“Pournelle’s Iron Law of Bureaucracy“ states that in any bureaucracy, the people devoted to the benefit of the bureaucracy itself always gain control…… and those dedicated to the goals the bureaucracy will gradually have less and less influence and often will be eliminated entirely.
The #EU administration in Brussels and Strasbourg is such a bureaucracy…….and if it continues to be ‘fed’, it will soon exist for its own sake and behave like a quasi State.
In fact, it is comparatively easy to see that the process has begun and is already at quite an advanced stage.
The EU Remaniacs are handing it to the Brexiteers!
Most of us have become used to the rather unedifying sight of Cameron and Osborne (often looking silver-spoon-awkward in hard hats and high-viz jackets) talking-down the United Kingdom by expressing their belief that without continental support, we are useless, worthless scum who would surely perish outside the EU.
They have both called on various organisations and individuals to reinforce their doom-laden scare-mongering….but whatever possessed Chancellor Gideon to seek approbation from the Chief Executive of a company which was at the epicentre of the 2008 financial crisis and so far, has managed to rack-up nearly £30 billion in fines for financial naughtiness?
Producing JP Morgan’s CEO Jamie Dimon like a rabbit out of a hat and then sitting and simpering while the American spouted threats of redundancy, general economic malaise and national catastrophe was arguably Osborne’s greatest-ever blunder and a sure-fire vote-winner for the Brexit camp.
It’s all very well inviting one’s likely future employer to the party but Osborne’s judgement has now been exposed to be nearly as suspect as his arithmetic and may have finally bought him a well-earned one-way ticket to political oblivion.
He and his sidekick Cameron have not-only mismanaged the whole “Stay in” campaign but in doing so, have trashed their own already flaky reputations and currently appear to be handing votes to the Brexiteers by the shed load.
Both Cameron and Osborne seem to be working under the misapprehension that they are liked and respected not only by Brussels but by those uber-nationalistic, self-serving, Brit-hating European leaders.
They should both wake up and smell Der Kaffee because they are being USED.
Cameron & The EU – more Chamberlain than Thatcher?
Have you noticed that in the post-WW1, post-Empire era, the British Establishment’s default position in respect of any perceived trouble from a foreign “authority” has been appeasement?
Remember Edward VIII cosying up to Hitler? Chamberlain’s piece of paper? Churchill handing Eastern Europe to Stalin?
More recently, the policy of appeasement in North Africa and its despotic dictators has resulted in the out-of-control tsunami of mass migration.
Thirty-five years ago, the United States put enormous pressure on Margaret Thatcher to pursue a policy of appeasement towards Argentina after it had invaded the Falklands. She had the courage to ignore them. Yes, there were sacrifices but we prevailed and can do so again.
‘Appeasement’ used to be a conscious policy designed to avoid confrontation and war…. and with very few exceptions, that is the policy which is still prevalent. For instance, consider Putin, Crimea and our collective inaction.
Today, the Establishment believes that if the United Kingdom exits the European Union, there will be an economic and social war….and that is the single premis upon which we are being asked to vote to remain within the #EU.
Before the Brexit campaign began, I, along with many others felt very neutral, assuming that whether we were IN or OUT would make little difference to our lives – and that is probably far nearer the truth than EITHER side would have us believe.
However, having listened to Cameron and Osborne and their Establishment friends describe a Brexit-fired apocalypse and the dystopian neo-Dickensian gloom into which we would be plunged if we had the temerity to vote against the wishes of Frau Merkel, the Brussels Commissars and the Banking establishment, many of us have changed our minds.
Our vote on June 23rd is not merely an IN-OUT vote or even an expression of the majority’s anti-Cameron sentiments……It is a LEGACY vote. The vote is not just for us and should certainly not be decided on the basis of the Establishment’s dire forecasts.
Our vote will be for the generations to come and THEIR place in a world.
A world which is rapidly degenerating into chaos – with The Middle East, North Africa and mainland Europe at the forefront of these seismic and probably irreversible changes.
A sharpish Brexit seems to be the only option.
Darwinism and EU Economic Theory
The European Union is languishing in a perpetual economic autumn whilst bankers, with the connivance of politicians, apply rudimentary quack remedies such as Quantitative Easing in the vain hope that somehow they’ll skip a couple of seasons and as if by miracle, an economic summer will materialise out of the murk.
Last year I wrote that modern global economics owes as much to Chaos Theory as it does to Keynes and has mutated beyond the competence of mere politicians. Economic evolution has overtaken the ability of those who traditionally administer the remedies when economic sickness hits.
The mechanisms which are needed to be put in place to even begin to have any effect on economies are so diverse and complex as to make present economic theory, especially that tainted by political dogma, almost redundant. The best that a politician and his advisers can do is to prod a small corner of the economic matrix in the hope that eventually a positive effect is somehow brought-about.
It is fair to say that politicians are no longer shapers of an economy but have now been diminished to mere observers.
The post-war years have seen such an incredible acceleration in all the factors which affect us – from technology to global financing, that it is only now becoming apparent that old solutions will NOT cure new problems. Sometime in the not-too-distant past, the “butterfly effect” became the wing-flap of the American Eagle – until the eagle itself became subject to bouts of economic coma .
Now it is probably the hot-breath of the Chinese dragon which will burn economies.
It has been universally established (even by China and Russia) that Capitalism is the way forward. However, it is no longer the gung-ho, asset-and-natural-resource-stripping capitalism of the past. A democratic and more ethically accountable flavour of capitalism is now needed.
For instance, “business” ought to be an activity which strives to maximise market share and commercial efficiency, i.e it should be inwardly-focused with profits as the essential by-product which is then used to disseminate wealth.
What we currently have is a business model where the rationale is primarily concerned with the maximisation of shareholder profits which concentrates wealth into comparatively few hands. Hence the 21st century craze for moving money in order to generate money without the added old-fashioned complication of production. A virtual world generates virtual money with a virtual value.
“Ah!” you’re thinking. Socialist!! Nothing could be further from the truth.
Let’s keep it simple and look at the two extremes.
The Left (Socialism, Labour, U.S. Democrats, EU) dreams of public or community ownership and what you might call “forced distribution” which unfortunately needs to be underpinned by bureaucratic control and masses of public expenditure.
The Right (Conservatives, Republicans) dreams of privatisation. That has absolutely nothing to do with the individual. It is to do with corporate power.
So, at one extreme, we have unsustainable and forever expanding bureaucracy and on the other we have unacceptable (to the individual) accelerating corporate power.
Western political systems have now become nothing more than a tension between those two extremes. For instance, witness the “Punch and Judy” politics of America and the United Kingdom, as currently exemplified by the quality of the United Kingdom’s EU referendum debate and the antagonistically offensive quality of the USA’s 2016 Presidential campaign.
Currently, there isn’t a better example of extreme corporate power than that exhibited by the banking system. A debt-fuelled crisis, which was accidentally engineered by the banking system ………aided and abetted by politicians who continue to have absolutely NO idea how to deal with it, except by assuming that the problem has gone away. They have adopted the “rabbit-staring -into-headlights” technique and have even been reduced to appealing to the bankers better nature, by inviting central banks into the economic driving seat!!
Paradoxically, the only people who will be able to clean-up the financial mess are financiers. Unfortunately, the type of financier that is needed is not the traditional self-serving, avaricious, unprincipled type which we have all come to love.
It is an as yet undiscovered species. The socially responsible financier who, with the assistance of the politician can generate new ideas which will, in turn, evolve into a NEW Capitalism which places the individual and not the corporation at its nucleus.
The financial crisis happened in spite of politics and will eventually cure itself in spite of politics. Chaos has its own mysterious mechanisms.
It is obvious though that the Darwinian aspects of world economics have outstripped the development of both our politicians and our economic theories.
…..and as China is demonstrating….it is the Survival of the Fittest…..and as the #EU is clearly demonstrating, the answers do not lie in organisational chaos, bureaucracy and huddling for political and economic warmth with people you wouldn’t normally invite into your home.
EU lies? Like S***to a Blanket……..
Listening to many of the Brexit-related vox pop on the news, especially from the older generation makes you realise that not only are many of the interviewees a bit thick , but that many do not appear to read past the headlines…… and that is exactly what Cameron and Osborne are tapping into.
They fully realise that all they have to do is trot out a few memorable short sentences containing lots of “Could” and “Probably”, in the knowledge that all the audience will hear is “job losses”, “recession”, “lower house prices”, “self-destruct” etc with the latest suggestion being that leaving the EU would be “immoral”.
Heavy shit! Of course, that is exactly what it is….Shit.
We are listening to two guys whose prediction record matches that of Dr. Dionysius Lardner who said in 1830: “Rail travel at high speed is not possible because passengers, unable to breathe, would die of asphyxia.”
Or as recently as 1977, when Ken Olson, chairman of The Digital Equipment Corporation predicted: “There is no reason for any individual to have a computer in his home.”
Neither Cameron nor Osborne has any idea what is going to happen next month. Never mind in twelve months’ or five years’ time.
Because of their tactical rather than strategic mentality, they are predicting what they think will happen to the British economy in the year or so following Brexit.
Proper leaders would be thinking very long-term but of course Dave and Gideon only have to frighten this generation of voters and will not have to apologise to future generations who may find themselves unable to escape from the economic and sociological straitjacket of EU membership.
The fact is that neither Cameron nor Osborne is capable running the United Kingdom without the reassuring comfort of Brussels and its rapidly mushrooming and already considerable population of commissars.
We should also notice that no one who is in favour of remaining within the EU club is even attempting to describe the socialist utopia which is being created right under our noses.
Where is the talk of increased incomes, a recession-free United Kingdom, more employment, a prospering NHS – all the things which are the corollary of the doom-infused nonsense which we are being fed?
Is it because negativity, doom and ruination are not-only more memorable but stick in the mind like s*** to a blanket?
The Ugly Spectre of EU Self-interest……
A recent survey has indicated that most companies based in the eurozone believe a British decision to leave the European Union would hurt the region as it struggles with a sluggish economy and a migration crisis.
79% of firms based in the eurozone said a Brexit would be bad for the area, with less than 4% saying it would have a positive impact, according to the report from accountants Grant Thornton.
“What’s abundantly clear from our research is that European business leaders overwhelmingly view a Brexit as a negative development for the EU,” Francesca Lagerberg, a senior tax partner at Grant Thornton, said.
She said business confidence was strong considering the various potential threats the region faced from low growth, high unemployment, migration and a potential Brexit.
“Any one of these flaring up over the next few months could see that optimism wobble if the economic shocks undermine business leaders’ ability to plan and invest,” she added.
The survey was based on interviews with more than 2,500 senior executives conducted in January and February.
The result is in keeping with the view of senior business leaders in Britain who are largely in favour of Britain staying in the EU. Most economists expect an exit would deal a blow to Britain’s economy in both the short- and longer-term.
The Grant Thornton report showed 68 percent of British-based firms believe Brexit would have a negative impact on Europe.
Parts of the eurozone have struggled with a debt crisis in recent years which, on the heels of the global financial crisis, has stifled growth and left many unemployed. Unfortunately, quite a high percentage of Europe’s unemployed appear to be headed for the UK.
In addition, many recent migrants to the EU stated their first choice of refuge as the UK. Many of those will be arriving here in a few years….when Germany and other states hand them EU citizenship.
The region as a whole remains at odds over how to contain the continuing flow of migrants to the region.
It is regrettable that neither the UK political leadership, nor the Brussels Commissars have any idea about Managing Change on a macro scale because the sociological change within the #EU is probably they biggest issue that will need to be addressed within the next five to ten years.
Both sides are doing their best to frighten the electorate into voting for their point of view. There has also been an attempt at what can only be described as The Blackmail of a Nation – especially by the IN camp and the leadership’s foreign banking and political friends..
The fact is that BOTH sides have valid arguments but instead of helping the average UK citizen to make a reasonable choice whilst at the same time preparing for change, BOTH sides prefer to persuade through the medium of fantasy rhetoric, insinuation and slur.
Meanwhile, mainland Europe, surrounded by the Ring of Chaos, which encompasses Ukraine, then east to Turkey and south to North Africa, sits and waits for more handouts and UK opportunities for its unemployed.
Brexit – Summary , so far……
Cameron’s ‘in crowd’ has expanded offshore to include the foreign senior banking community. Here in the UK, the ‘IN’ conspiracy has now recruited some senior corporate ‘suits’.
Meanwhile, Boris is looking increasingly shambolic and isolated plus, he does not appear to be appealing to the great unwashed.
The two main messages are either “Watch out for hordes of migrants and we could do it alone if we wanted to” or, more worryingly: “The UK is effectively imprisoned within the #EU with no way out without damaging EVERYTHING!”
Both messages are negative – especially now that it would appear that the Cameron camp has admitted that even if we wanted to leave – we can’t. We’re trapped!
Today it was the turn of Spain’s 800,000 permatanned British residents to have the fear of God put into them…..as if the Spanish economy would even think about risking the loss of such a vast slice of revenue!
The one aspect of the debate I cannot agree with and that is the perceived danger from millions of low-level migrants. Once the UK economy collapses, no-one will want to come here.
Now it’s just a matter of waiting for the ECB’s Mario Draghi to pontificate.
Brexit Fun with Statistics
Good to see the Cameron #EU ‘In-Crowd’ adopting the official government policy of spouting meaningless and spurious statistics in order to try and prove that being a member of the European Union is compulsory if one is to maintain economic success , which, incidentally, is something which continues to elude the United Kingdom – in spite of Chancellor Gideon’s creative use of percentages.
Here are some more numbers:
- Six out of ten of the world’s biggest economies are not members of the EU. If the UK Brexited, SEVEN out of ten of the world’s most powerful economies would not be members of the EU.
- According to Bloomberg , of the world’s top ten fastest-growing economies, not one is a member of the EU.
- If we look at real GDP growth rate, the highest performer within the EU is Ireland and is placed only 44th(!) in the world.
What Cameron is REALLY saying is very simple: He does NOT believe that he, Chancellor Gideon and the rest of the current crop of Westminster PPE and History Grads have the collective ability to run an economy without the bureaucratic and legal crutch of the Brussels Commissars.
Lagarde, Brexit & Panic
It was the IMF’s Christine Lagarde’s turn today.
She says that Brexit would have “assez mauvais to très , très mauvais” consequences but was not particularly specific.
“Pretty bad to very, very bad” is once again a judgement and not a prediction….and if she wants to see “very, very bad”, she should keep a closer eye on Greece’s problems!
Make no mistake, just like Mark Carney before her, prior to issuing her predictable statement, she would have been on the phone to Chancellor Gideon or David Cameron for approval of this latest piece of the well-choreographed scaremongering pro-EU referendum jigsaw. So WHO is next to have been recruited by the ‘IN’ camp?
One suspects that either this weekend or possibly on Monday, it will be the turn of the ECB’s Mario (il Papa) Draghi to instil a bit of ‘panico’ among us gullible Brits!
It started with Obama and they’re travelling East……..
Carney in the Cameron Corner?
The (hired by Chancellor Gideon) totally impartial Governor Mark Carney of the oh-so independent Bank of England said today that if the United Kingdom left the Bruderschaft of the oh-so economically-stable #EU, the risk of leaving “could possibly include a technical recession”……….which by implication suggests that if we stay firmly wedged in Bundeskanzlerin Merkel’s ample #EU cleavage, the risk of recession will be gone! Good news !!
David Cameron then said the warning amounted to “a very clear message” of the dangers of Brexit.
Some have declared that the Governor was spouting unwarranted and unmitigated bollocks with several calling for him to be sacked.
In reply, the Governor’s spokesperson said the Bank had “a duty to make its judgments known.”
As the Bank of England has been so incisive and accurate in all of its previous economic judgments and predictions – the 2008 economic collapse, the subsequent recession and the collapse of RBS, to name but a few – I cannot think of any reason why we should not take Governor Carney’s latest prophecy (it’s NOT a prediction!) VERY seriously. 🙂
I do wish that @bbclaurak at least made an EFFORT to be non-partisan in the #EU in-out referendum debate. She’s never struck me as a #Cameron groupie….or perhaps she just has issues with that other great champion of the poor and oppressed, #IDS?
Believe it or not, I have no particular view as to whether or not we should remain within the European Union but if we are minded to believe the sharp suited Westminster Europhiles (and Jeremy Corbyn), we should not take what is looking increasingly like the foolhardy and dangerous option of Brexit………. Of course, the other team is busy painting a picture of an economic Utopia, unencumbered by the tyrannical drag-chute of EU integration.
The only unsurprising phenomenon about the whole debate is that because we know of no other way, two teams were hastily put together and, as is the case with every other debate, confrontation has been the order of the day.
I would have considered David Cameron far more statesmanlike had he addressed the nation in a far more neutral way, outlining the pros and cons for both possible outcomes. Unfortunately, we only know one way and that is through the medium of opinion-fuelled conflict. Hence the Boris and Cameron camps both treating the debate more like a prizefight rather than what could have been a comradely discussion.
The most outrageous claims have come from the ‘stay in’ camp.
‘Each family will be £4300 per year worse off’, ‘mortgage rates will increase’, ‘house prices will fall’, ‘we are safer within the European Union.’ etc. are all no more than conjecture.
The fact is that whether we are in or out will make little difference to the average man in the street and given the politicians’, pollsters’ and economists’ track records on any sort of prediction, we should all be wary of all the nonsense which has been produced as implied ‘fact’.
Sadly, most of the United Kingdom’s voting population is not very ‘politically-bright’ – hence the outrageous claims made by both sides. It is the only way that they are able to communicate with the slack-jawed Mr and Mrs Average because proper economic and sovereignty arguments are far too complicated without being reduced to single sentence soundbites.
If only the government had had the foresight to produce a single ‘for and against’ document, clearly showing that the argument is largely opinion rather than fact-based, Mr and Mrs Average would not have to be subjected to the increasingly hysterical rhetoric of the Westminster wide-boys.
However, tell someone that their property value is going to fall and contrary to world trends, interest rates are mysteriously going to increase, you begin to understand that scaremongering by both sides is the only way forward.
What is it that we are being asked to keep or abandon?
What is in place at the moment is a self-amplifying bureaucracy which has arrived at the stage where it exists to perpetuate itself rather than be there for the good of the European Community. We have a European legal system whose main function appears to be to impose itself on EU member states plus a European economy which continues to be in terminal decline. There is a massive migration problem-without-end, with the prospect of an increased internal EU migration issue as a result of the proposed future membership of Turkey and Albania. That is the organisation of which we are currently a member.
The question is very straightforward: Do we want to belong to a totally unaudited association of failing and near bankrupt economies, overrun by unwanted (yes!) migrants and presided over by an inwardly-focused, self-amplifying bureaucracy – or should we be looking outwards to the rest of the world whilst maintaining relations only with the European states we can and WANT to do business with – without worrying about regulations governing what we eat or the amperage of our hairdryers and toasters!
The MOST frightening aspect of leaving the European Union is no more than a quite natural fear of CHANGE.
With very few exceptions, politicians have clearly demonstrated that they are incapable of preventing crises and they are certainly very frightened of being accused of creating a crisis such as they imagine might occur if we left the EU.
They surmise, quite correctly, that they would not be able to deal with it, and it is no accident that both David Cameron and George Osborne are at the desperate forefront of trying to keep us in the European Union because they would be the ones expected to deal with any Brexit fallout for which they are not professionally equipped.
Their motivation is fear, whereas the leaders of the Brexit campaign are driven by no more than a misplaced ambition to rule.
The stakes within the EU debate have very little to do with pragmatism or principle. They are to do with power and we as voters would do well to remember that.
The subtext of the Brexit debate is a battle for the leadership of BOTH of our main political parties.
Osborne’s Crassness and Stupidity
All that Chancellor Gideon has achieved by stating that if the UK leaves the #EU, MORTGAGE RATES will increase, has been to highlight his stupidity and total lack of understanding of the mortgage market. Presumably he is implying that if we remain in the EU, mortgage rates will NOT go up?
However, it was good to see that in preparation for any backlash, he made the point that his weasel words were, in fact, quoting what “The Americans” said.
Point of View
Remember that whatever your opinion, whether it’s the #EU hokey-kokey debate or Mr Cameron and his deep and (so genuine!) offshore love for his father, it all depends on where you’re standing …your POV……………… For instance:
Dog: ” I love the way I’ve trained that nice Dr Pavlov to smile, make notes and give me a treat every time I drool”
Excellent #EU insight
The question is very straightforward: Do we want to belong to a totally unaudited association of failing and near bankrupt economies, overrun by unwanted (yes!) migrants and presided over by an inward-focused, self-amplifying bureaucracy – or should we be looking outwards to the rest of the world whilst maintaining relations only with the European states we can do business with – without worrying about regulations governing what we eat or the amperage of our hairdryers and toasters!
Here is a link to Euro MP Daniel Hannan’s excellent revelations which we should all read: http://dailym.ai/1S2A0P6
David Cameron and George Osborne both appear to think that meeting other politicians somehow creates international trade. The fact is that politicians have very little influence on commerce and none at all on corporate trade-related decision-making.
The three months to September 2015 saw British exporters experience the weakest growth in orders since the second quarter of 2009 when the country was in the grip of recession.
Admittedly, manufacturing represents only about 10% of GDP but nevertheless it is worrying to see the UK’s export drive going into reverse at exactly the time when the government is dispensing such positive economic mood-music.
Yes, we understand that the UK economy is in better shape than most other European countries but then again, in the land of the blind, the one-eyed man IS king!
Our overall economic growth has slowed to 0.5% per quarter but it is most likely that almost all of that growth is as a result of domestic demand – which is certainly not particularly encouraging within the global economy.
A Markit survey published yesterday shows that in spite of the rhetoric, the construction sector also slowed in October.
We not only want our cake……….
Chancellor Osborne is off to Germany next week to outline how he wants to protect London’s financial services industry in a reformed European Union. The fear is that ever-closer integration of the eurozone could leave London sidelined in financial policymaking, affecting its banking sector. In fact, London’s status as a European financial centre has already been compromised by Cameron’s dithering and inability to put down on paper the exact changes he is (apparently) negotiating. The continuing lack of detail on his demands for new EU membership terms, is causing both frustration, bemusement and a level of confusion among EU leaders. Cameron has now had to “do a Chilcot” by promising to send them his wish-list by next week.
THE DEFICIT MYTH – We’re STILL underperforming the #EU ……..#GE2015
THE DEFICIT has been a constant in our ears ever since someone at Conservative HQ discovered that because the GDP was exceptionally low in 2010, THE DEFICIT was a high percentage of it.
In fact, it was about 10%.
Gradually, because the GDP has increased, THE DEFICIT has gradually become a lower percentage of the GDP.
It is now of the order of 5%……..or as Messrs Cameron and Osborne prefer: “We have HALVED the deficit!”.
Yes…from 10% to 5%.
The graph above shows that as far as THE DEFICIT is concerned, the United Kingdom continues to UNDERPERFORM the European Union.
(If you click on the “EXPLORE DATA” link on the above graph, you will land on the official Eurostat page where you can add other countries to the graph for comparison and have as much fun with statistics as our Coalition Government did!)
Booze for Solar Panels!
China is NOT happy – especially as over there the European Union’s decision to impose duties on Chinese solar panel imports, looks like no more than the twitch of a desperate and dying economy whose economic clout has long dissipated.
This is how it works on Planet EU: Countries such as France receive heavy EU agricultural subsidies which enable it to “dump” vast quantities of cheap wine in China. Chinese solar panel manufacturers receive subsidies from heir own government which allow it to dump cheap solar panels in Europe. So what does Europe do? It objects and then imposes import duties on the solar panels. But why?
The EU says that it is to safeguard jobs. Quite right too! Until you realise that the vast majority of EU solar panel manufacturers are in…..Germany!
Not surprisingly, China has retaliated and just announced its own anti-dumping and anti-subsidy investigation into imports of European wine. It is NOT Germany but France and Italy who will suffer.
EU Job protection? Yes – but mostly in Germany.
This is what the Chinese Communist Party’s official mouthpiece, the China People’s Daily says: “Times change and power rises and falls. Still this has not changed the deep-rooted, haughty attitudes of certain Europeans.” ………Bitchy!
China knows that a EU in trouble is a dangerous EU but it is also acutely aware that the EU is punching way above its weight.
The EU-imposed import duties will be a severe blow to Chinese companies such as Trina Solar Ltd, Suntech Power Holdings Co. Ltd. and Yingli Green Energy Holding Co. Ltd. The upshot for Europe will be inflationary with a big increase in solar panel prices.
China’s next likely target ? Probably French-based Airbus manufacturer EADS. That will mean even more headaches for President Hollande because the potential losses to France could be astronomical.
Never mind, as long as the EU continues to protect Germany’s interests.
The Eurocrisis isn’t just Financial.
The Eurozone crisis has managed to morph from a plain old currency crisis to a debt crisis, an economic crisis and now, a full-blown political crisis – although no-one seems to have noticed…….. and it’s not just the Eurozone:
In the United Kingdom, people are making increasingly indiscreet noises about the Prime Minister’s leadership capabilities and the Chancellor’s questionable competence, as the cold hand of political instability makes a (so far) half-hearted grab for No 10. Currently it looks as if there is already a swing to the right. Nigel Farage and UKIP no longer look like a bunch of extremist Right-wing loonies and as they gain respectability and seats, they will pose a genuine threat to the status quo.
Here’s a quick Grand Tour:
Greece’s political problems are well-documented and this is where the recent polarisation of national politics began with the success and increasing support of the right-wing Golden Dawn Party. Greece is on its knees.
In France there’s the scandal of a Minister and his secret Swiss Bank account with the consequent investigation of all Ministers – shades of the UK’s MP expenses outrage. President Hollande is keeping a very low profile because , let’s face it….he came to the table without any ideas. His mere presence has allowed Marine le Pen and her Right-wingers to re-emerge blinking into the sunlight, ready to build on her father’s legacy.
Germany’s Bundeskanzlerin Merkel is no longer odds-on to win her autumn election and so, in order to placate her detractors, countries such as Cyprus are being put through the debt-wringer and effectively having to bail themselves out! All in the cause of extra Brownie points for the Merkelator.
Many are anticipating more resignations from within the Cypriot government. Michalis Sarris, the Cypriot finance minister who negotiated Cyprus’s bailout agreement with international creditors has already gone.
Portugal’s Constitutional Court has kicked into touch some of the austerity measures imposed on the country by the Eurozone moneylenders. Now the politicians are wondering about how to plug the fiscal gap and Prime Minister Coelho may resign.
Belgium took 535 days to form a government after its last election and now has a 6-party Cabinet.
Italy is struggling to form a government and will most likely hold another election after President Napolitano comes to the end of his tenure as Head of State on May 15th. Goodness only knows what the reaction of not only the Eurozone but of the Markets would be should Silvio Berlusconi (again) rise from the dead! Italy’s political scene has become so surreal that ONE QUARTER of the vote in the recent election went to a protest movement headed-up by Beppe Grillo – a comedian!
Spain’s politicians, including its Prime Minister are mired in corruption scandals – and now there are anti-Royalist demonstrations as a direct result of the king’s daughter being implicated in a government financial rip-off. Mind you, affluent Spaniards have already pulled about $100 billion out of their Spanish bank accounts. They started running early. It’s only a matter of time before the Basques and Catalans start to make their separatist noises.
The difficulty is that one would normally expect the emergence of the Right to be counterbalanced by a strong showing from the political Left. But what Europe has are weak governments , compounded by even weaker oppositions. No European political party in government has over 50% of the vote……. and the less said about the European Union’s politicians, the better! They seem to have elevated ineptitude into an art form.
Currently, Britain’s Left is being driven by Ed Miliband and the New-Old-New-Who-Knows-Who-Cares Labour Party. They earn their salaries through the medium of being critical. They have shown themselves to be totally bereft of a coherent, cohesive strategy and will be directly responsible for the future success of UKIP.
Leadership (or a lack of it) within Germany’s Social Democratic Party will be the main factor which could give Merkel another few years of power. If that happens, the rest of the Eurozone should begin to consider itself as no more than a motley collection of Vassal States……there to do Germany’s bidding. Unless of course, Germany accepts George Soros’ advice and leaves the Euro.
France does not enjoy having a Socialist President and it is right to be sceptical. President Hollande is now totally ignored by Merkel and is doing what he does best – he keeps out of the way as Germany tightens its stranglehold.
Hollande could have been the Eurozone’s great hope but unfortunately is way out of his depth. France now has a negative bond rating by all three rating services and has lost much of its international respect. It’s precarious banking system is just waiting (like many others) to go “pop!”
The Main Event this year will be Merkel’s re-election so the Eurozone states must not expect any major policy changes until then – and when she wins? More of the same – but without the compassion!
What of Europe’s medium to long-term future? Without some sort of political quantum leap, it will inevitably descend into a collection of Third World states but with running water, TV and a banking system totally independent of its economy and probably with its own flag.
Equity Euphoria. Why?
The Markets are in the wrong place. For about two years, I have been suggesting that market sentiment bears absolutely no relation to what is really happening in the real economy.
Yesterday’s Markit manufacturing figures clearly show that Europe’s manufacturing sector is in a mess. At 12% , Eurozone unemployment is at an all time high with further austerity measures to follow.
In spite of all that and with increasing hand-wringing from economists, the markets are buoyant at near-record and record highs, the euro is showing only modest losses and for Bond investors it’s business as usual!
What is going on?
One thing that we can see from the manufacturing figures is that there is quite a marked divergence between Germany and the rest. Although manufacturing activity is shrinking to 5-6 month lows, the so-called “financial fragmentation” across the Eurozone has become increasingly obvious. The Eurozone does NOT have a uniform monetary policy which means that Italian and Spanish banks, for instance, pay much higher funding costs than Germany. That means that certain manufacturers are paying much more than German ones for their cash. On the face of it, that seems to be anti-competitive – but that unfortunately is just one of the many anomalies of the Eurozone – in fact of the entire European Union.
“The poorer you are, the more you pay for your heating fuel.”
This is the backdrop to a largely blinkered , almost “autistic” equities market where we appear to have reached the stage of self-amplification where , because of the abysmally low bank rates, EQUITIES is the only game in town. Self-amplifying? Yes – as more and more investors pile into stocks – mainly because they don’t want to lose out on a rally which they themselves are now fuelling.
The only cautionary note should be for investors who are only just coming into the market to ask themselves “What is the real likelihood of me making a profit?”
When will it stop? History shows us that rallies such as the current one can stop pretty suddenly!
There will come a point at which traders, especially those with short positions will decide “Enough!” – in spite of the fact that currently, there is no obvious level at which to climb out and possibly take a loss.
Once one jumps, the rest are sure to follow.
Eurozone Meetings Merrygoround
This week, Angela Merkel meets Herman Van Rompuy, Mario Monti meets Francois Hollande who also meets David Cameron.
The new Meeting Season seems to indicate that Eurozone leaders have decided that meeting in plenary will be punctuated by the new craze of meeting in pairs.
I thought that it may be useful to compute how many meetings 0f TWO, could be managed by 20 politicians.
They are: the 17 Eurozone leaders + Van Rompuy + Barroso + Cameron = 20.
So, how many meetings would 20 politicians generate if they met in pairs?
Using the formula n!/(r!(n-r)!)……… (n = number of leaders and r = 2, as they meet in pairs)
The total number of “pair meetings” achievable by 20 politicians is 20!/(2!(20 – 2)!) = 190
We have to double that, because they each will want to meet twice so that each one has TWO meetings with every one. (One Home and one Away).
Therefore 20 politicians can generate 380 meetings – if they confine themselves to meeting TWO at a time.
That of course is on TOP of the monthly Eurozone Crisis Meetings, EU meetings and special meetings – for instance, when Spain decides to take the €500 billion we all know it needs or the next time Greece is (once again) about to go down the Grexit toilet.
We can see therefore that any attempt to solve the European Crisis would only serve to interfere with what is already a very heavy meeting schedule.