Taking a look at Europe’s many “emperors without clothes” – starting with Mark Carney

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My City Grump of 12 July posed the question “Is Mark Carney the most dangerous man in Britain?” Little did I realise then that a whole range of political luminaries from William Hague, Michael Gove, to the Spectator magazine onwards would follow on and demand his head also.

This is hardly surprising though as in August Mark Carney decided to cut interest rates in a knee jerk response to his anti-Brexit stance. For the BoE to have cut interest rates then was verging on the criminally irresponsible. Even the lowliest foreign exchange dealer realises Sterling is a one way bet when Mark Carney cuts and Janet Yellen from the Federal Reserve Bank of New York is going the other way. The result: an increase in the likelihood of stagflation, a buckling banking system that struggles to make a margin and ballooning pensions deficits in funds stuck with liability-driven investment accounting (LDI).

Amazingly most of the traditional financial media, while recognising the whole central banking QE strategy is going off the rails, are horrified that anyone is prepared to attack Mark Carney in public as it believes this damages that mysterious beast called “confidence”. I think markets and most people post 2008 stopped regarding the governor of the BoE as some sort of deity. As Mandy said in Life of Brian: “e’s not the Messiah, e’s a very naughty boy”.

Then we have the emperors who sit in Brussels. They preside over the apparently magnificent and munificent “state” called the single market and woe betide anyone who questions its efficacy. But in reality the single market is riddled in protectionism.

Internally many commercial and financial companies are protected from cross- border takeover as so eloquently reported in none other than the ardently pro EU Economist magazine in May 2014: “As more takeover bids roll out across Europe, France planted its flag on the battlements by publishing a decree on 15 May that extends the government’s power to intervene when a firm is at risk of falling into foreign hands. The decree requires would-be foreign buyers to get the blessing of the economy ministry when planning to invest in French firms engaged in energy, transport, water, health or telecoms. A 2005 version put in place limited the government’s power of intervention to sectors linked to national defence. ‘Economic patriotism’ prompted the new decree, said Arnaud Montebourg, France’s interventionist industry minister. The communiqué announcing the decree said it was inspired by similar regimes in Europe and elsewhere.”

Externally the single market sits behind tariff barriers erected to protect the inefficiency of various members states in the production of many of life’s basics such as food and clothing. To put it simply ( you can read about this in more detail at http://www.economistsforbrexit.co.uk/a-vote-for-brexit and go to the sub heading “ The optimal WTO option and the route to a Free Trade Agreement with the EU”) these emperors’ clothes maybe protected but they are full of holes.

And what of our political emperor’s post Brexit? Former prime minister David Cameron, realising he was caught naked, has left the stage altogether. Francois Hollande has the lowest approval rating of any post war French President. German chancellor Angela Merkel’s power bases are crumbling and prime minister Matteo Renzi is up against it in Italy. Need I go on?

Of course back here prime minister Theresa May and chancellor Philip Hammond have yet to be really tested. I am not too worried that May will be caught short but I am concerned about Hammond as the signs are he may be falling under the influence of all those treasury officials who have been exposed, along with former chancellor George Osborne, for expecting the UK to grind to halt on 24 June. We shall see.

Talking of the “apocalypse now” contingent, this article would not be complete without a special mention for the Financial Times. This self-styled emperor of the financial press has been so all pervasive in its anti-Brexit stance that it seems to have taken on the role of a kind of Pravda for diehard Remainers. Just to give you a flavour, I’ll direct you to a recent editorial, entitled “British Economy sees off Brexit for another day”, written by one Lionel Barber who was awarded France’s Legion d’Honneur for the FT’S “positive role in the European debate”.

Mind you, in the same edition one of his senior wingmen, Martin Wolf, may be starting to realise his emperor is beginning to look a bit threadbare, as his article ends with the rather more conciliatory “The British understand that it is possible to be loyal and in opposition. That is where Remainers find themselves. So be it”. Which brings me to Jeremy Corbyn… enough said.

Image: Shutterstock

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