Is the EU Committing Suicide?
When I was very small I used to listen with
my mother to the Goon Show. The following day at school we'd
act out the surreal scenes amid hoots of laughter. These days
the surreal jokesters seem to be the officers of the EU.
Apparently they've just elected a new
leader. This has been done using the EU's intriguing version
of democracy. Someone who wasn't even a candidate has been
How can you vote for a non-candidate? Easy, join the EU.
But the really interesting development is the lapsed agreement
with the Swiss over equivalence deals concerning trading
The one thing everyone seems to forget about the EU is that it
is a fiercely protectionist union. I guess it all started with
the French agricultural deal, but it has grown substantially
since then, which is one of the main reasons the Brexit party
want out. Britain has traditionally been a free trade country.
The EU protectionism is expensive and actually stifles trade.
For heaven sake, does one need protectionism in trading
shares? Apparently so.
And that is one more reason why maybe a no-deal exit will be
good for Britain; increased wealth coming to the City because
so many EU companies are listed on the London stock exchange,
and if they have to chose between London and the local EU
exchanges, there is going to be no contest. 70% of Britain's
wealth comes from the financial markets, wealth which Germany
Apparently the EU wanted to do a Brexit type of deal with the
Swiss. In short they wanted the Swiss to do one
all-encompassing deal. "Nothing is agreed until everything is
agreed." I think you've heard the term before. But what's
It is now a criminal offence for an EU based trader to trade
shares on the Swiss stockmarket. If you ignore the rule you
apparently go to jail.
Now you have something a trifle odd. Three of the largest
companies in the EU are actually based in Switzerland.
Apparently now an EU based exchange will have to stop trading
in as many as 230 Swiss companies, including UBS, and
The Swiss, like the Brits, decided to ask their voters whether
they wanted an all or nothing deal with the EU. The result was
obvious: The Swiss, being politically more mature than the
Brits, asked some pertinent questions. So the Swiss
politicians went back to Brussels with those questions.
Asking question? Cant have that. The Swiss were accused of
That didn't do much so they let the stockmarket equivalence
deal lapse, hoping it would cause some damage which might make
the Swiss change their minds.
What happened? The Swiss stockmarket duly rose, and the Swiss
even banned trading in Swiss shares in the EU.
At the moment it looks as though the EU has shot itself in the
foot. Let's hope the new British negotiators draw the obvious
conclusion. Never mind a no deal situation, how about a No to
bully tactics from the EU?
We now have the interesting situation where Brussels is
fighting a political battle on at least four fronts. Fighting
on more than one front is difficult enough, but four? That
usually leads to annihilation. I wonder how long incompetent
politicians can play catch with four balls in the air.
Things have reached the stage where I am beginning to get
worried that I do still have assets priced in euros. I still
don't know how this is all going to turn out, but it
increasingly looks as though Brussels is hell bent on self
destruction. That can only be bad news for the euro. Now might
be a good idea to try and get out of euros and into sterling.
Now is certainly not the time to buy in Italy, and I suspect
that any purchases of real estate anywhere in the eurozone
with sterling would be a major mistake. Sterling is way
undervalued, and the euro is seriously over-valued.
My only worry is that sterling is in the hands of equally
incompetent politicians in the UK, which is why I have been
divesting myself of my wealth in both zones.
I've heard so much awful news about the state of Japan that I
intend going there sometime in the next year. I'm intrigued to
know what I will find behind all the claptrap.