FRA: Hi, welcome to FRA’s Roundtable Insight .. Today we have Yra Harris and John Browne. Yra is an independent Floor Trader, successful hedge fund manager, a global macro consultant trading foreign currencies, bonds, commodities, and equities for over 40 years. He was the CME Director from 1997-2003. And John is the Senior Market Strategist for Euro Pacific Capital, he’s a distinguished former member of Britain’s Parliament who served on the Treasury Select Committee as Chairman of the Conservative Small Business Committee. And also as a Principal Advisor to the British government on issues relating to geopolitical matters. He’s worked for Morgan Stanley as an investment banker and he’s also worked for other firms, Barclays Bank and Citigroup. Welcome, gentlemen.
Yra Harris: Thank you, Richard.
John Browne: Thank you, thanks for having me.
FRA: So today I thought we’d discuss the implications of the recent elections in Germany on the EMU, the Euro, ECB policies, financial markets, and the European economy. Your thoughts? I guess we can start with Yra, what you think happened and what are the implications?
Yra Harris: Well you know Richard, we’ve talked about this and you know I’ve written quite a bit about it over longer than I care to think about, but the results were to me a phenomenal loss for Merkel because she not only slipped from the vote totals but it was a very big slap in her face. And like in the Brexit vote, they want to sell it as anti-immigration and I think it’s so much bigger than that. I think this part of the vote .. and if we go back to when the AfD first began, I think in 2013 when it was founded by various economists, the issue is far more financial than anything else. Yeah, the AfD attracted some fringed wackos as we might call them, but most importantly, the Free-Democrats resurrected themselves. I think this is a pretty big statement as to how Germany will face what Macron has been trying to push down, I would say Macron and Draghi have been trying to push down the throats of German taxpayers but of course, it never had the okay from German voters. So, I think that this has a long way to play out, it was a very important vote .. the biggest winner from here may be Theresa May. But we’ll leave that for further discussion.
FRA: And John, your thoughts?
John Browne: Well, I’m very interested by what Yra said because I think you’re absolutely right. Theresa May may be the biggest winner of this because Merkel is very pro-German industry and that points towards a mutually favourable Brexit from Germany at least. And Germany really runs the European Union, although it’s meant to be everybody, but basically Germany runs the whole show. And that’s a very important thing that Yra mentioned. I agree with Yra that Merkel had a big loss, she was elected as forecasted but there was nobody else, she’s weakened significantly. I mean the interesting thing was that combination, again getting back to what Yra said, it wasn’t all immigration. It was partly to do with the financial environment. The Alternative für Deutschland, the Alternative for Germany, went from 0 seats to 88 and the Freedom Democratic Party went from 0 to 69 seats. 132 seats against Merkel’s 217, so it’s a big block in there. And it’s going to sober a lot of the left wing in Germany, the Greens lost and the Left both lost seats. And so, I think that’s very interesting in my view and I agree with what Yra said. I think its going to boost the thing for Brexit because Merkel is going to be favourable to a good deal with German business. As far as the ECB is concerned, I think there’s going to be continued press for EMU, the European Monetary Union. The Euro has faired fatally basically because it doesn’t have a unified economy and so, each threat to the Euro is going to be used by the European elite to force closer and closer fiscal unity on the way to becoming a superstate. And talk about undemocratic,
