It appears the chairmen of UBS have plenty to say on Europe.Following former UBS chairman Peter Kurer's comments that "to the elites, the EU is a means to get rich quickly and export their problems," UBS current chairman Axel Weber has warned bankers that Europe is not "out of the woods" from its political risks even after Emmanuel Macron’s reassuring victory in the French presidential election.
Peter Kurer recently remarked on the end of the Euro…
Following an unfortunate combination of wrong decisions at the top and the uncontrolled flourishing of a self-serving bureaucracy, the union has moved in a direction where it has become a prisoner of its own constructed reality.
The EU was a great idea but it has been ridden to death. Back in 1992, almost half of Swiss voted to join the European Economic Area, including the traveller. If there was a vote today on joining the union, the latest polls say just 15 per cent would vote yes.
The EU had its chances. It squandered them, and maybe it will come to an end in the foreseeable future under the weight of its burdens: La messa è finita, andate in pace.
And over the weekend speaking in Tokyo, as The FT reports, UBS Chairman Axel Weber said that political risk in Europe remained “actually quite high” even though “we’ve seen the centre hold in France” with Macron’s victory over far-right candidate Marine Le Pen, and even though all the signs were that the centre will also hold in the upcoming German location elections.
“That doesn’t mean Europe is out of the woods,” he told the International Institute of Finance’s spring meeting. “There is still Italy where it is very unclear that the centre will hold. And there is still Greece.”
He continued: “Where you find some bright side….there are (also) some downside risks that are not really priced into the market but could derail (Europe).”
“Brexit is a time bomb… and the countdown is on. It will be two years from now,” Mr Weber said. He added that “if the British really do leave the customs union and single market there could be a lot of volatility which could impact on the global economy”.
This is not the first time Weber has dared to comment against the global elites' party-line… Speaking on the sidelines of their annual meetings of the IMF and World Bank last year, Weber warned that monetary intervention is causing international spillovers and major disturbances in global markets.
"They (central banks) have taken on massive interventions in the market, you could almost say that central banks are now the central counterparties in many markets. They are the ultimate buyer,"
"Investors have been driven into investments where they have very little capability for dealing with what is on their plate and I think that is a sure reminder of where we were in a different asset class in 2007," he said.
"So I think the central bankers need to be very careful that they do not continue to produce disturbances in the markets, which they acknowledge – it's a known side effect – but the perception that the underlying impact of monetary policy outweighs the potential side effect in my view is starting to be wrong," he added.
Since the global financial crash of 2008, central bank policy has focused on buying up bonds in large quantities and cutting interest rates to record lows. The Federal Reserve has since looked to unwind its own policy which focused on the Treasury market and the yield curve, but the Bank of Japan and the ECB's large-scale bond-buying programs continue.
"I don't think a single trader can tell you what the appropriate price of an asset he buys is, if you take out all this central bank intervention," Weber warned, adding that it often meant investors were making bad choices with where to put their money.
UBS Chairman Axel Weber is a former policymaker at The ECB and was the president of Germany's Bundesbank.