Turmoil In The EU?

President Trump is threatening EU tariffs, hoping for better trade deals. It’s business as usual; politicians threaten, talk big in front of the camera, then end up at the negotiating table….

Ukraine leader Zelensky came to Washington to conclude a deal designed to end the war, and it blew up with Trump lamenting, “President Zelensky is not ready for peace…(and) gambling with WWIII….”

USA Watchdog (quoting Martin Armstrong) reported:

“It looks like every country in Europe is backing more war in Ukraine. And now, there is renewed talk of an EU army. Armstrong says, “Why? Because they all are facing the collapse of the European Union.

The debt is just unbelievable. …. The German economy has shrunk…. The economic growth (of the EU) is appalling. Europe is falling, and this is why they need war. So, they are backing Zelensky.”

FinExtra adds:

“Europe is a slow moving, ineffective leviathan ruled by the bureaucrats that are paid by the defense industry. They are interested in either prolonging the current war in Europe or in starting the new more brutal one.

…. The former chairman of the supervisory board of BlackRock Germany, Friedrich Merz, known as ‘the BlackRock candidate’ became the new German chancellor.

…. BlackRock allegedly owns 47% of Ukraine’s territory and they have no interest in losing any of that. …. BlackRock needs Europe to continue the war in order to not lose any investments already made in Ukraine.”

Expert Richard J. Maybury explained the DC power elite are also compromised by the military industrial complex.

FinExtra concludes:

“For now, it looks like the beginning of the end of the European Union as we know it.

…. The liberal elites of the west will try to continue engaging in the same politics. …. Germany and France being two strongest economies in the European Union will attempt to prolong the war in an attempt to participate in the financial deals once the conflict is over. The question…is whether they will be able to strike a deal.

(With no agreement), we may see a clear divide in Europe where some smaller more independent countries will either be forced out of the European Union or will leave it by themselves. Both outcomes will have huge impact on the European Union and the strength of the Euro as a currency.”

I contacted Urs Vrijhof-Droese the Managing Partner of WHVP, international asset managers. Urs, an expert in international banking, is based in Zurich. Urs is a clear thinker, generally ignoring short term hysteria fueled by the media. I’m a WHVP client.

DENNIS: Urs, thanks for taking your time to educate our readers. This EU website loudly trumpets their “founding fathers:”

“From resistance fighters to lawyers and parliamentarians, the EU pioneers were a diverse group of people who held the same ideals: a peaceful, united and prosperous Europe.”

The Swiss never bought into their grandiose dreams and, after 40+ years, the Brits said, “enough is enough!”

Let’s address peace and prosperity separately, starting with prosperity. I compared the EU and US economy.

Since the 2008 banking crisis, US Gross Domestic Product has more than doubled that of the EU.

Trump loudly proclaimed, “The EU was created to screw the US.” Like it or not, Trump wants more US goods sold in Europe without tariffs.

That could be tough for the EU. Yahoo Finance reported, “BMW profits take big hit, down 37% in 2024.”

Urs, what’s going on with the EU economy? Why have they not kept up?

URS: Dennis, thanks for the opportunity to address your readers.

The EU consists of many countries with different cultures and economic needs, yet it tries to regulate them all under a one-size-fits-all approach. A central government trying to clamp down hard is like herding cats and has not worked well.

In contrast, Switzerland has maintained its independence, avoiding centralization and overregulation. This has allowed it to remain one of the most competitive and innovative economies in the world.

I believe the EU has enormous potential—it just needs to be unlocked. Many globally used innovations originated in Europe, and the region still boasts a highly educated workforce. However, to truly thrive, it needs greater economic flexibility to reignite its entrepreneurial spirit. A combination of deregulation and reduced bureaucracy would provide a significant boost, and recent developments in that direction are encouraging.

There is some truth in ‘old guard’ protectionism versus ‘new idea’ way of thinking.

DENNIS: I feel currency diversification helps offset inflation in all fiat currencies. Expert Chuck Butler historically called the Euro the offset to the USD.

Urs, you not only have to find good companies, but also denominate your clients investments into currencies that will remain stable.

What changes have you seen? What currencies do you see rising, and perhaps falling in the next year or so?

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URS: Currencies play a crucial role in our investment decisions, but they are not the only factor. While we firmly believe in the long-term devaluation of the USD, we would never advise completely avoiding US investments. Short-term currency movements are difficult to predict, which is why we focus on long-term trends while understanding temporary market forces.

The Swiss franc, our preferred currency, is likely to face continued pressure to strengthen against both the USD and the EUR. This comes as no surprise—Switzerland’s sound monetary policies, strong banking system, and political stability have made the franc a reliable safe-haven currency for decades. We help our clients take advantage of this stability to protect and grow their wealth in uncertain times.

That said, short- to mid-term trends can shift, as we saw with the USD’s significant strengthening in 2024. We must adapt as market conditions change, while also conducting thorough due diligence to avoid overreacting to short-term fluctuations.

Additionally, the much-discussed Mar-a-Lago Accord presents a major risk to the USD. History offers a clear lesson—the Plaza Accord led to a 25% depreciation of the USD within just two years. If a similar agreement unfolds, the impact on the dollar could be substantial.

DENNIS: In 2016, Brexit The Movie explained Brexit as a power struggle between the elite and the common man:

“The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.” — David Rockefeller

• The idea is you are part of the elite, which decides how the little people live their lives.
• These people up here, the intellectuals, are looking down on the rest and saying, “You are not bright enough to decide the future of your country”.
• The vote is to take back the right to govern ourselves.

Germany’s AfD party, advocating Germany leaving the EU, captured 33% (2nd largest) of parliamentary seats. Despite their success, they were excluded from the new “ruling coalition.” Elites ignoring their people?

The EU system affords tremendous power to unelected bureaucrats and the only alternative appears to be to secede from the union.

FinExtra predicts, “some smaller more independent countries will either be forced out of the European Union or will leave it by themselves?” How do you see the EU over the next decade?

URS: The EU is at a critical crossroads—either it gets its act together or risks falling apart. There are promising signs of deregulation. If the EU can successfully combine stimulus spending with reduced bureaucracy and meaningful deregulation, it could unlock its former economic strength. While I feel the EU Parliament understands the urgency of the situation, bureaucrats voluntarily giving up power has been a challenge throughout history.

If there is a realignment, countries who cannot get their debt under control might be asked to leave the EU.

For the EU to get back on track and fulfill its promise of peace and prosperity, its leaders must return more power to individual member states—centralization has proven to be a roadblock, not a solution.

DENNIS: Now let’s discuss “peace.”

EU leaders, “Standing with Ukraine” makes for a nice, but laughable, sound bite. Trump is insisting NATO members fulfill their military commitments, which is good for business. Yet Trump (and US citizens) want no part of never-ending proxy wars or WWIII.

I’d appreciate your thoughts. Peace? War? Does it present any investment opportunities?

URS: I am optimistic that we will see peace in Europe. It was a mistake for Europe to remain passive and let the US take the lead, but with the new US government, this is changing.

While Europe may have benefited financially, European leaders have realized they can no longer afford to do so. If they want lasting peace, they must take responsibility. I feel they have learned their lesson and will now invest heavily in their defense. While change won’t happen overnight, Europe appears committed to making it work.

These investments, including infrastructure, are attracting strong interest from investors who see Europe regaining its strength while helping the economy. We are experiencing a high demand from Americans looking to capitalize on these opportunities. Many international investors use Switzerland, with its neutrality and political stability, as their preferred hub for targeting these types of investments.

DENNIS: Urs, thank you for your time.

URS: My pleasure

Dennis here. The EU has bailed out smaller countries who are incapable/unwilling to get their debt under control. A populist movement supporting local sovereignty is rising. US tariff negotiations and a European military buildup will present a challenge. European realignment is likely. Investment opportunities will emerge, and picking the winners will be very profitable.

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On The Lighter Side…

March Madness basketball is in full swing. The oddsmakers were right, the final four teams were all seeded #1 in their region. I can’t recall the last time that happened. Some games were close, but the top seeds prevailed.

I’m sure we will watch the games, but I don’t feel emotionally invested, pulling for a particular team to win. It’s much easier when there is a lower-seeded team still playing, you can pull for the underdog. SI indicated Auburn is the early favorite this coming weekend.

Personally, I hope the games are exciting, right down to the wire, and no young kid makes an unforgettable blunder.

Phoenix weather has been wild this month. We have seen 95-degree temperatures, and this week we are seeing 50-degree nighttime temperatures. It won’t be long before we see triple digits for weeks at a time.

I’ve had a few readers ask about Chuck Butler’s health. Good news is he is out of the hospital and likely headed back to St. Louis shortly. Pneumonia wears you out, but he is one tough hombre….

Quote Of The Week…

“An unwinnable war may be the best kind for a late-stage degenerate empire. It shuts down the opposition as ‘traitors,’ keeps ‘the people’ in line as ‘patriots’ and it keeps the money flowing to elites.”

— Bill Bonner

And Finally…

Subscriber Robert G. shares some clever remarks for our enjoyment:

• You know you’re getting older when you have to use a shopping cart at the drug store.
• What do you call an 80-year-old cheerleader? Old Yeller
• Never leave home without a kiss, a hug, and an “I love you.” Then remove the dog hair from your mouth as you walk out.
• Why don’t the 99% of us who aren’t offended by everything quit catering to the 1% who are?
• Happiness is letting go of what you think your life is supposed to look like and celebrating it for everything it is.
• Gas is so high the mailman is working from home. He called yesterday to read my bills to me.
• I never thought I’d be the type of person who would get up early in the morning to exercise. I was right.
• There should be a calorie refund for things that didn’t taste as good as you expected.
• I might wake up early and go running. I might wake up and win the lottery. The odds are about the same.
• I read recipes the same way I read science fiction. I get to the end and think, “Well that’s not going to happen!”
• I just bought a head of lettuce. Should I throw it away now or wait a couple weeks like I usually do?
• Wife: Did I get fat during quarantine?
  Husband: You weren’t really skinny to begin with.
  Time of death – 10PM. Cause of death – Covid
• Don’t worry about getting older. You’re still going to do dumb stuff, only slower.

And my favorite:

• Threw out my back sleeping and tweaked my neck sneezing. I’m probably one good fart away from complete paralysis.

Until next time…

Dennis Miller

“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken

 

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