Tag Archives: Austria

Money Makes the World Go Round

For the second time in a month, to my surprise, I find myself agreeing with President Putin.  Speaking at the International Economic Forum recently he warned: ‘We don’t need trade wars today … we need a comprehensive trade peace.’

Cuddly old Vlad was really warning us that there’s a financial firestorm brewing. Looking at what is going on with the euro and the Turkish lira, it’s hard to disagree.

The euro is really our old friend the Deutsche mark, cunningly devalued and disguised to pay for German re-unification, and now Europe’s chokehold currency of no choice. For example, any independent Scotland joining the EU would nowadays be ‘forced’ to accept the euro. Difficult for the Scots: not for nothing did Thomas Carlyle call economics the dismal science.’

Dismal science or not, money makes the world go round – and always has done. Even St Paul admitted: ‘The love of money is the root of all evil.’ This titanic battle for economic power rages around us every day, as China and America tussle behind the scenes over who owes how many dollars to whom and what they are worth, whilst a worried Commission in Brussels watches nervously as its great dream of a superstate called ‘Europe’ begins to disintegrate.

Because the UK’s ‘Brexit’ is the least of the EU’s problems. With Poland refusing to toe the Merkel party line, the Balkan states disobeying Juncker’s ‘diktats’ on immigration, and now a major trade war looming with the USA, Brussels has its hands full. Money is at the heart of it all. The unfolding Italian political train crash that is the new populist, anti-establishment Eurosceptic government is Brussels’ worst nightmare. It threatens their euro. Austrian chancellor Kurz gives the game away, bleating: ‘We saw in Greece how dangerous it is if a country has a bigger and bigger debt and I hope that we will not have a second Greece in our neighbouring country, Italy.’

The reason? Money and debt. Frightened hard currency has been haemorrhaging out of cash-strapped Italy for months, driving it even further into the red, amid fears of a Greek-style euro debt crisis which would bring the country to its knees. The new Italian government is even threatening to quit the euro and set up a parallel currency.

This is serious, because Italy is the eurozone’s third largest economy, nearly ten times the size of Greece’s.

The former chief economist of the IMF – Olivier Blanchard – believes the eurozone is heading for an ‘horrific crisis,’ denouncing Italy’s popular new government’s plans as ‘likely to violate all EU and domestic fiscal rules and put debt on an unsustainable trajectory’. What he means is that Rome is inviting an economic and political war, because the big French and German banks risk losing billions if Italy says, ‘no more pay offs.’

Brussels now has the beginnings of a serious rebellion on its hands. However, once again Italian voters have been over–ruled by EU technocrats, pressuring President Mattarella to ignore the voters, just as the Berlusconi government was toppled in 2011 by Brussels and the European Central Bank, in what was effectively a ‘soft coup.’

This is dangerous territory.

The Italian president’s refusal to accept the Lega-Gillini finance minister because he ‘could provoke Italy’s exit from the euro’ is dynamite. The political message to Italian voters is clear: whoever you vote for, the eurozone rules. A Lega spokesman explained: ‘You have to swear allegiance to the god of the euro in order to be allowed to have a political life in Italy. It’s worse than a religion.’

In Brussels,  Juncker openly threatens: ‘There can be no democratic choice against the European treaties. One cannot exit the euro without leaving the EU,’ and Günther Oettinger, European Budget Commissioner for Budget, actually said: ‘This will teach the Italians to vote for the right thing.’

Because the ECB and Brussels will fight to the last drop of Italian money to stop anyone escaping from their eurozone straitjacket.  The French Finance Minister warns: ‘If the new government takes the risk of not respecting its commitments [in other words, “If Italy doesn’t pay its huge debts to our big French and German banks”], the financial stability of the eurozone will be threatened. Everyone must understand that Italy’s future is in Europe and nowhere else. … there are rules that must be respected.’

This push to smother Italy’s eurosceptic rebellion, as they muzzled Syriza in Greece, comes from a worried Berlin, Brussels, and the EU power structure. But this time they may have blundered into a trap, because the EU’s economic problems grow worse every day. Now debt-ridden Spain admits it is in serious trouble. And Spain owes euro banks ‘zillions’, too. The bottom line for the EU is that if the Italians and Spanish welch on their euro debts, then the euro is finished – with huge international bankruptcies on the cards.

‘So what?’ says the man in the Kyrenia café, ‘How do big economic problems affect me, my family and my bank account? Who cares?’

The answer to the puzzled denizens of Turkish North Cyprus is ‘look at your money.’ Something very odd has happened to their Turkish lira. One year ago, 1 GBP pound sterling bought you 4.30 TRY; ten years ago, on 31 May 2008, a quid bought just 2.12 lira. And today? Going to press, a pound buys you around 6 lira. That’s what international currency fluctuations do to the expat, watching his pension. That’s how small Turkish Cypriot businesses, being paid in lira whilst paying for their rents in sterling, go bust. The reason? Money: because the Turkish lira is now in deep international doo-doo.

For years, Ankara’s AKP government has funded its massive vote-buying economic programme with money borrowed from overseas investors, attracted by Turkey’s generous interest rates. No less than 70% of Turkey’s deficit is covered by short-term foreign loans.

The problem is paying off those loans. Interest payments were biting deeper and deeper into Ankara’s Central Bank’s precious reserves of hard currency US dollars or euros. Loans began to dry up, so the Central Bank increased interest rates to tempt the punters and keep the all-important foreign dosh flowing. The problem is that at 13.5% the interest payments were expensive – but, at 16.5%, they could become ruinous.

At which point Turkey’s would-be President stepped in, boasting that he personally intends to run the economy when he wins the election on 24 June to become all-powerful leader. On his orders, interest rates will be slashed to 10% to save Turkey’s money. Result? Instant panic and predictable flight by spooked, nervous lira investors. Consequence? A market panic with foreigners desperate to unload their lira while they can. ‘Cheap? Your real, genuine Turkish lira. A real bargain, guv … Gotta sell.’

Because that’s what markets do. That’s how economics works: supply and demand. No demand for lira, they go dirt cheap. The result is that Turkey will either have to devalue, introduce capital controls or accept that, whatever their ‘Dear Leader’ thinks, foreigners will decide just what the Turkish lira is truly worth: and foreign investors are not impressed.

As an anonymous fund manager at a major asset management firm, complained: ‘Erdogan is fighting the extremists, he is fighting after the failed coup – now he is fighting the financial markets, and that is dangerous …. You can fight your domestic foes all you want; but when you are trying to take on the global financial market, that is a battle you can’t really win.’

And the EU? Watch this space. Of one thing we can be sure: the Commission, Berlin, Paris and Frankfurt will gang up in a darkened alley, ready to bludgeon, beat, bribe, browbeat and bully Italy to keep their precious euro together at all costs. Once again, the financial gloves are off. It’s going to get ugly. Just ask the Greeks.

Money really does make the world go round.

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Royal Weddings and Other Disasters

‘Did the earth move for you, darling?’

‘No, it bloody well didn’t! How am I expected to perform with all these damn’ courtiers standing around gawping?’

Fortunately for Prince Harry and Meghan, their wedding night will (hopefully) not be spoiled by the ancient custom of the public consummation of a royal marriage.

Throughout history, there have been some disastrous marriages involving royals. Not every royal wedding is the stuff of fairy tales.  Whilst we wish the happy couple all the best, history offers some cautionary examples.

Perhaps the most bizarre was the old custom of ‘bedding.’ The original purpose of this ceremony was to record the consummation of a marriage, without which the union could later be legally annulled. Public bedding was therefore essential for royalty and the nobility to establish the legality of any union. In medieval Iceland, a marriage was only valid if it included the bedding ritual witnessed by at least six men, including a lawyer. That must have put many a nervous groom off his stroke ….

Consummation was often a problem in dynastic marriages because of the age of the participants. For example, Isabella of Valois was just 6 years old when she was married off to King Richard II.  (But then, they couldn’t spell ‘paedophilia’ back in 1396 ….)  And Queen Mary II, of ‘William and Mary’ fame, was only 15 when she married William of Orange in 1677.

A less fortunate young bride was Marie-Antoinette, daughter of Austria’s Holy Roman Empress, who was married off by proxy in 1770 to the French Dauphin, the future King Louis XVI.  She was just 14, he was barely 15. Consummation was impossible because the groom was not present at his own wedding. That was held in the bride’s native Vienna; unfortunately, Louis was in Paris.

When the young bride finally arrived in France, her petulant husband sulked all through the wedding mass in Notre Dame and then, embarrassingly, later failed to do his public duty. As distinguished guests (including an archbishop to bless the newlyweds) crowded into the happy couple’s bed chamber to watch, something went wrong. An embarrassed Louis could not perform in public. It would be seven long years before Louis and Marie Antoinette finally consummated their marriage, making them the butt of suitably Rabelaisian jokes by court and commoners alike.

French royal weddings already had a dodgy track record.  On 18 August 1572 an arranged marriage between the Protestant (or ‘Huguenot’) Henri de Navarre, and Marguerite de Valois, the Catholic daughter of King Henri II, was designed to reunite two French royal houses by ending France’s savage religious civil war. It went wrong from the start.

The nervous groom had to stand outside Paris’s Notre Dame Cathedral during the religious part of the ceremony – because he was not a Catholic! Inside, the blushing bride was forced by her brother to go through with the wedding at knife point. Six days later, on 24 August 1572, Catholic mobs slaughtered thousands of French Protestants gathered in Paris for the great royal wedding knees-up in the ‘St. Bartholomew’s Day Massacre.’ Henri himself only survived the carnage by swiftly promising to convert. Sadly the newlyweds’ marriage did not survive – it was later annulled.

Britain has had its own problems with royal marriages, too. After the death in childbirth of his third wife, Jane Seymour, Henry VIII looked around for a suitable Protestant dynastic replacement. The artist Holbein was despatched to Germany to paint a prospective bride, Anne of Cleves. He returned with a portrait that appears to have flattered her, because when she arrived in England Henry took one look and fled, dismayed by her drab looks and lack of sophistication, famously calling her ‘the Flanders mare’. Henry’s Chancellor, Thomas Cromwell, convinced him to go through with the wedding for diplomatic reasons. After just one night, the king wanted out, proclaiming, ‘I liked her before not well, but now I like her much worse’, and complaining that she also had a bad case of BO. The marriage was quietly annulled on the grounds that it had never been consummated and, as a result, Anne was never crowned, just quietly pensioned off to court as ‘the King’s Beloved Sister’. Looking at Henry VIII’s track record with his brides, Anne seems to have had a lucky escape from the fat old monster.

Another continental import, Princess Augusta of Saxe-Gotha, arrived in London two centuries later in 1736, at the tender age of 16. She had been promised to King George II’s oldest son, Frederick. Speaking not a word of English, and clutching her favourite toy doll, she was likened to ‘a frightened puppy.’ Within ten days the unfortunate maiden was bundled into her wedding gown and marched off down the aisle. She was so nervous that she vomited down her wedding-dress and all over the skirt of her new mother-in-law. The wedding took place nonetheless, with Britain’s Hanoverian Queen translating the ceremony into Augusta’s ear.

History doesn’t record what happened on the new Princess of Wales’ wedding night but, despite its inauspicious beginning, the marriage is thought to have been a happy one and was definitely consummated. She bore nine children.

One of her grandchildren was Prince George Frederick Augustus, the dissolute eldest son of King George III. A marriage was arranged with his German cousin, Caroline of Brunswick. The future royal couple had never met. Worse, there was a little problem.  George was already married – to Maria Fitzherbert, a widow six years his senior and a commoner to boot. This existing marriage was recognised by the Catholic Church but not by English law. George protested, but the King ordered him to wed Caroline or lose his allowance.

In April 1795 a surly George met his affianced for the first time. Disappointed by Caroline’s looks and casual attitude to personal hygiene, the reluctant fiancé promptly demanded a large brandy, while the bride-to-be complained that her prince was ‘nothing like as handsome as his portrait.’

At the wedding, George arrived very late and very drunk. He managed to fall over on the altar steps in the Chapel Royal and only muttered his vows when his father, the King, shouted to him to behave himself – or else. The bridegroom then spent his wedding night drunk as a skunk, unconscious on the bedroom floor. The unhappy couple eventually produced a daughter, Princess Charlotte Augusta, in 1796. Soon afterwards George demanded a separation; but Caroline flatly refused any divorce.

An attempt to blacken the Queen by alleging ‘scandalous and improper conduct’ became the subject of an official investigation, but failed amid widespread public sympathy for Caroline. George got his revenge by having his Queen locked out of the Abbey for the coronation service in 1821. Poor old Caroline died just two weeks after guards stopped her attending her estranged husband’s coronation – by no means the first or the last victim of a disastrous royal marriage.

Closer to home the story has continued. Royalty are no more immune to the travails and trials of marriage than anyone else. Royalty pays a heavy public price for its privilege and duties – in some cases with harsh consequences, as the abdicated King Edward VIII found to his cost in 1936, when he announced he intended to marry Wallis Simpson, a divorced American.

And everyone remembers the fairy tale wedding of the Prince of Wales and Lady Diana Spencer in 1981 ending in bitter estrangement, divorce and ultimately tragedy. Now Britain’s future king will be a divorcé. The gilded cage of royalty can destroy relationships just like any other.

So today, let us raise our glasses to the happy couple and wish them, sincerely, all the luck in the world. They will need it on life’s journey together.

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