politicians executed in public for exercising their freedom of speech here? Who wants to live in a country like that? This civilisation has stumbled badly and we all need hope now.

  • 125 The Investor June 27, 2016, 11:05 am

    @Paul — I accept and respect your arguments about sovereignty and democracy. But (and I know I am repeating myself):

    My reasoning is that I care about the people at the bottom of society who have been disenfranchised by post-democracy crony-capitalist globalism.

    This is the tragic aspect of this result (beyond the even more obvious tragedy of rocket booster for racism, which I understand a great many Leave voters want nothing to do with, but which is the reality.)

    Poor, disenfranchised communities have en masse voted for an EU Referendum that has come about after 30 years of agitation among the most right-wing, economically liberal elements of the Conservative party (and outside it their fellow travelers who moved further to the right with UKIP).

    These people want to get out of the EU for a variety of reasons, of which sovereignty and concerns about mission creep at the EU are by far the best ones.

    But they also want to the ability to remove red tape and regulation (i.e. in many cases worker’s rights and environmental protections) and they want the freedom to trade freely, globally, without being held back by the inertia, laws, and left-wing tilt of Brussels.

    i.e. They are very much for exactly what you and some in these communities have voted against.

    See for just one example further up this comment thread the article about EU funding into Ebbw Vale in Wales. Does anyone really believe that in a Government led by the idealogy of the free market right-wingers like John Redwood the first order of business is to redirect even *more* money to such places?

    The first order of business will be to scrap all that, and to try to let the market do its job. (i.e. Thatcherism).

    Now for my part I have mixed feelings about that; I am a self-described capitalist, but one that comes to the view that checks, balances, intervention and safety nets are required because human beings are involved.

    But these people — and the direction of travel Leavers have voted for — almost make me look like Jeremy Corbyn by comparison.

    The one “win” you may get is that immigration — which is not really a factor in many of these Northern and Welsh and Cornish towns at all, anyway — may go down, and the lowest rung on the ladder may see some steadying in their wages (though as Claudia said earlier, we already have a minimum wage (which the Tory eurosceptics would scrap in a heartbeat…) so I wouldn’t hold your breath.

    The ‘benefit’ of that will likely be much diminished by a fall in GDP and tax receipts for the foreseeable future though, as well as higher inflation from a weaker pound and so on.

    Now, there’s Brexit scenarios in which this doesn’t happen. But those are scenarios where you don’t actually get what these Leavers seem to have been asking for. In that case it was all a big drama where only the racists will walk away with any sort of victory because they will claim (/believe) many millions of British actually agree with them.

    As I’ve said before, I understand the feeling of kicking out / standing up for this slice of community. But that’s not in practice what this Leave vote does, IMHO.

  • 126 Mark June 27, 2016, 11:19 am

    @The Investor, I share your concern that Brexit is actually a campaign by the right of the Tory party, and fellow travellers, whose underlying concern is actually that the EU imposes too many restrictions on business. It is a credible scenario that they’ve hoodwinked the left-behind provincial working class into supporting their project because of legitimate concerns about the effects of immigration on the availability and attractiveness of less skilled jobs.

    FWIW, while I note your self-description as a capitalist, I think we’re now moving into a world in which many of us, myself included, feel increasingly uncomfortable with that term. I’m a free marketeer, not a capitalist. For me, unfettered capitalism means a rule-free environment in which the firms and individuals that gain an initial advantage through luck are permitted to entrench and build on it, for instance by anti-competitive measures by a firm or buying advantage for an individual’s offspring.

    As an investor, I don’t like that. I’d rather than markets operated freely, which paradoxically means they have to be regulated to ensure that all participants can engage in genuine competition. Same goes for individuals. Those provincial, post-industrial kids who didn’t follow you down to London or me off my Croydon council estate may have lacked certain intangible advantages that we possessed. I would like the state to plug the gap for the next generation. Does that make me a socialist? Perhaps, though I’d rather think of myself as a ‘red Tory’ who yearns for a more participatory economy.

  • 127 Burgmeister June 27, 2016, 11:28 am

    A good read but I take issue with your implication that everyone in London voted Remain and everyone outside of London voted Leave. I live in Devon and I voted Remain. Yes, I was in a minority but there were still quite a few of us. In all of London’s boroughs 40.1% voted to Leave, quite a sizeable chunk. It is this kind of sweeping generalisation (London = right, Everywhere else = wrong) that actually increases resentment towards The City and the “Political Elite”. Not everyone in “the provinces” is bright enough to see passed this resentment.

    As it turns out, it now looks like those people that voted Leave to stop immigration will be very disappointed.

  • 128 The Rhino June 27, 2016, 11:48 am

    Interestingly, on the immigration angle, an acquaintance who works as an immigration lawyer within Whitehall told me that the Attorney General came in on Friday and told them that no contingency plans had been made for this outcome.

  • 129 David June 27, 2016, 11:53 am

    I live in Cambridge, a small City about as University educated as you can get and which voted 73.8% Remain. I grew up in the provinces but have lived here for nearly 20 years. I am under 40 and a graduate. I have never voted Conservative.

    I decided to vote Leave for the simple reasons that I do not think the UK should be part of the pan-European project in its current undemocratic form, and because I think immigration levels have got out of the control to the point that it’s doing more harm than good. It has not affected my job prospects but I have been forced to move house for example because there aren’t enough school places in Cambridge now.

    I don’t believe I am stupid or racist, but I am keeping away from social media because nearly all of my friends disagree with me, and they seem more interested into trying to overturn the result or explain it in a multitude of patronising ways than in understanding why it happened and how their attitudes annoy people.

    I am surprised at you, “The Investor”, for being so certain that you are right about this. I noticed you said you will change your mind if things don’t turn out as badly as you expect in 5 years, but frankly you seem so sure that the decision is “wrong” and of what will happen you’re actually agreeing with Neverland for a change!

    For what it’s worth, I think what we will see now is a fudge that means we end up with just the kind of “EU Lite” that I would have been prepared to vote for in the first place. That won’t please the hardcore Eurosceptics but it will re-take the political centre ground. I wouldn’t rule out another referendum as a rubber stamping exercise for the better deal. If that led to a 2:1 majority in favour then it would go a long way to legitimising both a watered down version of what people voted for, and the new government post Cameron. Such a clear mandate would also hopefully unify the country and heal some wounds.

  • 130 A Different Richard June 27, 2016, 11:58 am

    @Dragon – well summarised.

    I voted Leave. I’m not racist, and I clearly see a difference between Europe/Europeans and the EU. Like the former, don’t like the latter.

    I don’t like being called a thick, uneducated northern working class racist, by people who don’t share my views. Nor do I like the riposte that Remain are just a load of gilded trust-fund London-centric bankers out to continue to feather their own nest.

    It was a nearly 50:50 split – cheap insults and crass characterisations benefit no-one.

    Many Leavers are genuinely concerned about democracy – having a parliament and judiciary that cannot be over-ruled willy-nilly by distant unelected bodies.

    Many Leavers are concerned that the EU will never compromise / accommodate views that diverge from “ever greater union”. Juncker was one of Leave’s greatest, although unintended, assets.

    Many Leavers are concerned that the EU will continue on its sorry decline. If I thought the EU could be reformed or would get “better” (as I would define it) then I would have voted Remain. But in 10 or 20 years I simply see the EU as being in so much trouble that I want to get out while I can.

    Many Leavers were disappointed by Project Fear (especially when it was so overblown). But it was Project Condescension that really got my goat.

    A lot of the press (and some on here) have basically said “we’re clever Londoners, so do as you’re told”. That was never going to garner votes.

    The 52% who voted Leave are not wrong. The 48% who vote Remain are not privy to some secret knowledge. It’s a judgement call, and everyone will base their vote on their circumstances and their beliefs.

    Many Leavers are worried about the short and medium-term financial impact on them and the country. But they believe in a better long-term future, and so voted for that. They may be wrong. But so might you.

  • 131 clinging to the wreckage June 27, 2016, 12:05 pm

    @Elaf, like yourself I am an economist and your post has motivated me to respond with some fairly random thoughts.

    I agree that this is a slap in the face to those that benefit most from globalisation and there exists a powerful latent racism. But it’s only a slap.

    If I could sum up the situation at a macro level I would say that since the ’70’s our economy has been managed in a way that best suits those likely to benefit most from globalisation. There has been an event and after the dust settles the economy will be managed in a way that best suits those likely to benefit most from globalisation. Or to put it another way the interests of capital over labour before the event the interests of capital over labour after the event.

    I can’t think of any industrialised country with a different economic model at the moment.

    I agree with your sentiment that the leave campaign will not deliver anything to those globalisation losers. Plus ca change…. And all that.

    Over the years I have benefited from this situation and that’s why I voted remain, but I accept that a lot of people haven’t.

    @Paul, I am not qualified to comment on your view of the democracy of the EU but I would say that;
    1. The UK is already one of the least bureaucratic industrialised nations – room for some improvement, but can’t see it being a game changer.
    2. The notion that the UK could negotiate in aggregate more advantageous trade terms than the EU – beggars belief.

  • 132 Fremantle June 27, 2016, 12:59 pm

    To start, I voted leave based on classical liberal lines and great optimism in the UK. I moved to the UK in 2001 from Australia as backpacker and took out British nationality as soon as I could in 2010. London is my home, although for employment purposes I’m currently in Madrid. As such I’m certainly in for criticism in view of the apparent conflict between my vote and my circumstances. But we’re all in the world essentially on our own outside of family and a relatively small group of friends who might have our back, and we’ve got to do what we’ve got to do. My lack of prospects in the UK are more associated with global movements in resource pricing and I’m pretty sure Brexit is unlikely to motivate that sector, even if in the short term the exchange rate makes the UK more competitive in engineering services. EU citizenship has given me some short term relief, but medium term I’m concerned for my industry. Nevertheless, even as a Leave voter I am pro-immigration and pro-free trade, that’s just the classical liberal in me I suppose.

    There are a lot of good arguments that people prefer economic freedom over personal freedoms and democracy, and I don’t discount them, the success of Singapore and others is testament to the human desire for economic security over more esoteric rights, Maslow’s Hierarchy of Needs is starting point in understanding this. On the surface it would appear those voting in downtrodden areas are shooting themselves in the foot. But I’m not sure I’d describe a factory worker whose livelihood is underpinned by subsidies and largesse of the EU as a winner of UK membership of the EU. They may have employment, they may be raising families and having holidays on the Costa del Sol, but they’ve made lifelong commitments to industries that aren’t competitive without protection, without subsidy, and they are very less likely to take advantage of freedom of movement within the EU in the event that the winds of subsidy, technological innovation or innumerable potential changes take their jobs away from them.

    Ahh, but what about the Poles, the Bulgarians, the Slovaks, they picked themselves up and relocated for work, why wouldn’t the British working classes? Well, they do. Except they move to the US, Australia, Canada, New Zealand, where shared language, culture and history make them feel less alien and ease the transition to life as an immigrant. Maybe the anglosphere is simply more open to newcomers, we certainly have less barriers to employment for immigrants, which might explain why hundreds of immigrants bypass the EU miracle to sit in camps in Calais to get to the UK rather than seek work in Paris or Berlin. Freedom of movement works really well for the British middle class looking for a gap year in Italy or a holiday home in France, a tradesmen to build their loft extension, a waitress to take their order or barman to pour them a pint, but not so well for the working class.

    Don’t get me wrong, the Poles and the Bulgarians and Slovaks benefit the UK immensely, but these are the same fraction of the working classes with the same moxie as the small proportion of British who move to Australia have. Immigrants are a self-selecting group of risk takers with more motivation and self-belief than the average individual. The myth of the doll-bludging migrant is largely that, a myth, proven by the highly visible exceptions that the red tops love to point out.

    But the indigenous British working classes are failed by domestic governance, which present them with the option to look for support from the state rather than live by their own hard work. I don’t blame them. Life on welfare doesn’t sound very life affirming or rewarding to me, and certainly hurts the prospects of those trapped and their future generations. But the marginal cost of escaping is so high. Working brings you in to the tax system, it takes your housing benefit, it brings new costs like commuting and work clothes, and it’s scary.

    The welfare state in Britain has created a client of the state population, reliant on welfare for their income, their housing, and a leadership within the main political parties which are unable to offer an alternative except more of the same and in the EU an unelected executive and legislature that is hell bent on defending the status quo and drawing more power to the centre.

    The UK gets the motivated, hardworking labour from the East and South, the middle classes get the benefit of their labour, the government their taxes, and the main political parties get to sit on their hands while working class towns crumble under the weight of indigenous unemployment. Freedom of movement and the EU do not have the solution for these people and undermine any attempt to change direction. The Little Englanders and UKIPers might have voted Leave as a cry against the establishment and would mock me for my classical liberal ideas, but it is for anyone who believes that the state’s existence is underpinned by working for the least able to raise their own prospects to make sure the UK builds a better future for all of Britain.

    Free of the EU, of the scapegoat for all out problems, the regulations, the protectionism, the unaccountability, the UK has a chance to reshape the direction of our nation and remove barriers to opportunity for all and not just for those who are most able.

    ps. Even farmers who have a direct relationship with the EU through CAP have voiced significant concerns with the EU and the regulation placed on their sector to normalize trade within the Common Market. Farmers who voted Leave did so knowing that the Tories aren’t committed to subsidising their way of life and Labour aren’t interested in their Conservative voting constituencies as much as the French are committed to protecting their farmers. There was no abstract relationship between their livelihoods and the EU, they sucked directly on the EU teat and benefited from cheap European labour to bring in their crops. And yet many voted Leave, some pre-polling suggested at a rate greater than the overall vote.

    Rant over!

  • 133 John B June 27, 2016, 1:34 pm

    I really doubt the interests of the disenfranchised are best served by the Brexit side of the Tory party, as they need a government committed to wealth redistribution. What is needed is a general election, not a new referendum, where a range of parties offer their team, and manifesto, as a detailed as to where we go from here. I’ll be voting on the primary consideration on who I think can best keep us in Europe. But with both major parties in disarray, and the LDs invisible, I’ve no idea who that would be.

    My favourite suggestion, persuading the SNP to become a national party and put forward candidates south of the border….

  • 134 A Different Richard June 27, 2016, 1:41 pm

    @ John B

    I suspect that all the major (and, indeed, minor) parties will have pro-EU manifestos. Other than UKIP, of course.

    The referendum was a single issue vote, whereas a general election is not.

    However for none of the previous parties of government to support Brexit would be a rather odd form of democracy. But we live in strange times…

  • 135 theFIREstarter June 27, 2016, 1:56 pm

    “I avoided Brexit articles in the run-up to the vote, which I now slightly regret.” – I felt exactly the same way TI!

    I was basically completely bored of the whole thing and also just assumed most people would do the sane thing and vote remain. I wish I’d done more now although it wouldn’t have made a difference (apart from maybe me feeling I’d ‘done my bit’), I think on aggregate the quiet remain voters all felt the same way and so it maybe came across as apathetic?

    Anyway good rant, much more in depth and eloquent than my one, and I hope you felt better after all that 🙂

  • 136 Shewi June 27, 2016, 2:01 pm

    I voted Remain because I wanted more red tape and less sovereignty.
    Because I’m old enough to remember what it was like when we had none of the former and all of the latter.
    Nothing was regulated adequately; industries, companies, agencies of the state and the state themselves were allowed to pollute, exploit, neglect and abuse us; our health, safety, rights and the environment around us.
    We had the cherished ability to boot governments out for some one to change this and never did.

  • 137 Oliver June 27, 2016, 2:44 pm

    That was a really good read and it’s refreshing to hear someone actually discuss honestly their feelings of people they know who voted for the Brexit whilst also addressing some of the failings in the EU as well.

    I’ve lost count of the articles I’ve read which just ram their strong opinion down your throat.

  • 138 Learner June 27, 2016, 2:50 pm

    Being 100% in cash, I’ve had very few tools available for dealing with this outcome. In the last week I’ve moved 65% of savings into USD at rates between 1.48 (on 22 June) to 1.31 (today). The only only actionable question on my mind now is how low that rate can go. 1.2? 1.0?

    I wouldn’t bet on a snap election being called let alone a new referendum so I wish they’d just invoke A50 and get on with it, to provide some certainty at least of timeframe. But we don’t even get that step until October at the earliest, then 2 more years as a lame duck economy.

    Our own special little financial crisis, as if the last one wasn’t enough, and entirely self-inflicted. Simply unbelievable.

  • 139 Financial Samurai June 27, 2016, 3:08 pm

    I do wonder, now that we investors have lost a lot of money, whether it’s better to SPEND our money now to live it up or keep investing and ask “what’s the point of it all?”

    During downturns, I’m always thinking to myself, “I should just bought the damn Range Rover Sport HSE!” At least I would have had something fun to drive around instead of losing it in this market. 🙂

  • 140 The Rhino June 27, 2016, 3:48 pm

    @TEA (all the way back at #12) I just succumbed to the lure of checking the old portfolio, well I don’t feel too guilty – I did manage to hold out a few days since Armageddon and it is almost the end of the month, i.e. when I normally update the spreadsheet.

    What do I see? A few % up on the month. Chimes with your observation TEA

    On the investment side, I think TI has been doing a whole lot of sweating for not much getting.

  • 141 Knowles June 27, 2016, 4:04 pm

    First time post. Great writing as always. I don’t normally post as I usually have nothing of value to add. But on this I will – even if there is nothing of value.

    I support the positives of mixing with our European friends, the open borders, and liberal tolerant legislation.

    I identify with enjoying the variety and cultural mix of London and London was also my home.

    However unlike you, I left London and the UK, to live, work, and raise a family in Europe and experienced living in both Western and Eastern Europe.

    If I were still living in London I think I would have been a firm Remainer.

    But based on my experiences over the last decade I think the UK made the right decision to Leave.

    The EU is, as you said, a capitalist project. But even more the EU has become a proxy for NATO. When the US says the UK goes to the back of the queue, because it wants to negotiate trade deals with a block rather than individually it also means is that it wants a system that allows it to garner support of US foreign policy en masse too.

    You ask why there were not greater restrictions on the poorer Eastern European countries that joined the EU? Ask yourself who benefits. The US wanted the EU to expand East so that NATO can too.

    The US can be a power for good, but there should be some checks and balances.

    I have no answer as to whether an EU without the UK, or even the eventual dissolution of the EU may lead to Europe having a more balanced relationship with the US. But if the EU were just about free trade and Europeans living in harmony, I’d be at the front of the queue to support it. But at the moment it isn’t, and so I’m not.

  • 142 John B June 27, 2016, 5:04 pm

    The FTSE 250 has fallen 13%, which is interesting as I was planning to diversify away from the FTSE 100 into it. Do people think it is now good value?


  • 143 Mark June 27, 2016, 5:33 pm

    @John B, I think it’s difficult to assess whether any stocks are good or poor value, given the economic and political uncertainty.

    However, on balance, I suspect that 10 years from now we’ll still be in the single market and will have sufficient freedom of labour to avoid firms’ profitability being heavily eroded by an inflationary wage rate spiral.

    Therefore even if you buy today and see a subsequent paper loss in the coming weeks or even months, multiple years down the line you should do OK. This is particularly true of the FTSE250 or 350, both of which outperform the FTSE100 over the medium term.

    I’m a fan of investment trusts, and like smaller stocks. Today I added to my positions in Henderson Smaller Companies and its Blackrock namesake, both at 12-month lows. These two trusts have delivered annual increases in dividend payouts of around 20 percent per annum in recent years and seem to me to be well managed and suitably diversified.

  • 144 David Simms June 27, 2016, 5:49 pm

    “There is no economic argument for exiting the European Union. None.”

    I’m not sure how you can say this. There are of course economic arguments against membership of the EU, made by credible people, whether one agrees with them or not.
    For example, by Patrick Minford of Cardiff Business School (PDF: http://www.patrickminford.net/europe/chap1.pdf). Part of that particular argument, if you don’t want to read the whole thing, is the point that protectionist import tariffs applied by the EU on agriculture and manufactured goods keep prices of those things artificially high, and are very costly to the UK, since it is much more of a service economy.

  • 145 The Investor June 27, 2016, 6:52 pm

    @freemantle — That was a really interesting viewpoint, thanks for sharing in some depth. I do find some contradictions in it (which you’ve largely identified yourself) and you can see what I’d say to any of the bits and pieces in my various responses above, but anyway, I found it a refreshing perspective.

    @Shewi — I love your comment, I think it’s my favourite of the thread.

    @David Simms – Yes, I agree that’s a bit of rhetorical excess perhaps. What I mean and believe is that when you net out the huge upside from being a member of the EU and any small frictions caused by membership (such as tariffs or our net contribution to the budget) then I don’t believe you’re ever going to come up a positive figure, and most (not all) of what I’ve said suggests the same. This is especially true if you take into account the boost to our economy from inward migration. Only dodging the EU implosion that some Brexiteers foresee at some point in the future would be an economic argument for me (obviously I don’t subscribe to it) but then why not have waited until that looked likely, rather than while we were all from an economic benefit benefiting mightily from membership?

    All IMHO of course. I obviously don’t have the monopoly on truth. Like anyone writing an article I obviously do give me side of it. 🙂 Time will tell.

  • 146 The Investor June 27, 2016, 6:56 pm

    Sorry, I meant everything I said about @knowles to go to @freemantle! I’ve edited it now.

    I’ve spent three days moderating 130+ comments on this thread and trying to digest them all and delete as few as possible; going a bit cross-eyed. 🙂

    (Thanks to you to @knowles for sharing your view. And everyone else who has put forward the longer thoughtful comments.)

  • 147 hole_whirled June 27, 2016, 11:03 pm

    I don’t expect financial blogs to bring a tear to my eye. All the best and good luck.

  • 148 Financial Samurai June 28, 2016, 12:05 am

    Can I clarify one thing? And sorry for my ignorance:

    The people who voted to LEAVE all knew the repercussions of a 20%+ drop in investment portfolios, a worse recession, less jobs, and internal upheaval right? If so, is it safe to say there can’t possibly be a 2nd referendum to vote the UK back in and say “oopsie”?

    I’m just trying to think from an investors point of view. If there is no chance of reparations, then I will NOT be invested new capital into the market, but just hoarding all cash for the next 1-3 years. But if there is a chance, than I will be legging back in.

    What say you fellow investors?


  • 149 Paul June 28, 2016, 2:01 am

    @The Investor
    Thanks for the follow up. Yes, I accept that Johnson/Gove/Hannan and the rest of the Tory Leave campaign do not necessarily have the interests of the working class at heart. That’s a discussion about one future government of post-Brexit UK. Now that we (might) have just regained democratic self government citizens have the ability to elect a British government with a very different agenda to Tory Leave in future elections. Being in the EU means that things such as no state-aid and free movement of goods and labour are non-negotiable so cannot be overturned by any electorate. As a capitalist I benefit from this neo-liberalism but I voted Leave for the British people’s right to elect a government with a different policy. To me it is this issue of democratic principle that was at stake.

  • 150 Learner June 28, 2016, 5:56 am

    @FS Finding it hard to generalise about the leavers’ motivations. It is complex. Expert opinion on consequences of exit were dismissed as groundless fearmongering by vested interests. People without pensions or portfolios don’t care what the sharemarket does and many felt the jobs situation could hardly get worse. I think there’s practically zero chance of a new referendum, unless one is held in a few years time to ratify whatever agreements have been hammered out. There is a slightly higher chance of a new election before 2020. I wouldn’t bet on either event, personally.