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28 Minus 1=27, not the end of the world

Aug 29, 2016 12:18PM ● Published by Neighbors Magazines

by John Masus

The European Union which is also the world’s largest economy suffered a major earthquake on June 23 when Great Britain voted to exit the European Union (EU). The majority, about 52% indi­cated that enough was enough. Stock markets around the world went into a nosedive. Predictions of catastro­phe were common. I don’t know if it will play out like that or it’s just looking at the worst case scenario.

I have a tendency to think that intelligent people will figure out how to move forward before the planet comes to an end as we know it. It also could be a whole new beginning of something better. The current situa­tion in Europe isn’t working that great anyway. More on that later.

In order to move forward in a productive fashion it might be important to have some history of the EU and the Eurozone which are two separate organizations.

Historically Europe and wars go way back. For years every colonial power was fighting every other colonial power. The Seven Years’ War, the Hundred Years’ War. Britain vs France vs Spain. After a while it looked like spaghetti. France was fighting all of Europe and Russia (Napoleon). Germany and two world wars, Italy want­ing to bring back the Roman Empire, and on and on. By the end of WWII Europe was exhausted and devastated.

At that point intelligent people wanted to figure out a way not only to rebuild Europe and create an atmo­sphere of safety from an aggressive Soviet Union but to also stop the wars between each other. Something even beyond NATO was needed. It took years and a lot of discussion and work but the beginnings of a solution began to form. Even now it’s still a work in progress.

The current situation:*

The EU has 28 member countries. The Eurozone has 19 countries. You must be a member of the EU and meet certain other criteria to be considered for member­ship in the Eurozone. Some members of the EU want to join the Eurozone and others do not. The Eurozone is a tighter alliance and a member has to give up their own currency and adopt the Euro. A very large commitment.

The EU was founded to provide a free trade zone among the members as well as freedom of travel be­tween the various nations. It was thought that the closer the economic ties the less likely wars would break out. That sounds good but unfortunately, other regulations came into existence with what many feel is complete overreach.

Sovereign nations gave up some of their sovereignty and turned it over to bureaucrats in Brussels, Belgium the headquarters of the EU. So elected officials in member countries have less power and more goes to the unelected officials in Brussels. In its simplest form refu­gees, immigration, heavy regulations, etc. come into play with less of what the actual country wants and more of what the EU wants. In fact the regulations seem to get overdone as the EU evolves.

For example: **The EU has guide lines for the curva­ture of bananas. The EU evidently is very concerned if the banana has too much of a curve. Also the unelected heavyweights in Brussels are not very transparent when it comes to voting on new guidelines. Of course who could blame them for the lack of transparency? If I’m on the Executive Council of the EU, I don’t want you to know how I voted on the banana curvature. It’s also not important for you to question why one week every month we move all of our staff and ourselves from our headquarters in Brussels, Belgium to Strasbourg, France for our Parliamentary session. Don’t worry about the cost. We’re the EU. We have plenty of money.

Great Britain was always a hard sell with the EU on things like this. In fact, Prime Minister Margaret Thatcher did not want to join the Eurozone and give up their own currency to adopt the Euro because, as she stated at the time, she didn’t believe the Eurozone could work properly because they would have strong econo­mies supporting weak economies to the detriment of all. She had great vision didn’t she? Incidentally, they never joined the Eurozone.

All we have to do is look at what has happened over there since 2008. The turmoil, the bailouts, the riots, the restructuring of debt with some of the member coun­tries. The motivation to bring Europe together is good but it is still a work in progress.

In fact, it wouldn’t surprise me to see other countries rethink their status and sovereignty. Great Britain always has been a pragmatic leader.

* Wikipedia.org

** Washington Post

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

John Masus CLU,ChFC,CFP is an LPL registered principal with clients in 24 states. Securities offered through LPL financial, Member FINRA/SIPC. Masus Financial Group, ltd. Is a registered investment advisor, a separate entity from LPL Financial. You can email John.Masus@LPL.com we have been located in downtown Batavia for over 23 years.

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