The global economy has become a house of the flimsiest cards you’ve ever seen – the kind of cards that have been drenched in water and now need only the slightest of touches to rip apart and come tumbling down.
Some of the smartest fiscal minds and greatest investors in history have already put their money where there mouths are on this matter, including George Soros, who came out of retirement to bet BIG against the market.
But when does it all begin? What’s the first card that will fall? This could be what triggers the next great recession on June 23rd…
To this point, the major media outlets have barely mentioned what could actually turn out to be the most significant even of 2016: The Brexit vote.
On June 23rd, British citizens will vote on whether or not to leave the European Union, or EU.
While the British government is campaigning to remain a member of the EU, frustrated Brits who will decide the outcome of this situation aren’t totally convinced that inaction is best for them.
That uncertainty so close to the vote has given us a small taste of the volatility we can expect, and it’s only been growing and growing.
Yet everything up to this point could pale in comparison to what’s in store should the Brexit vote pass with the U.K. departing from the EU.
In fact, it’s largely unknown exactly what the impact would be.
What I’m relatively sure of is that a separation of that magnitude would have drastic consequences for an already vulnerable Europe. Estimates project that European stocks could get hit by as much as 15-20%, and I think that would just be the start…
Why?
First of all, Europe isn’t prepared for this. The strain it would put on resources and the time it would take to renegotiate contracts, figure out the new policies that will have to be put in place, etc. can only hurt.
Secondly, Europe is in bad condition already, especially when you consider the near-crisis level that Italy is at with its massive debt.
Thirdly, the global economy isn’t exactly running smoothly right now. So while Europe may need China and the U.S. to hold it above water, what could easily end up happening is that Europe drags everything else down with it.
The scary part is that a vote to remain a part of the EU would likely not even be enough to keep the world from such a fate anyway; it may just postpone it.
But if the Brexit vote ends with the U.K. leaving the EU, I believe we’ll look back on the date of the vote, June 23rd, as the beginning of the global recession…
