The European Union banking systems are interlinked with the wealthiest nations, funding the poorer nations. Thus, Germany, France, Austria and Holland have many loans with Portugal, Italy, Greece and Spain. Does investment banker Martin Lustgarten believe that Frexit is next?
“Reasons for Brexit”
England has always “straddled the fence” with respect to Europe. It had established its own empire and saw Europe as a potential rival. By associating itself with the European Union, the British could feel like an insider, while maintaining its independent outsider monetary policy.
The Brexit voters might have thought that the problems with the European Union, outweighed the benefits. With the PIIGS requiring more funds, some internal England investments were being ignored. Brexit was about England focusing on its own problems.
“Why French Might Leave”
The beginning of 2017 will see very competitive French elections as the leader has decided not to run again. Since Germany and France were the key creators of the European Union, they are also the primary funding mechanisms. The third primary capital source – Britain – voted to leave with Brexit.
Thus, Germany and France may need to shoulder a larger portion of the European debt. Already, France has had to lower its growth projections, due to PIIGS debt. Without England, the burden could become very dangerous politically and economically.
“Why France Might Not Leave”
If you hosted a dinner party and decided to leave early, wouldn’t that ruin the event? Of course. Because France was key in forming the European Union, it can’t really leave the organization. Unfortunately, it might need to continue to “bite the bullet.”
While the French citizens may be unhappy, the nation is kind of stuck. Investment banker Martin Lustgarten can help individuals determine how financial adjustments, must be made after Brexit. The French and Germans will need to spend a higher percentage of their budget on the PIIGS.
The French election may help the citizens feel better about their position. The European Union is still an important productive entity. Investment banker Martin Lustgarten can help you determine the best path through these murky waters.
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