by John Galt
May 6, 2012 15:25 ET
Ambrose Evans-Pritchard sounds off in his new commentary in tonight’s U.K. Telegraph with a resounding shot across the bow of continental Europe and what could be an indication that a new wave of capital flight is about to begin. The commentary may well bear some truth sooner than speculated as the investors have been piling monies into the U.S. Treasury market and gold in the face of a slowing U.S. economy. The extract below is a reminder as to the severity of the Great Depression and how the election of Hollande could change the economic landscape of the European Union:
Yet he may be prisoner of events if he fails to win an outright majority in the legislative elections in June and has to rely on the fast-rising Front de Gauche — the neo-Communist movement of Jean-Luc Melenchon with 11pc of the vote.
History buffs will remember the events of 1936 when Leon Blum’s Front Populaire came to power with “New Deal” rhetoric and Communist backing. Investors rushed for the exits, forcing the franc off the Gold Standard. The money crossed the Channel.
“Conversations in French became increasingly commonplace in the City of London, as French citizens made arrangements to open sterling bank accounts,” writes Barry Eichengreen in Golden Fetters, my favourite book on the Great Depression.
There are signs that it is happening again, says Louise Cooper from BGC Partners. If Italians were the biggest foreign buyers of top properties in London last year, the French are catching up this year in the £3m to £5m range.
“London property is like German Bunds – somewhere safe to park cash,” she said. Is it capital flight? Hard to tell.
Should the people of means continue their flight from the restructuring of traditional Socialist governments which renounce the EMU and embrace nationalism with the support of radical parties, the United States will see some of those Euros flowing back into the U.S. markets in very short order as the proverbial “flight to safety” moves from a trickle to a full fledged panic stricken rush to the lifeboats.
To read the artcile in full, click on the link below:
Recent Comments