George Soros: Brexit Could Trigger Black Friday

Posted: Jun 21 2016, 5:09am CDT | by , Updated: Jun 21 2016, 5:12am CDT, in News | Latest Political News

George Soros: Brexit Could Trigger Black Friday
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Great Britain votes on Thursday on leaving the EU. An exit could mean a Black Friday, June 24 warns famous investor George Soros.

The Brexit vote is on June 23. The polls show that it is too close to call, weather the UK will stay or leave the European Union. The most famous currency speculator has a glum view on an exit.

Soros wrote in The Guardian: "My 60 years of experience tells me the pound will plummet, along with your living standards. The only winners will be speculators." He continues: "I want people to know what the consequences of leaving the EU would be before they cast their votes, rather than after. A vote to leave could see the week end with a Black Friday, and serious consequences for ordinary people."

To be clear, with Black Friday, George Soros does not mean the big sales day, but an financial crash.

Soros picks up the discussion about how in 1992 a devaluation of the Point turned out to be a good thing. He says though that the situation is different in 2016.

"First, the Bank of England would not cut interest rates after a Brexit devaluation (as it did in 1992 and also after the large devaluation of 2008) because interest rates are already at the lowest level compatible with the stability of British banks. That, incidentally, is another reason to worry about Brexit. For if a fall in house prices and loss of jobs causes a recession after Brexit, as is likely, there will be very little that monetary policy can do to stimulate the economy and counteract the consequent loss of demand."

"Second, the UK now has a very large current account deficit – much larger, relatively, than in 1992 or 2008. In fact Britain is more dependent than at any time in history on inflows of foreign capital."

"Third, a post-Brexit devaluation is unlikely to produce the improvement in manufacturing exports seen after 1992, because trading conditions would be too uncertain for British businesses to undertake new investments, hire more workers or otherwise add to export capacity."

As John Oliver points out in his HBO show on Sunday, pretty much all financial analysts say that a Brexit is bad for the British economy.

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