“Ah! my poor dear child, the truth is, that in London it is always a sickly season. Nobody is healthy in London, nobody can be.” - Jane Austen
We didn’t write for quite a long time. Small and big projects kept us busy while a business trip to London hasn’t allowed us to follow the news as we used to. However, our short stay in London has had quite an impact on us. Talking with a number of persons, we’ve realized how people have been brainwashed by liberal propaganda: banks are not seen as the main culprit of the GFC, but the regulators; people don’t understand why we pay taxes, but require ever better infrastructure, healthcare and education; and whatever they do, governments are always bad, corrupted and incompetent.
There is room for debate: regulators can better manage the economy; taxes can be spent more efficiently; and governments can always do a better job. Yet countries cannot be run like businesses; citizens are not employees; and you can’t have a cake and eat it too. The pernicious idea that government is bad cannot compare to the fact that corporations have a very different goal (pecuniary) that runs directly against citizens’ welfare. But unfortunately the current underlying idea is that governments should be run like a private corporation. Until we get rid of this destructive idea, we can only expect more inequalities, suffering and extremism.
Why You Should NEVER Buy an Amazon Echo or Even Get Near One – ‘Home helping’ devices are actually great if you want your everyday life to be recorded and put in the cloud for future analytical purposes by large corporations. Not to mention that it can be used for eavesdropping, another step towards inviting security agencies into your living room.
Pickup Sales Boom, Cars Get Crushed, Tesla Deliveries Plunge – The US total demand for motor vehicles is down, with car sales falling 10% and only supported by the sales of pickups and other ‘trucks’ (+4%). Besides the implication for the valuation of the car companies (especially Tesla’s eye popping USD 54 billion), it is the state of the US economy that we could question.
We May Not Have Enough Minerals To Even Meet Electric Car Demand – Unsurprising if you had only read a little bit more about electric cars. Nickel and cobalt prices are trending up, mining companies are positioning and car markers are worried about supply. In our view, electric cars remain some fancy gadget: they won’t save the world from global warming, but they probably make a lot of rich people feel better about themselves.
UK Leaders Starting to Crack as Brexit Realities Finally Sink In – UK leaders appear to be pursuing Brexit even when they believe it will be disastrous for their country. Yet the tremendous complexities and enormous consequences of Brexit will most likely result in ‘no deal’ by March 2019, meaning that the country will suddenly be cut off from nothing less than the rest of the world. More here: Hard Brexiters Continue Humiliating Theresa May – More Signs Brexit Negotiations Coming Apart
Kingdom Of Fear: Saudi Arabia On Lockdown – A massive crackdown from Crown Prince Mohammed Bin Salman sees dozens of key officials (former and current) and royal family members imprisoned, accounts frozen and news outlet taken over. This pre-emptive strike is worrying since literally all major initiatives undertaken by MBS have failed so far (oil prices, Yemen, Qatar…). While MBS may have acted to defeat opposition, this is likely to further increase internal resistance in the long term.
At the Communist Party Congress, Xi Jinping Plays the Emperor – President Xi has amassed power on a scale only comparable to Deng Xiaoping or even Mao Zedong, which will help him move forward with his vision, even if it means crushing freedoms and limited economic reforms. Yet these things are probably what China needs on the long run if the country wishes to avoid the Japanese trap.
An assertive China challenges the west – （Hat tip Lao Ho) – China’s power is growing and the West appears weak, leading the government of the Middle Kingdom to challenge Western ideas such as liberal democracy and its economic model. Instead, China believes in political and economic control by a strong government. We acknowledge that short term prospects can look better for China but we remain skeptical of the long term consequences of the lack of independent institutions.
Robert Reich: Trump’s Gang Is Plotting the Biggest Heist in American History – While the media focuses on Trump’s unending barrage of absurdities, Republicans are busy working on the biggest tax cut for the rich and the corporations, leaving the rest of the American public to pay for them.
Decline and fall: how American society unravelled – (Hat tip Lao Ho) -After decades of a ‘New Deal’, where social justice primed over inequalities, America is back to its roots: a free for all struggle where the richer can only be richer and the poor poorer. One thing that changes though, is how entrenched corruption (the corporate type) is.
Croissance sous stéroïdes : un risque pour la Chine… et la France ? – (Hat tip Lao Ho) – La BRI s’inquiète de l’endettement rapide des pays émergents (surtout la Chine, qui représente 65% de l’endettement de ces pays) mais également de la lenteur du désendettement des pays développés.
New Potential Credit Risk Bombs: Exotic, ‘Nonlinear’ and Private Transactions – CDO like transactions are back: ‘bad’ loans are packaged and split into tranches, with investors having a claim on the cash flows (waterfall structure). Even though these trades appear to be rather small compared to pre-crisis level, it’s not the first time we hear about attempts to start again complex structured finance markets.
Picture of the week: London Thames Sunset
About Carlito Riego
"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi