Hi David, I thought this was interesting although somewhat gloomy and your comments will be appreciated.

Best wishes

David Fuller's view

Many thanks.  I remember Russell Napier from his CLSA days, although I do not think we ever actually met.  He is a thoughtful, academic man, and yes, inclined to be bearish.  This is perhaps not surprising given all the problems and uncertainties over many years, although the money flows have been positive more often than not.  Here is the opening of his interview with Barron’s:

Barron’s: Britain will vote on June 23 on whether to leave the European Union. How do you expect the so-called Brexit vote to go?

Napier: It is too tight to call. The most important thing is that the move to a federal Europe is a massive constitutional change, which at some stage will need to be endorsed by the people of each sovereign state, usually by referendum. It is silly to believe this issue is just a United Kingdom thing. Look at polls all over Europe. People are voting for anybody who, whether on the extreme left or right, wants to maintain the sovereignty of that particular state within the European Union. That is completely contrary to the ability to have a functioning euro.

This is round one. The most important referendums will be those in the euro countries. I expect referendums in places like Finland, the Netherlands, and even Italy. European legislation is forcing Italy into a form of bank recapitalization, which won’t work and is bad for the Italian economy. Italy will move up the agenda quickly.

These are astute comments.  Many people all over Europe are dissatisfied with the EU, which is currently a burning barn in terms of economic underperformance.  This has resulted in widespread dissatisfaction, compounded by undemocratic policies and the EU’s privileged, political oligarchy. 

I hope Russell Napier is right about future referendums in Euro countries.  That would be democracy in action but I fear this will be resisted by governments on behalf of the EU bureaucracy.