What Brexit Means?

Unexpected social change. Britain voted to Leave the European Union. The stock markets dropped and gold went up as investors react with fear to the surprise. I am among the many who never thought this vote would happen.

The British people will go through changes. But Brussels is shocked because they thought no one wanted to upset years without war. Doesn’t everyone want our leadership and rules? No one wants overreaching rules telling us how little we can do.

The leaders of the EU do not realize their advice and interference is holding economies back. Iceland and Ireland both ignored EU edicts to follow austerity rules and raise taxes. They reorganized and their economies have recovered fairly quickly. How well are Greece and Spain doing? France’s economy is struggling, and Italy & Portugal economies are a real mess following EU advice. Germany cannot pay for all EU’s issues.

What may happen next? Britain is going to have tough negotiations. The EU leadership will want to prevent other countries from leaving. Some members may want to be more reasonable because their countries may want to leave. Netherlands is likely to have a referendum next.

Most countries will find a way to trade with Britain. Why would you not want to trade with the 5^th largest economy? Already heard proposals Britain be invited to join NAFTA.

Will there be a recession? Of course, recessions are a normal part of the economic cycle. Will it be as bad as 2008 crisis? No.

Change is a constant in life. Accept it, adjust to change, and keep enjoying life. Children still grow up and we grow a little wiser. Keep your faith. Life goes on.

Business Owners Need Fans

The average business owner is not flush with cash. If they still have their best customers, the orders are smaller, and he has to offer lower prices. Half their small customers have gone out of business and the business owner had to at their debt. The average business is hurting for income and profits.

If the owner has any cash, he is waiting for the next crazy idea to come from DC. Taxes will go up next year 4%. Cap and Trade (Tax) will export more manufacturing jobs overseas. Who knows how much health care will cost in a few years.

Look at states that have better economies. Texas, Oklahoma and North Dakota have lower unemployment and generated two thirds of all new jobs created over the last three years. Why? Business friendly regulations, stable taxes, governments within budget, limits on litigation awards, and respect for taxpayers.

Canada is doing well in this global recession. Why? Business friendly regulations, lower taxes, limited government spending, limits on litigation, and lots of legal immigrants. Same thing that built the USA. Canada also avoided the real estate bubble by not allowing very low down payments nor subprime lending. Smart regulations unlike Fannie and Freddie offerings.

If DC wants to improve the economy, the government has to be fans of business owners. Not vilify them. What business needs is stability. Cut government spending and borrowing, don’t add more regulations, and limit tax increases. Then businesses will start investing, expanding and hiring. Until then we are starting down the path of the Japanese lost decades.