Investors may be wringing their hands around the world over Britain's vote to leave the European Union but one of the market biggest bears stands by his upbeat call on the Brexit, saying it would be a bullish injection for global economic growth.
The stunning vote roiled markets, sending indexes plunging across the world. When asked why the markets and polls got it so wrong, Marc Faber, editor of the Gloom, Boom & Doom Report, told CNBC, "They were conducted or paid by the elite."
He told CNBC the Brexit is the best thing that could have happened, "It sends a clear message to a sick political elite and useless Brussels bureaucracy, which can't retard economic growth enough with complex laws and endless regulatory hurdles that the working people have had enough."
Faber stressed Britain leaving the EU would not be disastrous, saying that if Switzerland can operate in a "single" market and outside of the EU so can Britain. "Brexit is a victory of ordinary people, common sense and people who are prepared to take responsibility for the sake of freedom against a political and financial elite that only cares if stocks go up or down and does not care about the interests of the average British citizen." Said Faber, "We can only hope that more countries will opt out of the failed EU monster. I see only a good contagion.” Uncertainty will linger as other countries consider their options. Uncertainty always brings volatility, but it also brings opportunities.
There will be much speculation in coming days about the exact shape of Britain’s relationship with the E.U. Will the U.K. try to follow Norway, a member of the European Economic Area but not the E.U.? That would provide privileged, but not total, access to the single market, but the U.K. would still have to contribute to the E.U. budget and accept regulations drawn up in Brussels. Will it look to imitate Switzerland, which relies on individual agreements with E.U. members to gain partial access to the single market? That’s not the best result for Britain’s all-important finance sector, and Switzerland still accepts free movement of labor from other E.U. states.
Or Britain could look for inspiration to Canada, which has built a “comprehensive economic and trade agreement” with the E.U. that would provide the fullest possible (though still incomplete) access to the single market without having to send money to Brussels or offer open borders to E.U. workers. But European negotiators are unlikely to make it that easy. There are other possibilities, but they will all take time to hammer out. The E.U. will want this exit to take place quickly, however, this will most likely be a jog and not a sprint.