June 28th, 2016
The Prime Minister has just announced his resignation.
A Conservative MP who voted to leave said we must remember that nothing will change.
Everything will change and in ways which we cannot predict we cannot know what we cannot know. The economy is characterised by positive feedback. This means a small change in one part of the system is magnified by the systemic response.
As I write this, global stock markets are crashing, sterling has fallen to $1.30, and Moody’s have said the UK will lose its AAA rating. These are knee jerk reactions but they are destabilising: positive feedback has already been triggered.
The Bank of England has made soothing noises and will supply short run liquidity to prevent the wholesale market from seizing up. Boardrooms round the world will be trying to evaluate both the risks and the opportunities.
Everything will change, and it has already started.
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