The Contrarian

“In the investment markets, what everyone knows is usually not worth knowing.”

The EU Will Crumble

Government is usually the problem. The aggressive EU government is trying to get Apple to pay over €13 billion in back taxes. As you know, Apple’s foreign profits are taxed in Ireland at a very, very low rate. But that is between Ireland and Apple. Whether Apple should “pay its fair share” as liberals always say, we leave up to the reader. However, the legal side is explained by Irish Finance Minister Michael Noonan. He said:

“As far as I am concerned there is no economic basis for this decision. They (the European Commission) don’t have responsibility for taxes and they are opening a back door through state aid to influence tax policy in European countries when the European treaties say tax policy is a matter for sovereign governments.”

That’s what we wrote in our last issue of our Wellington Letter. It’s exactly this heavy-handedness of the EU government that is causing countries to consider leaving the EU.

The EU is starting to crumble into a bitter fist fight. It doesn’t have a leader. The current head of the Brussels based government reportedly drinks cognac for breakfast. Many say he has no idea what he is doing.

Now we hear this, from Mish Shedlock:

A gang of 27 EU nations hit the UK with a parade of impossible demands. All the countries demand the UK grant free movement of people, but that is why the UK left.

In addition, Spain wants joint sovereignty over Gibraltar, Malta demands the UK get an “inferior” deal, the Czech Republic says “Four freedoms or no freedoms”, and Lithuania says the UK should “pay if they stay.”

For its part, the gang of 27 believe the UK has an impossible demand on immigration control that they cannot accept. If neither side gives, and that is increasingly likely, a hard Brexit looms, very hard.

This is the time for a strong leader in the EU to step in and say, “stop the fighting. We all have to cooperate even if Britain exits the EU. We will still trade with each other.”

Anything else will go back to conditions that led to two World Wars. And if the EU can’t find that person, another type of leader will step in, and he may just be another Hitler, Stalin, or Mussolini.