Sunday 5, June 2022
The European project
This week’s Macro Compass talks about the ‘hidden dual mandate’ of the ECB. The hidden bit is the need to keep the Eurozone from breaking up. Alf argues that it’s going to be impossible to keep the PIIGS solvent and at the time keep inflation from bursting out all over. Alf can seem a bit omnipresent. I don’t completely buy all his theses. To be fair, he’s owned up to a few wrong calls, and inserts this great quote into the newsletter:
‘‘Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong’’.
— Benjamin Graham - The Intelligent Investor
To me, the Eurozone cannot work. All currency unions and fixed exchange regimes end up failing when the going gets tough, unless there is a single source of political authority, which in the Eurozone there is not. However, I’ve held that view for a couple of decades, so I’m quite prepared to believe that the wheels will not come off for another couple of years. The global elite want the Eurozone to survive, and they are a powerful force in the world. Brexit was a wake up (although, of course, the UK never joined the Euro). The problem with making these ideas actionable is that this is a purely political issue, and politics can be very unpredictable.
I’m not sure this will work. I think the actual image is ‘not dope’ but I was browsing Opensea and the Bored Ape Yacht Club website and I thought it’d be interesting to share.
Matt Levine is a genius. His coverage of hedge funds, crypto, Elon Musk, and the rest of Wall Street (to use a dead metaphor) are unparalleled this is his latest update.