THE STATE OF WEALTH, EMPIRE AND PLANET IN 2023

20 April 2023

Today, we consider three related questions:

 - how to save our wealth?

 - how to save our Order?

 - how to save our planet?

Our belief in liberal democracy remains strong but our elite has corrupted its values. 

1. HOW TO MANAGE OUR SAVINGS?

Means how to save the economy, financial markets and the dollar.

Macroeconomic signals of a recession abound. On a four-light dashboard - housing, supplier orders, company profits and employment - the first three lights are red and the fourth is blinking. With average time delays, we are looking - according to this  macro view - at a recession this year; and on closer examination of the data, it won't be "a soft landing"...can't be, won't be.

We are saying that the economy and financial markets are done for. 

Stock market equity - where we store our savings - is where the consequences will be felt first.

What to do? Is it world equity or will some regions or countries fare better than others?

What about the business cycle? If the economy is shutting down, which sectors tumble first?

We will return to answers in a future article ... God willing ...

2. HOW TO MANAGE AMERICA'S EMPIRE?

On which we in The West depend, let's not forget.

All these troubles and threats emanate from America's hopeless mismanagement of its turn in the pecking Order.

But is the economic collapse of economies, markets and currencies the worst that can happen to us?

3. HOW TO SAVE OUR PLANET?

Noooo - we could blow our planet apart or completely deregulate the climate.

4. ARE THERE ANY REASONS TO BE CHEERFUL?

Time and again the cause seems to go back to the corruption of our values. Our belief in liberal democracy remains strong, but we have lost the benign tolerance. Our leadership is not connected to the interests of the people.

I want to understand how the elite became so adrift, how it has become so disrespectful of the people ... it is hubris, but that is just to describe...how did it happen? Is it something to do with the strength of its control, made possible by te hnology, that has allowed our leaders to become complacent about their power.

And what to do to put things back together again? Can the system be reformed? Or must it be overturned? This was Edmond Burke's question. Reform or revolution - France again points one way. How to break the control of the corporations and restore central authority on behalf of the people ... of the planet even?

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FROM COST-PLUS TO LIST-MINUS

16 April 2023

Victrex is an interesting company. It's a world leader in specialist polymers.

They say: "Victrex is an innovative world leader in high-performance polymer solutions and the number 1  polyetheretherketone (PEEK) experts. Millions of people rely on our sustainable polymers, in  smartphones, aeroplanes and cars to oil & gas operations and medical devices."

Polymers, even specialist, is just a commodity market - they sell pellets by the tonne, it's cost-plus pricing. 

Their idea is to go up the value chain, into list-price-minus, building their moat by doing high-end moulding themselves, researching and making "forms and parts". 

They are opening a new factory in Leeds and upgrading facilities in China. They aim to grow revenues from  forms and parts from 20 to 60% of tot rev by 2033. 

They've got seven mega programmes. Aerospoace structures is one and interesting as polymers are even lighter than aluminium.

In the Medical sub-division, perhaps the best example is in the $1 billion replacement knee market (this is what prompted me to investigate and to write this!!!). Early trials are going well. 

Not being cynical, but obviously war zones, esp wars of attrition, which seem to be the only way to avoid nuclear, would generate a lot of business from public health services in developed economies.

Victrex is going to help the many veterans.  Do you feel this is profiting - supporting even - from these foolish neocon wars? Or is being involved part of the philosophy that says the world does not fold to our needs, but it is for us to adapt to the world and meet the needs of the world as we find it. Take the world as is and not as we'd like it to be ... the Realist position.

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IS AMERICA SUCCEEDING?

10 April 2023

Looking at the facts, three things emerge. One is that America has started a large number of wars, especially noticeable post USSR when America was actually at its safest! You know, Vietnam, Afghanistan, Iraq...plenty more...now Ukraine

And its come off worst in all of them. It takes on little guys, still it loses.

A second thing is, look at the polls from home, the domestic audience doesn't want all this loss of blood and treasure. It wants American leadership, of course, but not this constant flexing of the military.

And thirdly, outside Europe and the Anglo Saxon world, the rest of humanity, maybe three quarters of the world population, are totally fed up with all this trouble and strife. They want peace, diplomatic resolutions, trade and balanced economies. You know, the kind of set up where you can take care of friends and family and look forward to the future. America is very unpopular abroad and fast losing influence, even at home all this propaganda is wearing thin.

And fourthly (ok four), this bad and bloody behavior of America all it does is to incite other nations and non-state groups to copy in response.

Why not just try to do more good and less harm?

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ARE RUSSIAN AND UKRAINIAN PEOPLE OF COMMON STOCK? WHY IS RUSSIA EASTERN ORTHODOX?

10 April 2023

Are Russian and Ukrainian people of common stock as Putin alleges?

Why is Russia Eastern Orthodox?

I found the answers in an airport book - here is what it says.

THE SLAVS AND MAGYARS

The Slavs were a broad group of peoples (whose history and origin are largely undocumented) who spoke a variety of Slavic languages of Indo-European descent.

Also known as the Antes or Venethi (among numerous other names), they migrated westward during the great migrations of the fifth and sixth centuries AD, settling in the regions of the Baltic, the Elbe, the Rhine (laying siege to Constantinople in AD 540), the Adriatic and the Black Sea. Thereafter, they established various Slavic states, to include the first Bulgarian Empire in AD 681 where the Slavic language of Bulgarian was spoken. The missionary activities of Byzantium (namely by the brothers St Cyril and St Methodius, who are credited with having invented the earliest Slavic alphabet) led to the southern Slavs joining the Eastern Church in the ninth century.

The eastern Slavs occupied the river valleys of the Black Sea and the hills near Kiev, and their early settlements and towns formed the basis of future Russia. In the ninth century, the Vikings sailed up the long Russian rivers to conquer the eastern Slavs, selling some of them as slaves to the south (the name Slav eventually became synonymous with 'slave'). The Nordic and pagan influence of the Vikings continued for another century, although relations between Byzantium and Kiev strengthened steadily throughout the tenth century, culminating in AD 987 when the Russian prince Vladimir finally accepted Orthodox Christianity for himself and the Russian people (a turning point in Russian history and culture).

Another Eastern European people known as the Magyars who had in the ninth century settled in Hungary and Romania (from the area of the River Volga in Russia) advanced into central and Western Europe just as it was being plagued by Viking raids. In AD 955 they were finally defeated by the German king, Otto I, at the Battle of Lechfeld. Otto in turn conquered the lands from the Rhine to far beyond the Elbe (and overwhelming, also, the Slavs who lived there).

THE GREAT SCHISM

Increasing theological and political differences between the Byzantine Eastern Churches and the Western Roman Church led to a final and permanent separation between the two in 1054, a watershed in Church history known as the Great Schism (or East-West Schism).

The estrangement between Constantinople and Rome had been brewing ever since the division of the Roman Empire into east and west and the transfer of the capital from Rome to Constantinople in the fourth century. Constantinople's increasing power and its pre eminence as the battleground between Islam and Christianity threatened the position of the Roman Church. And yet, unlike its Western counterpart, the Eastern Church was increasingly rocked by violent theological dispute amongst its patriarchates.

The cultural and linguistic differences of the east and west - Eastern theology had its roots in Greek philosopy whereas Western theology was based on Roman law -  increasingly led to a different understanding of Christian doctrine, most notably over papal primacy and the procession of the Holy Spirit from the Father and Son (the Roman Church incorporating the Son into their creed).

Matters came to a head in 1054 when Pope Leo IX and Patriarch of Constantinople Michael Cerularius suppressed Greek and Latin in their respective domains. This led to the two Churches, through their official representatives, excommunicating and denouncing each other. Constantinople later became known as the Eastern Orthodox Church; the Western Church as the Roman Catholic Church, and the rift between the two has never been healed (although in recent years dialogue has been reopened, with the excommunications revoked by both Churches in 1965).

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"WE ARE LIVING IN YOUR FUTURE"

10 April 2023

                          Artist's vision for St Persburg

    

Doing a catch-up on the effects of Western companies quitting Russia.

IKEA quit Russia six months ago and the existing Russian management simply took over the business and have renamed it, but this time prices are lower and the profits stay in Russia. Sweden's loss, they are ideology-bound.

Similarly, before the SMO, the biggest car producer in Russia was Renault. Well now same story: it's been taken over by local management and the supply chains for parts and assemblies from the West have been replaced by supply chains from China. China now has a big interest in the Russian Motor Industry and as we know is already the dominant player in the future Electric Vehicle.

After an initial rise in inflation and anxiety, especially for those living near the border, now things in Russia have quietened down and the war is not the dominant subject of conversation.

Inflation is back under control, interest rates have fallen back to 7.5% (they initially shot up to 20%), Swift has gone but it's been replaced so transfers are no problem. Efficient management of interest rates in service to the money supply, inflation and FX rates by the Russian Central Bank.

Russia is the world's number one agricultural producer, but the West has been cut out of its markets... 

...we can conclude that sanctions have failed and indeed backfired  Sanctions were the west's one chance to hammer the Russian economy and they were wasted on this pointless war over a piece of land called Ukraine that is not of any strategic value to America. 

The result is that sanctions will be well nigh impossible to make work against the real potential enemy which is China : victim economies now know what to expect and have re-jigged themselves to mitigate the effects of sanctions and to conserve their capital which may be stored in western economies. I imagine central banks and corporations are quitting the Eurodollar.

Same for energy, with India just signing a long-term oil deal for price security.

Same for commodities: cut out.

And the eu's Von delayan goes to Moscow to threaten and warn Putin. How smart is that?

The Russian government's economic plan apparently sees Russia as an industrial and construction(*) powerhouse, with the share of GDP from these sectors going from a third to a half ... which sounds like China's plan too.

The West's pivot to Asia should have been an economic success for us, but was not properly managed. Europe's share of world GDP has been shrinking and de-dollarisation is underway. The sanctions were a great success for Russia it seems. Now there is a new Iron Curtain containing and shuttering the West, and the West's (America's) pivot has military objectives to dominate, rather than cooperate. Compare this with China: China is mainly interested in money and its objectives rely on the success of its Belt and Road strategy.

When Russians visiting London or Paris or New York return home to Moscow or St Petersburg, they are relieved to be back in a situation of personal security and technological advance (and it's the same for expats who have quit America and Europe, everything in EurAsia is convenient and automated) and cleanliness on the streets, and much lower levels of stress than life in Western capital cities these days. 

Those Russians who remember the Soviet Union and have travelled, think that the EU today resembles the Soviet Union of Yesteryear.

There's one Russian commentator quoted as saying "we live in your future"... he means if we in Europe are that lucky! But really what he means is that the West is no longer a model for Russians. Just thinking about beautiful Russian women: these women are no longer interested in talking to "American boy".

So anyway visitors are surprised to find how well organised is Russia, and Moscow and St Petersburg in particular. And Russians are not much interested in the American way of life anymore.

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MACRON VISITS BEIJING

9 April 2023

Alexander Mercouris, international affairs analyst, again comments on Macron's visit to Beijing:

Macron's visit to China is covered by Mercouris

https://youtu.be/sOrX1uYrXDE   Offset 32'

https://youtu.be/BJTv9ktHCcA   Offset 45'26"

Ref video 2 and backgrounds trip to Beijing.

Macron brought interesting  gifts: 

a French photographer’s pictures of mid-20th-century China,

a blue Sèvres porcelain vase decorated with golden fish.

So this recalls the early trade - before the "century of humiliation" - in decorative arts, though it may also remind us of where the West's knowledge of porcelain and silk making came from (was stolen from...hurumppph).

These gifts are about Paris, world flagship of luxury retail, about China's re-opening, about the Paris Summer Olympics 2024. 

Macron came on a commercial mission, "inking" (as they say) many deals for aircraft, cosmetics, financial products, and pork ( maybe I miss-remember, but I seem to recall that Russia is now the largest hog exporter in the world, so well done Macron).

So that's interesting as instead of diversifying France's economic interests *away* from China, he's defying Washington and looking to build them up. 

Indeed on top of that list above, he also sold nuclear power stations and a water desalination plant - this vd goes into Russo-Sino realities - not so much that Russia is the junior in the relationship as we are told but more of Russia's weaknesses with regard to the much smaller geographically, but much bigger in wealth and population, China:

https://youtu.be/Iibs7buNwxQ

As to Intl Relns, he came to Beijing to sell, also asking for Chinese help with Russia and Ukraine not really threatening. He said he is “convinced that China has a major role to play in building peace”.

Compare with that horror-show von de Leyden, threatening China if it thinks to provide military equipment "directly or indirectly" to Russia, because “arming the aggressor would be against international law [joking right?] and it would significantly harm our relationship.”

With 3/4 of the world linking up commercially and soon militarily, was this was very wise of the EU "Chancellor"? Or should she like Macron have been there to promote national and European interests? Has she not had enough of American bullying and Europe's shameful dependence?

So to answer your question, the Chinese leader will be pleased to have met Macron, he'll be glad to have something to ship the other way up his belt and road there's got to be some exports from Europe surely, and he'll welcome Macron's independent Gaullian line.

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THE FUTURE OF RUSSO-SINO RELATIONS

9 April 2023

This video, below, goes into Russo-Sino realities - not so much that Russia is the junior in the relationship as we are told but more of Russia's weaknesses with regard to the much smaller geographically, but much bigger in wealth and population, China:

https://youtu.be/Iibs7buNwxQ

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EUROPEAN LEADERS VISIT THE COURT OF XI JINPING

7 April 2023

Q: That sounds like Macron. What will the Chinese make of Macron?

A: A bit bumptious, but basically OK.

Macron brought interesting  gifts: 

-a French photographer’s pictures of mid-20th-century China,

-a blue Sèvres porcelain vase decorated with golden fish.

So this recalls the early trade - before the "century of humiliation" - in decorative arts, though it may also remind us of where the West's knowledge of porcelain and silk- making came from (was stolen from...hurumppph).

These gifts are about Paris, world flagship of luxury retail, about China's re-opening, about the Paris Summer Olympics 2024. 

Macron came on a commercial mission, "inking" (as they say) many deals for aircraft, cosmetics, financial products, and pork ( maybe I miss-remember, but I seem to recall that Russia is now the largest hog exporter in the world).

So that's interesting as instead of diversifying France's economic interests *away* from China, he's defying Washington and looking to build them up. 

Indeed on top of that list above, he also sold nuclear power stations and a water desalination plant - this vd goes into Russo-Sino realities - not so much that Russia is the junior in the relationship as we are told but more of Russia's weaknesses with regard to the much smaller geographically, but much bigger in wealth and population, China:

https://youtu.be/Iibs7buNwxQ

As to Intl Relns, he came to Beijing to sell, also asking for Chinese help with Russia and Ukraine not really threatening. He said he is “convinced that China has a major role to play in building peace”.

Compare with that horror-show von de Leyden, threatening China if it thinks to provide military equipment "directly or indirectly" to Russia, because “arming the aggressor would be against international law [joking right?] and it would significantly harm our relationship.”

With 3/4 of the non-Western world linking up commercially and soon militarily, was this was very wise of the EU "Chancellor"? Or should she like Macron have been there to promote national and EU interests? Has she not had enough of American bullying and Europe's baby-like dependence on America?

So to answer the question, the Chinese leader will be pleased to have met Macron, he'll be glad to have something to ship the other way up his belt and road - there's got to be some exports from Europe surely - and he'll welcome Macron's independent Gaullian and commercial objectives.

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UKRAINE WAR 101

1 April 1023

To understand this war, it is necessary to get behind the propaganda.

The guy from St Petersburg that I recently met in the plane does not like having the tanks and nukes of the North American Terrorist Organisation (NATO) pushed further East since the end of the cold war, certainly since 2014, till now they are planted on Moscow's front lawn and pointing at the Kremlin.

He, like Putin, does not trust America. Would you, if the facts in these three vids, below, are to be believed.

1. A visibly irritated Geoffrey Sachs rehearses the facts one more time.

https://youtu.be/_Fv_nKyF_5g - Geoffrey Sachs

2. A daily commentary on the Ukraine war which is usually structured with an opening comment on the content he will discuss followed by the situation on the battlefronts and then an analysis taken from various articles published in the world's quality press.

https://youtu.be/kqGwdBjEXlY - Mercouris

3. Generally recognized  in The West as the "chief contrarian" and proponent of offensive realism as a International Relations (IR) school of thought

https://youtu.be/_7lTOJXjfCM - Mearsheimer

 

He explained what we knew already - if Ukraine doesn't fight "to the last Ukrainian" (I think it was a member of the Biden administration who created this meme)  they won't get into the EU and even more importantly they will not get any security guarantees, so Kiev having made an enemy of Moscow by bombing East Ukraine ("Novorossiya" - New Russia built by Catherine the Great and Potemkin in the late 18th century, in Ukraine since the dissolution of Soviet Russia), they'll be at the mercy of Russia.

In a war of attrition, it's the first to lose the will to fight or the material with which to fight, who will lose the war; and that's true here unless it goes nuclear and then all bets are off. 

While Putin's objective at the start of the war was to demilitarize Ukraine and denazify, as he called it, the government in Kiev, in the light of experience his objectives now seems to be to eliminate the Ukrainian army as a threat and to keep Ukraine neutral i.e out of NATO and to retain the eastern part of Ukraine, probably down to Odessa and possibly to include Transnistria, as part of the Russian Federation.

Everyone is waiting for this spring offensive when a "rabo de toro de lidia" will be made for consumption by Poland and Russia and there'll be a rump steak for Ukraine.

Maybe if you have the interest, click on Mearsheimer first.

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IN THE BEGINNING THERE WAS WAR

24 March 2023

day!https://www.livingintheair.org/2022/11/eckhart-tolle.html?m=1

There's a book that has just come out which I haven't read and it's entitled " in the beginning there was War"

How true is that! I've been looking at some videos on YouTube about history and all it is is the history of war and Conflict forever, it's been going on since the beginning of time, we've never really had peace ... Pax Romana maybe.

But where does that quote come from? it comes from the New Testament. it's either Genesis or John or both saying that "in the beginning there was the word". The Word.

What does this mean, "the word". So I looked it up and actually it's not just a word, it's a whole huge system of logic and reason. It is translated from the Greek "logos" which goes back to 700 BC.

The idea is that there is a structure and function or purpose to the universe, ok, this is something like Ekke is trying to say, created by God or some supernatural being, or really anything that you think explains the way we are all connected to each other by the logic and rules of the universe.

Now war is completely the opposite as it is chaos and disorder and destruction.

Perhaps it's a bit "manichean" to see things like this - structure and order v. chaos and destruction, true. But even so, who is the evil one, if it isn't America? Evil, dark, full of hate, the destroyer.

Not to say Putin wouldn't be the same if he were top dog, or Xi ... " the scum rises to the top". It is the nature of man, we are not God.

My rant for the day.

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DIRECT LINE INSURANCE

23 March 2023

Price: 143.90

Obvious to most that financial stocks are in trouble becuse their quality balance sheets are getting a clawing from angry interest rate tigers. It is a bit facile to say liabilities don't match assets, yet it is true that long-dated guilts may have to be sold at below par to meet demands from depositors. Would you call this a liquidity issue? Or is it LDI? - Liability-Driven Investment strategy misfired?

I pity the Fed - hugely qualified, high IQs the highest, know their history and have their own massive experience, but cannot manage a multi-factorial world, so many moving parts, always get it wrong.

What did they do? For these regional banks, they will take on these good-quality bonds at par, so at zero cost theses banks can honour withdrawals, no more bank runs.

And yet ...

To continue ... the story so far ... We can now understand the macroeconomics and changing regulations at work in the insurance industry generally, but still there is opaqueness - some analysts advise the clouds will lift September-time. Six month investment strategy then...

The CEO made a special divi payout of 100m, when he should have been building his buffers post covid; and secondly, he thought lowering premiums would take market share enough to keep up his EPS. He was wrong on both counts and he's gone as a result.

DLG has a new advanced-pricing model. Not sure how it works but it is being trialed in car insurance then rolled out to other product segments.

There is a threat to the traditionally-run insurance industry, weighed down with heavy admin costs that come out of the premiums. That threat is a new business model, P2P, from insurance brokerage firms like Bought By Many, Friendsurance, Guevara, InsPeer and PeerCover. These new online Brorkers underwrite their own policies rather going to the Carriers.

The problem is that until now, there has been a fundamental conflict of interests between the insurers, with their massive reserves sufficient to cover the worst of rainy days, and the insured, protected by heavy regulation but always interested in bending their claims.

Plus, to repeat, the premiums that are held against a rainy day are invested in low risk government bonds, but as we have seen this low risk turns out to be illusory in a fast-rising interest rate environment; and in any case the coupons are not enough to keep up with with inflation in repair costs, nor the rising numbers of claims.

But what if you could accurately segment the customers by risk profile - I imagine this part of the new advanced-pricing software - but also by social affiliation (friends, family, colleagues, clubs...), then pool the premiums in a transparent way and offer discounts to pool memebers, giving them an incentive to good behaviour? This is what we call a network effect.

Further, investors in the business, who provide the capital reserve, could now invest in any of the groups, and an organisation such as Uvamo would cover any claims that exceeded the total amount in the pool.

This would mean the insurers and the insured are one and the same group. The whole business to be managed on line by AI algos. Still a dream? See how a new outfit, 'Lemonade' (finding sweet solutions to sour problems) is a new organisation challenging the way that insurance companies work "with a peer-to-peer business model fueled by self-serve technology."

DLG interim results August seem too early to bring good news.

But a new CEO can bring clarity over the summer on the regulatory front (releasing insurance funds for equity investment?) and recalibrate DLG's new pricing model to support P2P insurance.

If this happens, we can expect sector-performance for next March's results and probably a great deal more.

With a poor view on the Fundamentals, I cling to a Technical trading analysis that suggests buy mid 140s, sell mid-180s, over next six months, for a 25% SP gain

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