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Tuesday, 9 February 2016

Does all the American and European QE and near-zero interest rate money in the world end up in Silicon Valley? As it does not trickle down to the real economy, seemingly.

Last week was a normal week in The Netherlands, without very conspicuous news. 

ING bank, one of the so-called 'Global Systemically Important Financial Institutions' or GSIFI banks – and on top of that one of my former employers – presented its Q4 quarterly report with a summary of the annual results. These results were seemingly outstanding, with an annual profit for the bank for 2015 of more than €4 billion euro.

Curious about the data behind the balance data I browsed briefly through the Q4 report and ran into this table of the ING Loan Book:

ING Loanbook from the Q4 Quarterly data
Chart courtesy of:
Click to enlarge
The first thing that struck me was how enormously important the residential mortgages still are for ING, with over €277 billion in residential real estate (RRE) loans on a total loan book of €593 billion. Even though the Dutch housing market suffered from more than 30% in price drops during the crisis years, residential mortgages are still a large cash cow for ING.

And then I looked at the amounts for Business Lending in this chart. I am always extra interested in business lending, as this was a department where I spent six very informative and pleasant working years and where I learned a lot about banking,  loans and credit lines for Small and Medium Enterprise companies.

The second thing that struck me, was how relatively unimportant financing of SME companies (i.e. business lending) is for the bank as a whole, in comparison with the amount in RRE loans: only €94 billion of the total loan book is spent on business lending.

And the third thing that struck me in the aforementioned chart was that ING’s domestic market, The Netherlands, was ‘fobbed off’ with ‘only’ €25 billion in SME loans; almost €10 billion less than Belgium (€34 billion), a country with 6 million inhabitants less than The Netherlands (respectively 11 million inhabitants for Belgium and 17 million for The Netherlands).

I even would not be surprised when these loans for Belgium are actually deployed in Flanders alone in most cases, the Dutch speaking part of the population, including Brussels: a part of the country which has only 7.4 million inhabitants. 

In my opinion, it can be expected that people and companies in Wallonia – the French speaking part of Belgium – will rather do business with French-oriented banks, like Société Générale or Crédit Agricole, than with the Dutch-oriented ING bank, even if I can’t prove that.

This would mean that roughly 8 million inhabitants of Belgium received €34 billion in SME loans from ING, against the €25 billion that 17 million Dutch inhabitants received in total.

Probably one of the reasons for this conspicuous phenomenon – one that I already heard back in 2014 – was that the risk management of SME credit for the Belgian market stood at a higher level than risk management for SME credit in The Netherlands. 

Roughly translated, this means that the risk that banks suffer from under-performing and non-performing loans is substantially lower in Belgium than in The Netherlands. What surprises me, however, is that this phenomenon did not change in the two years after I heard it first. And that the situation with SME and retail companies is still below par in The Netherlands, seemingly.

On the other hand, this news is perhaps not so surprising after all. In contrary to The Netherlands, where wages have been on a virtual stand-still for more than a decade, there has been a healthy wage development in Belgium:

The inflation and wage development in Belgium
Chart by: Ernst's Economy for You
Data courtesy of: Eurostat
Click to enlarge

The inflation and wage development in The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of: Eurostat
Click to enlarge
Belgium is one of the few countries where the indexed wages (red line) between 2005 and 2015 have actually risen considerably. Except for the categories with low price elasticity Energy and Food, there has not been a considerable inflation for the other categories. Particularly in Belgium, one can see clearly that the dropping energy prices of 2015 will have a strong downward effect on the Belgian inflation rate.

In Italy, The Netherlands and Spain wage development between 2005 and 2015 was close to nought, while energy and food were nearly the only triggers for inflation.

Therefore one of the reasons for the circumstance that SME companies in Belgium are allegedly healthier than the Dutch ones, could be the fact that the purchase power of Belgian citizens remained better intact than that of their Dutch counterparts. People with their purchase power intact are of course more spending-happy than people who saw their purchase power erode during the last decade, due to a lack of wage increases and years of substantial inflation and strongly elevated taxes.

In my opinion, the macro-economic development of wages has everything to do with the general health of SME companies in a particular country and – consequently – the willingness of banks to invest money in such companies. Banks simply don’t want to invest money in SME companies, when they could lose that money easily: this makes their risk on substantial losses too high. Or in a clear paraphrase of the famous proverb about the horse and the water source:  “You can take a bank to an SME company, but you cannot force that bank to invest in it!”

Perhaps ING is an outlier regarding SME loans to domestic customers in The Netherlands. Perhaps the other large banks Rabobank and ABN Amro do lend more to Dutch small and medium enterprises and retailers. Yet, I would be really surprised when that would be true actually.

What may be the cause is not clear yet, but it is obvious that Dutch SME companies and retailers are not in such a good shape that banks actually like to lend money to them. The easiest and most convenient solution is to blame the banks for that, but in my opinion it is defensible to blame this partially on the stagnant wage development in The Netherlands and the consequential erosion of purchase power among Dutch middle class and lower class citizens.

And then – on Thursday February 4 – there was a business news broadcast on the Dutch financial-economic channel RTL Z that attracted my attention.

The Dutch trendwatcher Vincent Everts gave a lecture about the lending bonanza that is currently going on in Silicon Valley. For everybody who masters Dutch, there is this link to this hilarious, but yet very serious scene. For all others there is this rough translation:

Vincent Evers: The current hype in Silicon Valley, leading to start-ups getting outrageous market values, is totally ludicrous. Currently there are more than 151 start-ups with a market value of over $ 1 billion. The value of companies that everyone knows, like Uber ($51 billion), Spotify ($10 billion) and Airbnb ($25 billion), can more or less be defended. These are the champions in their respective markets and make everybody jealous of their success.

But what about SpaceX ($12 billion)? And have you ever heard of Xiami? Still this company has a market value of $46 billion! And what about Wework ($10 billion) or Zenefits ($4.5 billion). Have you ever heard of those start-ups?!

I have here a chart with three names on it:

Palantir – this company analyses data (i.e. big data)    
  • $20 billion in market value
Theranosa company that invented a new way to measure blood samples 
  • $10 billion

Stripe – this is a fintech company that created an API for electronic payments    
  • $5 billion

Everything that would have had a value of roughly $10 million in earlier years, has now a value of $100 million, $1 billion, $5 billion, $10 billion. The interest rates are currently so darn low that the money virtually flows into these companies through the trenches, holes and open windows. 

Everybody and their sister think that Silicon Valley is king. And Silicon Valley itself?! They think: ‘it’s partytime so let’s party for as long as the party lasts. But when the music stops, we run like hell’. 

The current situation in Silicon Valley remembers me of the situation in the movie The Big Short. Everybody is waiting when – not if – this bubble is going to burst. Yet, some people become shamelessly rich with this hype. And now the losers start to invest in Silicon Valley: the pension funds and the insurers that invest the hard-earnt cash of the teachers and hospital nurses, for which they must collect sufficient pension money. 

This must go wrong, but you don’t know WHEN this goes wrong. 

Everybody is putting his money in Silicon Valley. Silicon Valley is now totally overheated and must crash down. The only point is: I don’t know when that happens, otherwise I would become rich too.

Of course, Vincent Everts is totally right with this outcry. This 'ball of billions' can’t go on forever in Silicon Valley and therefore the whole hype there will crash and burn in the end.

Yet – and that is the game that everybody is playing currently –  every person or company who sells stock, bonds and other stakes in such companies for a higher price than for which he purchased them, is a winner. 

The sorry meatheads that get stuck in the end with overpriced stock and bonds or worthless interests in defaulted companies, are definitely the losers. And that group will probably not be the fancy business banks, the venture capitalists and private equity investors that currently pay the mega prices for unknown start-ups in Silicon Valley.

Todd Harrison (i.e. founder of Minyanville), one of the wisest and savviest investors and writers with whom I got acquainted during the last five years, used this beautiful proverb for such a situation: 

‘If you enter a high stakes poker game and you don’t know who the sucker is, it is probably you!’ 

I have little to add to that...

The million dollar question is however: how can it be that the whole SME industry of The Netherlands – the 17th strongest economy in the world – gets a total amount in loans from the leading Dutch banks, which is probably less than the alleged market value of Xiami ($46 billion), a company that no-one has ever heard of yet? Is this not the craziest situation?

And even the total amount of SME loans for Belgium, the 25th strongest economy in the world with a much healthier SME infrastructure nowadays, is less than the alleged market value of Xiami and one or two other start-ups in Silicon Valley combined.

The only explanation that I have for this conundrum is the so-called trickle-down effect. For this I created the following illustration

Quantitative Easing and the trickle down effect
Illustration created by: Ernst's Economy for You
Click to enlarge
This huge ‘swimming pool’ of liquidity that has been created by the European and American quantitative easing initiatives, as well as by the 'kamikaze', near-zero interest rates of nearly all the global central banks, does not trickle down at all into the real economy; except for a few droplets.

This is the reason that the middle and lower classes in f.i. Europe came almost to a total standstill with respect to their wage development. This is also the reason that countless SME companies and almost the whole retail industry everywhere are still having a very tough time after the crisis, even though the amount of globally available liquidity is nearly endless.

On the other hand, that enormous pool of liquidity is still trying to find a way out as the water tap only lets out a few droplets of liquidity to the real economy. And all that available liquidity should make a decent profit for its borrower anyway, in spite of the near zero interest rates.

And I suppose that this new-found, huge water outlet for the swimming pool of liquidity... is Silicon Valley these days.

That is not because all 151 multi-billion dollar investments in Silicon Valley will be hugely successful in the future; they almost certainly won’t be. Of these 151 companies, perhaps only 25 might turn out to be real winners in the end. The rest will default sooner or later...

No.. It is simply, because the people who are involved in these multi billion dollar investments in Silicon Valley seem to know who the sucker is. And it is certainly not them...

Sunday, 7 February 2016

“Ladies and Gentlemen, please fasten your seatbelts”. It seems time for British companies to buckle up for the approaching Brexit, as mood seems to go over mind in the United Kingdom.

Lately I have written a few articles about the United Kingdom (see also this one) , where a Brexit seems the inevitable climax of a process going on for years and years: a culmination of the feelings of anger and alienation against the EU, that had already been simmering for years since the 1980’s. Feelings that have mounted to an ubiquitous, national resentment in England during the last five years of the Euro-crisis.

People look at the EU as the institution that should be blamed for the industrial downfall of the United Kingdom and especially England, as ‘they’ allegedly made an end to the British steel industry, the coalmines, the independent British car industry  – except for a few outlying, high-end car companies –  and many other parts of the British industrial legacy.

Four of the bedrocks of English quality, attention for detail and luxury lifestyle – although very much alive and kicking – in the British car industry could not recover independently from  the European  scourge in the past:  Bentley, Jaguar, Aston Martin and Rolls Royce.

Bentley is now a subsidiary of Volkswagen and Rolls Royce is now part of BMW, both extremely successful brands from the UK’s adversary-after-all-these-years  Germany.  Jaguar, the luxury brand for the intermediate budget, is owned by Indian steel maker Tata Steel (‘Oh Irony’)  and Aston Martin, the British builder of iconic thoroughbred sports cars, is partially privatized in 2007 after a 13 year marriage to the American Ford Motor Company.

And while England (i.e. London) is an absolute stronghold in the financial and  commercial services industry and holds a position virtually second to none, this success and wealth has turned London and its suburbs into a ghetto for ‘the rich and shameless’, with unlimited amounts of money to spend. And on the other hand, the successful position of London as beating heart of the UK did not lead to a distribution of wealth to the more rural and formerly industrial parts of the United Kingdom, where the income per capita is much, much lower than in the City.

It is easy to blame the European Union – instead of the British government – for the general demise of the British industrial glory and so it happens quite often. Nevertheless, one should ask himself how all these aforementioned brands and other large industries would have done in the relative vacuum of total British independence in Europe. Would the UK and England still be the glorious industrial stronghold? Or would the decay have set in even stronger than nowadays?! We will never know.

Yet, when an American cartoon movie – Cars 2 –makes jokes about the quality of the British cars and engines (i.e. the starring Landrover in the movie allegedly having “the worst engine ever built”) and the UK’s national number one motor show Topgear broadcasted numerous displays of utter self-loathing (all episodes about ‘British Leyland’ products), one should understand that it was not the competition from Germany alone that did all the damage to the British national car industry.

Still, the EU is now the national scapegoat in England and an increasing number of English citizens is seemingly heading for the exit, now that they have the chance. And there is probably nothing that David Cameron can do about it anymore, as his cheap and translucent blackmail attempt of the EU has seemingly blown up in his face. 

See for instance the following outraged headlines of last week: 

Headlines of  The Sun and the Daily Mail
Pictures courtesy of: The Sun and the Daily Mail
Click to enlarge

Headlines of  The Daily Express
Pictures courtesy of: 
The Daily ExpressClick to enlarge
The following, more business-like snippets were printed in the Guardian:

A new poll has suggested more Britons favour leaving the EU over staying in, with 45% supporting “Brexit” compared with 36% against, while a fifth remain undecided.

The YouGov poll for the Times was carried out in the two days after publication of an outline deal that David Cameron negotiated which could change the UK’s relationship with Brussels while keeping it within the European Union.

The poll suggested the number of voters wanting to quit had risen by three points on the previous week, the Times said.

As I said, I don’t see how PM David Cameron can turn the tides for a prolonged British stay in the EU, as the momentum for his desired outcome of the referendum – staying ’in’ the EU – is killing at this moment.

My readers could think that I am gloating about the situation in the United Kingdom, but I really don’t. As far as I’m concerned, the British can stay by all means, albeit under the current conditions with only a few minor changes!

Nevertheless, I was outraged by the cheap blackmail of PM Cameron. By the way he put pressure on the rights and privileges, as well as the ideas about democracy and ‘their’ European Union of almost 400 million European citizens on the continent. And on the political representatives that these 400 million citizens chose to act on their behalf. PM Cameron wanted to change the EU towards his vision of a neoliberal free trade zone, with only the benefits and without the hassle: at gunpoint! How is that for democracy?!

Of course I know that the resentment against the EU is also mounting on the continent at this very moment. It would definitely be grotesque to state that ‘every European citizen’ supports the EU at this very moment. They don’t. Yet I believe that most of the quiet European citizens all over the EU are still firmly behind the EU, although I don’t have the data to proof it. As many people still don’t forgot what the EU has brought them over the last 70 years.

Therefore I really hope that the EU stands tall and hands out an ultimatum to the British: “Stay with a clear majority and without further conditions and opaque deals, or leave as soon as possible and face the consequences of a life on your own...!”

Yet, if I had to make a prediction at this moment, I would go for the last of the two possibilities, even if Donald Tusk will pull yet another rabbit from the hat.

Therefore it was extremely surprising for me to read in the Financial Times that British companies are seemingly assuming the ostrich position, with respect to the national mood in England. Here are the pertinent snips of this FT article:

The boards of many of Britain’s largest listed companies have made no contingency plans for a possible Brexit amid polls showing rising public support for leaving the European Union.

The Financial Times contacted every FTSE 100 company, and only four — Easyjet, Persimmon, GKN and Standard Life — said they were engaged in detailed planning for a Brexit. Asked what measures it was taking to prepare, Vodafone, on the other hand, said “none of note required”.
One in 10 of the constituents of the City benchmark have not yet taken a position on Britain potentially leaving the EU, the FT research found, with three companies saying they had not even discussed the issue at board level.

The prime minister last month urged business leaders to start speaking out for Britain’s membership of the EU, amid frustration in senior Tory circles that some companies seemed prepared to keep their heads down.

Ian Peters, chief executive of the Chartered Institute of Internal Auditors, said it was dangerous for boards to ignore the potential impact of Brexit. “[It] has rather crept up on boards.” It affects all organisations to a “greater or lesser degree,” he added.

Analysts warned that even those companies with limited operations in the UK should not dismiss the effects of a Brexit. “Chief executives come in two stripes concerning Brexit: those who think it won’t happen, and those who think it won’t matter,” said Mujtaba Rahman, from Eurasia Group, a firm of political risk consultants.

“This complacency has prevented boards from investing serious resources into understanding Brexit risk and planning around it were it to happen...”

Although the remainder of this important article showed a few good reasons for companies to keep their profile low and not put their cards on the table yet – in order to be not accused of ‘high corporate treason’ when they bet on the wrong horse – the impression of Mujtaba Rahman is undoubtedly alarming. The result of the Brexit might be an untwining process and an adaptation to a new and unknown situation that would put the Y2K-bug (“who does remember that one?”) and the introduction to the Euro to shame. As I worked as an ICT consultant during both events, with a lot of active involvement in the Euro-project, it is hard for me to understand the logic behind this ostrich behaviour of the listed British companies.

Even if the untwining between the UK and the EU runs its course in a friendly and cooperative way, the effects and longevity of the process will be enormous. And then I don’t even mention the internal tensions between the countries of the UK that may mount after the Brexit, as that is probably not in the heartfelt interest of the citizens of Northern Island, Scotland and Wales

The only thing that I can think of, after reading this article, is that the emergency scenarios are lying in the company vaults after all, for the moment that Br€xit day emerges indeed. Otherwise I have to assume that these companies are acting out of hope and/or sheer naivety.

As I stated before, I really don’t see how Cameron can change the current hostile anti-EU mood in England and I don’t know how the Scottish, North-Irish and Welsh votes could stand up against the highest populated part of the UK. Seeing the near-majority of 46% in favour of the Brexit in the aforementioned poll, I neither see possibilites for Cameron nor the other British countries to turn the tides. Therefore I can only summarize with the following statement: 

‘Ladies and gentlemen, please fasten your seatbelts, as the plane towards Brexit is about to leave!’ Companies better buckle up!

Monday, 1 February 2016

“You can go your own way!” Cameron’s mega blackmail gamble might blow up in his face, as he either could unwillingly lead the United Kingdom to the exit of the European Union or totally lose his own credibility.

Tell me why
Everything turned around
Packing up
Shacking up is all you want to do

These first months of 2016 are the months in the eve of the British national referendum upon the UK’s membership of the European Union. That referendum, which was officially announced by PM David Cameron in 2013, is now hanging above his head as Damocles’ sword.

When I just browsed through my old articles tonight, it seemed that the British referendum was an almost unavoidable fact-of-life since 2011, when ‘rogue’ Tory MP’s were pushing the envelope in the House of Commons for it. Perhaps, in order to save his political bacon, Cameron thought that he was obliged to organize such a gamechanging event in 2017.

And in a way it is good that the British population now has the chance to speak up about the European Union and whether they want to share their common future with the EU or want to be separated from it forever(!).

As I argued before in the aforementioned article, perhaps all countries in the whole European Union should even have the chance to renew their wedding vows with respect to the EU, in order to prevent the EU from becoming a loveless marriage of partners ‘that stay together for the children’.

However, what I don’t like in the way in which PM Cameron is organizing the road to the British referendum, is the obvious blackmail of the European Union that he has done, in order to force the EU into accepting a number of British terms and conditions, that would otherwise have been seen as ‘unnegotiable’.

His message to the other EU members was very simple: accept my terms and I will ask my fellow countrymen to vote in favour of the EU membership. Refuse my terms and I will ask them to vote against the membership. There is no other word for that than blackmail:

No matter how you call this, it is political blackmail: “Do as I tell you, or my country will run away”. This would be a license for the British to change the EU towards their own image. Did somebody ask how the other 270 million European citizens think about that?!

Many Europeans are already sick and tired of the German yoke upon the EU and will go definitely short on the EU 2.0, that David Cameron has in mind: a free trading zone with all the benefits for the British and no burdens, aka an egoistical EU.

And those terms and conditions are not minor ones that are easy to accept, but a number of very intrusive changes that collide with the core structure of the Union as we know it.

And so David Cameron – who is allegedly an advocate of the EU membership – is playing a massive gamble with the membership of the European Union. As that is how it will turn out for him: 
  • Gamble 1: Cameron gets what he wants from the EU and advices his citizens to stay in the EU. The Brittons follow his lead. 
  • Gamble 2: Cameron does not get what he wants from the EU, but the British population wants to stay in the EU anyway. 
  • Gamble 3: Cameron gets what he wants from the EU, but the population does not listen to him and votes in favour of a Brexit anyway.
  • Gamble 4: Cameron does not get what he wants from the EU and he successfully endorses a Brexit towards his population.

This would lead to the following results:

In case of gamble 1: Cameron is the glorious winner of the gamble and he wins a set of privileges and concessions from the EU that is truly unprecedented, while maintaining the unity in the British Union.

This is the win-win situation for the United Kingdom, but an enormous loss of face for the EU and a definitive proof that the floodgates for political blackmail by other member states are wide open.

However, all other possibilities pose a losing situation for both PM David Cameron and the European Union as a whole. 
  • Gamble 2: Britain votes against a Brexit, which would be ‘good’ for the EU, but Cameron has lost the last bit of credibility within and outside his country and the European Union as a whole. The only thing that he can do in this situation is resign, as nobody will take him seriously anymore. 

  • Gamble 3: In this case both Cameron and the EU suffer from severe loss of face. Cameron clearly loses his credibility and influence, as the Brittons blatantly do not listen to him and his advices anymore. He also can’t do anything else than resign, in this case.
    • The EU on their end shows that political blackmail is a winning option and loses its face too in a very harmful way. 

  • Gamble 4: The EU does not lose face and so doesn’t Cameron. For the rest everybody is a loser in this situation, as a Brexit is then inevitable.

In other words: both gamble 3 and 4 have a Brexit as ultimate result. And please be aware of the following: the consequences might be severe for the UK!

When the UK will have left the EU as a consequence of Cameron’s referendum, after a long and difficult period of untwining that might last for at least 5 to 10 years, the United Kingdom will be on its own outside this very union. And so will the British people be.

Perhaps the largest difference between the UK and other non-EU countries in the European Economic Space or Switzerland is, that the other countries have never been a member of the EU in the first place. They have always followed a path of cohabitation with the EU, without ever being a member of it. However, the UK has been a – reluctant – member of the EU for the last 45 years; a member which has profited from its membership to the fullest, against a substantial reduction in expenses in comparison with other leading members.

I personally think that the UK will be seen by the other EU countries – and perhaps even the USA - as a mutineer, who left ship and betrayed his allies. The UK’s political loneliness might be very palpable in the not so distant future, just like the shockedness and flabbergastedness of the other ‘sailors on the European ship’.

Yet, at this moment David Cameron is still aiming for the outcome of gamble 1 and his attempts might more or less succeed, as the following snippets of this excellent FD article by Rik Winkel prove:

Tuesday, President Donald Tusk will come with new proposals for the British situation.

On Tuesday President of the European Council Donald Tusk will lay proposals on the table in order to keep the British within the EU. According to the chairman ‘good progress has been made during the last 24 hour in the negotiations with the British, but there are still questions to be solved’.

The Pole paid a visit to Downing Street on Sunday. After a relatively short dialogue with PM David Cameron, both parties informed the media that another day of talking would be necessary, before Tusk would formulate his proposals.

These are about the boundaries of the agreement that Tusk will deploy at the European Council assembly of 18 and 19 February. When this plan succeeds, Cameron could ask the British citizens whether they would like to remain a member of the EU, based upon these new agreements. The date in mind for this event is the end of June, 2016.

The proposals of Tusk are not much more than the foundation, based upon which the 28 EU-leaders will negotiate later this month. The preparations for these negotiations start later this week in Brussels, with conversations between the so-called sherpa’s, the personal assistants of the leaders.

A spokesman in London stated this Sunday that Cameron has enabled a breakthrough in his desire to short welfare payments to EU labour migrants for a period of four years, immediately after the referendum. The European Commission refused to confirm this statement on Monday.

The president of the European Central Bank, Mario Draghi, said this Monday in Strassbourg that an agreement with the British would offer a chance to the EU-leaders to show that the future of the European project is firmly at their retinas. ‘A solution that would sturdily anchor the United Kingdom in the EU and at the same time allows the Eurozone to further integrate, would enhance confidence’, according to the Italian in the European Parliament.

With this remark Draghi points at one of the most difficult questions in the negotiations, the relations between the nineteen Eurozone countries and the other nine EU member states. Cameron wants guarantees that the Eurozone will integrate only without harming the rest of the internal market – read: the City. The Eurozone countries are apprehensive of a British veto upon measures, that they deem necessary for the survival of the Eurozone as a whole.

I hope that the proposals by Donald Tusk will be nothing more than a sign of good will of the EU and not the preliminary to serious changes in the structure of the EU on behalf of the British. However, the fact that Cameron has raised the flag with regards to some serious commitments being made by President Tusk, with respect to EU immigrant workers and their rights to receive British state benefits when necessary, might show that the worst has yet to come in the negotiations regarding the British blackmail.

As I said earlier, Gamble 1 would be an enormous victory for David Cameron, but a dangerous loss of face for the EU, as it would turn serious political blackmail into a reality for the EU.

On top of that, the aforementioned remarks by Draghi and especially the accompanying explanation of Rik Winkel show the dangerous possible consequences of the current British blackmail gamble and the desperate situation in which the whole EU resides at this very moment.

Once the EU gives in to the British by granting these guarantees to Cameron, the UK will continue to do anything (and more...)  to keep the strenght of the City intact, by using its vetoes against necessary Eurozone integration anywhere it can.

The alternative for this, however, is simply ignoring the British demands and hoping for option (gamble) 2, while taking the risk to get gamble 4. And even when gamble 4 would play out – a Brexit – the Eurozone might actually be better off than with the British inside the team.

One should remember that one of the main reasons that the Eurozone has been such a toothless tiger during the last five years, was the negative influence of PM Cameron upon the negotiations.

Cameron will do everything for the city, as it is the economic cork on which the whole British nation floats, even if the City’s interests collide with the interests of all other countries in the European Union. And Cameron will do and allow nothing that could weaken the City’s position; for instance by allowing further Eurozone integration to happen, like Draghi wants.

This is the reason that Draghi’s words are in fact futile and rather based upon hope and make-belief than on sound judgment of the seriousness of the situation regarding the United Kingdom.

The longer I think about a possible Brexit, the more I feel that it could be the best for both parties in the end, unless... the British population decides to choose for an unconditional and broad ‘No’ against a Brexit with at least 65% of the votes. Then we will welcome the UK ‘back’ in the EU, as unconditional and loyal members. Otherwise Cameron’s blackmail could turn into a drama with only losers at both sides.

And therefore, perhaps even the best solution is that the UK follows the lyrics of the famous Fleetwood Mac song: “You can go your own way!”

In the early part of this article, I said that it would perhaps be a good thing when the whole European Union would once have the possibility to speak out about the future of the union. However, at this very moment the ubiquitous nationalistic and anti-European feelings in the whole European Union are running so out of hand, that a broad referendum about this particular question would probably mean the end of the EU as we know it. 

And that would be the sad end of the best thing that has happened to Europe in a long, long time... In spite of all its obvious drawbacks and serious issues.