Brexit will not cause financial crisis, says BoE’s Mark Carney

Ever since the Brexit vote became inevitable, the pound has plunged to a 30-year low, the prime minister has resigned, two credit rating agencies have announced Britain would be downgraded and there have been double digit losses in stock markets.

Mr Carney made it clear that he could only mitigate the damage rather than resolve the problems.

“There will be a period of uncertainty and adjustment following this result,” the governor said and in the longer-term the UK economy will suffer because “the economy will adjust to new trading relationships that will be put in place over time”.

LINK

I don't understand the talk of a "global meltdown" following the Brexit. My understanding is the adjustment period is going take around two years. That's plenty of time for all of the trade deals and contracts to be rewritten. Why can't everything keep functioning like usual during and following the transition?

a reply to: Profusion

Negotiating leaving the EU could take up to 2 years. Some trade deals won't even be able to take place until AFTER we have left.

For example, membership and access to EFTA (European Free Trade Agreement) is conditional and tied up within membership of the EU. Now we are no longer in the EU, in theory we no longer have access to the EFTA market. Renegotiating this is certainly a possibility but would mean re writing EU Treaty law, something that i can't imagine the rest of Europe will be keen to do (at least with any haste). And that is just one simple aspect (that is anything but simple when you start delving). It isn't simply a matter of taking Britain off the treaty, it would involve completely redrafting the Treaty.

originally posted by: Profusion

Ever since the Brexit vote became inevitable, the pound has plunged to a 30-year low, the prime minister has resigned, two credit rating agencies have announced Britain would be downgraded and there have been double digit losses in stock markets.

Mr Carney made it clear that he could only mitigate the damage rather than resolve the problems.

“There will be a period of uncertainty and adjustment following this result,” the governor said and in the longer-term the UK economy will suffer because “the economy will adjust to new trading relationships that will be put in place over time”.

LINK

I don't understand the talk of a "global meltdown" following the Brexit. My understanding is the adjustment period is going take around two years. That's plenty of time for all of the trade deals and contracts to be rewritten. Why can't everything keep functioning like usual during and following the transition?

Order out of chaos..


I would love the UK to start signing deals with large nations outside the EU and really push on and forward..

"Oh but that's against EU legislation number blah blah bollox"... Shove it we are leaving.

I think the real concern is who will follow us?...


RA

a reply to: Profusion

There's going to be a period of adjustment because the market figures were illusionary in that they relied on the economic factors of all members of the EU.

Now Germany is going to carry the brunt of the load because the other EU countries like Greece, Spain, Portugal are hurting financially.

The US will also be hurt because trade is so heavily invested in the EU. So markets will fall, they will correct.

I see Greece leaving next, then Spain and France just because they won't want Germany calling the shots, economically speaking.

Just my opinion.

a reply to: Profusion

As usual the short-term markets are reacting in an emotional way, instead of based on economic fundamentals.

The bottom line is that those with cooler heads are going to make a lot of money by buying in at or near the bottom of this "crisis" dip.

Great Britain is going to be just fine...and likely better off in the long run, not having to pay the freight for under-performing economies (like Greece), being subject to dictates from Brussels that go counter to Britain's best interests - and of course freeing them from the financial and cultural burdens of unfettered "immigration" from all points EU (and beyond, thanks to EU pinheads like Merkel).

And as you point out, and people will figure out in a few days, there is nothing immediate about this exit. It will be accomplished over at least a 2 year period...over which span all things economic and legal will be sorted out, without great upheaval.

originally posted by: DBCowboy
a reply to: Profusion

There's going to be a period of adjustment because the market figures were illusionary in that they relied on the economic factors of all members of the EU.

Now Germany is going to carry the brunt of The US will also be hurt because trade is so heavily invested in the EU. So markets will fall, they will correct.the load because the other EU countries like Greece, Spain, Portugal are hurting financially.

The US will also be hurt because trade is so heavily invested in the EU. So markets will fall, they will correct.

I see Greece leaving next, then Spain and France just because they won't want Germany calling the shots, economically speaking.

Just my opinion.

They already are here in the US. When the news broke , the Dow futures fell to over -700. Now they are above -400. The US has lost more than that for no other reason than they could.

a reply to: Gothmog

I'm no banker or economist, but I bet that they had a plan in effect regardless of the vote.

The market "crashes' today are designed to maximize profit, and are not a true reflection of the situation.

a reply to: DBCowboy
And again, you and I have met a mutual agreement.
W.A.D.
Peace.

I can't see the UK crashing.
All we are seeing last night and this morning are rich people selling their shares and bonds, hoping to make money.
There are and will be much bigger loses in Europe.

ALL the 'top economists', big banks, corporations and top politicians were saying this will be devastating for the UK economy, let's wait and see...

If it turns out that there isn't a recession/massive crash, then surely that all these people, who are doing THEIR DAY JOBS and being payed nicely for it thank you, would be wrong and have ZERO credibility.

originally posted by: DBCowboy
a reply to: Profusion

The US will also be hurt because trade is so heavily invested in the EU. So markets will fall, they will correct.

Nonsense. Only effect to the U.S. is good. This can only hurt the euro which helps the dollar.

Disolve the EU, disband NATO, send the US packing…

originally posted by: sprtpilot

originally posted by: DBCowboy
a reply to: Profusion

The US will also be hurt because trade is so heavily invested in the EU. So markets will fall, they will correct.

Nonsense. Only effect to the U.S. is good. This can only hurt the euro which helps the dollar.

Maybe, but the market is so invested in Europe because our economy is service based and not manufacturer-based. So the US market actually reflects Europe's standards, and not America's.

Global stock market collapse this morning but maybe they are choreographing a short term event like 1987?
Doubt stocks are headed back to the bat#hit crazy low after the US Lehmann scandal but who knows?

a reply to: Profusion

UK is the debt heaviest nation in EU. Having now decided to stay outside of the regions largest market area, and the biggest trading partner for UK, for sure will impact the earning capacity, and thus give higher risk for the overall economy and capabilities to handle the debt.

That said, UK will now form its part forward, and in due course of time, will forge its place in the international community.

Would it happen that Trump would become POTUS, this might open a HUUUUUGE opportunity for UK to become prioritised partner for US - and give a kick-start for the new-UK economy, and reduce the negative effects from slump in trade with EU.

opening bell on wall street about was two minutes ago already down 509.

What I see happening is this:

First, and right now the markets are reflecting this, is that they are going to have a bit of a hiccup in the financial markets, and then there will be negotiations in the EU and then with Great Britain. The new Prime Minister is going to have to have a good solid plan if he does not want to see his country hit had by this, and will have to be working over time with such, for they still have to activate Article 50 of the Lisbon Treaty.

In the mean time, while they are celebrating right now, the next step would be to ask people to leave, some will go, as they will go home and vice versa, those people who live in EU who are British citizens will have to return back to Great Britain, and then there is a good chance that before they hit the proverbial red button, they are going to hold another vote, to make absolutely sure that the citizens of the country wants to leave, to send a message of yes or no, to happen within about 2 years, in 2018. If the public sways and changes their mind, which the public often does, it could reverse the prior decision and it remains, if not, then the red button is pushed and the Great Britain activate article 50 and starts the process of divesting from the rest of the EU.

a reply to: Profusion

At this point, what I find most interesting is that, as of right now (9:55 EST), British Stocks (FTSE 100) are down approx 2.35% while the EURO STOXX 50, which I am led to believe is a european blue-chip index and the Euro equivalent of the Dow, is down 7.67%.

This seems to indicate that the markets are more concerned about the overall financial impact on Europe than Britain.

Also, some of this is probably driven by big gains the markets had yesterday on false beliefs that Brexit would fail.

In any event, it is quite possible that these losses will be erased over the next week anyway, which underscores how it is somewhat unwise to assess the merit of world events based upon the short term impact on markets.

At least we know Soros made money by shorting the market. That makes feel better.

I saw his comments last night and I thought they were great. A voice of sanity.

originally posted by: slider1982

originally posted by: Profusion

Ever since the Brexit vote became inevitable, the pound has plunged to a 30-year low, the prime minister has resigned, two credit rating agencies have announced Britain would be downgraded and there have been double digit losses in stock markets.

Mr Carney made it clear that he could only mitigate the damage rather than resolve the problems.

“There will be a period of uncertainty and adjustment following this result,” the governor said and in the longer-term the UK economy will suffer because “the economy will adjust to new trading relationships that will be put in place over time”.

LINK

I don't understand the talk of a "global meltdown" following the Brexit. My understanding is the adjustment period is going take around two years. That's plenty of time for all of the trade deals and contracts to be rewritten. Why can't everything keep functioning like usual during and following the transition?

Order out of chaos..


I would love the UK to start signing deals with large nations outside the EU and really push on and forward..

"Oh but that's against EU legislation number blah blah bollox"... Shove it we are leaving.

I think the real concern is who will follow us?...



RA

Yeah, I heard last night on the news that Germany? would insist on keeping current trade deals intact after the 'divorce' and then later, a replay of Obama essentially threatening Britain being moved to the back of the line. Aren't these just SOME of the reasons for the Brexit? Oppression, dominance and authoritarian coercion, tell them all to shove it where the sun don't shine!

I would like to see George Osbourne and Mark Carney step down from their positions.
They have zero credibility anymore.

This is Mark Carneys speech in the morning after the Brexit results were announced...


He says.. "We are well prepared for this. HM Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have remained in close contact, including through the night and this morning."

Why didn't he say any of this pre-referendum?
All we got from him was doom and gloom. Talk about impartiality!

And what is their solution to all this... Yet MORE Quantitative Easing!!! More than £250 BILLION worth!!
That is the printing of money and giving it to the banks.

What a joke this whole system is.