Russell Napier is one of MoneyWeek's favourite strategists. And in his Solid Ground Fortnightly, he has had a look at the things we're not thinking about in Europe. I'm worried about the redistributory and social effects of quantitative easing, and about the shock effects of Greece leaving the euro. But he is thinking more of Europe as a whole, and the attempts to create clearing prices in a federal whole.
"Have we totted up the impact on emigration from Ireland and on family life as prices in that country adjust to their clearing level? Have we calculated the faith of the people of Spain in the democratic process as prices in that country adjust to their clearing level? Has anybody put a figure on the impact on political stability of the loss of sovereign power dictated by the move to federalism under a single currency?
"Ultimately all these things which are not counted, because they are in essence unquantifiable, remain crucial to stability and the sanctity of property rights, and may be the only thing which actually does count to investors in the single currency experiment."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Think back, says Napier, "to the occupation of Washington DC by an army of 43,000 unemployed WWI veterans in July 1932" after Andrew Mellon, Secretary of the Treasury decided it would be a good idea to "to "liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate" in order to let everything find its clearing price.
On that occasion the appearance of General Douglas MacArthur, Major George Patton and Major Dwight Eisenhower on Pennsylvania Avenue with a heavy presence of infantry, cavalry, tanks and tear-gas made it clear that finding clearing prices can come with risks that can't be counted.
At the time "the great speculator, head of the SEC, US Ambassador to the Court of St James and much else besides", Joseph P Kennedy, was worried. He would, he said, have been "willing to part with half of what I had if I could be sure of keeping, under law and order, the other half." No one in Europe feels quite like that yet. But as Napier points out, we once again find ourselves surrounded by economists who refuse to see what actually counts.
It might, he says, be "time to stop counting and to start watching." Because "it is clearer every day that the people will not consent to a process which forces upon them a decline in both living standards and state sovereignty. Without such consent there can be no single currency. And there are now, right across Europe, any number of people loudly voicing that discontent and non-consent."
It's a more fragile time than our politicians would have us believe.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
