Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on June 25, 2016

Bookmark and Share

Will the ‘Brexit’ mark the end of the age of globalization?

Will the ‘Brexit’ mark the end of the age of globalization? thumbnail

For decades, financial and political leaders have preached the inevitability of globalization, promising nations that by sacrificing some of their sovereignty and dropping national barriers they could reap far greater rewards through economic integration and cooperation. And that turned out to be largely true.

But Britain’s surprise vote to leave the European Union signals a new era for the post-World War II globalization drive, exposing deep populist anger and leaving open the question of how best to rein in an increasingly connected and interdependent world economy.

The vote was perhaps the biggest public referendum to date on globalization, and it yielded a far different outcome than in 2014, when Scots voted to stay part of Britain.

Now Britain and other Western democracies are likely to face growing pressure to put the brakes on open trade and immigration policies that have been hallmarks of world growth.

“The age of globalization has certainly ended,” said Fredrik Erixon, director of the European Center for International Political Economy, an independent think tank in Brussels.

Few are predicting a scenario in which major borders are closed and protectionism rules the day. But the sentiments underlying the British public’s rebellion are broadly shared by many others in the EU as well as the United States.

Policymakers and investors are particularly worried that Britain’s move will be a catalyst for a reenergized effort by Scots — who overwhelmingly favored remaining in the EU — to break away fromBritain. It may also encourage other secession movements in the EU, which could fundamentally alter the political and economic structure that has been in place for decades.

“With one fell swoop, the world order has been turned upside down overnight, and where the chaos stops no one knows,” said Chris Rupkey, chief financial economist for Mitsubishi UFG Financial Group.

The backlash stems from a growing realization that the biggest winners of globalization have been international corporations, wealthy families, skilled and educated workers and those with easy access to capital. Older, working-class families in many Western nations have instead struggled with stagnant wages, job losses and staggering debt. Income inequality has grown worse in many of the same countries that have embraced globalization.

At the same time, forces that once propelled globalization — advanced technologies, reduction of barriers and the rise of China and other developing economies — have diminished. World trade and economic growth have also slowed in recent years.

With the so-called Brexit vote, the European Union, itself arguably the most ambitious post-World War II  experiment in globalization, appears at risk of unraveling.

“In the postwar period, with the shadow of world wars and the shadow of the USSR no longer over Europe, countries are increasingly ready to go back to nationalism,” a European diplomat told reporters in Washington on Friday, speaking anonymously to comment on other countries’ politics.

In the U.S., the antiglobalization tide has led to public opposition to sweeping trade deals, such as the North American Free Trade Agreement and the proposed 12-nation trade pact known as the Trans-Pacific Partnership, which Hillary Clinton and Donald Trump, the presumptive presidential nominees, oppose.

President Obama, speaking to entrepreneurs from around the world at a Global Entrepreneurship Summit on the Stanford University campus, acknowledged Friday that Britain’s vote “speaks to the ongoing changes and challenges that are raised by globalization.”

Obama called upon business leaders to work harder to make the benefits of globalization more accessible to a greater number of people.

“The world has shrunk,’’ he said. “It is interconnected…. It promises to bring extraordinary benefits. But it also has challenges. And it also evokes concerns and fears.”

At the core of the “Leave” campaign in Britain was the desire to curtail immigration and reclaim full sovereignty in Parliament.

“Both of those are incompatible with a world that is increasingly globalized,” said Erixon, the think tank director. He added that “a U.K. departure is going to make the entire EU inward-looking, more defensive on globalization and less confident about making it on the back of the world.”

The EU was born out of the ashes of two world wars that had divided the continent, and the single market and political union had grown to 28 members as European leaders saw stronger economic and social integration as a way to compete in a world increasingly orbiting around the United States and China, the two largest economies.

But anti-EU feelings have deepened in the wake of its inability to respond effectively to the global downturn and the Eurozone crisis, as well as to manage the heavy migration from Eastern Europe and, more recently, waves of refugees from the Middle East.

What’s more, as in the U.S., the economic recovery has left out large segments of the population in Britain and elsewhere in the EU. And they have become increasingly frustrated at what they see as a lack of government actions to address their needs.

“The really, really surprising part of the Brexit referendum and rebellion against globalization is that it’s held up by the group of baby boomers that have benefited enormously from open societies,” Erixon said. “Now they’re rebelling against their own economic history.”

In Europe and the U.S., complaints have been particularly loud from older and less-educated citizens who have struggled with job loss or income stagnation. Many of their livelihoods have been undercut by automation and cheaper foreign labor — two prominent features of globalization — even as corporations and wealthy individuals have gotten richer.

“This vote [in Britain] was mobilized around issues of nationalism defined in ethnic terms,” said Robert Shapiro, chairman of consulting firm Sonecon and a former economic advisor to President Clinton. “It’s surprising that one of the most sophisticated countries would fall for this,” he said. “That tells us about the fundamental failure of the EU.”

The pushback against globalization also raises a new question: What’s the alternative? So far, there’s much more agreement on the problems globalization has created than on any solution or response.

The direct and immediate economic pain will be felt hardest in Britain. The nation’s economy had outperformed most others in Western Europe in recent years but is now likely to tip into recession in coming months.

The world has long regarded London as the financial capital of Europe, but one of the things that gave it that imprimatur was the city’s cosmopolitan culture and free flow of workers. Now it may end up a casualty of the globalization backlash.

“It’s clear that there’s a lot of dissatisfaction out there,” said Clyde Prestowitz, president of the Economic Strategy Institute and a former top trade negotiator in the Reagan administration. The problem has been building for years, he said, but the political and business elite in urban centers such as London, New York and Washington have tended to do fine whether the economy is up or down.

“What they have ignored,” he added, “is that for much of the population, globalization hasn’t been such a great thing.”

LA Times



21 Comments on "Will the ‘Brexit’ mark the end of the age of globalization?"

  1. Goat1001 on Sat, 25th Jun 2016 8:44 pm 

    Globalization has proven to be a great wealth generator for the point-one percenters at the expense of almost everyone else. Almost as good as slave labor but politically slightly more tolerable until…now. However, it’s unlikeky the ruling elites will give up power and wealth without a fight, a BIG fight.

  2. makati1 on Sat, 25th Jun 2016 9:18 pm 

    It may be the beginning of the end, but it may take time to see if it is or not. The next year will tell. If the UK actually exits and there are more countries following, it will be the end of globalization. But, I would not be surprised if the elite start a war to distract/end the breakup

  3. ghung on Sat, 25th Jun 2016 10:44 pm 

    Economies and populations, especially developed economies, are pretty hard-coded to globalisation after many decades of global growth. Too many countries can’t, or no longer, produce many of the things essential to day-to-day life, so some form of globalisation must continue, or expect to pay a lot more for things like hardware, socks and underwear. I expect we’ll see increasingly a more chaotic and volatile globalisation lite for a time before the whole mess implodes.

    Can the world feed itself without globalisation?

  4. JuanP on Sat, 25th Jun 2016 11:37 pm 

    The end of globalization has started already but it will take decades. This is not something that will happen overnight. Every day things will get worse for the rest of our lives.

  5. Anonymous on Sun, 26th Jun 2016 1:09 am 

    This farticle highlights the problem of americans ignorance perfectly. The writer believes ‘globalization’ is a purely narrow economic phenomenon. He\she ‘acknowledges this, but ‘globalization is so poorly, and narrowly defined here, it ends up giving readers the impression opposition to globalization is only about jobs and wages.

    Which of course, is true only in a very narrow sense. Globalization, for its proponents, is about control, power, wealth, not about ‘trade’. Military power, a global spy regime, uS hegemony, endless war and exploitation, environmental devastation. People are upset about lost jobs and opportunities, that’s true enough, but what really gets most of us, is the endless transfer of wealth and control to uS and allied corporations.

  6. Croatian Holiday Maker on Sun, 26th Jun 2016 3:35 am 

    Brexit is a very important marker of the beginning of the end of globalization. Brexit is an uprising of the loosers of globalization against the “elite”/establishment and their capitalist-commie One World vision.

    Trump in the US, Brexit, the meteoric rise of “populist” parties in continental Europe… all point in the same direction: pulling the emergency brake and a call for “localization”, meaning that the “indegenious” people want to protect their countries from becoming overrun.

    I am writing these words from the terrace of cafe Sol-Mar in Zadar-Croatia, to be read mainly by North-Americans, how globalist. This is a very relaxed society, like Holland was in the fifties. Apart from a lone German, British or Dutch tourist, Croatie is 100% Croatian. No Arabs, no Africans, no Asians.

    Prices are 2-3 times lower than in NW-Europe. No people sleeping in the street like in London. A few beggars and there are old men busy fishing empty beer cans from the public dust bins. Many people have a second hand car, no doubt left-overs from western Europe, but the Lada’s are long gone. One would like to warn these eastern Europeans: don’t go where western Europe went.

    Today moving from Zadar to Split along the Dalmatian coast.

  7. Cloud9 on Sun, 26th Jun 2016 6:28 am 

    I have been feeling the resentment against the North Africans and Gypsies in London, Rome, Paris and Berlin with each visit for the last decade. When I was in Prague last summer, it became apparent to me that the Czech Republic seemed to be the only country we visited who seemed to have a handle on the immigration crisis. If my gut instincts are correct and Short is right on his prediction of 13 years is correct, then those nations removed from the ethnic polyglot that is western Europe will find themselves in a better place. Diversity and tolerance are the step children of abundance.

  8. Northwest Resident on Sun, 26th Jun 2016 10:36 am 

    Brexit is as much about refugees and the anger/fear that those refugees are bringing to Europe as it is about financial concerns, perhaps more so.

    But here’s the bottom line: Global economic chaos and eventual collapse was imminent with or without the Brexit vote. The dramatic plunge in stock market values and European bank stocks in particular was not something that could be held back for much longer. The whole global economy and the stock markets and trading exchanges that the global economy rests on were (and still are) rotten to the core. SOMETHING had to give.

    My first reaction when I learned that Brexit vote succeeded was “you gotta be kidding me — they actually let the vote to exit EU pass without trying to cheat?” That in itself says something very import. And now, it looks like one of the benefits of the Brexit vote and the looming chaos is that it empowers the EU to begin taking drastic steps to save failing banks in Italy, Spain and Germany — it provides excellent cover for the EU to make moves that it couldn’t have done otherwise. Not only that, the financial chaos that is sure to be with us going forward now has a convenient explanation — UK set off this chaos with the Brexit vote.

    Look for extreme measures and policy decisions going forward from not just EU countries but from most if not all other countries and their central banks, ALL under cover of the global financial chaos that is now upon us, ALL conveniently using the financial chaos as a reason and excuse to make dramatic moves that would otherwise have not been possible.

    Never let a good crises go wasted. This Brexit-induced crises will not go wasted by EU and other governments. Brexit is bigger than 9/11 in its scope and power to provide government and TPTB in general to enact extreme measures.

    Extreme measures is what we’re going to start seeing a lot more of.

    Ask Michael Greer — is this one of those “steps down” in the long series of steps down to eventual total collapse. I’ll bet his answer is “yes, definitely”.

    Despite all appearances to the contrary, my guess is that Brexit is just what TPTB doctor ordered. The oncoming chaos and fear and destruction will provide governments with a new and powerful mandate to do all kinds of things that they couldn’t have done before. Keep your eyes open (and your liquor cabinet fully stocked).

  9. Davy on Sun, 26th Jun 2016 11:08 am 

    Mad Max Monday

    “JPM Head Quant: Expect Up To $300 Billion In Program Selling, “5-10% Near-Term Downside To The S&P500”
    http://www.zerohedge.com/news/2016-06-26/jpm-head-quant-expect-300-billion-program-selling-5-10-near-term-downside-sp500

    “As we noted earlier this week, we expected a Brexit outcome to have an asymmetric impact for equities, with downside exacerbated by unwind of long equity investor positioning. In particular, increasing equity volatility would induce systematic strategies (Volatility Targeting, Risk Parity, CTAs) to start deleveraging their high equity exposure, resulting in $100-300 billion of selling.”

    “Finally, his conclusion: “We see another 5-10% downside to the S&P 500 in the short term as likely, but we maintain our 2016 year-end price target at 2,000.”

  10. efarmer on Sun, 26th Jun 2016 11:16 am 

    England is our mother empire and during and after WWII, has been part of the Old Empire / New Empire duality that has been able to manipulate things on a global basis, very few American military adventures have taken place without Brits in the mix for example. Global information and the apparant facts that BRitAmerican financial hegemony is only good for the New Royalty made with money instead of blood lines. The world is connected up now and there are a great many talented people all over, and a new system will emerge. BritAmerica simply won’t get to run the table. The Chinese will fit in and do business, Europe will too, the adjustment period will be quite long and strange. We screwed people out of their wealth and prosperity while we told them we were defending them, and we were, but just not from us. The Royal Family in England rules the Cayman Islands, which is where the most notorious pirates on earth have safe haven, especially the ones from Wall Street and Conneticut who need to hide the goods before a show trial threatens to steal a pinch of plunder.

  11. Northwest Resident on Sun, 26th Jun 2016 12:07 pm 

    Davy — Mad Max Monday. You got that right. And more than likely followed by Mad Max Tuesday, Wednesday, etc.

    Member and spokesman for the global PTB, George Soros, describes the situation as: “catastrophic scenario”.

    We can be absolutely certain that he did not use the word “catastrophic” without thoughtful purpose beforehand.

    Now expectations are set. We’re in for global economic chaos. The paradigm has shifted substantially. The world has changed, dramatically, with Brexit merely the catalyst for what was coming anyway.

    The wild ride down just got wilder. We’ve rolled off the undulating plateau and started downhill on the Rollercoaster To Doom that we’re all crammed into, and we are picking up considerable speed. G-force inducing curves are dead ahead. Only question is, will the seat belts hold!?

  12. shortonoil on Mon, 27th Jun 2016 6:32 am 

    ” Only question is, will the seat belts hold!? “

    What seat belts??

    Do you mean those tenuous threads called renewable energy; or then again maybe you are referring to the cables that lead to fusion power; the energy too cheap to meter? We have started on the biggest roller coaster ride in the solar system; – it’s gravity powered all the way to the end!

    The seat belts were constructed from illusions. Products of virtual “reality”! We’ll find out just how well they work – when we hit the ground.

  13. adonis on Mon, 27th Jun 2016 9:44 am 

    this will begin more exits from the euro and further drops in the stockmarket better load up on precious metals those paper promises will soon evaporate it may pay off or it may all be for nothing

  14. makati1 on Mon, 27th Jun 2016 9:52 am 

    adonis, I hope so. The sooner the EU shreds, the sooner NATO goes with it. The financial collapse is going to happen no matter what happens in Europe, but that could speed it up.

    Precious metals are for the wealthy. Better consider all of the other more necessary preps and if you have anything left, a few 1/10 oz coins might be ok.

    If you need something to eat and offer me gold for some food I have, I may not consider that a fair trade. Ever consider that as a possibility? I may let you eat your gold and starve.

  15. Croatian Holiday Maker on Mon, 27th Jun 2016 9:57 am 

    Oh really adonis?

    http://www.dailymail.co.uk/news/article-3661258/Bitter-Brexit-losers-gang-scupper-EU-pull-17-million-voted-for.html

    I have yet to see that Boris Johnson and Nigel Farage will actually make good on their promise and lead Britain out of the EU, although I hope they will (so continental Europe could finally turn to Eurasia and blow up the West… and “make Europe Great Again”, to borrow a phrase from the Trumpeteers).

    But it is by no means certain.

    What an incredible mess this referendum kicked Britain into.

    London could very well lose Scotland, Gibraltar; UK is completely isolated, with only Merkel wanting to play soft on the Brits, but the rest wants to use Britain to set an example what will happen to defectors.

    Expect Britain to be kicked in a terrible recession.

    Even the most anti EU-country Britain could only achieve 52/48; all the other “euro-skeptic” countries will vote Remain.

  16. adonis on Mon, 27th Jun 2016 10:39 am 

    makati iam also stocking up on numerous canned goods,books,water and anything else i think will be useful post bau and croation holiday maker i think we are on the beginning of the end of globalisation nations will start falling like dominoes as they revert to their former ways

  17. adonis on Mon, 27th Jun 2016 10:44 am 

    makati iam also stocking up on numerous canned goods,books,water and anything else i think will be useful post bau and croation holiday maker i think we shall soon see what will come next im going for Frexit

  18. peakyeast on Mon, 27th Jun 2016 11:31 am 

    The Danes misvoted some 15 years ago saying NO to EU. A very short while later – after some insignificant changes – the Danes had to vote again. The changes moved about 1%, but that was enough.

    I think the brits will have to vote again – after being subjected to intense manipulation and after some easily bypassed changes has been introduced. Just like the case with the Danes.

  19. JuanP on Mon, 27th Jun 2016 11:31 am 

    Mak “I may let you eat your gold and starve.” And after you starve I will take your gold from your dead body! LOL!

  20. Bystander on Mon, 27th Jun 2016 11:55 am 

    Even der Spiegel admits: the EU can’t press for speed, only a British government can initiate socalled article 50 which sets in motion a two year process of EU exit.

    And nobody in the UK is in a hurry, not even The Boris.

    Argument Cameron: a new Brexit pm should initiate article 50.

    Brussels has no choice although they can’t wait to begin to defend their Euro-Reich by really kicking Britain under the nuts… to set an deterring example.

    http://www.spiegel.de/politik/ausland/grossbritannien-torries-katerstimmung-nach-dem-brexit-a-1100026.html

  21. makati1 on Mon, 27th Jun 2016 7:29 pm 

    JuanP, I didn’t think that far ahead in the scene, but you are correct. lol

Leave a Reply

Your email address will not be published. Required fields are marked *