Today’s briefing:
— The EU’s central bank drama
— Paris gives Iran the cold finger
— Just plane boring
Your Insider’s briefing:
— The EU’s central bank drama
— Paris gives Iran the cold finger
— Just plane boring
Good morning {{first_name | Intriguer}}. One of my favourite executive exit emails came from Groupon’s Andrew Mason, who opened an all-staff note like this:
“After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding - I was fired today. If you’re wondering why… you haven’t been paying attention.” He then listed all the things going wrong. Legend.
I mention this because today’s briefing explores why the European Central Bank’s Christine Lagarde is really resigning early, and what this might mean for Europe.
 | Managing Editor Jeremy Dicker |
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Number of the day
17,000
That’s apparently how many F-35 fighter jet parts are missing in the Pentagon’s logistics database, according to a new report from the Government Accountability Office. They’re worth an estimated ~$1.3B.
Bank on it.
Two weeks ago, European Central Bank (ECB) boss Christine Lagarde confirmed months of rumours: she’s stepping down in Feb, ahead of her October finish line.
Why? Not to spend more time with family or scarves, but because she fears that sticking it out until late 2027 could leave the bank, aka Europe’s monetary guardian, in a sticky situation.
That’s because 2027 will see high-stakes elections right across Europe, including in Estonia, France, Finland, Greece, Slovakia, Poland, and Italy.
So with euro-sceptics polling strongly across the bloc, Lagarde and her institutional guard are basically now pulling a pre-emptive strike: lock in a strong and technocratic bank leadership before (say) France’s next euro-sceptic president gets the reins, whether that’s the left’s Mélenchon or the right’s Le Pen.
Or to put it in US political terms, Lagarde is doing whatever it takes to avoid pulling an RBG.
Now of course, Lagarde can really leave whenever she wants, but critics are calling this a stealthy and undemocratic shenanigan to stack a key European institution.
Lagarde’s supporters, however, point out that the ECB’s only real role is to a) maintain its own independence, so that it can b) keep Europe’s inflation anchored.
And if you’re wondering what that actually means, France’s Le Pen (now a clear favourite to be France’s next president) just gave the perfect example last month: she called on the ECB to buy up French debt and ease her country’s borrowing costs.
Maybe that sounds okay, sweet Intriguer, but EU law bans the ECB from directly financing national governments! Otherwise, you risk your central bank just becoming an ATM for high-debt capitals like Paris, shifting risk onto others (cue fury in Berlin), eroding trust in the euro, and fuelling inflation across the bloc, all without actually fixing the problem, which is that Paris spends more than it earns.
So that’s what Lagarde wants to avoid. She’s also flagged an interest in getting her voice back (ECB presidents must stay neutral), plus there are rumours she’ll run the World Economic Forum (WEF), thus completing her global economic governance trophy cabinet after leading a G20 finance ministry, the IMF, and now the ECB.
But then… who’ll replace her?
With the runway now shortened, the deadline for nominations just closed last week, presenting a neat two-horse race:
First, there’s Spain’s Pablo Hernández de Cos, former Bank of Spain governor (2018 to 2024) and now boss of the Bank for International Settlements (BIS) in Basel, a sort of central bank for central banks.
Second, there’s Klaas Knot, who likewise ran the Dutch central bank (2011-2025) alongside board stints with the IMF, ECB, and BIS!
Either would satisfy Lagarde’s save-the-union criteria, as they’re both essentially the same person: ultra-credentialed, ultra-experienced centrist technocrats who know how to build consensus in these kinds of cross-border supra-national banks.
Sure, Knot is slightly more hawkish (tougher on inflation) and has a slightly funnier name (haha Klaas Knot), but the fact Europe just nominated two economic doppelgangers for the top role is itself an interesting signal that Europe’s member states share a desire for boring, steady-handed continuity at their central bank.
But… who’s tipped to win?
The final decision rests with EU leaders, acting by a reinforced qualified majority (72% of countries covering 65% of the euro-area population). They’re hoping to wrap this thing up by Christmas for a smooth Feb handover.
A January survey of economists named Knot as the frontrunner, but lots can change in 11 months, and it really comes down to rank horse-trading: tough to win without the blessing of France and Germany, who’ll want (say) a seat on the board.
Plus whoever wins, the poisoned chalice remains the same: inflation from the Iran war, soaring debt levels (looking at you, France), punitive bond markets, and a war roaring just over the border.
Intrigue’s Take
The quiet irony of Christine Lagarde stepping down early to protect central bank independence is that…
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Intrigue’s Take
The quiet irony of Christine Lagarde stepping down early to protect central bank independence is that central banks were never meant to carry this much political weight in the first place.
But ever since the sovereign debt crisis more than a decade ago, there’s been a creeping assumption that the ECB can be Europe’s magical emergency room, where an Italian nerd utters the right chant (“whatever it takes”) and economic fires suddenly get extinguished without any elected leader having to hand voters the bill.
But the ECB’s monetary toolkit isn’t a real substitute for local structural reforms. Take its emergency bond-buying tools: to stop borrowing costs from spiralling in high-debt nations like France, the ECB *can* step in to buy their bonds, but it comes with a huge catch: the bank only offers that safety net if the country commits to the kind of strict, painful discipline that’d make a safety net unnecessary.
Meanwhile, the exact austerity conditions necessary to enable an ECB lifeline are also the very reforms that anti-austerity populists have built their brands opposing.
So even assuming we soon see Knot or Hernández at the helm of the ECB, they might not be able to stop what’s next: if a populist Le Pen or Mélenchon administration triggers market panic by seizing power without a credible fiscal plan, and instead starts demanding the ECB fill the gap by essentially printing money, the ECB faces a brutal lose-lose: refuse and watch a core eurozone economy go Greek, or cave and wobble the broader eurozone.
Sure, Europe has stretched its own rules before when the survival of the union was on the line; think joint debt issuance during Covid, for example. But that worked because there was broad political consensus across Europe. In a more fragmented, nationalist, and populist-heavy Europe? That kind of consensus seems more elusive.
So all that to say that a steady new face at the top of the ECB can keep the institution stable and buy European leaders more time. But no central banker, no matter how centrist or experienced or credentialed or amusingly named, can save national governments who are unwilling or unable to eventually balance their own books.
Sound even smarter:
Christine Lagarde was seen as an unorthodox choice back in 2019 due to her lack of experience as a central banker.
Plot twist: five-time Olympic medallist Teddy Riner has announced he’s running for the French presidency on a centrist, unifying platform. He’s genuinely popular but his lack of party machinery means his odds are low.
Today’s briefing is sponsored by:
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Meanwhile, elsewhere…
🇺🇸 UNITED STATES — Huang out to dry.
Following his explosive admission of an affair (with a woman allegedly working with Chinese intelligence), both Jensen Huang and his Nvidia chips giant are now facing a class action arguing they misled shareholders by concealing his romantic ties to Megaspeed! That’s the mysterious Singapore-based shop where his paramour allegedly smuggled chips to China. (Reuters)
Comment: We explored this scandal yesterday but the news keeps getting worse for Jensen, including claims his firm might’ve also intervened in a US investigation into Megaspeed. The whiff of impropriety has been in public for at least a year, so why suddenly confess now? The midterms might’ve played a role, nudging Jensen to come clean before a more hostile Congress takes its seats in January.
🇫🇷 FRANCE — Cold war.
Contrary to our initial guess that Moscow had the more obvious motive, French officials have now pinned the blame on Iran’s Revolutionary Guards for last month’s cyberattack that fried commercial refrigerators across various supermarket chains. (France24)
Comment: France isn’t dropping the bombs on Iran, but it has been leading the charge to expand EU sanctions against the regime and formally designate the Guards as a terrorist organisation. So that’s presumably why the Guards took this shot at French supermarkets, though predictably it’s just validated French warnings: Paris is now issuing arrest warrants against the regime’s Shahid Kaveh cyber unit.
🇻🇪 VENEZUELA — We’re so back (maybe).
US oil giant ExxonMobil has signed a preliminary deal with Venezuela’s interim government to explore local drilling opportunities. Just months ago the oil major had called Venezuela “uninvestable”. (WSJ $)
Comment: ExxonMobil’s press release was only 38 words long, a hint at how cautious the firm remains in this post-Maduro Venezuela, particularly with a popular opposition figure and Nobel laureate (Machado) now back in town and calling for elections.
🇮🇷 IRAN — “Effectively over”?
President Trump has emerged from a meeting with Qatar’s PM, declaring the military portion of the Iran war now “effectively over”. Compare that with the latest from Trump’s chief diplomat Marco Rubio, who’s insisting the two foes are still nowhere near a breakthrough. (AP)
Comment: This president has made this claim before, though it doesn’t necessarily clash with Rubio’s latest. Rather, it might increasingly reflect Trump’s lost appetite for military action in light of the midterm results and Gulf lobbying. Either way, energy markets are hopeful, pushing Brent down another 1.7% to $90.99 on the news.
🇦🇷 ARGENTINA — Pontiff and the populist.
Pope Leo XIV has drawn a record-breaking crowd of 2.5 million faithful in Buenos Aires for the largest Mass of his pontificate. Spicily, he also used the stage to issue a thinly veiled rebuke of President Milei’s austerity policies, warning “the economy must be at the service of the person, rather than the person at the service of the economy.” (Al Jazeera)
Comment: For what it’s worth, we agree with that tight Papal line (kudos to the speechwriter), though unlike Milei’s fiscal orthodoxy, it still doesn’t offer an alternative to Argentina’s boom-bust history that’s harmed the people for decades.
🇻🇳 VIETNAM — Cross-border snatch.
There are now eye-witness accounts seemingly confirming that Vietnamese intelligence might’ve abducted Australian, Norwegian, and Vietnamese pro-democracy activists from neighbouring Cambodia in September! They’re now facing terrorism charges back in Vietnam, which claims they “entered illegally”. (Mekong Independent)
Comment: Hanoi has grown increasingly aggressive in pursuing offshore dissidents, a fact that’s easy to miss among the world’s bigger push to de-risk supply chains from neighbouring China. Absent any pushback, Vietnam’s authoritarian rulers seem to calculate that neighbours and Western powers would rather not risk ties with a regional swing power.
🇷🇺 RUSSIA — The Abu Dhabi talks.
With US, Russian, and Ukrainian delegates due to resume peace talks in Abu Dhabi today (Tuesday), there are wild reports DC is asking if Russia will accept Western partners making a NATO-like guarantee for Ukraine (ie… to deter Russia from attacking again). (Politico)
Comment: Putin will never agree to the kind of formal Western security backing he’s long flagged among his swirling justifications for invading Ukraine in the first place. But even seeking his agreement still risks validating his baseless claim to a veto over how other sovereign nations manage their own affairs. Besides, the region’s challenge isn’t a lack of security architecture, but just Putin’s own continued disregard for it.
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Flight path of the day
That’s the record-breaking flight.
Surely if there’s anything more boring than sitting on a plane up in the air for a record-breaking 24 hours and 24 minutes, it’s… watching the flight path slowly drag its way across your screen via FlightRadar24 for a record 24 hours and 24 minutes.
But apparently that’s exactly what 3.6 million aviation nerds did when an Airbus A350-1000ULR recently flew 23,155km (12,503nm) from Melbourne to Toulouse, in what the folks at Guinness just confirmed as a new world record.
And yet, it’s not even the most-watched flight path in history! Apparently that honour belongs to the final Royal Air Force flight carrying the late Queen Elizabeth to her state funeral in London, in a 72-minute journey tracked by 4.79 million folks.
Proof that nothing unites humanity like procrastination.
Today’s poll
How do you feel about Lagarde's early-exit strategy?
Yesterday’s poll: Do you think Huang's affair will hurt Nvidia long-term?
🔥 Yep, the honeymoon is over (46%)
🥱 Nope, it changes nothing (53%)
✍️ Other (write us!) (1%)
Your two cents:
🥱 R.C: “I believe it will hurt short term, but the company's products are too important for the US AI industry. Accordingly, Nvidia should be OK going forward. I do think the Board should insist on grooming a successor to Jensen Huang.”
🔥 S: “It won't sink Nvidia, but at that rarefied level where business and politics are inextricably intertwined, this sort of scrutiny is never good business.”
✍️ I.S: “Reports are already circulating that Nvidia was more involved in selling chips to China than it wants to admit to its allies. If so, then we don't have the full picture yet.”
