“There will be stress tests during this month and then you will see results on July 23rd and they will show that all banks are solid and healthy,” said French Economy Minister Christine Lagarde yesterday, who has just added astrology to her list of many talents.

Politicians and bureaucrats in the EU have grow used to passing off bollocks as the truth on their citizens. Most people are easily bored, and they usually only take notice when the media discovers something ridiculous Brussels has done, or the IMF discovers something truly crazy about the finances.

The process simply doesn’t work with the markets – for two reasons. First of all, the vast majority of European traders think Mme Lagarde is a muppet. And much more important, the word ‘trust’ is not in their language. So far, France’s economics chief has produced her normal level of arrogant Gallic assertion – “It will happen, you will see” – and far from cutting any ice, the lack of detail on the how and who thing has been greeted with suspicious incredulity.

Ultimately, the EU is a controlling, socially rather than economically focused Union. Bourse and commodity markets don’t get it at all, the Americans think it’s a sort of fluffy USSR, and the credit agency/lender sector doesn’t believe anything it says – which, after the Greek fiasco, is entirely understandable.

The EU tends to do navel gazing rather than market-seeking, on-message rather than inventive strategy, summitry rather than action, secrecy not transparency. Above all, it doesn’t like people who argue with it. Trying that strategy with folks who ask only that you tell the truth and keep your house in order is never going to work. The best commentators and dealers deal in horse-sense, not horseshit.

Because of these innately uncompetitive flaws, the European Union will fall further and further behind the rest of the world – and eventually become an unwanted millstone for more and more members. Just like the real USSR, it will fail on the age-old dimensions of individual freedom and mass living standards.

A senior diplomatic contact told me last week that he had been at a reception in Singapore, where an unusual mix of business winners, politicians and media folk had come together to congratulate each other. The diplomat said he was struck by two things: the derision reserved for the EU, with its posturing and obviously intractable problems; and fear on many levels about the Chinese short-term economy – and long-term foreign policy.

“It was another world” he said, “in which Europe was an irritating legacy from the past, and China is a terrifyingly huge factor in everything”.

A good summation, I think.

Related piece: Why nobody believes the Spanish Inquisition.

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