20 October 2021

6 min read

🔔 Polexit, Frexit: EU'll Do Nothing

Opening Belle

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The EU is a walking disaster zone.

Well, it's barely walking. It's more like a zombie, lurching unstably from one existential 'crisis' to the next...

The latest involves Poland, and the ever-present battle for legal supremacy between nation states and the EU.

The TL;DR version:

Polish courts ruled that key parts of EU law are not compatible with the Polish constitution.
The EU/EC say that a 2018 Polish law allowing judges to be 'disciplined' by the ruling party undermines the role of an independent judiciary.

They're both probably right and both wrong to some extent.

That's not really the point.

Ignoring any lessons from Brexit or the Greek Austerity saga that nearly led to Grexit, the EU have decided that blackmail is the best way to deal with this and are threatening to withhold €36bn in EU recovery funds...

The Polish PM made his thoughts clear in a letter...

“Poland is ready for dialogue. We look forward to talking — in the spirit of mutual respect, and respect of our sovereignty, without pushing us to give up our national competences.”

“Unfortunately, today we are dealing with a very dangerous phenomenon whereby various European Union institutions usurp powers they do not have under the treaties and impose their will on member states,”

“...a dangerous phenomenon that threatens the future of our Union. We ought to be anxious about the gradual transformation of the Union into an entity that would cease to be an alliance of free, equal and sovereign states, and instead become a single, centrally managed organism, run by institutions deprived of democratic control by the citizens of European countries.”

“The language of financial blackmail, punishment, ‘starving’ of unsubordinated states, undemocratic and centralist pressures do not have a place in European politics,”

Morawiecki and von der Leyen debated in European parliament yesterday and as is usually the way, nothing was resolved.

The most likely outcome is some kind of compromise. As Morawiecki says, the EU is dangerously close to overstepping the mark.

Not so bad for Poland.

They can just play the waiting game and keep banking EU money (they are due €139.4 billion in subsidies and €34.2 billion in repayable aid from 2021 to 2027, aside from the recovery funds).

The precedent it potentially sets for other member states is terrible.

Do as we say or you don't get the money isn't a great look.

Stepping back, Polexit won't happen as the Polish people want to stay in the EU, and there are billions of reasons to keep the door open for EU funding anyway.

The risk (as always) is that the reaction here hastens the rise of the populists.

Over in France, there's a buzz about town... Eric Zemmour

Zemmour says, France is being "submerged" by migrants, and parents should be forced to give their children "French names".

His speech in Béziers targeted France's education system - "infiltrated by Marxism, anti-racism, and LGBT ideologies", in his view.

As for the French media, he dismissed them as "a propaganda machine that hates France".

"He tells it like it is," Christian explained. "He's more down-to-earth [than other politicians]

This rhetoric will sound familiar to British ears.

International media have taken to calling him the French Trump, but I think the French Farage is more apt: He probably won't win, but he may well shape the course of next years election...

For example, this happened when Zemmour claimed no desire to leave the EU or the euro...

Potential mainstream Right-wing rivals jumped into the breach with Xavier Bertrand proposing a "safeguard mechanism of France's higher interests" that would have primacy over EU law. Even the EU's former chief Brexit negotiator Michel Barnier called for French "judicial sovereignty" - if only for immigration.

Even if populists don't get into power, they can shift the Overton Window (the range of policies politically acceptable to the mainstream population at a given time).

Polexit & Frexit remain highly unlikely, so a continuation of the unhappy union has to be expected. The next battleground will be fought over the return of fiscal rules and Excessive Deficit Procedures.

EU'll do nothing (again).

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Banged on for too long about the EU there so let's pick up the pace.

I mentioned Ed Conway yesterday, and he's followed up with another excellent piece today...

The Industrial Re-Revolution 👇

It's an IMMENSE challenge (that many seem to have a simple solution for)...

It's not a case of just replacing the old energy sources. We'll need MORE 👇

Maybe this years energy problems focus a few minds.

Kickstarting a new productivity cycle would be nice too...

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What's the best way to improve this?

We deal with this question constantly.

Unfortunately, our endlessly flawed human psychology hinders us...

So says this study.

Here we show that people systematically default to searching for additive transformations, and consequently overlook subtractive transformations

In layman's terms, we're programmed to add complexity, rather than remove it.

Think of regulations, workplace rules.

The 'solution' is nearly always MORE.

It's rare for rules to be removed or for processes to be simplifed down to the bare bones...

Does this apply to trading?

I'll just add yet another indicator and get back to you...

Summing up:

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