A Balkanized E.U. would be terrible for America in any number of ways – our export sector, which has played an outsized role in our nation’s post 2008 economic recovery, has suffered over the last few years from lackluster sales in a slow growth Europe, as well as being hurt by the dollar’s relative strength to a weaker euro. Brexit will only exacerbate those effects, with the pound now having tanked and the euro likely to fall against the dollar as well. There’s a longer term worry, too – Britain is the main channel through which America expresses its economic and political will in Europe. Its exit from that stage will undoubtedly make it harder to assert any American agendas around trade, digital privacy, global tax reform and such in Europe.
But the folks who are telling us not to worry about the economic effects of Brexit on the U.S. have also missed a key, immediate impact of the decision – the Fed has kept interest rate hikes on hold in large part due to the turbulence abroad, and may be forced to do so now for much longer than it would like.