Frederick Forsyth, Angela Merkel, and an Anonymous Tipster on the Euro Breakup
Breaking news from the latest Eurorescue summit:
A friend of mine in London, who shall remain anonymous, brought to my attention this open letter to Angela Merkel, written in mid-December by none other than the great Frederick Forsyth. Forsyth does have a gift for putting things economically, in both senses:
I was therefore disappointed ... to see you take the part of a small and vindictive Frenchman in what can only be seen as a targeted attack on the land of my fathers.
We both know that every country has at least one aspect of its society or economy that is so crucial, so vital that it simply cannot be conceded.
For Germany it is surely your automotive sector, your car industry. Any foreign-sourced measure to target German cars and render them unsaleable would have to be opposed to vetopoint by a German chancellor.
For France it is the agricultural sector. For more than 50 years members of the EU have been taxed under the terms of the Common Agricultural Policy in order to subsidise France’s agriculture. Indeed, the CAP has been the cornerstone of every EU budget since the first day. Attack it and France fights back.
For us the crucial corner of our economy is the financial services industry. Although parts of it exist all over the country it is concentrated in that part of London known even internationally as “the City”. It is not just a few greedy bankers; we both have those but the City is far more. It is indeed a vast banking agglomeration of more banks than anywhere else in the world.
But that is the tip of the iceberg. Also in the City is the world’s greatest concentration of insurance companies. Add to that the brokers; traders in stocks and shares worldwide, second only, and then maybe not, to Wall Street.
But it is not just stocks. The City is also home to the “exchanges” of gold and precious metals, diamonds, base metals, commodities, futures, derivatives, coffee, cocoa… the list goes on and on. And it does not yet touch upon shipping, aviation, fuels, energy, textiles… enough. Suffice to say the City is the biggest and busiest marketplace in the world.
It makes the Paris Bourse look like a parish council set against the United Nations and even dwarfs your Frankfurt many times.
The tipster then added a comment: He noted that all the big London law firms are coming out with client notes on the possibility of an imminent Euro break-up. "Whatever our great leaders say," wrote the tipster, "the people who are at the sharp end clearly think it’s worthwhile spending huge amounts of resources to produce these things. They don’t do that about the existence of aliens or fairies … "
The tipster attached documentation to illustrate his point. Indeed, the people at the sharp end, as he puts it, clearly do think it's worthwhile to spend a great deal of time and money gaming out what will happen.
Not long ago, the head of the ECB, Mario Baghdad Bob Draghi, dismissed these concerns as "morbid speculation."
I have no doubt whatsoever about the strength of the euro, about its permanence, about its irreversibility," he said. "The one currency is irreversible."
Yes, of course. In any event, back in the real world, this morning's news:
The euro fell to an 11-year low against the yen and reached the weakest in 15 months versus the dollar after French borrowing costs rose at a bond sale today.
The 17-nation currency slumped against most major peers after France sold 7.96 billion euros ($10.3 billion) of debt today in its first auction of the year as credit companies threaten to cut the nation’s top AAA rating.
“The market reaction is rather underwhelming” toward the sale, said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London.
I'm underwhelmed myself.
Apropos of nothing, has it occurred to anyone that one may be underwhelmed or overwhelmed, but not whelmed? Isn't that odd?