Nigel Farage makes outspoken tirade against the Euro currency, 6 major interbank FX dealers back London
The Eurozone “never was an optimal currency zone” says Nigel Farage as he takes a very comprehensive look back at the last decade, and launches a scathing attack, writing off the European single currency, meanwhile the 6 largest interbank FX dealers in the world sign a pledge and praise London, saying nowhere in Europe even comes close
Infamous British politician Nigel Farage may well be outspoken, having championed the cause of a Britain free from the bureaucracy of the European Union for a number of years, and then delivering a series of charismatic and somewhat sarcastic speeches following the referendum on European Union membership in June in which the result was music to his ears.
Although Mr. Farage is a persona which polarizes opinion, and can be regarded as very far from middle-of-the-road in parlance or stance, he does have one advantage over many career politicians in terms of business acumen and understanding of London’s absolute dominance of the global financial markets an electronic trading business from an interbank and institutional perspective.
Unlike many of today’s politicians across Europe, including the post-1997 United Kingdom, whose career paths go from school to university to public sector administrative position to Prime Minister to a fat pension within a protected, bureaucratic Brussels office whose existence today spurred the dystopian imagination of George Orwell back in 1949, Mr. Farage, like him or not, actually had a real career, in real senior executive positions, within real companies in London’s financial sector.
Therefore, whether his lager-drinking, bar-room bravado is likable or contemptible, he is perhaps more qualified to express opinion on global markets than any other political leader in the whole of Europe including former British Prime Minister David Cameron who actually never held a position in the commercial world at any point whatsoever.
Before entering the political arena, Mr. Farage did not attend university, instead making his way to the City of London in 1982, aged 18 to enter the world of institutional trading.
At a young age he began trading commodities at the London Metal Exchange. Initially, he joined the American commodity operation of brokerage firm Drexel Burnham Lambert, transferring to Credit Lyonnais Rouse in 1986. He joined Refco in 1994, and Natexis Metals in 2003.
This week, Mr. Farage has spoken out, practically writing off the Euro currency. “What is the most commonly used word in association with the Euro?” asked Mr. Farage. “No, its not failure, although it could be. It’s stability isnt it!” he said.
“A decade ago, everybody said once we have got the Euro currency, it will bring us stability. Now, a decade on, what it has brought is chaos, discord and misery for millions” he said.
In a scathing review, Mr. Farage took a look back at pre-financial crisis Britain, taking a look back at his speech in Parliament in October 2008 where he stated “What has happened in the last week marks the beginning of the end. The markets are saying already. Italian government bonds are now worth 1 percent more than German or French issued bonds. The markets are saying that the economic monetary union will not last, and I am not surprised because it never was an optimal currency zone, one interest rate could never fit all of these countries, and you have never had proper public support.”
“It never was an optimal currency zone” – Nigel Farage
By January 13, 2009, the true grip of the financial crisis that swept Europe had made its presence felt. The runs on the banks in the UK and their subsequent nationalization were by no means a distant memory, credit was hard to come by for business and retail customers, and the Tier 1 liquidity providers of Canary Wharf had begun to make extremely stringent risk management policies, restricting the amount of credit extended to counterparties for the purposes of OTC electronic trading.
On that day, Mr. Farage said “The Eurozone has never been tested, but it is about to be. Spain is in economic trouble, Italy, and economists at the time said Germany should never have joined the Euro, but the situation in Greece is where we should focus our attention.”
“Thousands of citizens out on the street protesting, demanding that their government does something, but Greece is stuck inside the Eurozone strait jacket. There is nothing they can do, there is nothing a future general election in Greece can do to change anything” he said.
“What you have done with the Euro, is trap people in an economic prison from which to get out will take extreme courage, leadership and perhaps the inevitable economic meltdown.” he said to the European Parliament, to an accompaniment of discord by European leaders.
“The thing is, Greek bonds are now trading 233 basis points higher than German bonds. Now I know most of the people in this room do not know what that means, and those who do will probably choose to ignore it. You can ignore the markets if you want, but in time, the markets will not ignore you” – Nigel Farage
In February 2010, 3 months before the Greek bailout, 9 months before the Irish bailout and 1 year before the Portuguese bailout, Mr. Farage said “Whilst 60 years ago, an iron curtain fell across Europe, today we have the iron fist of the European Commission. It will not just be Greece, it will be Spain, Portugal and Ireland. The euro will fall to pieces, of that there can be no doubt.”
“Ireland should never have joined the Euro, they suffered with low interest rates, a false boom and a massive bust” explained Mr. Farage “Yet the words stability are still being used.”
On January 19, 2011, Mr. Farage made the point that Mssrs Van Rumpoy and Broso had continued to explain to the European Parliament that stability was still high, and that several European politicians at the time had stated that the bond auctions in Portugal had been successful that week, however he pointed out that it was taxpayers money used by the European Central Bank to buy their own debt.
“The model itself is failing, and yet what you want is to double the size of the bailout fund” – Nigel Farage, January 2011.
Mr. Farage accused the European Commission of wanting to increase the scope of the bailout fund as well as its size, so that the ECB can continue to buy more of its own debt.
Five years later, after a brief fall in the value of the British pound to its lowest point in 31 years as volatility took hold following the British electorate’s vote to leave the European Union, along with fall of share prices in British stocks listed on the FTSE 100, the markets bounced back almost immediately and now, London’s dominance as the world’s financial center is absolutely bounding forward.
After many politicians pre-referendum attempted to sway British voters toward a remain stance, whereas financial sector executives in senior leadership positions showed their pro-Brexit cards, examples being CMC Markets CEO Peter Cruddas, who sponsored the Brexit campaign to the tune of £1 million, and Hargreaves Lansdown co-founder Peter Hargreaves who stumped up £3.5 million to support the Brexit campaign, those in business have shown themselves to be once again more shrewd than those in career politics.
Now, the Conservative Party, without the stifling words of former Prime Minister David Cameron, is beginning to once again support the City’s business and gain the reciprocal support of the largest FX dealers in the world as they put their signatures on the line.
During the later hours of yesterday, Chancellor of the Exchequer George Osborne, who has long since been a proponent of stimulating modernity and FinTech among London’s bright spark entrepreneurs, has now stated that the City of London will thrive post Brexit, with Goldman Sachs, Standard Chartered, Citigroup (the world’s largest FX dealer), Bank of America Merrill Lynch, Morgan Stanley and JPMorgan having stated their commitment to ensuring that London remains their central focus forthwith.
As FinanceFeeds said pre-referendum, the City of London will be very prominent post-Brexit, markets will strengthen and the electronic financial center will lead the world, and as we also stated, scaremongering that companies will seek to leave the UK for the European mainland is exactly that – scaremongering.
All of the world’s largest FX interbank dealers have signed a pledge in front of the government, stating that Britain has a ‘brilliant workforce, stable legal system, world class regulators, and deep liquid capital markets unmatched anywhere else in Europe.
They put their signature on the line, and indeed their reasons are so sound that nothing else needs to be said to emphasize London’s impeccable and bright future.