Io, Saturnalia!

Ah, Brexit! What is there left to say that not already been said, most of it either out of folly or falsehood? As regards the overall political backdrop to this lightning bolt of mass discontent, the only thing that is clear is that there is no clarity—neither within Britain nor without. If, as the Good Book tells us, a house divided against itself cannot stand—hard hats on, people!

In the UK, the bile and vituperation pouring out both from the petulant, metropolitan ‘thought leaders’ by whose pontifications more than half the country have decided NOT to be led and from the howling, left-wing street mobs whose rage the former have so assiduously cultivated has been a depressing, if not an entirely unexpected sight in this age of political Manicheism.

All those barracadista micro-celebrities who so recently threatened to quit Albion’s shores should a Tory government ever be elected are again out crying, Wolf!, in declaring they will seek exile in the tender bosom of the EU any minute now, just as soon as their latest appearance on Big Brother has aired or their last Bush Tucker Trial is completed. Meanwhile, the reptile-brain revolutionaries, amygdalas in overdrive, have been hurling the usual smear list of -isms and –ists at those shrewd enough to get out and vote while they were still queueing for benefits and mindlessly tweeting their self-reinforcing sense of moral superiority to one another.

Nor is it any more edifying up on high. The political classes are bitterly divided between die-hard Remainers, suddenly directionless Leavers, and the serpentine schemers seeking to exploit the power vacuum between the two camps for their own careerist ends. Both (all three?) major political parties have descended into internecine strife while the Tartan Taliban subvention separatists are trying to open another front, north of Hadrian’s Wall.

In Europe, the vote has revealed the growing schism between the Jacobin ideologues who want to use the crisis not just to eradicate the last vestiges of the nation state, but also those of cultural nationhood itself, and the bogeyman ’populists’ who see those same distinctions as their fellow citizens’ most precious protection, as well as the glue that binds them all together.

Some wish to take fire and sword to chastise the renegade British, even if they set fire to their own châteaux thereby: others are not so much punitive for its own sake as anxious to encourager les autres. Calmer heads elsewhere are equally keen not to jeopardise the relationship with one of their bigger (net) markets in a world not exactly brimming with juicy prospects for expanded business.

East has taken up the cudgels with West—see the doings of the Visegrad nations (the Visigoth nations as they are probably regarded by a horrified Brussels), not to mention the violation of the sanctum sanctorum of the Slovenian central bank in pursuit of a local corruption investigation this week. South is again at odds with North where the fulminations of an embattled Renzi against EU strictures (bank bail-out rules, in his case) are about to be echoed by the Portuguese and Spanish Finance Ministers, the latter outraged at not being accorded the same budgetary leeway by the Commission as have the unfairly advantaged French.

Editorial columns everywhere reflect the same growing rejection of the Push Me-Pull You pantomime of alternating rule by the established parties on the Continent proper as is running rampant in its most fractious Atlantic archipelago. The FPÖ have secured a re-run of Austria’s dubiously-conducted presidential race and may make it into an implicit referendum on EU membership. The FN in France is enjoying its moment in the spotlight which the horrors of le quatorze juillet will do little to curtail. Five Star has taken two mayoralties and a lead in the opinion polls in Italy. The AfD has become sorely distracted by internal squabbles but nevertheless represents a potent threat to the status quo in Merkelland.

In fact, the list of such instances goes on to the point that it has prompted one or two historians to draw overly neat, if not entirely inapt, parallels with the Rome of the last century BC.

Amid all this chaos, the economic prospects seem to be darkening once more to the point we are in danger of revealing just how futile has been the last nine years’ struggle (nine years!) to put Humpty-Dumpty back on his wall.

‘Whatever it takes’ to do so, it clearly does not take whatever has been so far attempted, is the stark conclusion we must draw.

Not that this should be a call for yet another monetary-fiscal Flucht nach Vorne. Surely the fact that Italy’s banking black hole would give Kip Thorne a fit of the vapours, or that Deutsche Bank’s market cap has shrunk to the value of a packet of Smarties, two Panini football stickers, and knotted handkerchief should give the lie to that idea.

Nor should it come as a shock that, having crammed everyone, willy-nilly into ever longer-duration, less creditworthy, more illiquid instruments in the vain hope that their hard-spared savings might not then be unconstitutionally taxed away by Draghi and his peers, the first rush back out of such vehicles almost caused a motorway pile-up of sizeable proportions and not inconsiderable reputational as well as financial casualties.

Given the interconnectedness of markets; the sometimes undeniable need to ‘pull up the flowers to water the weeds’ – i.e. to sell out of still nominally profitable positions in order to meet margin calls and/or to compensate for losses on the bad ones – and the imperative that if you are going to run, run early, there could be a lot more pain where that came from when the latest central bank narcotic high wears off . No wonder gold went bid alongside the long bond or that the first half’s other big winners – e.g., oil – were being dumped.

It promises to be an interesting second half, even before we get to what is likely to be a highly entertaining US presidential contest between the would-be Tiberius Gracchus and the female re-incarnation of Marcus Licinius Crassus.

Io, Saturnalia!