He gave the impression of being the most centered political representative during the elections. Also the most dynamic one that can drive change as well keep the hard core rightist in check.
Three years into office, he has impressed to be right leaning, concerned only with fame and money. In addition, he is perceived as a smooth talker that has delivered nothing to satisfy the left nor the right. His policies are constantly self contradictory designed only to appease to both sides while achieving nothing. He has been considered by the youth, his primary support base, to have deserted them.
The youth of France feels funding for public services are inadequate and getting more so by the day. Is fearful the hardcore rightist are getting stronger by the day. Social mobility concerns loom at the top of their mind.
There is a hard core leftist faction that is small but mainly considered communist and negligible.
The ability to implement compounding models with competitive moats and a winner takes all dynamics in our markets inevitably leads to wealth inequality.
Last century, we experimented with Liberalism (US), Communism (USSR), Facism (Germany) and Militarism (Japan) as solutions to tackle the problem. Liberalism was the model that won.
Right now, in addition to continued work on Liberalism, we explore technologism, populism, socialism and terrorism.
In worst case scenario, we should expect a system reset that is not backed by any framework when the percentage of disenfranchised crosses the critical threshold. It will be very messy when that happens.
Following the collapse of the USSR, globalism hijacked globalization. And that is the problem.
Globalization is defined as interconnectivity driven by movement of people, technology and economies.
Globalism is based on the doctrines of neoliberalism (the Washington Consensus). It is a drive lead by the US to universalize Western values. Western values contain three components politics (liberal democracy), economics (market capitalism) and international relations (institutions like the IMF and WTO).
This does not allow the various cultures the space to figure out their systems for themselves.
China is proposing a different approach where the countries should decide for themselves how they want to run things internally. Countries should limit their interfacing to just economic transactions.
Drawing lessons from the failure resulting from wholesale adoption of Communism, China choose to push back on repeating the same mistake with neoliberalism. Instead it choose to forge its own path to figure out system that works for itself. To date it has successfully lifted 800million people out of poverty while keeping income inequality low and social mobility healthy.
While the country remains under the rule of a one party government, its HR system is one of the most rigorous systems in the world. Candidates are put through a rigorous process of cross training across various departments where they gain management expertise. Only the most able candidates are promoted to the central committee after a 30 year long process.
Key take away
The effects of counter balancing that is classical of liberal democracies that is managed through a two party system could still be possible in a one party system so long as it can keep avoid being
Always bet against the central banks and with the real world
truly down trodden people do not rise, but hell hath no fury like suppressed peoples whose expectations have been aroused
people don’t change their ways until their are forced to
while it is easy to figure out an investment is cheap, the real work is figuring out if a change is about to occur in the near future. It is important to study markets and their history
when seeing a big change coming (the opening of the trans Siberian railway), consider the economic, political and social shift
Why buy a new sofa when it could be put to work in the markets
Only invest in what I can sell quickly
do nothing until you can see the money to be picked up around the corner
key areas of study
Company assessment criteria
Price to book value
sound balance sheet
Price to earnings ratios
start with largest soundest enterprises
On assessing countries
Watch out for statism – governments getting in the way of an organic market
democracy does not equal prosperity
US government piling more and more regulations
SnL crisis of the 1980s
Artificially suppressed prices
1970s gold in America
2019 prices of pork in China
Foreign aids (IMF, UN and Peace Corps) just props up a system that does not work and delays the actual rebuilding process. Have faith in the locals to rebuild themselves in a configuration that works for them as opposed to a system suited to foreigners liking (hubris)
On ethnic strife and separatism
Some geographical boundaries don’t make sense.
no borders remain stable for long
economic hardship will bring to surface these fault lines as they get used as a vehicles to get more
Wait till wars are fought and border issues sorted out. It might then become a great investment opportunity to enter at the bottom
Rise of Islam and Christianity in Siberia prior to Soviet collapse
Hong Kong riots
Barcelona declaration of independence
black markets as signals: difference between black markets rates and official exchange rates provide an indicator of how much the central bank has propped up the exchange rate. Minimal to no differences are signs of a strong economy
major red flags:
currency controls, import taxes, export restrictions. Makes it hard to pull funds out
is country trying to devalue its way out of its internal problems instead of doing a proper fix?
frantic purchase of gold in local jewelry store
Is the country trying to get foreign hard currency by making things other people want to buy – quality goods
Is the country learning to compete and out innovate its competition
an educated population
On centrally planned economies
the market feedback mechanism is missing
resources get ruined due to misuse
it would have thrive if it was a sound economic theory
while Russia abused their resources, China having nowhere to go were more deliberate and took better care of their resources
success had a lot to do with economic and political organization
took bees to blooming flowers to work them 5-7 times harder than their foreign counterparts
Hong Kong, Guangzhou and Shanghai being captured by the capitalist spirit generally ignores capital’s policies
Note worthy collations
China (labor) / Siberia (natural resources)
Australia (natural resources) / Japan (capital)
US (capital) / Canada (natural resources) / Mexico (labor)
most local markets will eventually get assimilated into the global market
diamonds have artificially propped up prices that will be hard to maintain in the long run. DeBeers will eventually run out of cash buying up supplies from the black market and it will lead to sudden price collapse. Opt for gem and rubies instead
when gold gets too cheap companies will figure out ways to use it thereby depleting its supply driving up price. Same could be said of oil
underlying structural issues within a country can stay hidden for long during times of a commodity boom
The key to success
out of every 1000 people who wants to be rich only 6 can master the discipline to do so
stay focus on a single goal for five, ten, twenty years
Core inflation at 1.8% continues to run below target 2%.
Federal reserve decides upon another 0.25% cut in interest rates, targeting range of 1.5% to 1.75%.
Action is taken to provide meaningful support to the economy in response to global economic slowdown and the increasing disinflationary pressure felt from around the world. The special characteristics of this particular slow down is a lack of any large imbalances in the economy.
Dual mandate of the federal reserve
2% symmetrical inflation target
Low unemployment rates
Consumer confidence remains strong
Unemployment rate is at historic low
Business fixed investments has slowed
Global exports has slowed
Manufacturing compared to a year ago is down
macro environment risk
protracted US/China trade risk is down
No deal Brexit risk is down
economic health monitor
Leverage in financial system: low
Funding risk in banks and non-banks: low
Asset prices: no major bubble, high in some
Leverage in non-financial sector
households: gone down
businesses + corporate debts: historic high
Concerns in Overnight Repo markets persist.
Banks have liquidity in excess of required reserves level but choose not to participate in the markets.
Federal reserve will seek to inject short term liquidity into the system
build up short term treasury reserves
buying into short term treasury bills thereby boosting treasury reserves
opposed to the standard QE mechanism which entails buying up of assets and securities with longer maturity periods