The Hokey Pokey

It took just six hours for the FTSE to recover, quite a feat indeed.  Hopefully now the Bank of England will not have to step in with a £250 billion injection.

The FTSE 100 recovered from the initial shock of Britain's decision to leave the European Union to end 3.15% lower at 6,138.69 which, to add context, is higher than last Friday's close.

However it is not all roses just yet there are still lot of companies that have not recovered from the free fall on Friday morning (see the article in full above).  Is it however just a storm in a tea cup or perhaps the quiet before the storm, who knows.

It is however definitely the end of the world as we know it or at least to 48% of the population whereas 52% are looking forward to brighter future and there is some talk of putting the 'Great' back into Britain.  I am pretty sure that was when Crackerjack was on BBC1 at 4:55, Friday or Saturday I cannot remember.  Still anything is possible really now we have put chaos into the driving seat or is that Boris.

Whilst the FTSE has recovered somewhat the Pound is:

The pound was down 9% against the US dollar and down around 7% against the Euro.

Which will reduce our spending power abroad, personally I prefer the British Summer.  I am still hoping for a really good thunder storm, I think Thor is currently on Economy 7 these days.

The irony is the rest of the universe have not noticed they were watching the other side.

Cock Up!

What are the immediate effects of Britain leaving the EU, aside from Nigel Farage's u turn on NHS spending:

“No I can’t [guarantee it], and I would never have made that claim. That was one of the mistakes that I think the Leave campaign made,” he said.

When it was pointed out that Vote Leave emblazoned the £350 million claim onto the side of a tour bus and drove it around the country, Mr Farage said.
“It wasn’t one of my adverts – I can assure you! I think they made a mistake in doing that.

Translation is pretty basic: GOTCHA!

In other news the FTSE dropped by more than 8% which is a lost of £140 billion wiped from the market, taking us back in time to 1985.  The Bank of England responded saying that they intend to inject £250 billion back into economy to stabilize the markets.  The problem with that is you are effectively printing more money which will devalue the Pound further than it already has dropped today.

Inflation will rise also which is never a good thing:

"Fall in value of savings. If people have cash savings, then inflation will erode the value  of your savings. £1 million marks in 1921 was a lot. But, two years later, your savings would have become worthless. High inflation can also reduce the incentive to save.

Menu costs. If inflation is very high then it becomes harder to make transactions. Prices frequently change. Firms have to spend more on changing price lists. In the hyperinflation of Germany, prices rose so rapidly, people used to get paid twice a day. If you didn’t buy bread straight away, it would become too expensive. This destabilizes an economy.

Uncertainty and confusion. High inflation creates uncertainty. Periods of high inflation discourage firms from investing and can lead to lower economic growth."

Quote from: Economics Help

Increased inflation may force the Bank of England to raise interest rates in attempt to attract investors back to Britain.  Which is good thing for savers and bad thing for people with mortgages and those looking to buy. How I wish I made more over-payments on my mortgage instead of enjoying myself.

A lower Pound does mean UK exports will be cheaper in theory although should we exit the single market in 5 years time the tariffs we will end paying will probably offset the profits achieved.  UK imports however will become more expensive and we do import a lot.  Obviously this will push prices up!

In April 2016 the value of exports (EU and Non-EU) increased to £25.0 billion, and imports (EU and Non-EU) increased to £41.0 billion, compared with last month. Consequently the UK is a net importer this month, with imports exceeding exports by £16.0 billion.

Quote from: HM Revenue & Customs

Well done to 52% of the population of Britain you have managed Cock Up the economy, you have nobody to blame but yourselves this time.

This is just the thin of the wedge!