No Strategy, Just Tactics” - The Gatekeepers

Is the world mad? Or maybe it has always been so? In our ‘everything is a bubble’ world, asset prices of anything -and everything- are skyrocketing for no logical reason: stock markets, house markets, bond markets, crypto-currencies… While the European recovery is based on strong fundamentals, we have reasons to doubt the US one. Let us remember that these regions account for most of the world’s demand (that is, drive economic growth of other countries). We do not foresee imminent economic crash or crisis, but the fact that a digital currency without traditional features of currencies and used by organized crime, terrorists, drug users and speculators is up 2,000% over the last 12 months is unsettling.

From our experience, the Bitcoin frenzy looks like the Chinese stock market bubble of 2015: thousands of people entered the market with hopes of a quick profit even when the economy was slowing down. Everyone you would talk to believed it was a bubble, which was exactly why they were speculating: bubble usually experience faster price increases. Throughout history, similar scenario unfolded and many reasons have been put forward: a skewed value system (materialism/short-termism), excess liquidity, herding…

The reality is probably a combination of all these. ‘In-lab’ empirical research show that far from being ‘self-regulating’ and efficient, markets follow boom-bust cycles that strongly deviate from fundamentals. Asset prices are thus probably only the reflection of investors’ sentiment, with fundamentals only put forward to justify current pricing (post hoc rationalization). As a result, larger issues such as global warming and its causes and consequences are not adequately perceived, ‘priced’ and addressed. Until now, the only place that implemented meaningful policies is Europe, yet without the rest of the world, it won’t save us from the coming catastrophe.

Meanwhile, Trump keeps on taking decisions that needlessly destabilize the rest of the world, his most recent one being the recognition of Jerusalem as Israel’s capital. This decision is particularly ill-advised because it further reinforce the belief that the USA is only a pawn of Zionists bent on destroying the Muslim world. After over 15 years of direct military intervention in this region, Trump’s latest move is a big step in the wrong direction, making it even harder to stabilize a region spinning out of control.

Overall, the world keeps addressing its challenges as they come. There is little international coordination for the biggest issues threatening the human race (nuclear weapons, climate crisis…) and incentives will likely decrease as the world continues its chaotic shift to a multi-polar world order. In this ‘every man for himself’ situation, there will be no winner.

Only 60 Years of Farming Left If Soil Degradation ContinuesSoil Power! The Dirty Way to a Green Planet – The planet’s soil is degrading rapidly due to inefficient farming practices. Yet soil is just as important as water and is key to everything from carbon capture, increased crop yields, water management, air quality etc.

World’s Largest Water Diversion Plan Won’t Quench China’s Thirst – China has mega water projects to irrigate water starved provinces, but even these may not be enough as water depletion is already an acute problem and there are little incentives to save water. Just another disaster in the making.

More Climate Change Refugees Means More Walls – As we discussed in previous weeks, climate change will have catastrophic consequences for the world, especially the ‘rest of the world’. Walled borders are sprouting at the edges of the developed world but it remains to see whether it will stop the people flood.

Mr. Money Mustache, UBER Driver – A blogger went undercover as a Uber driver and finds (as expected) that it doesn’t pay well and that the company willfully retains information that could be handy to drivers while pressuring them to accept uneconomical rides. Money quote: “Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like? “ Uber.

Carmegeddon for Tesla – Still no mass production for Model 3 and ridiculously low number of delivered vehicles for Tesla. The company has a market capitalization on par with large automakers yet doesn’t have their manufacturing expertise. Electric and/or Autonomous Vehicles are also being developed by auto giants, who don’t benefit from Wall /Main Street hype but actually show year-on-year growth and profit.

Gizmodo Echoes Naked Capitalism: “Don’t Buy Anyone an Echo” – A friendly reminder: ‘home assistant’ record everything that happens within their range, with the data being collected, stored and used by large tech companies, and potentially security agencies. As a side note, ‘connected’ objects imply that they can be hacked since they are communicating through networks. This in turn means that the more ‘connected’ objects you have, the more opportunities to be hacked.

Pentagon Papers whistleblower Daniel Ellsberg on Trump and North Korea – (Hat tip Lao Ho) – Daniel Ellsberg on the fragile peace and underlying dangers of nuclear weapons, Trump’s presidency and some philosophical rumination on the state of the world -and how fast it can change.

Mali is France’s Afghanistan, But With a Difference – France and African neighbors faces a deadly counter-insurgency mission in Mali, but has no choice other than succeed given the battlefield’s proximity to Europe.

It Is Now an Obstruction Investigation – Mueller’s investigation resulted in non-core guilty pleads that do not threaten Trump for the moment, but it may be constructed into a Congressional obstruction and impeachment.

DUP Humiliates May, Extends Freeze on Talks as Hard Core Brexiters Fume – Northern Ireland Unionists have effectively frozen Brexit talks by refusing to to talk with PM May on the Ireland(s) border. The Brexit realities have (finally) become so real that even ‘hard’ Brexiters are starting to doubt about the whole scheme. But they can’t risk election because of Labour (Corbyn)’s high chances of winning…

Beijing knows exactly what it’s doing Downunder – Australia’s new legislation regarding foreign donations to political parties has triggered a furious answer from Beijing. China has steadily expanded its influence in Australia over the last 2 decades, is now the country’s largest trade partner (3x Australia/USA) and has been pressuring various politicians and other institutions (book publishers, universities, businesses…) to follow the CCP line… And it turns out that 80% of foreign political donations in Australia between 2000-2016 were linked to China: Who’s overreacting here, Australia or China?

Picture of the week: Aurora australis dancing over an LED illuminated igloo

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