The EU seems hell-bent on vindicating Britain’s departure. Just consider the selection of the new president of the Eurogroup. The list of finance minister candidates put forward to replace Jeroen Dijsselbloem is hilarious.
You had Spain’s Luis de Guindos, because Spain is a bastion of fiscal stability and prudence. Not to mention the country recently dealt admirably with the political problems posed by internal fiscal imbalances… by sending in riot police and beating up Catalans trying to vote in a referendum. The same solution would’ve made the Brexit vote interesting.
Then there was Italy’s Pier Carlo Padoan, who must at least be an expert on bank failures and dodgy lending. That’d be useful when Italy’s bank’s fail thanks to their dodgy lending and the whole problem becomes too big for the EU to deal with.
But both ruled themselves out of the Eurogroup presidency. One had higher ambitions at the European Central Bank and the other is needed to stand in Italy’s turbulent coming elections. That left the EU with a choice of four. The ministers from Luxembourg, Latvia and Slovakia might’ve been a good idea. Their debt-to-GDP levels embarrass other major nations.
But the EU decided to go with option number four. I’ve mentioned Italy and Spain. Greece would be a bit too embarrassing, even for the EU. Ireland has implemented some serious fiscal reform and austerity, so that’d be inappropriate as far as the southern Europeans are concerned.
Who is left out of the infamous PIIGS?
That’s right, it chose the Portuguese finance minister to be the next president of the Eurogroup.
Mário Centeno is the first Eurogroup president from southern Europe. In a modern politician’s eyes, the lack of southern Eurogroup presidents isn’t for a very good reason, but something that should be remedied.
The Financial Times explains the significance of the appointment with the understatement of the century: “Giving the job to a minister from a former bailout economy and an anti-austerity Socialist party is certainly laden with symbolism.” It’s not symbolism, it’s lunacy.
The only good news is that he’s been an economist, not a politician, for most of his career. He’s already stated his positions will be neutral and driven by economic thinking, not political or ideological.
The other good news is that this needn’t make you panic. If we ever manage to leave the EU, it’ll only make Brexit look better.
But have a heart for our former allies inside the bloc
Swapping a fiscally responsible Dutchman for a profligate Portuguese socialist must leave the other fiscally sensitive nations terrified.
Especially when the EU is pushing for a new bailout fund. The European Monetary Fund (EMF), it wants to call it. It’s already decided how it’d like to spend the money it’ll have. But it’ll still working how to get it first. Only the countries paying for the thing are resisting. Germany is far from keen.
The idea of taxing people in order to provide loans to EU governments is a bit bizarre. Why not just leave people alone? They tend to flock to government loans during crises anyway. But only of credible borrowing countries. The whole point of the EMF is supposedly to link loans to economic reforms. But of course economic reforms mean you shouldn’t need loans…
It’s all very odd. Until you read a book about public choice theory and start to recognise the incentives that political institutions face. They don’t care about solving problems or doing what they’re supposed to.
They care about survival, of their jobs
Imagine, for example, if everyone stopped parking illegally, or nobody was poor. What would government departments and all their employees do? Get a real job that is subject to the accountability of market forces? Never.
In the end, the EU is just trying to expand. It’s the same as any government body. Its measure of success is not the success of what it rules over, or the resolution of the problems it’s trying to solve, but the amount of control it has. It’s size.
Which is of course what Britain had a problem with. The encroachment of the EU into its own sphere.
Ambrose Evans-Pritchard found Belgian historian David Van Reybrouck who explains Brexit and euroscepticism in a way much of the world can empathise with. Largely thanks to British misbehaviour in the past.
“Life in Europe in 2017 is resembling more and more what it was like under colonial administration. We are subjected to an invisible administration that shapes our destiny down to the tiniest details. Should we really be surprised that it is leading to revolts?”
Ironic that Britain should subject itself to the rule it once subjected much of the world to.
Two weeks ago we dreamed up a letter from Theresa May to the EU. It agreed to the £50 billion divorce bill by framing it as badly needed financial aid for the EU from a prospectively prosperous Britain.
This week, I’d like to propose a letter from May to our future trading partners in the US, Australia, India and Canada.
Dear former subjugated,
You were once part of the British Empire. You all sought your independence as a means of establishing national sovereignty. The idea that a people should rule itself is the foundation of a democratic nation state. Guided by this principle, your nations have become great indeed since declaring independence.
As you well know, we have become not so great. We gave up our independence, democracy and nation state. Our laws, financial affairs, regulation, budgets and much more are now run out of Brussels, not Britain. Countries we vanquished or liberated alongside you now take our money and rule us. We can’t even make trade agreements with you. Only our currency survived the onslaught from the continent.
Last year, the British people declared an end to this foreign rule, much as your own people did once. We have voted to leave the European Empire. We seek to join you now, as an independent and self-governing nation. Independent from foreign rule and influence, fit to govern and make laws for itself. We want to be like you.
Much like your independence struggles in the past, this process has been a needlessly painful experience. It must make you laugh till you cry to know we subjected ourselves to these humiliations willingly – humiliation we once pressed upon you. As Gandhi or Richie Benaud might’ve said, “Karma sucks.”
But Britain is now set to return to greatness. Greatness in the form of international co-operation, trade, partnership and peace in the spirit of equals. No more ruling or being ruled – neither is the solution to international tension, as you well know, but we forgot.
Although our joint history, both distant past and very recent, has often been marred by conflict, in the fields of war as in the outfields, we believe that these experiences must give you a unique sympathy for the position Britain finds itself in. Quite frankly, we need your help in our own fight for independence.
Inside the EU, such a request for help would imply funds, interest free loans, aid, bailouts and back-door bond purchases from the central bank. This is not what we mean by “help”.
All we ask for is open trade, co-operation on security and Josh Hazlewood.
Kind regards,
Theresa May
Prime minister of the United Kingdom
Bitcoin commentary bubble continues
Today, my girlfriend asked me about bitcoin. This is by far the most convincing sign yet that the cryptocurrency is in a bubble.
But the story doesn’t end there.
Jamie Dimon is the CEO and chairman of the US’s biggest bank, JP Morgan. Months ago he called bitcoin a “stupid” “fraud” that is “worse than tulip bulbs” and “will blow up”. He threatened to fire anyone who said otherwise.
Along comes JP Morgan analyst Nikolaos Panigirtzoglou, who says otherwise. According to him, the adoption of bitcoin into COMEX and NASDAQ trading markets “has the potential to elevate cryptocurrencies to an emerging asset class,”. That’d imply people should own some of the stuff as part of a diversified portfolio. Panigirtzoglou even compared cryptocurrencies to gold as a way to store your wealth.
One last bitcoin anecdote. Back at our conference in September, Bill Bonner was asked about bitcoin too. His story was much the same as poor Dimon’s, only more embarrassing.
Bill’s son pitched for the family office to invest in bitcoin at one of their family meetings. In the end, the wiser and older guardians of the family funds decided to allow a tiny allocation of money to bitcoin in order to teach the youngster a lesson about investing.
Next time around, he’d think twice about fads like bitcoin
But the price rose. Then it rose further. And further. “Now he thinks he’s a genius,” Bill told the audience miserably. You can see the look on his face here as he tells the audience about it.
But can you see the trend emerging between those three stories, dear reader? We fuddy-duddies with our gold and stocks, are we just behind the times?
Perhaps. But after getting sucked into Pokémon cards and Tamagotchis shortly before those bubbles burst, I doubt it.
The good news is, there’s a compromise. One Bill and his son can meet halfway on.
You see, the real power of bitcoin technology has barely gotten started. It’s not just cryptocurrencies that distributed ledger technology (DLT) can be applied to. But thousands of other things too.
Imagine if banks could run without back offices – their biggest cost. If stock exchanges settled instantly, not days later. If hospitals all had your records at their fingertips without invading your privacy.
Thousands of DLT patents have been registered already. That means hundreds of companies have the potential to see their share price go bitcoin as the technology is adopted in places other than cryptocurrencies.
You can find out which companies are set to soar here, from one of bitcoin’s earliest investors. It’s the next stage of the boom.
Until next time,
Nick Hubble
Capital & Conflict
Related Articles:
Category: The End of Europe