Brexit: A rebuke of Germany not Foreigners

I’m an Australian living in Czech who's building a startup and I’m reading a lot of commentary saying that the UK voted to leave because of racism.

Like every piece written this is an opinion piece but the “UK is sick of foreigners” card is unfair. Especially when it comes from Americans.

If US was part of the EU then the US would have voted leave even more definitively.

No — this was, in essence a vote for long term gain over short term pain — a vote against Germany’s decisions and Brussels’ rules.

The EU is a mess and the vote will prove good for the UK and, I hope, good for Europe.

Imagine for a moment if all the major decisions in the US were made on what California wanted. From economic policy to immigration. That the leaders of every other state eventually agreed to California’s position. The people in the other states would get increasingly angry at Washington and their politicians. California’s economy would boom. Other economies — especially in the South would collapse. Industrial states were seeing factories move to California. Then New York decided to have a referendum to leave. Of course many New Yorkers would want to stay especially in Manhattan, they rely on finance not other industries. But some people are angry at recent immigration policies made in Sacramento and Washington. Economic policies have meant there are many people from Forida and other Southern states who’ve moved to New York — plus Washington’s rules are a drag on the economy and annoying to just about everyone. Add to that Sacremento’s closeness with Mexico and their decision to allow visa free travel into the US and speed up the process of Mexico joining the US.

Under these conditions if New York voted to leave on a close vote would anyone argue?

Wouldn’t smart people in the media be thinking “wow — if New York voted to leave imagine if Illinois or Texas got to vote?

Swap California for Germany, New York for the UK… well you get the picture. This is the reality in Europe.

There are two major problems that Europe has.

Problem number 1 is Merkel’s close relationship with Erdogan. Germany has a large Turkish community because in the 60’s and 70’s many Turks were brought to Germany to work in the automobile and other industries.

With Syrian refugees in Turkey a major problem Merkel invited them to cross the border into Greece, which is part of the EU if you didn’t know. This of course pissed off the Greeks and every country between Turkey and Germany. It pissed so many off it threatened Schengen (open borders inside the EU policy).

This brings me to problem number 2, Germany’s vampire economic model. Without getting to much into it Germany’s economy is sucking the blood from the rest of the Euro economies. As the GFC took hold Merkel announced the implicit guarantee Germany had given on other Euro governments debt was withdrawn.

Look it up if you don’t believe me.

You only need a small amount of economic knowledge to know that this meant all the German banks that had pumped money into other European countries now had to get their money out, prioritizing what they considered the most risky.

A German bank who had leant money to a Greek bank now had to get their money out because a Greek bank now wouldn’t be bailed out by the Greek Government because Greek Government debt was no longer guarrenteed.

The result was massive outflows of capital from the PIIGS (Portugal, Ireland, Italy, Greece and Spain).

Everyone focuses on the negatives in the PIIGS — no one mentions what happened on the other side.

German banks deployed that money into German manufacturing making them much more competitive — right as the rest of the EU was going backwards.

Everytime Germany puts more capital into manufacturing they gain a bigger advantage over the rest of Europe — so they get stronger and as other countries get weaker they need to buy their goods from Germany.

Look at the economic figures like unemployment comparing Germany with other Euro countries over the last decade.

Of course when Greece finally fell apart Merkel decided it was politically advantageous to make Greece even less competitive. So the EU did as Merkel said and put all these restrictions on Greece in exchange for bailouts.

But what happened is the bailout money was to cover the bad bets that German banks had made in Greece.

Writing this I am admiring the strategy — but it was only a medium term win for Germany.

When Merkel invited all those refugees (over 1 million) to Germany they first come through Greece. But Merkel miscalulated- they came too fast and there was no strategy for dealing with them. Every country East and South of Germany was pissed off too.

Merkel had to do something. Instead of getting the EU to invest in stronger border security in Greece (and Italy) she was angry because the Greeks didn’t want to help Germany after Germany had screwed them and, at any rate, Greece needed the resources and Merkel didn’t want to give the Greeks any more money (after all her banks had been bailed out).

So instead she turned to Erdogan who told her “We will stop the refugees if you give free visa access to Turkish in the EU and fast track Turkey into the EU”.

Merkel agreed. The EU agreed with Merkel because they always agree with Merkel.

But the people of the EU — they don’t want Turkey in the EU. They certainly don’t want a country that basically backs ISIS with an ever more extreme Muslim government being free to roam in Europe.

This was the final straw. Polls in the UK show the leave vote immediately jumped. Meanwhile across other EU countries the political class discovered doing whatever Merkel wanted was no longer a winning strategy.

Finland, one of the most economic conservative countries that was pushing Germany for more conservative policies against Greece found it’s economy unable to compete with Germany and Merkel is losing even their support. Greece had already decided to kick out the government that did deals with Merkel in exchange for semi-far-left party. Spain looks like it may do the same and in Italy Renzo has become anti-Merkel because the Italians are so angry.

Talking about these 2 big problems the only real solution is for Germany to lose power or dramatically change it’s attitude.

This is Europe and the weight of World War II is still felt strongly. Especially in former Communist countries who had to live with the results of Nazi rule much longer. The feeling here, especially amoungst the less educated, is that Germany rules Europe for their benefit only.

Even amoungst younger educated people know this is a structural problem. Germany is too strong and the Germans like making decisions that are best for Germany. Outside of Germany making the big, visible, decisions for the rest of Europe and the EU political class just agreeing, there is also Brussels.

Brussels makes the little decisions that annoy people. Having worked on EU projects I know first hand how ‘annoying’ their operations are. The UK has a very good system of Government and they had handed over much of it to a worse option. This was annoying but that is all it was.

UKIP in 2014 won 27.5% of the UK vote in the European elections. They came first in UK ahead of both Labor and the Conservatives.

In 2015 general elections with Cameron agreeing to hold the Brexit referendum UKIP won just 12.6% of the vote. If you call UKIP a far-right party then you have to wonder about the drop. I would generally say the 12.6% represents the right wing nut jobs and the 15% difference up to 27.5% were the people that were sick of Brussels in 2014.

So how did 27.5% become 51.9% in 2 years?

It’s pretty simple — The deal with Turkey was a deal that made people really angry at the EU. I’m surprised the UK cares but it just shows how bad the EU works for everyone except Germany and there is much more anger in other EU countries.

It’s the bureaucracy, it’s the crazy regulations, it’s the rules, it’s the concentrated power and it’s that the EU only works for a very select few. San Francisco may complain about their inept local government but they haven’t seen anything on this magnitude of incompetence.

Letting the Turkish into the EU was simply the final straw. It was the smoking gun that the average, uneducated man can see as evidence the EU is a negative.

The British basically said — “Why should we stay in the EU when someone like Merkel can make these really bad decisions we have no say in”.

Why Merkel is so focused on Germany that she didn’t see the ramifications is beyond me.

So the UK, economically, may fall down a bit, but they are going to have a much stronger growth rate without the EU holding them back.

Over here, in continental Europe, things have been getting much worse. So I’m hoping Brussels and Berlin wakes up. The longer they take and the worse it gets the more it makes sense to leave and the more extreme governments from both the left and right will get elected.

We are at a tipping point. The EU needs to quickly step back from the precipice. If it doesn’t the probabilities are either a fast disentegration of the EU or an economic situation that continues to get worse with depression spreading North.

The best way to address it is for Germany to leave the Euro (not the EU). I fear until that happens we will see one country after the other head for the exits.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.