Jokes about there not being an EU to exit from next year are making the rounds in the papers. My book about exactly how this will happen hit the printworks last night. You can get a copy here.
But today we tie together two extraordinary stories that also just hit the papers.
The EU has revealed it is bluffing. Its biggest fear and its biggest lie are now laid bare for the world to see. And it’s utterly disgusting.
EU politicians and bureaucrats don’t care about the Irish. They’re still threatening to impose a hard border if there’s a hard Brexit.
They don’t care about expat pensioners. They’re still threatening to block international pension flows, claiming they’d be “illegal”.
They don’t care about travellers. They’re still threatening to halt flights. And the British politicians were dumb enough to point out this works both ways.
They don’t care about free trade. They’re threatening border delays and tariffs.
They don’t care about democracy. They still want to sabotage Brexit.
They don’t care about Britain. They want to punish us.
They don’t care about expats. They are still threatening to expel them.
But here’s what they do care about. Their ability to finance their deficits.
The Financial Times reports the “EU pledges access to UK clearing houses in no-deal Brexit”. And in a different article, it explained what this means:
Valdis Dombrovskis, the European Commissioner responsible for financial regulation, told the Financial Times that EU banks and companies could continue using UK-based clearing houses to process derivatives trades even if Brexit negotiations fail — but on a strictly short-term and conditional basis.
In other words, the Europeans realised that, in the event of a no-deal Brexit, their insurance contracts on an Italian government default would not be enforceable. And so they panicked and reversed their hard-line stance.
But the change is wacky in so many ways.
First of all, why is the EU deciding who can access UK clearing houses!? Surely it’s a UK decision if EU businesses want to use London’s financial markets. The strangling nature of the EU’s rulers is laid bare by the decision. You can’t do anything without their express permission.
But more importantly, why doesn’t the same solution apply to the Irish border, the expat pensioners, the flights, the trade, the expats and every other fake problem Brexit creates?
Why can’t a Brexit deal be done on all other matters with exactly the same reasoning: for the sake of stability and cooperation, on the day of Brexit, businesses and people working, trading and travelling between Britain and the EU can continue to go about their day as before. After all, there will be no difference between Britain and the EU on day one of Brexit. Divergence will take time.
This solution doesn’t even require a deal. It just requires both sides to declare they won’t do anything that is blatantly and obviously stupid, such as restricting trade, financial flows, flights, and so on. It is an immediate solution too.
If the EU decides at some later date that allowing flights to Britain is not in its interest, then it can stop them.
If it decides at some later date that a border in Ireland is needed for the same reasons a wall in Berlin was, then it can build one.
But picking and choosing EU priorities for safeguarding from Brexit, while everyone else suffers from EU self-harm, is plain disgusting. Caring about bankers but not people on the Irish border puts on display the true nature of the EU. You can bet flights carrying EU politicians and bureaucrats would escape that ban too. They won’t be lining up at the border in Dundalk.
At least we’ve learned something from this outrage. The EU demands to maintain the integrity of the EU in the face of Brexit are simply not true. They only hold water when they inflict only symbolic self-harm on the EU itself. Any existential threat for the EU, such as losing access to the UK’s financial system, and a solution is quickly found.
All those bankers who left for Paris and Frankfurt are going to have to commute to London each day. Let’s hope the EU gives up on stopping flights next…
The news has a darker twist to it too though. It may be more of a trick than a treat.
How Italexit could sabotage Brexit
With Bloody October coming to an end, you might be wondering what comes next. Subscribers to Zero Hour Alert already know. Just as they knew Bloody October was coming since April.
But yesterday we got news that things are progressing faster than expected. Italian economic growth came in at 0% for the third quarter of 2018.
Eurozone growth slowed to 0.2% too. All those commentators who pointed out Brexit was the cause for Britain trailing European economic growth have gone quiet.
But Italy is the key here. Ferdinando Giugliano wrote this on Bloomberg about the growth figures:
Italy’s Economic Horror Show Starts Now
With economic growth slowing, the government needs to reverse course on its spending plans or face an even graver crisis.
Given exactly the same economic data, the Italian government reached the exact opposite conclusion according to the BBC: “Italian Prime Minister Giuseppe Conte said the zero growth in Italy justified Rome’s expansionary 2019 budget.”
It’s always good fun watching politicians play with economics. But the consequences for British investors won’t be so fun. Unless they’ve signed up to watch this tomorrow. It’ll feature a jetlagged me on video, a must-see.
The thing is, tie today’s two stories together and you get a shocking conclusion. A eurozone crisis is precisely what Remainers need to delay Brexit.
You can see how they’ll argue it. A no-deal Brexit now would kick Europe when it’s down. And where it hurts, in the financial markets of London. The one place they truly care about. Therefore, we should delay Brexit in the interests of stability and cooperation and blah blah blah.
This is of course a false argument. As the EU’s temporary assurances show, when push comes to shove, they back down on Brexit red lines.
So if you think it through, a financial crisis in Europe is an opportunity to deliver a genuinely decent Brexit. Not as part of some selfish plan to abandon a sinking ship.
A financial crisis in Europe will force EU politicians not to self-harm their economies for the sake of maintaining the integrity of the EU rules. They’ll be forced to do a sensible deal to avoid any further damage in the midst of a crash.
Which of the two angles do you think British politicians will take? Will they jump at the chance of delivering a good Brexit? Or will they jump at the chance to delay Brexit indefinitely?
Take a wild guess…
Until next time,
Capital & Conflict