This is a rush transcript from "Your World," December 5, 2016. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Well, so much for market predictions.
Welcome, everybody. I’m Neil Cavuto.
And the feeling was that if the Italian reform effort to speed up its political process went down to defeat, which it did, handsomely, I might point out, by about a 6-4 margin, then the markets would tank not only in Italy, but in Europe. It would extend pretty much worldwide.
One little footnote. It didn’t happen. Why didn’t it happen, even when the Italian prime minister submitted his resignation? That would be like you leaving your company, forced out, and everyone applauds. Ouch.
The Italian for ouch is ouche. Just thought you would know.
CAVUTO: All right, we have got the European Parliament member Daniel Hannan, force behind this movement years ago.
And, Daniel, wow, that’s a great thank you to the prime minister. He tries to speed up a process, but a populist movement overwhelms him and now he is out. What do you think?
DANIEL HANNAN, EUROPEAN PARLIAMENT MEMBER: Well, his basic problem is that, incredible as this is, Italy has not really grown since it joined the euro 17 years ago.
Italy’s economy is about the same size now that it was in 1999, and his fingerprints are all over that murder weapon. He was the guy who was the Brussels candidate here. The E.U. loved him. He said, I’m working for the united states of Europe.
So, voters were not going to reward someone standing on that shtick in any circumstances. And he has paid the price.
CAVUTO: Why don’t you think, Daniel, the markets had the same reaction they did initially to Brexit, when your fine country decided we don’t want to be part of this club anymore? What happened?
HANNAN: There’s a pattern here, isn’t it? Brexit, Trump, all the experts tells us that the sky is going to fall in and it will be a disaster and so on.
Then, of course, reality asserts itself. I remember we were told before Brexit, if you vote to leave, there will be an immediate recession. There will be a recession in 2016. Obviously, that has not happened. We were told unemployment would rise. In fact, it’s at its lower level ever.
We were told that the stock exchange would collapse. We weren’t told that that would be the Italian stock exchange and that British stocks would be the best performing in Europe. And much the same here, as I understand it, when Donald Trump was elected.
And the experts were implicated I think in having tied themselves to this kind of euro-corporatist vision. And they have been shown to be wrong.
CAVUTO: I heard from one representative today on FOX Business, which, Daniel, if you don’t get, you should demand.
But, anyway, his basic take was this. Don’t get too cocky here. The populous worldwide shouldn’t react to this as a great market cure. Oh, sure, your Dow will likely hit a record. At the time, that’s what he was saying. And, sure enough, it did. Other markets might bounce up. Sure enough, they did. But this is just a short-lived phenomenon, that the longer-term trend is down because the world, to quote him, is going to hell in handbasket.
What do you say?
HANNAN: No one has yet been able to overcome the economic cycle. There’s always going to be boom and bust.
But what we are going to find is that, in my country, all the downsides are going to be attributed now to Brexit by the experts and all the good sides are going to be...
CAVUTO: That’s true. I didn’t think of that. You’re right about that.
HANNAN: And eventually the people who are saying, oh, just wait for it all to go wrong, of course, eventually they are going to be proved right, because, cyclically, that is what happens. And there will be an ouche, as you Italian Americas say.
CAVUTO: I’m wondering, do you think that part of this fear was that each country is building up its own walls?
Now, I always had a problem. I know you would always explain to me how this whole European Union was supposed to work. And you were never a fan. This idea that if one country is having problems, you can either cut interest rates, devalue your currency, whatever you want to do, but you can’t do that when you’re all part of the same club and you’re all sharing the same currency.
So on paper, it never seemed to make sense. Is the reality here that, depending on how things go in a couple of few closely watched contests next year, that this whole European Union itself, you can stick a fork in it? What?
HANNAN: Well, the European Union in a sense has already failed.
The two biggest projects that it rested on were the euro and the Schengen agreement, which opened the borders. Both of those turned out to be fair- weather schemes that’s didn’t survive the first storm. Euro was cruelly shown to be a disaster when the debt crisis hit, and of course Schengen is crumbling under the weight of the migration crisis.
The promises that were made to voters by all the experts and the politicians have shown to be false. But I’m very optimistic about Britain. As we cut loose from that particular mess, we’re now in a position to be able to have free trade agreements with our friends here and further afield.
And we can use Brexit to lift the whole world economy by revitalizing the stalled world trading system. And that fills me with optimism about the future.
CAVUTO: Dan, always good having you. Thank you very much. If I don’t see you again, have a merry Christmas.
HANNAN: Thank you, Neil. Same to you.
CAVUTO: Daniel Hannan.
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