Sameh El-Shahat’s Blog

The Financial fallout has provided an excellent opportunity for little countries in Europe to show the big players, humbled by the global recession, who’s boss.

This is a salutary tale of how and why you should think carefully before badly treating a small country, however harmless it may seem. Not so long ago, 65million years to be exact, the dinosaurs thought they had the Earth to themselves and  thought nothing of riding roughshod over little creatures called mammals that were all to intents and purposes insignificant. Then came the Asteroid (the precursor to the sub-prime crisis) and wiped out the big dinosaurs leaving the meek to inherit the earth. History could be repeating itself.

Here are two sobering tales from our times:

How Switzerland Turned on Germany To Teach The Americans A Lesson

This is a truly bad time for Germany. In classical Götterdämmerung style, it is being assailed by its friends and allies for money.

Only yesterday, I wrote about how its Euro-area partners are trying to fleece it, so that they may carrying on living way beyond their means. To fill up its rainy day chest, beleaguered Germany is being forced to turn on small tax haven Liechtenstein to claw back some of the money stashed away there by its rich barons.

Don't Mess With UBS!

And now, in a typical kick’em-while-they’re-down fashion, Switzerland has entered the fray as the latest country asking Germany to bail it out, and it is doing so in a very imaginative fashion. We’ve been dumping on the Swiss for a while now about their banking secrecy laws, so it seems that they are fighting back to secure a future in a rather bleak financial future.

The Swiss are neither in the Euro nor in the EU. They also have no natural resources to speak of, aside Milka cows, fresh air and great scenery. For their fabled chocolate, they have to depend on some pretty dodgy African countries for supply, and for their legendary timepieces, they need a constant supply of people with at least two free wrists to wear them, if the business is to remain sustainable.  So they had to be resourceful. First, they invented secret numbered bank accounts where, behind the façade of respectable cute family-owned banks that looked like something out of Legoland, anyone could hide their money and have access to it with no questions asked. But then the Americans and the Germans turned on them to try to get them to divulge the assets of their nationals. And so, in an attempt to show they are still in control, the Swiss have unveiled their new and deadly weapon.

Swiss Chocolate may be innocent for children,but the Swiss secret service has been using it as their weapon of choice for seduction and espionage for centuries. Ever wondered how a country could live off chocolate?

The Swiss Gigolo.

The Swiss Treasury, together with their fabled Nestle-fed Secret Services have sent their best agent first to seduce and then blackmail Germany’s richest woman who is heiress to the BMW fortune. The Swiss Secret services must have planned this operation very carefully, and they counted on certain German national proclivities. For example, they Swiss are obsessive about time-keeping, and so are the Germans. And so it was most natural that Ms Susanne Klatten, a member of the reclusive Quandt dynasty, and a major shareholder of BMW, would fall for suitor whose charm lay, largely, in being punctual and arriving on time for their secretive trysts. If there is one thing the Germans love, it is punctuality. A punctual yet unimaginative lover from the clock making Germanic  races could easily trump a constanly late but more ardent latin lover. If there are two things the Germans and the Swiss adore in a partner, they would be constancy and punctuality. The Swiss then asked their chocolatiers to produce to the most aphrodisiacal confectionaries for their man to ensure that his prey would offer no resistance.

He is considered "good-looking" by German matrons, and she's a good catch if you're a nerdy looking Swiss spy on the make. But he always "came on time", and that's what really made her fall for him. She became his "Swiss Made"

Having sold her some cockamamie story about running over some US mafia kid and the mafia dad asking for EURO10 million to care for his daughter. He would put up EUR3m and she the remaining EUR7m, which she did. Then he asked for her to leave her husband and place EUR290m into a trust fund for their future lives together. When she refused, he threatened to show intimate videos of them making love (punctually, of course). She reported him to the police, he was arrested and just sentenced to six years imprisonment by a Munich court.

It turned out that Ms Klatten was nothing more than the fourth wealthy woman he had seduced then conned and duped into coughing up the cash. He had been practicing for his big hit. While this may seem like a failed mission by the Swiss secret service, it is in fact a very successful mission. The Swiss wanted the Germans to know that they can strike at the heart of the industrio-financial complex. BMW had been penetrated (excuse the pun). What of Mercedes?

Unbeknownst to a German car manufacturer with a similar logo, this the coat of arms of the Swiss secret service. It stands for Blackmailing Married Women

This was also a shot across the American bow. UBS, the Swiss bank has been forced to hand over a few hundred client account details under duress by the US with the threat of criminal action. The Americans want details of 52,000 more clients who, they say, are flouting America’s stringent tax laws. For the Swiss, banking is their means of survival and they will defend it at any cost. Is it any coincidence that the Sgarbi case has been made public now? No, they Swiss are simply warning the Americans. Every American leader of industry, major banker, or politician, must now be wondering if his wife is currently being seduced by a suave, charming, and very punctual Swiss agent masquerading as an “attentive” lover, as Ms Klatten touchingly described Mr Sgarbi. Every package of Swiss chocolate entering the US can now justifiably be considered a tool of industrial espionage, aimed at giving the Swiss an unassailable advantage over the Americans.

How The Central Europeans Finally Got To Screw Austria

Up until less than a century ago, Austria had reigned supreme for over a thousand years over large swathes of Central Europe. The Holy Roman Empire, in the hands of the Hapsburg dynasty, kept a tight rein over the whole area. From 962 to 1806 (when it was dissolved by Napoleon). Then it was revived again briefly and managed to keep going till WWI when it was finally laid to rest.

So it was quite big, as you can imagine.

The Holy Roman Empire would eventually become a Wholly Austrian Mess

The Austrians, in typical Imperial fashion, lorded it over the Central Europeans and treated them like they were some oafish backward louts. They did have a favourite in Hungary, but generally treated the whole area with the disdain reserved for exotic diseases. They waited and bided their time, these Central Europeans, and they knew that eventually, they would have the last laugh.

The WWII came and went, and they all fell under the Soviet Yoke and got even more abused. Then the Iron Curtain fell and they were free again for a while, and then they saw their opportunity. Austria was so near, and yet so far.

In 2004, a whole bunch of them joined the EU where Austria had found refuge. A rump state and a far smaller one, but still a haughty one, all the same. Their revenge would be sweet.

http://www.eurointelligence.com/Article3.1018+M545e0be824a.0.html

They all then secretly agreed to start building shakiest and most advanced banking system that money could buy, and they made sure that they didn’t use their own money. In effect, the Central Europeans got Western Europeans, with Austrians at their forefront, to buy them a banking system from scratch. Then, in a concerted action that History will remember as the true end of the Hapsburgs, they encouraged their citizens to borrow their mortgages in Euros and Swiss francs, where the rates were lower than local currency banana republic rates. The Central Europeans then went on the kind of profligate shopping spree that one only does with other people’s credit cards! When the financial downturn came, all the local currencies collapsed, and all the mortgage repayments became huge as the local currency value of the foreign currency loans shot up sky high.

When people talk of the banking system of Hungary being screwed, they are in effect saying that Austria’s banking system is screwed. That is because Austria, in a last fit of imperial grandeur, thought it its god given right to recreate a financial Holy Roman Empire all over again. They fell into the Central Europeans’ trap. Austria got burned badly and the Central Europeans know that the Austrians, much as they would love nothing better than see them go to hell, must now bail them out as that’s the only way to save the Austrian banking system.

“After leading the way in providing credit to the eight former communist nations that joined the European Union in 2004, Austria’s banks are now on the hook for 201 billion euros ($254 billion) in loans, equal to about 71 percent of the nation’s gross domestic product. International investors rank Austria’s bonds as less safe than those of Italy, Spain or even Slovakia”. ©Bloomberg 2009

http://www.bloomberg.com/apps/news?pid=20601085&sid=aSskJbEPpc4A&refer=europe

Who’s having the last laugh now??

© Sameh El-Shahat 2009

Imagine the following scene. Two parents, one strict and one indulgent having to deal with a bunch of spoiled kids. The strict one (mum or dad, couldn’t tell nor care, this is not a gender column) always finds that the kids will ultimately side with the indulgent partner. This ultimately causes friction between the parents to the point that it may put their marriage under considerable strain. Nobody loves to be constantly portrayed as the boring disciplinarian one.

Now let’s replace the cast of actors in this fractious domestic scene with something closer to home. So the members of the Euro family are:

·         Mama Euro: Germany. Strict. Thrifty, dull, dependable

·         Papa Euro: France. Loose. Drama Queen, profligate and loves nothing better than maxing out credit card at Maxime’s

·         Spoiled Euro brats:

o   Greece. Taramasalata economy with too much olive oil and precious little to show for it. Believes herself a descendent of the Ancient Greeks and spends like Midas

o   Spain. Snorting too many tapas and a predilection for excessive property speculation

o   Portugal. Where’s the money gone? Always looking a mess despite excessive cosmetic surgery

o   Ireland. Affable but ended up falling for its own blarney. Wants money for an abortion of a baby nicknamed Success, that’s not its own

o   Italy. Stylish, peacock-like and utterly self-obsessed to the point of being vacuous. Doesn’t care about debt, so long as she looks good, bella figura style

This is Bacalhau or dried salted cod. As I write this, it is the only reason why Portugal got into the EU and the EURO. But if the reason for them being there is the need for having some Portuguese speakers for a spot of diversity, then why not let in Brazil. Their women are beautiful, their dialect is sexier, and they have a space program of their own. They also know how not to treat fish so it tastes like salty carpet.

This is the Euro family and the Euro brats are all after more pocket money to bail them out of the mess they’re in. They look to France to lean their way, as they have some of the largest public debts within the larger EU clan. The public deficit of Greece, this year, is expected to reach 100% of GDP. Italy, on the other hand, is happily looking forward to public deficit of 110% of GDP by next year and intends to have a party to celebrate! Italy does nothing by halves.

After the collapse of the Spanish economy, the national sport will now only use bears...

Mama Euro, played by the very able actress Angela Merkel, has no intention of throwing the family fortune (she’s the moneyed one in the marriage) on a increasingly ineffective husband and even more useless brood. So she refuses to hold big family meetings anymore, because she finds she comes under too much pressure from hubby and kids and ends up looking like shit. That is why Merkel has resisted Sarkozy (Papa Euro)’s calls for a Euro-Zone summit where she will probably be shamed into opening her purse.

http://www.iht.com/articles/2009/03/04/europe/letter.php

Mama always lost at SCISSORS, PAPER, STONE, but surely there are better ways to takes decisions on the family budget

Mama Europe has some allies, like the Netherlands, Sweden, Denmark, Finland, Luxembourg, the Czech Republic and Poland. They are all very ascetic rational types with very low debt. But sadly they cannot come to her immediate help as, with the exception of the Dutch, Finns and Luxembourg, they are not Euro family members. Yet another reason why Mama Europe would rather not have Euro family meetings too often.

The EU family has good candidates to replace some of the EURO junkie kids. The Czechs won't be asking for too many cheques, unlike greasy Greece

http://www.economist.com/opinion/displaystory.cfm?story_id=13184594

There was a time when the Euro family was the star of the EU clan, and in fact, there was talk of the EURO famille moving out of the ancestral lands into better accommodation leaving the non-EURO bunch behind. But now that the EURO family is in trouble, the whole EU grand plan looks like the world seen through a very bad hangover after a night of serious excess.

May be we should ask the question of whether we should consider letting Morocco or Egypt into the EU. If the answer seems a complete and utter “NO WAY, JOSE”, as it rightly should be, then may be we should be asking what Greece and Portugal are doing inside the EU in the first place.

While an excellent appetizer, the taramasalata alone cannot replace prudent fiscal policies, let alone a functioning economy, come to think of it!

Greece and Portugal don’t have to leave the EU. After all the Greeks supposedly gave us culture, although the only culture in Greece to speak of at the moment is their delicious yogurt. And Portugal, well, I don’t know what exactly what it is, or does for that matter. But Papa and Mama Euro may get on a lot better if some of their hopeless brood are kicked out to fend for themselves. There are better kids out there to adopt, like Poland and the Czecks. Yes, that would mean Greece and Portugal defaulting on their Euro debt obligations and being considered pariahs for  a while, but at least the whole family won’t be declared bankrupt.

© Sameh El-Shahat 2009