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Thursday, 24 April 2014

Dave tries to show his muscles in Brussels

As Europeans, we ought to be quite pleased that our transatlantic cousins are tied up today and that they will therefore not be sitting there, scratching their heads and wondering just what the great and the good of the EU leadership are smoking as the budget negotiations yesterday ended up precisely where they were forecast to – namely where they started.

Anthony Peters, SwissInvest Strategist

(In my guise as your humble correspondent, I must confess that I rather overdid it in the Thanksgiving dinner stakes last night and so “Black Friday” will be just that. It will have precious little, if anything at all, to do with Christmas shopping. I shall be a trifle briefer than usual.)

In an rare act of deference, I take my hat off to British Prime Monster David “Call me Dave” Cameron. In what can only be described as a “drive by”, he cornered European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso before the meeting had even begun and tabled a proposal to cut €6bn out of the EU budget by cleaning up the Eurocracy.

By a simple act of increasing the retirement age of the “spenderati”, cutting pensions and salaries and generally exposing the pampered eurocrats to the kind of adjustments which their peers across the EU have had to face at national level, Cameron suggested that first steps could and should be taken. There has been talk of “surprise” – sadly this is not because of their unpreparedness for the way in which DC pounced on the two of them but because it appears to have been a thought which had never crossed their minds – or at least not in public.

In the event, the UK, a large net contributor, won’t negotiate away its rebate and France, as largest net receiver of EU funds by way of farm subsidies, won’t let anyone lay a finger on its position either. Total deadlock in the world’s second most expensive Kindergarten – I’d suggest that the US Congress in Washington still beats it on that front, albeit in all probability not by a huge margin.

Receiving 1% of GDP – that’s what the EU administration and funding pools are run on – may sound like a lot or not a lot, depending on how you see it but with the area in recession and with GDP shrinking, it hurts. The desire to increase revenues – that means milking the net contributors harder – looks easy and in a one-member-one-vote environment with no vetoes that proposal would have sailed through.

Barroso, bless him, got the message when he later stated that somehow the EU would have to learn to do more with less. Welcome to the real world, guys, and have a nice day. Mutti Merkel, ever the pragmatist, simply suggested that the deadlock would in all likelihood not be broken and they we will most probably have to wait until 2013 to find the matter resolved.

Really? Did I say pragmatist? Continuez a rêver.

Beck is back

I would like to take the opportunity to welcome Steve Beck back to the markets where he has taken a senior role in Banco Santander’s London based gilts business. It was Steve, a wonderful thinker and writer on things market, who coined the phrase that there is simply not enough money on this planet to meet the accrued liabilities and who went on to conclude that, as we couldn’t very well borrow from another one, we’d have start to cut our suits to match our cloth on this one here. Some people in Washington and Brussels would do well to wash their ears out.

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Alas, it is that time of the week again. All that remains is for me to wish you and yours a happy and peaceful week-end. Here in the UK we were hit by rain and by winds yesterday which had the house wobbling and there’s is supposed to be more to follow. May I humbly suggest that you put away the driving licence, sign up for a course as a day skipper, begin to practice your reef knots and read up on how to securely moor a Mercedes or a BMW in a supermarket car park. 

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