I was lying flat on the fuel tank of my motorcycle just blasting it on the A31 north, and this thing was roaring like mad passing the cities of Dijon, Nancy, Metz and finally reaching Luxembourg.
I booked a posh Sofitel hotel for the night, located in the middle of the European institutions buildings, all of them made of glass, steel and mirrors. No smoke during the weekend, they’re not in session.
I walked into the tremendous lobby, and I stand out after my rides - the motorcycle jacket, hair a bloody mess, helmet in one hand and the bag in the other. The receptionist looked at my Canadian ID and she asked – “did you just come straight from there?”
This city-state has a population of 600,000 with about half of it being foreigners.
The EU institutions contrast with the city’s old quarters and fortifications and give it a special flavor. In Luxembourg, the repeated invasions by Germany, especially during World War II, resulted in the country's strong will for mediation between France and Germany that, among other things, led to the foundation of the European Union and the Euro currency.
Now the city of Luxembourg is the seat of several major institutions and agencies of the EU.
Luxembourg is also the world's second largest investment fund center (after the United States), and the most important private banking center in the Eurozone.
In March 2010, the Sunday Telegraph reported that most of Kim Jong-Il's (the North Korean Rocket Boy’s) $4 billion in secret accounts is in Luxembourg banks.
In 2013, Luxembourg ranked as the 2nd safest tax haven in the world, behind only Switzerland.
Their Euros are printed in Germany, and have a serial number starting with R, if you’re interested. Actually, a lot of Euro notes for several EU countries are printed in Great Britain by the De La Rue company, and they will likely loose the business with the Brexit “no deal, crashing out” ordeal that is coming.
It is important to comprehend a critical point here. The European currencies are not safe to keep for long. A US dollar bill from 1861 is still a legal tender. That is no the case in Europe – not even Britain. Why do you think the narcos from all over the world deal with dollars? They know the currency is here to stay. Europe routinely cancels their currencies. They demonetize both, previous coins and notes. They always cancelled the notes to ensure people pay taxes. If you had a bundle of cash you didn’t pay taxes on, cancelling the old notes forced capital out of hiding and it was then taxed.
I’d say, if you want to safe cash, get the old $100 bills while you still can. The new ones they can pick up on a scanner going through an airport these days.
There is a major difference between Europe and the US and apparently it takes a Polish guy to point it out. The United States was founded upon the distinction between the public and the private, and the public was held in suspect. The idea of the United States was that the government was dangerous and therefore we need to make them so incapable of making decisions that they would leave everybody alone.
But Europe is built on a totally different premise. While the US constitution promises the freedom to pursue fortune and happiness, the EU promises to everyone fortune and happiness. That’s worlds apart.
I came to Luxembourg with some hesitation – it is too EU-ish for me, like, being the heart of the milieu that I don’t like.
But then I was totally taken by the vibe of the city.
In the afternoon I went for a late lunch over the famous big bridge with great views all around. In the old town a trumpet band all dressed in red was playing at the Place D’Armes under the trees, but then I found one better - a slim brunette woman playing violin on the street with a man accompanying on a piano. And a great violin play brings me into different reality every time.
And in life I take the experiences I go through and I adjust my thinking.
Sometimes you bend, sometimes you stand, sometimes you turn your back to the wind, no?
Switzerland as a whole is about the size of the US states of Massachusetts and Rhode Island taken together. There are three official languages here plus a forth one, Romansh, which is how some people from the mountains speak (about 1% of the population).
The country’s roots go back to 1291 when local notables formed an alliance bringing together Uri, Schwyz and Unterwalden, the first three cantons. There was a strong business case for doing it – with the opening of the Gotthard Pass at stake was the control of the cross-Alpine trade.
It was also an act of independence against Habsburg rule, which couldn’t be tolerated, of course. The new bailiff Hermann Gessler was dispatched from Vienna to regain control with cruel oppression. One of his moves is a famous legend now – in the city of Altdorf he raised a pole in the central square with his hat on top demanding that whoever passes bows with respect. One William Tell didn’t, so he got arrested and was ordered to shoot an apple off his son’s head. Tell put one arrow in his quiver and another in his crossbow. Then he shot the apple clean off his son’s head.
“Why the second arrow?” asked Gessler.
“If the first arrow had struck the child, the second would be for you.”
A little later, with their defeat of a Habsburg army in 1315, Switzerland's existence inside the Holy Roman Empire took root.
And the process of bringing the confederation together was long. Geneva, for one, finally joined in 1815 as the 22nd canton and it made an interesting contribution. When the Calvinists banned jewelry from use there in 1541, goldsmiths and jewelers in Geneva brainstormed the invention of watches, since a functional timepiece was acceptable. It’s been one of the most successful industries of the country ever since – and the Swiss know how to add charm to the passing of time. It is clearly a place where people thrive, as we’re all organic creatures who need the right climate to develop and you can find it here. A recent Bloomberg story described a group of new, young Swiss millionaires who made it big betting on volatility of the pound during the messy Brexit divorce. Some of them are sporting private jets now.
Living here gives the feeling that making money is a natural progression.
For me the French speaking part of Switzerland, the west of the country, is the best-kept secret in Europe. You may sense that I am hooked.
So, fast-forward more than 700 years from the adventure of William Tell - I spent the last weekend at the Radisson Blu in Andermatt, a hotel advertised as “Scandinavian design in the heart of the Alps”.
For me the hotel looks like IKEA on steroids at this is good, Swiss touch only adds to the experience. Consider also that this is high up in the Alps, ears ringing and shortage of oxygen is obvious when you first get here on the twisty mountain road. Some experience, this.
Switzerland was granted neutrality at the congress of Vienna in 1815 and they steadfastly refused to give it up ever since. In the mid 19th century they established a constitution, borrowing rather extensively from the less then a century old US constitution. Officially Switzerland maintains a policy of “aggressive neutrality”, which means it will defend its own interest with vigor – and they’re in terrifyingly over-prepared position to fight.
Now, let’s relax a bit. I had an excellent foie gras for dinner with a glass of red wine.
With all the wineries I saw on the hills in the valleys, the Swiss only export about 2% of their wines out to the world; they keep the rest to themselves.
And the wine is good, I enjoy it, but it doesn’t end with wine here.
I was relaxing by the fireplace in the hotel lobby on Friday night when the waitress came up and asked if I would like a shot of the Studer Swiss Gold Vodka.“Thank you, but no. After vodka I see white Teddy Bears everywhere.”And she laughed and it was a nice end of the day.
There are some systemic risks out there with the ability to blow up, and they’re interesting if you’re like me, a context person.
The first is Europe, or, more specifically the European Union.
Christine Lagarde will replace Mario Draghi as the head of the European Central Bank later this year. It is clear that the Super Mario was unsuccessful in resolving banking issues stemming from the 2008 financial crisis (just look at the stock performance of European banks since then). He just “papered over” the problems by pumping huge amount of liquidity into the markets.
The Americans call it: “kicking the can down the road.”
I am not sure if Mrs. Lagarde fully realizes what is she walking into, but the European elites seem to think that there is still some road available to kick the can further down, hence her appointment. She is a lawyer without any real world banking experience (give it to Draghi, he is an ex Goldman Sachs banker).
The problem with lawyers is that they think that to solve a problem all you need to do is enact a new law, which then the people have to follow.
The thing with bankers is – they know that this is not how the real life works.
So, Europe is in a holding mode for now, brewing persistently, but the one region that is definitely not is South-East Asia – political events there are clearly accelerating.
Just last week, not only did president Trump meet with the North Korean leader Kim Jong Un (whom he refers to casually as the Rocket Boy) for the second time, but the meeting took place in the DMZ, making Trump the first sitting American leader to cross into North Korean territory proper. Their nuclear program is nothing less than a quest for survival for the country – its neighbors have it (Russia, China) or are capable to have it within short time (Japan, South Korea). It appears that what is being negotiated is letting the program continue, but without intercontinental missile carrying capacity. Notice that with this swift move, president Trump drop-kicked the North Korean nuclear problem on the laps of its neighbors, taking the US of A out of the fight.
Now have a look at China – it’s history shows that it never unites for long. Some countries unite well, like Germany, some not so well, like Italy, but to keep China united usually requires some ammunition.
There are three major problems that China is facing at the moment – first, their economy was built for a world that is going away, never to come back. Second, there is no way to replace the foreign markets with domestic consumption due to terrible demographics and the fact that China (except for coastal cities in the east) really is a poor country.
The third issue is this – the Chinese government has been pumping money into their economy with the goal to guarantee employment, so that people don’t protest, and the hell with profit margins. These are loans that are not repayable, the amounts are staggering, and they know full well that they’re entering the end of the road.
Now enter Hong Kong, the real flashpoint.
A step back in time: the British seized the city, located in the delta of Pearl River, to exploit local labor and to control the trade.
When China itself started exploiting cheap labor, the reason for existence for HK changed to financial and logistic hub. It was then, when the Chinese government negotiated with Margaret Thatcher the return of the city to China. She gave in, however, it was agreed that over the next 50 years (until 2047) Hong Kong would be an independent democracy.
Give it to her: she was good.
What followed is what the Chinese call One Country – Two Systems.
They tolerated the situation as long as the economy was booming.
With the output now in the plateau mode at best, trade wars, supply lines security disruptions, internal tensions; we’re into a new reality.
In short – China will not allow Hong Kong to be independent anymore, the protests will be crushed, and the city will be folded into China.
This is the end of Hong Kong as we know it, and hopefully it will go down with a just whisper, but I wouldn’t put my money on it.
Situated along the coast of the Mediterranean Sea between the Llobregat and Besòs River, lies Barcelona, Spain’s second-largest metropolis. It’s history goes back four thousand years.
The Gothic Quarter on the right side of La Rambla is my favorite. The artist Picasso occupied a residence here for some years.
And it’s not just the city that is great; there are wineries and historical sites within a short drive.
I arrived at the Montsarrat monastery on a great, sunny morning, resisted the lineup to see the Black Madonna and went for the mass instead. That was a good decision – the inside of this church high up in the mountains is the most beautiful I remember.
The finishes, the colors and the paintings are nothing short of phenomenal.
Unfortunately, someone with no sense of harmony and no sense of space replaced the original church organ with something that looks like it was lifted from IKEA.
Still, it is worth the hour drive from Barcelona, absolutely fantastic place.
Later I took my tour through the Sagrada Família basilica, whose original interior is as inviting and spiritual as a church can be.
Gaudi was a genius, I am convinced of that.
As for the exterior, my views are mixed, but since they’re still building it, I give them the benefit of doubt.
There is little doubt that Spain was once the Financial Capital of the West. Their conquest of America produced mountains of gold and silver to the point that they really impacted the European economy creating waves of inflation. Then, on one day in July 1715 the famous Spanish Fleet was sunk with a massive treasure that was long held in the New World precisely because of the risk of being attacked when bringing it home.
The British wanted to prevent the Spanish from funding themselves for the Succession War sinking ships trying to make it back to Spain. This fleet was 11 ships carrying not only gold and silver but also more than 1200 pieces of rare jewelry.
The war was critical in changing the European balance of power, and with the riches of the New World at stake, Spain was a major economic prize.
And Spain borrowed heavily in Europe for the war and, as it couldn’t bring its gold from America, they had become a serial defaulter ending in a 3rd world status, the loss of the treasure fleet in 1715 being the nail in the coffin.
The New World wealth that had made Spain a world power in the 16th and 17th Century now made it a fraction of what it once was.
The country never returned to its imperial status, in part because the rugged Pyreneesseparate itfrom the North European Plains, where most of the economic action is.
Later in the evening I was sitting on a small balcony of a boutique hotel called Pulitzer, just off the Plaça de Catalunya sipping Penedès wine, Catalonian flags displayed on several buildings around.
If you read the Spanish constitution, its very confusing because it will say in one breath that there is one unified Spanish nation and the government exists to protect that, and also there is a number of autonomous regions with their own nations that also need to be protected. And it goes back and forth between these two things. The Catalonian separatist movement goes back hundreds and hundreds of years – this region was always wealthier than the other parts of Spain, especially than the interior of the country. There is strong push towards independence here, but of course the businesses don’t want to loose ties to Madrid and letting Catalonia go independent is really an existential tread to Spain.
At over one trillion euros, the Spain GDP is nearly five times that of Greece, so they’re not easily disposable. If Spain fails, the euro fails, so Spain will not be allowed to fail.
If the euro goes first, watch for a new reality, Paradise City.
Tom Kubiak is the author of The Traveler