WTHIH? EU politics and the future of NATO.
What the hell is happening? July 2023
Well, its been a while, and the most bearish expectations have been proven seriously wrong.
Bears are jumping ship one by one and changing tune and looking for reasons to go long. That could be a problem for them down the line.
We touched upon the trap of conflating every macro setup with how the stock market will do here, here and here. Simplicity is brilliance!
Shouldn’t I have been given credit for my more positive thoughts under such extreme bearishness? Maybe — but the point is that even the most pessimistic or optimistic predictors later to be proven wrong, will systematically forget their extreme emotions as things calm down and mean revert. Seldom will credit be given to those who cried “It’s OK” when people were losing their heads.
But if you want to get better and better you should work on your mistakes and tweak your methods — not move the goal posts and make excuses.
Now, what’s happening?
USA
POTUS son Hunter Biden is making a fool of himself and so is his father. For how long will the US and the Democrats double down on the narrative that Joe is the chosen one to run again for POTUS? If you can’t stand or utter 5 coherent words, you should hold no political office let alone be POTUS.
UK
No shock here, Rishi and his unelected Tory government is failing across the board. I often express my worry and discontent with the UK on Twitter @Philoinvestor and analyse the reasons why the UK is stuck, with detail.
Why are UK sovereign yields spiking again?
A broader context on the British Empire’s unravelling.
RUSSIA - UKRAINE
In Ukraine it seems Russia is winning the war slowly but surely, while the country is getting decimated. Why is this happening?
Who benefits from the narrative that Ukraine stands a chance against the Russian bear at its doorstop nonetheless?
Arguing that Russia expected to take over Ukraine in 3 days or that Putin is dying does not change what’s actually happening.
There are some who so much wanted to believe the narrative that they believed Prighozin’s Wagner will march to Moscow, convert Russian troops to his side and topple Putin. Twitter was blowing up with laughable and extreme fake news and predictions about what’s happening in Russia while some of us kept saner heads. TWEET. TWEET.
FRANCE
France is dealing with riots again supposedly because of the murder of a teen by police, but that’s an excuse for looting and creating destruction. Muslim or Christian it doesn’t matter — France needs to get a grip and control these uprisings. Why should the French have confidence in their country when they risks financial destruction whenever? How will capital and business form confidently under these risks?
These events are definitely shaping the polls and giving a boost to right-wing parties like Marine Le Pen’s (MLP) party. Sure, Macron doesn’t care because he isn’t running again but next time could be even closer for MLP.
This is from April after the pension reforms riots:
Paris (AFP) – French far-right leader Marine Le Pen would beat Emmanuel Macron if the presidential election of last year were repeated now, a shock poll suggested Wednesday on the eve of fresh protests against the government's pension reform.
From France 24 article. LINK.
So how do things look now - POLITICO french polls here. The French are increasingly disapproving of Macron.
Is Europe turning more to the “extreme” right?
A theme I follow closely is German energy politics and the coalition currently ruling Germany. I expressed my worries last year in another WTHIH piece here and started tracking German polls on Twitter.
See all my Tweets on the right-wing party of Germany AfD by clicking here.
Late June, Chancellor Scholz woke up from his sliding-in-the-polls slumber and realised AfD is overtaking his own party! The headline above is from this Bloomberg article.
He then started to realise he needs to change the rhetoric — he backtracked from supporting Ukraine to joining NATO and pivoted to just supporting Ukraine to defend itself. Too little too late and Scholz is trapped as his coalition partner the Greens are pro-War, anti-Nuclear and pro-Gibberish as they don’t know what they are talking about..
Read my thematic piece from last year about the German energy politics context and what is shaping modern Germany. PIECE.
The problem for Germany is..
That even the CDU (Merkel’s party) is also pro-War and pushing a rhetoric of escalation, increasing defence expenditure and a prolonged conflict with Russia that scares Germans. They are a prosperous and wealthy peoples that are not willing to sacrifice their economic prosperity for the battles of someone else.
The cessation of Russian gas flows into Germany and the subsequent explosion of the Nordstream pipelines has put their economy into troubles they have no patience for — and this shows in the polls.
All the parties in the coalition (SPD, Greens, FDP) are sliding. Right-wing AfD just overtook SPD and the CDU/CSU is going sideways. I don’t know what the next government will look like for Germany — but it’s not going to be easy.
And I wouldn’t be shocked to see defections from one party to another during this time. Maybe some CDU/CSU Bundestag members switching over to AfD?
The future of NATO
The inability of NATO to ultimately defend Ukraine from total destruction while the US is pushing NATO members and the EU into more and more conflict with Russia could ultimately tear NATO apart.
NATO members already have differing and conflicting interest in this war, many wanting to have good ties with Russia as well as keep their military budgets low.
On the other hand the US shows no willingness for conflict resolution while shouting about military budgets and targets.
Newsflash: countries have problems of their own and right now balancing the budget amidst increasing interest rates and inflationary spikes is top priority. Ramping up defence spending and pushing for WW3 isn’t top in their to do list!
Is that why Biden pushed for Von der Leyen for NATO SG next year to take over after Stoltenberg?
Maybe putting a German to lead NATO would make Germans look at it more positively? I don’t know but VdL doesn’t seem the most competent to run anything unless you want someone who is corruptible and that you can easily handle.
The NATO summit will be taking place on July 11-12 and you can be certain there will be friction as to whether Ukraine should join or not and other key issues.
Stoltenberg has confirmed the summit will not result in a formal invitation to Ukraine to join NATO.
More on this theme and much more soon.
Sincerely,
Philo 🦉