So Fed chair Janet Yellen wasn't wrong all these months to emphasize “risk” from a possible Brexit. Its happening should make the Fed yet more cautious, with the stronger Dollar unhelpful for American purposes, though watch out for the next payroll number (which could change perceptions anew?). 

Fed caution, if it lasts, will reinforce BoE liquidity support (rate cuts shortly from 0.5% to zero?), while Draghi at ECB may also take more support action (deeper negative rates, extending his QE bond purchases deeper into 2017, and yet more bank liquidity support?). 

Meanwhile, what lessons does Brexit offer? What genuine motivations could be observed? Do these extend to a wider western footprint than only Britain? 

In nearly every European country today there are large chunks of the electorate which are conservative and inward focused, detesting Brussels with a passion for its minute interference in shaping distant local lives, and being saddled with ever more distant refugees, many of whom may have difficulty fully assimilating, not unlike many other southern migrant inflows before them. 

This compared to a more socially tolerant leftwing, with the center of politics inclined to throw in its weight with tolerance, but this margin of late eroding. Passions have been boiling over all over Europe in this respect, with similar kind of anger and intolerance noticeable in America. 

At bottom, this is described as caused by globalisation, favouring some often stupendously, but leaving others in the dust, and this whole picture complicated by financial crises of the past decade, large-scale job destruction, slow growth recuperation, large geopolitical dislocations, substantial migration flows, and a bureaucracy micro-managing daily European life ever more closely. 

Whatever the exact nature of the strains, they clearly keep spreading, eroding past tolerance. This is leading to some confusion. For is Europe about to be rolled back to something more simple, local, national? Or is certain stuff an indication of accelerating the European Project integration? Do some people want out, at any cost if necessary? Or can they be convinced to stay? 

It would seem the anti-establishment rebellion is most advanced in Italy, where a new party (M5S) is making the biggest strides, demanding its exit referendum. Italy is a cornerstone of the Euro arrangement. Its going would seriously weaken everything. Beyond her loom Dutch, French and German elections. 

The strains inside Europe aren't only about poorly integrating immigrants. It is about regions having become economically forgotten due to creative destruction of globalisation, and the Brussels rule-making going to excessive lengths, indeed to the point of being rejected as “foreign” control over “local” lives, many people no longer taking it lying down. 

And this being a reality throughout Europe. 

What are the main takeaways for European countries about Brexit? 

Referendums may be poor ways to conduct geopolitical policy. Zealous Brussels bureaucrats may need to be reined in. A definite limit is needed on refugee streams unable to assimilate quickly, a function of education, language ability, and ability to find work. 

But also that exits are costly to those leaving. 

Whether Europe could reform its bureaucracy may at this early stage look as unlikely as SA reforming its political & policy paradigm. And even if Europe were to change, it is no given that a Conservative British government would consider another referendum about staying in. Then again, this referendum last week only has the legal status of being “advisory”. It is for a future leader and cabinet to decide whether they want to activate article 50 of the Lisbon Treaty (setting in motion exit). 

Which also highlights that the Conservatives better pick a leader that could handle such complex considerations. 

Then again, Europe may no longer be interested in having Britain back if it means endless friction about non-negotiables, apparently defined as the four freedoms, of people, capital, goods and services. It remains at this early stage totally unclear how British leadership wants to take this forward, what Europe will consider and what it will reject. There should be grounds for common interest (trade), but the grounds for disagreement may remain intimidating. 

But it gets worse than that. For the immediate outcry and post-Brexit realisation in Britain was one of financial pain, coming economic shock and fear about what looms further out in time, for its trade, for its global financial services hub, for its youth. This hasn't been lost on other European leaders. These painful costs of wanting to exit can be held up to their own Eurosceptics, restraining their rising populism. It creates additional reason not to be too sympathetic with Britain. Instead, its real pain serves a purpose, to keep greater Europe together, rather than its exit being a tool to force Europe apart. 

In the short term, the temptation is to focus on Britain and its internal strains now unleashed. But it likely will be a sideshow to the bigger drama â€" how Europe faces up to widespread rebellion in its own ranks, through reform or its lack. Or through a combination of reform and old-fashioned intimidation. 

It gives the world now four major sources of disturbances and gnawing uncertainty, major areas of reinvention and renewal â€" the US economy, Chinese economic and financial adjustment, European reinvention, geopolitical strains from the Islamic world (with Russia western border and Chinese south sea operations opportunistic sideshows?). 

Those four major footprints hold some 3 billion people. The rest of us 4 billion global citizens are bystanders, though very much affected. 

Cees Bruggemans
Bruggemans & Associates, Consulting Economists
Website  www.bruggemans.co.za
Email  economics@bruggemans.co.za <mailto:economics@bruggemans.co.za>
Twitter  @ceesbruggemans
LinkedLn