BALTIMORE – Brexit, Brexit, Brexit!
Last week, the Dow fell 1%. The news media blamed nervousness over the upcoming referendum in Britain on whether to leave or stay in the European Union (EU).
On Thursday, British voters will decide whether to invoke Article 50 in one of the treaties that forms the constitutional basis of the union, the 2007 Lisbon Treaty.
Article 50 provides a vague roadmap for how a member state wishing to leave the EU might rescind its membership.
It has never before been exercised… and apparently was never intended to be used by anyone.
Yesterday, the Dow rose by 129 points. The press claimed investors were buoyed by recent polls showing voters were now leaning back toward the Remain camp… after last week’s surge in the polls for the Leave camp.
“Investors hate uncertainty,” or so they say. After Germany, Britain is the second largest economy in the EU. If it ends its 43-year-old membership, no one knows how bumpy the departure could be.
No nation has ever left the EU. Like a divorce, it could be completely smooth, amicable, and better for everyone.
We caught a glimpse of British Conservative Party politician Jacob Rees-Mogg on the TV. We don’t know Jacob very well. But he is the son of our old friend and colleague Lord William Rees-Mogg, now deceased.
(After a career as a newspaperman, Lord Rees-Mogg became a regular contributor to our Strategic Investment newsletter advisory. His old writing partner James Dale Davidson continues to publish it today.)
But we remember when Jacob was a boy… when he started his career in the financial industry… and when he ran for parliament.
We recall that he was once featured in TIME magazine as one of the “young fogeys” who were leading London’s 20-somethings in a new direction.
Now, he is one of the most outspoken and articulate proponents of Brexit, attempting to lead the entire country away from the EU.
Jacob believes Britain would be better off independent from the EU.
He thinks the Remain crowd – chief among them Prime Minister David Cameron – are just trying to make voters fearful, so they will be afraid to back the Leave campaign.
Would Britain be better off outside of the EU?
We don’t know. But we admire Jacob’s smooth and confident handling of the press. Like his father, Jacob is intelligent, sensible, and dignified – almost the exact opposite of both of America’s presumptive presidential nominees.
Lord Rees-Mogg’s mother was an Irish-American actress. And there was always something a little theatrical about William, too.
He was not merely English; he played the role of a particular kind of Englishman… and played it well.
He always dressed in a dark blue suit, padded out by a cardigan sweater in wintertime. From time to time, we met for lunch at the Garrick Club.
The Garrick is in an old building near Covent Garden in London’s West End. You go into the front door and address yourself to the liveried doorman.
“I’m Bill Bonner. I’m here to see Lord Rees-Mogg.”
“Oh, yes… His Lordship is in the reading room. He’s expecting you.”
And there he was, invariably squinting at the newspaper he once edited. He had been the top man at the Times of London from 1967 to 1980. And he later became a member of the Board of Governors of Britain’s public service broadcaster, the BBC.
It was he who – in a 1967 op-ed in the Times, titled “Who Breaks a Butterfly on a Wheel?” – helped keep Mick Jagger and Keith Richards out of jail after they were arrested on a minor drug charge.
It was he who helped us understand the proper role of government in an orderly, just society. (“Less is more.”)
And it was he, too, who understood his duty, as one of the well-educated elite, to not plunder his countrymen by using the machinery of government to get favors, privileges, and handouts. Instead, he believed, it was his duty to serve his country in public life, offering advice and leadership, simply because it was the right thing to do.
He sought no power. He expected no money. He had no vain impulse to assert his own will and force others to do his bidding.
He was no politician. But he was deeply concerned with the politics and policies.
The Garrick was, and still is, wonderfully old fashioned.
Founded in 1831, it was the club of the literary set, and the stage for a famous feud between Britain’s top Victorian literary stars, Dickens and Thackeray.
On the walls are paintings of British actors, notably the great David Garrick, whom the club was named after. As you go up the broad, sweeping staircase, you find the leading lights of the British stage.
In the dining room, the menu could be as old as the club itself. Lord Rees-Mogg stuck to the basics – roast beef, spinach, and a glass of claret, followed, this time of the year, by the summer pudding.
“What do you think of the EU?” we asked him once, after a particularly galling story had appeared in the press.
British gas stations were being required to switch to the metric system. Henceforth, the EU had ordered, thou shalt not sell gasoline by the imperial gallon; it shall be dispensed in liters and nothing else.
“Well,” Lord Rees-Mogg began, with a little preparatory stuttering and a playful smile, “we have more than enough silly rules coming from our own bureaucrats; we hardly need more from the French. They are our historic enemies, you know.”
He saw the EU as a Gallic subterfuge. Napoleon had been able to hold Europe together for only a few years… and never brought Britain to heel. Today, under cover of the EU – with its headquarters not far from the site where Wellington and Blücher teamed up to beat Bonaparte – the French hold sway over most of the continent… from the west coast of Spain to the eastern border of modern-day Poland.
It must have been Lord Rees-Mogg whom French president Charles de Gaulle had in mind when he first blackballed Britain, in 1963, from membership in what was then the European Economic Community (a precursor of today’s EU).
“l’Angleterre, ce n’est plus grand chose (England is not much anymore),” de Gaulle said at the time.
Besides, the British, he claimed, had a “deep-seated hostility toward European construction.” Or as TV talk show host John Oliver put it: The English have an “innate desire to tell Europe to go F themselves.”
De Gaulle was probably right about that. On Thursday, we will see how deep-seated that hostility still is.
P.S. Lord Rees-Mogg’s prestige, wisdom, and friendship helped us on a number of occasions. He once convinced a former CIA director to advise us, for example. It didn’t end well. Stay tuned…
BY CHRIS LOWE, EDITOR AT LARGE
Today’s chart is of the U.S. stock market’s “fear gauge,” the VIX.
The VIX shows investors’ expectation of short-term volatility – or price swings – in the stock market.
A spike in the VIX signals a jump in short-term market fear. A falling VIX means investors are becoming complacent again.
As you can see, the VIX jumped to a high of 21 points on June 13, as polls in Britain showed a surprise swing in support for Brexit.
Sudden spikes in market fear like this are often great contrarian buying opportunities.
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The controversy over whether Bill should stick to talking about financial matters… and avoid the thornier subject of religion (see last Wednesday’s issue, “Mass Murder in the Bible”)… just won’t go away.
I don’t always agree with you but you ALWAYS make me think. You are truly awesome! To those with fragile egos and shallow minds who write in to cancel their subscriptions, I offer this bit of advice: It’s not good enough that you disagree. You have to have a reason. You must understand the argument being offered and you must provide a counter argument, a reasoned, thoughtful argument. Just saying “you are wrong” or “I don’t like your discussion” isn’t acceptable. Unless you can engage in a true debate, you are just like the intellectual idiots we have running for president…— Ron S.
You have a right to discuss religion. Religion is all about money and power. There are over 3,000 religions in the world. It would be nice if all 3,000 would do what they preach and give all of their money to the poor. But that will never ever happen. Keep telling it like it is!— William C.
About the mass murder in the Bible controversy. Don’t forget folks, most or all of Bill’s commentary was about the stories in the Old Testament, which pre-dates Christianity.
There was no Christianity before the birth of Christ. So…. anyone ascribing to the Christian faith has absolutely no logical reasoning to be upset… unless, of course, that is your permanent state of mind.— Nolan Y.
Good for you, Bill. I enjoyed your missive about God and the Mailbag comments.
All those people who He destroyed via other Earthlings or via the Flood… one would think their might be at least one or two who deserved pardoning.— Danny M.
Shoo-wee! Or as they would say in South Mississippi, “Dammit, boy!” Looks like the guy predicting your personal apocalypse from stepping on the hornet’s nest hit the nail on the head.
Everyone seems to be universally confident that you are going to rot in Hell for issuing such “blasphemy.” Personally though, I enjoyed it. At 60+ years of age, I’ve had some time to reflect on God as represented by men on Earth. And even before college level history courses it became a bit disconcerting on a theoretical basis.
Keep up the provocative thoughts and the mundane financial blah-blah – which is also interesting sometimes. You can keep my subscription intact for the time being. You seem to eventually p**s off everybody. You just haven’t gotten to me yet.— Jack S.
What: Bill Bonner, Chris Mayer, and Porter Stansberry join forces to discuss their top investing strategies.
When: Tonight at 8 p.m. ET.
Where: Our RSVP-only website.