By now, everyone is familiar with Brexit, Britain’s decision to leave the European Union. In wake of this decision, Britain has given momentum to the movement supporting Texas’ succession from the United States. This movement is driven by a lot of similar issues that resulted in Brexit, including feelings of intrusive federal government, a weak job market and stagnant wages, and dissatisfaction with the current political and economic landscape. During the Brexit vote, the hashtag #Texit blew up. It was present in nearly 2,000 tweets between 7:00 and 8:00 a.m. London time (1:00 a.m. in Dallas).
Many people may be thinking, “That’s absurd! Texas can’t secede!” But, in her recent article “Opting Out”, financial expert Dawn J. Bennett points out its possibility and the circumstances that are causing this push for secession. She notes that Texas has the 12th largest economy in the world, just behind Canada and ahead of Australia and South Korea. Texas has a GDP of nearly $1.7 trillion and grosses just as much in exports a year as Switzerland.
The Context For Texit
After the Brexit vote, global markets took a hit, mostly in developed economies. Bennett explains, “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. ”
Another reason for the upsurge in talk about for Texas’ succession is our negative economic data points, which people are catching onto. Consumers are more bearish about expectations for the economy. American-made durable goods orders dropped recently dropped 2.2%, and core capital orders sank. Around 2 billion dollar bonds in Puerto Rico and coming due, and it’s been said that they need help or else will default on their obligations. They’re lobbying in Washington for Congressional approval of a bill intended to help them pay them. Additionally capital is rapidly shifting. Fortunes are being made and lost. While opportunities are present, they appear and then vanish quickly.
Bennett recommends examining these issues in context of your own personal situation. “How do you weight 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.”
She continued, “This should be an opportunity for our leaders and central banks, and even our political candidates. Instead of grandstanding, or hiding their heads in the sand or over-stimulating by printing money, this could be an opportunity to be open and share, to address the omnipresent sense of betrayal and mistrust of politicians and economists. To speak honestly, and listen carefully. Because if they don’t start, more and more of us will simply choose to opt out.”