It’s all so familiar. If I was you, I’d be thoroughly furious. Maggie seems to be absolutely fuming too.
Let’s play a game so I can show you what I mean.
Round 1. You have to guess which of the following four news headlines referred to the euro back in the day, and which refer to Brexit more recently.
The Telegraph: “Nissan, the Japanese carmaker, said yesterday that further investment in the UK depends on whether Britain leaves the EU.” Or was it “joins the euro”?
Sunderland Echo: “Nissan ‘halts investment plans’ while it remains ‘in the dark’ over Brexit plans.” Or was it “plans to join the euro”?
The Guardian: “Toyota threat to quit UK over Brexit.” Or was it “over euro?”
CNBC: “Auto firms are at risk of extinction in the UK after Brexit, business chief says.” Or was it “after failing to join the euro”?
I’ll give you a hint. Two are about Brexit, and two are about the euro. But does it really matter which you chose?
These days, Nissan’s website says “Nissan Motor Manufacturing UK (NMUK) is the jewel in the crown of Nissan’s manufacturing presence in Europe.” Expansions are underway. Jobs are up since the warnings about not joining the euro. The only major recent crisis has been the government’s diesel debacle…
As for Toyota, production and employment is down a little. But they’re still going strong. Failing to join the euro didn’t work out so badly…
The next round of our game will be much easier. This time, you have to guess what year the following quotes are from. Don’t worry, it’s multiple choice.
The round starts with Austria, which voted for a moderately eurosceptic right wing coalition. But was that in 1999 or 2017? Here are the quotes you have to date…
“In October 1999 Austrians voted to end the old, corrupt system of power- and perk-sharing between left and right. Fifty-four per cent of voters supported the Austrian People’s Party and the Austrian Freedom Party.” Or was it “In October 2017,” with “fifty-seven percent”?
“Various insensitive utterances by Herr Haider [of the Freedom Party] were adduced to confirm that Europe was faced with a threat from right-wing extremists. But it seems likely that the Freedom Party’s scepticism about the merits of European integration was at least as important in earning the EU’s disapproval.” Or was it the right-wing comments of Herr Strache of the Freedom Party in 2017 which unsettled Europe?
1999 or 2017? “The bungled attempt to override the wishes of the Austrian people in order to achieve a national government of a political complexion pleasing to the EU member states was a highly significant indication of the shape of the future.”
Before I give you the answers, consider the same phenomenon for Italy.
“The truth is that Silvio Berlusconi and his Forza Italia party, with the Northern League and the National Alliance parties, represent everything that the left-wing power-brokers of the EU fear and loathe.” Or is it just the “Northern league and Five Star” which have the EU’s fear and loathing seventeen years later?
“A concerted Europe-wide media campaign of vilification, the like of which I have rarely seen in politics, was launched against Italian Deputy Prime Minister Salvini to intimidate the Italian electorate…” Or was it Signor Berlusconi they were intimidating in 2001?
Given the quotes about Austria and Italy are from Margaret Thatcher, published on my birthday in 2002 in a book called Statecraft, you might be able to guess that the original versions of these quotes refer to the early 2000s.
But they could just as easily apply today. As Thatcher wrote at the time, “This is not the first such Europewide attempt to bully national electorates. But it may turn out to be the last – if Italy refused to bend the knee.”
There’s Italy again. Just like in my warnings about how the euro will die this year. Many of the crucial dates I identify as high-risk points are approaching. Your time to be in the know is growing slim.
The EU’s bullying continues, with Hungary the latest victim. Back in the early 2000s, it was Austria that the EU sanctioned.
How about this quote which discusses internal EU politics? Does it refer to Martyn Selmayr’s double promotion to the highest level of the EU civil service via “four instances of maladministration” according to the European Ombudsman, or an earlier incident?
The counterpart of the EU’s lack of democracy is a lack of accountability. There is simply not sufficient public interest in the conduct of European politicians and high officials to place it under continuing effective scrutiny. The resulting remoteness is a recipe for abuse of power, misuse of public funds, and in some cases straightforward corruption. One has only to read the damning conclusions of the ‘Committee of Independent Experts’ on allegations of fraud, mismanagement and nepotism of 15 March 1999.
The date at the end gives it away. And it’s another Thatcher quote…
For Round 3, we turn to the euro. Can you date this quote?
With a single currency, “there will be a monetary identity throughout Europe, a great advantage for trade”. Add a common legal code and university system and you “would have achieved a single family in Europe. No one would ever have left home while travelling.”
Sounds familiar, but who said it? Certainly not Thatcher…
Is it from the leaders of the Latin Monetary Union in 1865? Perhaps Hitler’s central bank governor Herr Funk in the 30s, who had a similar plan which Italy’s European Affairs Minister recently spoke about. Is it from the Werner Plan of the 70s, or the Delors Commission in the 90s? Perhaps a more recent president of the EU Commission, central bank or parliament said it?
Nope, it was Napoleon Bonaparte. But, as Thatcher pointed out, “The President of today’s European Central Bank could hardly have put it better.”
Round 4. We turn to economic forecasts.
Lately, the forecasts about Britain’s economic growth after Brexit are back in the news. The IMF is especially pessimistic about Brexit.
But the head of the IMF has already apologised to Britain for her organisation’s forecasting mistakes. My question to you is, what does her apology in the Telegraph refer to? The incorrect poor economic forecasts about the failure to join the euro, or the failure to have the forecast recession after the Brexit vote?
“We got it wrong,” Ms Lagarde told the Andrew Marr Show. “We acknowledged it. Clearly the confidence building that has resulted from the economic policies adopted by the government has surprised many of us.”
“We said very clearly that we had underestimated growth for the U.K. and that our forecasts had been proven wrong by the reality of economic developments,” she said.
Pressed on whether she had apologised to Mr Osborne for the incorrect forecasts, she said: “Do I have to go on my knees?”
It was a trick question. Lagarde’ comments don’t refer to Brexit or the euro. They refer to British austerity policies of 2013. Growth surpassed IMF estimates and made their earlier warnings look ridiculous. Meanwhile, the IMF’s own austerity policies were trashing Greece, forcing another apology from the IMF there.
It’s very odd that people publish, let alone listen to forecasts from such nincompoops.
Asked about the speculation Lagarde will one day lead the EU Commission, she replied, “The only position that has not been debated for me has been the Vatican.”
May I make a suggestion, Madame?
How to invest when politicians are mucking up markets
Watching the juggernaut of the EU roll on is awe inspiring. Nothing seems to stop it. No failure is too embarrassing. No rejection too demoralising. No consequence too horrifying.
But I haven’t left you with much investment wisdom today.
My message is this. We are due for a financial crisis. They happen. It’s always just a matter of time. And we’ve had suspicious calm in markets for suspiciously long. I think the eurozone will unleash the next crash. But it might be something else.
Because of this, I think it’s time to invest based on a new strategy. Buy and hold simply won’t work over the next few years. Instead, you need to find market inefficiencies to profit from. Idiosyncratic events which generate predictable market moves you can chip away at.
My friend Eoin Treacy has developed precisely one such trading strategy. It’s incredibly simple to understand, use and implement. But the fortnightly gains are powerful.
Until next time,
Nick Hubble
Capital & Conflict
Category: The End of Europe