In her recent article titled "Opting Out", financial expert Dawn J. Bennett discusses Brexit and its implications on other EU countries, as well as the United States. She said the British referendum has given momentum to the movement supporting Texas' succession from the U.S. This movement is driven by a lot of the same problems that led to Brexit, such as feelings of an overbearing federal government, sluggish wages and weak labor markets, and a general dissatisfaction with the dreary economic and political landscape the nation faces. In fact, the hashtag #Texit blew up on Twitter by nearly five times during the Brexit vote. It saw almost 2,000 tweets between 7:00 and 8:00 a.m. London time.
While the likelihood of Texas' succession from the union seems ridiculous to some, Bennett explains that if the state were a sovereign nation it would have a GDP of nearly $1.7 billion and be the world's 12th largest economy. This would put it right behind Canada and before Australia and South Korea. With Britain exiting the EU, other EU countries and even Texas could leave their unions too.
"Following the Brexit vote, global markets took a hit on Friday, primarily in the developed economies," says Bennett. "In currency trading, the pound lost more than 10 percent against the dollar at one point. Gold screamed up. Friday was also an indication from a trading perspective that the plunge protection team or the Federal Reserve, whoever is currently attempting to control the markets, has lost a bit of that control. When trading is that heavy, it's just too hard to artificially keep things buoyant."
She continued, "Another reason is because our economic data points have been negative, and people are catching up with it… Consumers on the whole are now more bearish about expectations for the economy." Bennett also points out that capital is quickly shifting, as fortunes are being made and lost.
As a result, she urges people to starting asking themselves some questions." It's always worth examining the issues in the light of your own personal circumstances," says Bennett. "How do you weigh protection and liquidity in your portfolio? What do you need to do to prosper in this type of environment, or even just hold on to what you have now? I believe that you need to be hyper-focused on and skeptical of certain asset classes that suffer illiquidity gaps even during good times, like micro-cap and small-cap stocks."
To read the full article from Dawn J. Bennett, click here.