The Year of Populism

Europe's Right Wing Takes Aim at the EU

Right-wing populist parties in Europe have been gaining strength for years. Now, they hope to use European Parliament elections in May as a springboard for gaining greater influence in the EU. Surveys indicate they may be successful. By DER SPIEGEL Staff

 Marine Le Pen, head of the French right-wing populist party Rassemblement...
Marine Le Pen, head of the French right-wing populist party Rassemblement National (RN), has already begun producing campaign posters ahead of European Parliament elections in May.

Spontaneous applause erupted as she entered the room. It was the middle of November and Marine Le Pen had just walked into the Bulgarian National Assembly as the most prominent guest at a meeting of European right-wing populists. Representatives from Flanders in Belgium were there, as were delegates from Italy and radicals from Bulgaria and the Czech Republic.

The head of the French right-wing party Rassemblement National, known as the Front National until last June, took a seat toward the front of the horseshoe of tables. Behind her was a poster: "Movement for a Europe of Nations and Freedom," it read. "A new model for European citizens!"

That's why she had traveled to Bulgaria -- to show that she and her allies are a force to be reckoned with and that 2019 will be the year of right-wing populists on the European stage. They hope that the European Parliament elections in May will send the Continent in a new political direction.

And surveys show that the right wing could end up becoming stronger than ever before. There are, to be sure, significant differences between some of the parties on the far right and they are not nearly well-organized enough to be able to push through a joint political platform. But they could certainly put the brakes on European integration.

Right-wing populists have become a feature in the political landscape of almost every European Union member state, while in Italy, Austria, Poland, Hungary, Slovakia, Denmark and Finland, they are either part of the government or support the government. They are no longer merely a fringe phenomenon or a passing anomaly. Rather, they are a movement that could continue to grow -- and they are doing all they can to position themselves as such.

Despite all of their differences, the target of their ire is the same: the cosmopolitan elite, liberal opinion leaders in the media and EU bureaucrats in Brussels. Their best enemies? German Chancellor Angela Merkel and French President Emmanuel Macron, the latter having proven to be a tireless promoter of deeper European integration.

From the perspective of the right wing, the plans pushed by Macron and his supporters can mean only one thing: Further impositions on "normal people," upon whom much has already been imposed -- things like smoking bans, gay marriages, refugees and expensive environmental protection regulations. The populists claim they are the only ones who speak for the majority of Europeans. And one of their primary goals is a Europe free of immigration. They call their concept the "Europe of Nations."

The right wing hopes to transform the European elections into a kind of plebiscite: What kind of Europe do people want? Open or closed? Traditionalist or tolerant? Should the European bloc become a political union with fewer powers reserved for the nation-states or should it merely be something like a free-trade area in which each individual country can chart its own course?

The Most Pressing Problem

The mood on the Continent is currently playing into the hands of the right-wing populists. According to the most recent Eurobarometer survey, a majority of 62 percent believes that EU membership is a good thing, but at the same time, exactly half of EU citizens believe that things are "going in the wrong direction," an increase of eight percentage points over the results of a survey from half a year before. Migration continues to be seen as the most pressing problem facing the bloc.

Public opinion researchers believe that right-wing populists could end up with 20 percent of the EU-wide vote. That is, of course, far short of a majority, but it is enough to throw a spanner in the Brussels works by blocking joint initiatives on financial issues, social welfare and migration. In short: They can turn back the clock on European integration. Hungarian political scientist Daniel Hegedüs of the German Marshall Fund believes the elections in May will be vital to Europe's further development.

That is precisely to Marine Le Pen's liking. "We are at an historic turning point," she said in Sofia. "Wild globalization is coming to an end." Now, she said, it is time for the peoples of Europe to take center stage.

Le Pen has already had posters printed for the European election campaign, depicting her with Italian Interior Minister Matteo Salvini, a close friend of hers with whom she likes to go dancing on occasion. Another poster has likewise been produced, with the message: "Our ideas are winning across Europe!"

That is certainly true in Italy. According to the results of the March 2018 elections in the country, Salvini is merely the junior coalition partner in the Roman cabinet. But the head of the Lega party has long since taken on a dominant role when it comes to defining the government's agenda. And he also leaves no doubts about his ambition of becoming the figurehead of the European right wing.

During an October visit to Moscow, he even said that he could imaging himself as a candidate to succeed Jean-Claude Juncker -- a man for whom he has nothing but contempt -- as European Commission president. In Rome, too, he seemed in December like he was brimming with confidence. He said that he often reads that "Europe is in danger because of these populists, racists and fascists, because of Salvini, Le Pen and the AfD," the latter a reference to the Alternative for Germany party. But, he went on, the EU's problem is actually "that it has been governed poorly by the same people for decades." That, he intimated, is something he intends to change.

Tight International Bonds

He had just finished speaking to 80,000 followers on Rome's Piazza del Popolo, where he promised to launch a new era in Brussels. "There are people," he said in that speech, "who have betrayed the European dream. But we will give our blood and veins for a new Europe." Still, it was notable that he said nothing about leaving the eurozone, something he promised frequently when his party was still in the opposition. It appears that Salvini has reinvented himself yet again. Now, he is presenting himself as the leader of the charge to take over power in the parliament of a united Europe.

He is constantly receiving guests from around Europe. One of them, Austrian Vice Chancellor Heinz-Christian Strache, dropped by in June, a visit that produced a nice selfie with Italy's new strongman for Strache's Facebook profile.

Strache's Freedom Party of Austria has long been a major player in the European right-wing movement, with former FPÖ leader Jörg Haider many years ago adopting the phrase "Europe of nations," a slogan coined by France's nationalist-minded postwar president Charles de Gaulle. Haider's former disciple Strache, who has led the party since 2005, has continued pursuing the strategy, strengthening his own position by establishing tight international bonds.

Strache has toned down his anti-European rhetoric since he became junior partner in Chancellor Sebastian Kurz's right-wing coalition, but he continues to cultivate tight relations with fellow populists across Europe. FPÖ General Secretary Harald Vilimsky, who has grabbed headlines in the past by deriding Juncker's alleged fondness for alcohol, has repeatedly demanded solidarity on the right. He says that a right-wing alliance should be developed to the point that "we can save Europe."

Then there is the FPÖ's traditionally tight ties with Moscow. Strache's right-wingers have a cooperation agreement with Russian President Vladimir Putin's United Russia party -- a deal that took center stage in August at the wedding of Austria's FPÖ foreign minister, Karin Kneissl, who thanked Putin for coming with a highly publicized curtsy that doubled as an affront against the EU and its sanctions against Russia.

The FPÖ also has ties with right-wing parties in neighboring countries, such as Hungarian Prime Minister Viktor Orbán's Fidesz party, which takes a position on immigration that is at least as nationalist as that of the government in Vienna.

But the European right wing has a significant Achilles heel. Thus far, the various parties have had trouble cooperating, a problem that has been particularly apparent at the European level. There are two right-wing populist groups in the European Parliament, the Europe of Freedom and Direct Democracy (EFDD) and the Europe of Nations and Freedom (ENF), but both are rather loose alliances, with coordinated voting more the exception than the rule. A study conducted by the Berlin-based Jacques Delors Institute found that members of the ENF group maintain fraction discipline in only 69 percent of the votes. With other European Parliament groups, that number is up to 90 percent.

Cheap Loans from Russia

That lack of discipline shows that despite all the demonstrations of unity, the basis for real cooperation is narrow at best. The differences in the parties' interests are rather substantial in places. Salvini, for example, wants to see refugees -- if migration can't be stopped altogether -- distributed more fairly across Europe, including to Eastern European countries. That is something to which the right-wing Law and Justice (PiS) party, which heads up the government in Poland, is adamantly opposed, as is Orbán in Hungary.

The European right wing is also divided when it comes to relations with Russia. For historical reasons, the Poles want nothing to do with Putin, but Orbán and Le Pen have both turned to the Russian president for cheap loans in the past.

The German nationalists in the AfD are also broadly viewed with suspicion, likewise a product of 20th century history. That makes it virtually impossible for right-wing populists from Poland to consider working together with the right-wing populists from Germany. After all, the new Desiderius Erasmus Foundation, launched in 2017 as the AfD's right-wing populist think tank, is led by Erika Steinbach, a woman who was once head of the Federation of Expellees, which represents those Germans expelled from present-day Polish territory following World War II. In the 1990s, Steinbach even questioned the legitimacy of the current German-Polish border. She is, in short, enemy No. 1 for Polish nationalists.

There is also little agreement when it comes to budgetary issues. Alice Weidel, co-leader of the AfD in the German parliament, issued a press statement recently in which she was sharply critical of the Italian budget: "Germany cannot become Italy's paymaster!" she wrote, and reminded Salvini that without EU support, Italy "would have been broke long ago." The statement ended with a quote from the Asterix comic series: "These Romans are crazy!"

Furthermore, there is disagreement regarding who should be the right wing's leading figure: Salvini or Orbán. The latter has been prime minister of Hungary for the last eight years and is fond of posing as the pioneer of the new, populist right. He has a solid parliamentary majority at home and has largely brought the state, the media and the judiciary under his control.

Spreading Orbán's Ideas

It was also Orbán who demonstrated in summer 2015 how to reap political capital from the presence of refugees. In a propaganda offensive that year, he stigmatized refugees as potential terrorists, as competition on the labor market and even as carriers of infectious diseases. His government then built a razor wire-topped border fence that is up to four meters tall. And Orbán subsequently demanded that the EU reimburse him for the cost.

Orbán's team also invented the treacherous, and widespread, propaganda lie about the alleged Soros Plan. According to the fabrication, the billionaire George Soros, who is originally from Hungary, is planning to have Christian Europe flooded with Muslim refugees and is preparing the way for that invasion by funding all manner of liberal foundations. Elements of the conspiracy theory are frequently quoted by nationalists in Poland and Bulgaria.

Orbán is particularly fond of posing as the savior of the Christian West. And he has a plan for that as well: A new training center allied with his party is to establish branches in the most important capital cities in Europe to spread Orbán's ideas across the Continent.

Orbán's links to the political establishment provide him with a strategic advantage among the European right. His Fidesz party belongs to the European People's Party (EPP), the parliamentary group in the European parliament that is also home to Germany's conservative Christian Democrats.

"Orbán can deliver his message from the center," says political scientist Hegedus, which boosts his standing and could attract new groups of voters.

The Hungarians, though, are largely dependent on EU subsidies. Between its accession to the EU in 2004 and the end of 2017, the country received 40 billion euros from Brussels. The same is true of Poland. The country, with a population of 38 million and led by the EU-critical PiS party, has transformed itself from a backward, agrarian nation into a center of growth -- in part thanks to European subsidies.

Troublemakers in Brussels

Yet despite the benefits they reap from EU membership, Poland and Hungary tend to be troublemakers in Brussels. But why?

It is a question to which conservative professor Krzysztof Szczerski, appointed as cabinet chief by Polish President Andrzej Duda, has given a lot of thought. "The EU has lost the support of society," Szczerski notes. "It is no longer the guarantor of security that it once was."

Europe failed in the euro crisis, he says, but above all in border protection. The sociologist claims that Muslim mass migration is bringing terrorism to Europe. "Without this EU policy, people would not feel threatened."

He also says that the EU is assuming ever greater powers. "Anyone who builds a house or opens a company knows that." Szczerski claims that Brussels has become a threat to freedom. "That's why the political elite fear elections -- they're afraid of the people's dissatisfaction."

In any case, he says, democracy is only possible at the national level, which is why he believes that EU member states need to be given more powers. He wants to see the EU return to the principle of unanimity in all decision-making. "Nothing can be decided over our heads, without us." The professor gets angry when he thinks about what he alleges to be a paternalistic tone coming from Brussels at times. "The tone," he says, "is similar to the one between east and west Germans. But we don't want to be the eastern Germans of the EU."

By making the comparison between eastern and western Germans in the reunified country, he touches on an open wound that Germans are all too familiar with. Around three decades after the fall of the Berlin Wall, considerable resentment still persists along the former Iron Curtain.

As such, it is no coincidence that the Alternative for Germany has particularly strong support in the east. In Saxony, it is only four percentage points behind the CDU, with around 25 percent approval.

The AFD vs. the EUSSR

When party chair Jörg Meuthen stepped onto the stage at the Magdeburg convention center on Nov. 16, he knew exactly how to get his audience in the right mood. "People have the choice in the European elections between two completely different political visions," he told the audience. On the one hand, he said, you have the "socialist Greens who deliberately disintegrated the fatherland, abolished Germany and re-educated the people" in their desire for some kind of EUSSR, a European version of the USSR. The AfD on the other hand, stands for the opposite: "conservative, (economically) liberal and patriotic politics."

The disparaging term EUSSR has long been popular in right-wing radical circles, but now it has arrived in the AfD mainstream. Meuthen also promised his audience that they have many "natural allies" in the European Parliament.

When questioned a few weeks later in a Berlin cafe, Meuthen said his party's partnerships were still in their infancy. Meuthen says he knows Strache well but he has never met Salvini personally. His contact with Orbán, meanwhile, has been limited to a brief handshake. The AfD's contacts with Marine Le Pen's Rassemblement National party have also gone into a slumber since former party leader Frauke Petry and her husband Marcus Pretzell bolted the AfD in September 2017.

Fragile or Non-Existent Alliances

Ultimately, AfD's alliances with other European right-wing parties are fragile or non-existent. Not only because Meuthen is the sole member of the AfD in the European Parliament, but also due to the fact that his ideological brethren there regard him as being powerless.

Meuthen says the language barrier also presents an obstacle to successful partnerships. "It's hard to imagine a joint election campaign," he says, before suggesting that something like a joint political rally might be more realistic.

Is it possible the initiative will get a little help from America in the form of Stephen Bannon?

Meuthen says with no lack of pride that the former Donald Trump confidant is currently trying to set up an appointment with him. "I wouldn't be against meeting with Mr. Bannon either," he says. But he doesn't seem to be in a great rush. "I don't think we Europeans need American support in the election campaign. We can manage very well on our own." Trump's former campaign manager has taken on the task of promoting the European right to success through his intiative "The Movement." To that end, he's been traveling around the Continent, meeting with Salvini, Le Pen and Orbán -- and he apparently planning to stay: Bannon confidant Benjamin Harnwell recently rented an 800-year-old monastery just outside of Rome. Trisulti in the Apennines mountains is to be developed into a right-wing populist think tank, a "gladiator school for culture warriors," as Harnwell has described it.

Treading Water

But these partial successes can't hide the fact that Bannon is currently not making much progress. As the Guardian has reported, foreign election campaign assistance is prohibited in many EU member states, including France, Spain, Poland, the Czech Republic, Hungary and Finland. It is possible only to a limited extent in Germany and Austria. The only countries that don't limit such assistance are Denmark, Sweden, Italy and the Netherlands, but right-wing populists in Denmark and Sweden have refused to work together with Bannon, leaving just Italy and the Netherlands at the moment.

But even Dutch far-right politician Geert Wilders, weakened after a poor election result in the summer of 2017, has rejected the American politician. "Bannon is our friend, but we don't need American help in this form," he says.

Despite their numerous differences, though, European nationalists are still dangerous. Their core message, a direct challenge to democracy as such, has taken root: We are the people and we must drive out the elites. It's also likely that the right-wing will be newly structured in the future European Parliament. On the one hand, there is the comparatively moderate European Conservatives and Reformists (ECR) group. Given that the group is losing Britain's Tories with Brexit, Poland's PiS is likely to gain influence in that body.

Parties oriented further to the right are likely to be part of the Europe of Nations and Freedom (ENF), the parliamentary group that is home to true EU skeptics. Italy's Lega, Austria's FPÖ and Germany's AfD could all form a group together with Marine Le Pen's Rassemblement National. Current polls show that the two groups could together account for up to 150 out of a total of around 705 members of the European Parliament.

Slamming the Brakes on Europe

And within the European Council, which represents the leaders of the EU member states, movement on refugee policy has already come to a standstill because Salvini is blocking such efforts.

The populists could also slow down a number of other things at the European Commission, the EU's executive branch. The question is the degree to which several commissioners from countries with euro-skeptic governments will hinder the effectiveness of the European Commission. So far, there have only been problems with Orbán's appointee, Tibor Navracsiscs, who is responsible for the education, youth, culture and sport portfolios -- a post where there's not a lot he can mess up.

But if several EU-critical governments were to send commissioners at the same time, it wouldn't be as easy to sideline them with second-tier portfolios. In the Brussels power game, the Commission has so far been the authority that has been the most committed to finding joint European solutions. But a Commission with a number of commissioners and critics pulling the brakes all the time would weaken the European Union.

And that would be a boon to the EU skeptics. After all, one of their main messages has long been that Brussels is incompetent. They claim the EU is incapable of identifying and resolving the problems people are facing. If they ascended to positions where they were able to exert more control, the EU would likely come to resemble what its critics claim it to be: bureaucratic, cumbersome and irrelevant.

At the end of the day, Europe's right-wing populists are in a position to make some of their own predictions come true, while at the same time attracting more voters for the next election.

By Melanie Amann, Julia Amalia Heyer, Walter Mayr, Peter Müller, Dietmar Pieper and Jan Puhl

Trade Tensions Take a Toll on China’s Economy

China’s manufacturing slowdown comes as the country gears up for new talks with the U.S.

By Lingling Wei

Chinese consumers have cut back, resulting in a slump in sales of cars and other goods. A vehicle manufacturing factory in China.
Chinese consumers have cut back, resulting in a slump in sales of cars and other goods. A vehicle manufacturing factory in China. Photo: Wang Jilin/Zuma Press 

SHENZHEN—China’s economy is slowing faster than expected as Beijing this week heads into a crucial new round of negotiations with the U.S. over trade.

For the past couple of months, senior Chinese officials have sought to play down the impact of U.S.-China trade tensions on the world’s second-largest economy, telling the public the conflict is doing little more than hurting the nation’s stock indexes, making it a good time to buy China again.


Behind the scenes, officials in the gated Zhongnanhai leadership compound are coming to a stark conclusion, according to people involved in the discussions: The trade dispute is short-circuiting growth.

The Trump administration’s trade offensive, say the people and business executives, is hitting China’s export-oriented manufacturing sector especially hard, reducing new orders for business and forcing factories to cut production and delay decisions on investing and hiring.

Beijing has been trying for years to make the economy less manufacturing dependent and more oriented toward domestic services. Still, the factory sector accounts for a little less than a third of all economic output.

In December, both big, state-owned companies and small, private ones reported a drop in new orders, resulting in an official measure of factory activity hitting its lowest level in nearly three years. Profits from big Chinese industrial firms, official data show, also declined in November for the first time in three years.

In the southern province of Guangdong, the country’s export hub for electronics, chemicals and auto parts, the local government was recently forced by the National Bureau of Statistics to suspend publication of a monthly indicator of regional manufacturing activity that had been trending lower. Beijing said the province lacked permission to produce the local survey of factories, which has been publishing since 2011.

“The purchasing managers’ survey conducted by the Guangdong Department of Industry and Information Technology was an illegal activity,” the statistics bureau said in a statement.

Small, private entrepreneurs, already struggling with higher costs of funding compared with bigger state-owned enterprises, are bearing a large share of the manufacturing slowdown.

“We didn’t feel anything even during the 2008 global financial crisis,” said Shao Danping, an engineer-turned-entrepreneur who owns a Shenzhen factory that makes printing devices. Now machines in the three-story facility are largely sitting idle, and half of the factory’s first floor has been rented out to another company. Her products haven’t been hit directly by tariffs, but potential customers are looking outside China for suppliers, she said. “The trade war is really killing our business.”

The slowdown goes beyond manufacturing. Chinese consumers have cut back, resulting in a slump in sales of cars and other goods. Apple Inc.reported a sales shortfall last week in part because of troubles in China. Meanwhile, despite being prodded by Beijing to spend again on infrastructure and other big-ticket projects, many local governments are already stretched after years of spending on debt-driven projects.

Some government advisers and economists estimate that China’s officially recorded growth rate in the fourth quarter fell below 6.5%, a figure disputed by many analysts and investors. While that is high by global standards, it would be the weakest pace of growth since the financial crisis.

Growth will slow even further in the coming months, say some economic advisers to China’s policy makers.

“The economy undoubtedly faces greater downward pressure,” says one of the Beijing advisers. “How bad it will become, and how strongly we should stimulate the economy will largely depend on how soon we can settle the trade dispute with the U.S.”

The slowdown could give Mr. Xi’s advisers a greater sense of urgency to hash out a trade deal with U.S. negotiators when the two sides sit down in Beijing this week. Just a few months ago, when the economy was still performing within expectations, Mr. Xi had adopted a largely bare-knuckle approach to Washington’s trade-clash escalations, vowing to match President Trump’s tariff threats dollar for dollar.

The new round of negotiations follows a trade truce agreed by Messrs. Trump and Xi in Argentina on Dec. 1. Under that agreement, the U.S. is suspending tariff increases on $200 billion of Chinese imports until March. 
China has pledged to cut tariffs, buy more U.S. goods and services, ease restrictions on foreign firms operating in China and further open sectors for foreign capital. Chinese officials also indicate that Beijing is willing to put in place a mechanism for measuring how it implements those promises. But details of a full trade pact are yet to be worked out.

Three Things That Will Definitely Happen In 2019

Much about 2019 is uncertain. But a few things are pretty much guaranteed, including the following:

Government debt will rise at an accelerating rate

 Like a life-long dieter who finally gives up and decides to eat himself to death, the US is now committed to trillion-dollar deficits for as far as the eye can see. And that’s – get this – assuming no recession in the coming decade. During the next downturn that trillion will become two or more, but in 2019 another trillion-plus is guaranteed.

US government debt three things for 2019

But the US debt binge is downright orderly compared to much of the rest of the world.

After Paris nearly burned to the ground last month, president Macron responded – surprise! – with massively higher spending:

Macron Bets Spending Binge Can Save His Plan to Transform France
(Bloomberg) – Emmanuel Macron is rolling the dice with France’s public finances to keep his grand plans for the economy alive after weeks of protests on the streets. 
Macron’s government will set out a raft of measures to try to calm the so-called Yellow Vest protests on Thursday and they will almost certainly see France breach the European Union’s budget deficit ceiling next year. 
The 40-year-old president is arguing the concessions are necessary to maintain public support for his efforts to make the economy more efficient. 
“Macron is now facing an impossible trilemma,” said Bernhard Bartels, associate director at Frankfurt-based Scope Ratings. “You can’t have have popular support, ongoing structural reforms and fiscal consolidation all at the same time.” 
Macron’s announcement Monday that he’ll raise the minimum wage, abolish taxes on overtime, and get rid of a controversial tax on pensions will send next year’s budget deficit to about 3.5 percent of output, up from a previous target of 2.9 percent, according to media reports. That’s well beyond the 3 percent limit imposed on members of the euro zone.
China’s growth has been slowing, in part because it eventually had to and in part because the US has finally lost patience with Beijing’s cheating and cybertheft. China’s response:

China Says More Tax Cuts, Easier Monetary Policy Coming in 2019
(Bloomberg) – China’s top policy makers confirmed that more monetary and fiscal support will be rolled out in 2019, as the world’s second-largest economy grapples with a slowdown that’s yet to show signs of ending. 
China growth three things for 2019
Facing the most difficult economic environment in years amid the trade standoff with the U.S., the conference outcome suggests Beijing sees increasing urgency in tackling stalling growth. 
“The focus for macro policy has shifted from lowering long-term risks to boosting short-term demand,” said Larry Hu, head of China economics at Macquarie Securities Ltd. 
The stimulus pledge did little to convince investors, who have seen nearly $3 trillion wiped off the value of China’s stock market since the end of January. The Australian dollar, a proxy for betting on China due to the country’s trade exposure to the Asian economy, fell against the dollar along with most major currencies. 
The economy slowed again in November as retail sales and industrial production weakened. Economists see growth of the world’s second-largest economy slowing to 6.2 percent next year from 6.6 percent in 2018, as uncertainty over the trade war couples with a decline in consumer confidence to dim the Outlook.

Corporate share buybacks will slow to a trickle

Corporations are the ultimate dumb money. Note on the following chart how in the previous cycle their buying back of their own shares peaked just as stock prices hit record highs in 2007.

Stocks then plunged and corporations – dumb to the end – became net sellers at the bottom.

Corporate share buybacks three things for 2019

The first part of this pattern repeated in 2018, as corporations took advantage of tax law changes to repatriate hundreds of billions of dollars and apparently used the whole load to buy back their shares – just before pretty much everything fell off a cliff starting in October.

Now CEOs across the corporate spectrum are heading into their annual shareholder meetings having squandered big parts of their investors’ capital on overpriced stock. Tense times for sure, and not likely to whet the appetite for more buybacks.

If the rest of the pattern holds, expect corporations to stop buying and maybe even start selling by year-end.

Politics will get even crazier

This is the easiest prediction in the history of predicting. The US just handed the House of Representatives to Democrats who have been itching to destroy the president for two interminable years. Given a chance to make those dreams a reality, the Dems will throw everything in the political dirty tricks handbook at the executive branch. The result: something much worse than gridlock. Let’s call it “chaos” until the media coins catchier term.

Across the pond, Brexit is looking decidedly “hard,” meaning the UK just leaves the EU and lets the lawyers sort out who owes what to whom and who gets to go where when.

The French government’s promise of deficits that blow through the EU’s limits, meanwhile, presents Continental bureaucrats with a dilemma: Let France get away with it, which also means letting Italy and every other dysfunctional European country do whatever they want. Or stop France and open a possibly irreparable rift between the EU’s major powers.

And this is all happening with German Chancellor Angela Merkel a lame duck and no clear replacement in sight — and with the far right ascendant.
As for Latin America, just Google Brazil, Argentina or Venezuela and see what their 2019 looks like.

A year of crosscurrents

Take soaring government debt, combine it with less corporate support for stocks and political turmoil wherever you look, and the impact on equity and bond prices is unclear. Rising government spending will boost stocks while falling corporate share buybacks will depress them. Political turmoil will spook the markets but also engender hope that panicked central banks will respond with bigger and better QE programs, which other things being equal would be good for bonds and maybe stocks. 
Financial assets, as a result, might do pretty much anything; there’s no way to know.
Precious metals, however, will love a world of falling governments and soaring debt. So…one bonus prediction: Gold tests the $1,360 resistance that has repelled it four times in the past five years, and this time breaks through.

gold price three things for 2019

Europe’s Future Is Up to Us

As 2019 begins, many in the Europe Union are no doubt feeling a sense of despair in the face of mounting environmental, economic, and political threats. But by focusing on four key priorities in the coming year, EU leaders could start to put the European project back on track.

Michel Barnier

the future is europe

BRUSSELS – Not far from my Brussels office, there is a large fresco with the inscription, “The Future Is Europe.” Once a deeply held truth among most Europeans, this belief is being increasingly challenged today.

Of course, pessimism comes easy nowadays. While the damaging effects of climate change are playing out before our eyes, the United States’ choice of unilateralism, the rise of China, and escalating geopolitical tensions elsewhere are posing new challenges to European prosperity and security. So, too, does the spread of disinformation and terrorist attacks in the heart of our cities, as we saw again this Christmas season in Strasbourg, France.

Yet this is not the time for defeatism. Now more than ever, we Europeans need collective action in defense of our values and a rules-based international order. This could be Europe’s moment, based on a more robust and decisive European Union, as German Chancellor Angela Merkel recently called for. To achieve this, Europeans will have to come together to tackle the challenges to our sovereignty, and to ensure responsive governance. That means asserting both national and European sovereignty in trade, defense, and the digital sector, lest China and the US end up imposing their own rules on us. And it means bringing national governments and EU institutions closer to European citizens. As Brexit and the “Yellow Vest” protests have shown, the fault lines cutting across European societies can no longer be ignored.

To seize the moment in 2019, European leaders should focus on four key priorities. The first is to build a “Green Europe.” If every country in the world had the same resource footprint as most European countries, the world would need three times more resources to sustain everyone. This is not just a problem for future generations. The World Health Organization has estimated that air pollution accounts for more than 3.4 million years of life lost across the EU per year.

A comprehensive response to this challenge should use all available policy levers, from supporting green finance to reducing waste and discouraging planned obsolescence on the part of producers. But we also need to think and act boldly, in the spirit of those in the US who are now calling for a “Green New Deal.” Europe could be the global leader in developing a circular economy, and in becoming the first fully electric continent by 2030 based on clean transport and electric vehicles.

Moreover, the measures to achieve these goals need not be socially regressive. If policies are fair and well-designed, they can improve our collective wellbeing and stimulate economic growth without imposing an intolerable burden on those least able to bear it.

The second priority, then, is to build an economy that serves everyone. As matters stand, there are still around 17 million unemployed people in Europe, including 35% or more of young people in Italy, Greece, and Spain. With incomes in many EU member states failing to catch up with the EU average, economic convergence has stalled.

In a world of increasing geo-economic competition, we must consolidate our foundations if we are to preserve our social-market model. That means deepening the single market and ensuring that there are no double standards in how citizens and companies across the EU are treated. Beyond that, we must further strengthen the European Monetary Union, bolster the international role of the euro, and direct massive shared investments toward strategic technologies, particularly in the digital sector.

Managing globalization means that nobody should be left behind without economic opportunities or access to public services. To respond to financial and demographic pressures, we need to modernize our social and education policies. We can begin by mapping the skills and jobs that will be needed in 2030, in order to anticipate the changes that are in store. But we must also ensure that multinational companies pay their fair share of tax, and that competition in the digital age is fair. As Guy Verhofstadt of the European Parliament recently pointed out, that means holding big tech accountable.

The third priority is to control our borders and deal with the challenges of migration. Our response cannot be based on fears and myths, but nor can we ignore national debates and identities. We should focus on the mechanisms that actually work. In addition to consolidating the EU’s Frontex border-management system and creating common hotspots at our external borders and beyond, we must also harmonize national-level migration and asylum policies as much as possible.

Equally important, we need to reinforce solidarity mechanisms and compensate member states that are relatively more exposed to the effects of migration or do more than others. And we must work with our partners outside the EU, not least by developing a comprehensive partnership with Africa on economic development and managed migration. After all, by 2050, Africa will be home to 2.5 billion people, half of them under the age of 25.

Last but not least, Europe can no longer afford to outsource its security. All told, Europe is second only to the US in terms of defense spending. But our investments are piecemeal. For example, we produce 17 different models of tanks, whereas the US relies primarily on just one. This kind of military duplication costs Europe €20 billion ($23 billion) per year.

Nobody will do for us what we will not do for ourselves. Fortunately, under the leadership of European Commission President Jean-Claude Juncker, we have already made progress toward jointly producing equipment and technologies through the European Defense Fund, ending the competition between the EU and NATO, and stimulating cooperation among national defense industries. Now, we must build on these initiatives and go further, by reinforcing our crisis-management tools and developing a common strategic culture based on joint forces and pooled national capabilities.

Meeting Europe’s challenges will require political courage at both the national and EU levels. But it will also require transparency, debates on the ground (and not just in capital cities), effective and accountable leaderhips, and new ways of engaging citizens. Only then will people truly believe that Europe is the future, not just wishful thinking.

Michel Barnier is a former vice president of the European Commission and French Minister of Foreign Affairs. He is currently EU chief negotiator for Brexit.