There is a development in the markets that will ultimately impact all of us - the rates charged by commercial banks on items like car loans and credit cards carry a huge spread to the official rates targeted by the central banks (at least times 10, for good borrowers).
Interest rates were always free market, and now the central banks are trapped. About 30% of the bonds issued by governments and companies worldwide are trading at negative yields, which is about $17tn of outstanding debt. This means you loose money if you hold them to maturity.
The scheme works like this: say you hold a $100 bond, maturing in one year with a coupon payment (interest) of 3%. At the end of that year you will be paid $103 by the issuer. But the bond is trading in the market for $110. This means that whoever holds it, needs to get rid of it before it matures, or he will loose money.
Trading these bonds is a game of musical chairs and nobody thinks twice as long as the rates decline. This is possible as central banks buy government debt, if they stop and even slow down, where is the bid going to come from? The rates in the real world show that there is a shortage of liquidity, which makes perfect sense – with low interest rates you need to spend less and save more for retirement.
The European Central Bank is in the 10th year of Quantitative Easing, meaning pumping fresh money into the economies, and they have failed to reach their inflation targets. They are not even close.
One more thought to close the topic – in many countries pension funds must invest into the negative yielding government bonds (the proportions vary). Which means a guaranteed loss – it simply just became another tax.
Now, to the good side of life. I had a nice lunch with a friend of mine, who looks like the actor John Goodman who just skipped a meal.
Rumor has it that he owns the legendary dress Marilyn Monroe wore when she sang that famous “Happy Birthday” to JFK.
Actually I just made it up, but I think it may be true.
He held up his glass of red wine at the end, looking at the great river and said:
“if this is not nice, I don’t know what is.”
In an unrelated thought he said: "I enjoy fake science. If a piece of news starts with the sentence “according to a recent study...” I am listening to the whole nonsense with enthusiasm."
That was after he finished the wine, putting him in philosophical mood.
“Sometimes you’re ahead, sometimes you’re behind – the race is long, and in end it’s only with yourself.”
“What do you think?” he leaned over the table.
“About the nature of this conversation or the nature of you?”
“Take your pick.”
“There is only one rule in this jungle – if the lion is hungry, he eats.
It’s called life.”
“Exactly”, he said, “we’re all in it. Working hard to eat, not to be eaten.”
“Women make it right”, I said.
“Life wouldn’t be bearable without them, hell if I understand how they do it.”
There was a good story about a flight to New York when lighting hit the plane in the air. Bono, the one of U2 fame, got up and walked to Claudia Cardinale, who was sitting not far.
“God just took a picture of you,” he said.
And he was right, because it was so worth it.
CC is a great actress and a beautiful woman; she was in 142 movies so far.
Truly Italian in looks, character and temperament, still sweet after all these years (she started her career in 1958).
I have a weak spot as a man and as an art lover.
Now to the movie from the title of this essay.
“When you hear a strange sound,” Charles Bronson said to her in the scene by the well, “you drop to the ground.”
“Like how,” she asked.
“Like that” he dropped a cup of cold water.
And after the ordeal was over, she realized – “he can not only play the harmonica, he can shoot too.”
And she was the only woman in the movie full of rough men and she made an impression on everyone.
Here is another great line from this movie:
“Your friends have a high mortality rate, Frank.”
He looked and the Harmonica man, finally starting to be afraid.
It took him a while to say it:
“And you’re making the appointments…”
Charles Bronson was a Lithuanian-American actor, born Charles Dennis Buchinsky, and he learned to speak English when he was a teenager; before that, he spoke Lithuanian and Russian, which are close languages, and as a Polish guy I can understand them both pretty well. Small world.
When Bronson was 10 years old, his father died and he went to work in the coal mines.
He said later that his life was tougher than the characters he played.
My move to the wild West happened a long time ago and I consider Toronto home ever since. It’s a great place to be, North America - land of the free. Nothing beats it.
So much different than Europe.
Which is why Sergio Leone went to America to deliver his life performance, as did Roman Polanski with “Chinatown”.
Milos Forman came here too, to make his “Amadeus”.
For a while I was not sure how my European affair is going to play out, but sitting on a fence it’s a dangerous course, you could even catch a bullet from the peace-keeping force (Dire Straits song).
So, I am going to take a 777 across the ocean and ride my big motorcycle there until the snow stops me. I’ll be in the big wide North typing my next essay.
Man’s got to know his limitations, but they appear in the body, not in the mind.
The mind is stronger - I went to hell and back lately, but I am back, so it appears that the devil loves his children. One of them is me.
I may be around for a while longer, writing more essays.
Let’s get back to thinking about women - they make the life worth living.
Screw the recent diversity theme in the press, like, were we all just born yesterday?
Who just woke up?
Don’t teach me what I already know.
Women are sweet, and loving and smart and I don’t need a policy, official Communiqué,
to tell me that.
It’s in my blood, I am not a lonely man.
Claudia C. and Catherine Deneuve are charming women from times gone by.
I may be old fashioned and I enjoy a great old wine too, plus a vintage Ford Mustang, all done up. And I like my music slow and strong.
Take that from an Eastern man.
In order to be able to think originally, you have to risk being offensive, I am rather sure of that.
And this is an important thing for me, because I bounce my ideas off people hoping for their feedback, risking me being imposing and offending, but if you can take me as I come, we’ll have a meaningful exchange. I am good, have a dinner with me, you will not regret it – it will make both our minds richer.
The opposite of original thinking is political correctness, which is the elevation of sensitivity over truth - it’s when something irrational is forced to become normal. The good part is – it never lasts long. Bad part - it tends to happen every day.
Sad thing all this, but part of life.
I was reading Bloomberg news in the Le Café du Marché when the waitress dropped a bottle of water and I caught it in mid air. She looked at me and said: “you should relax”.
“No, I don’t. I feel better tense.”
And they had absolutely nothing interesting to say about the world, the Bloomberg staff. A bunch of people with no sense of harmony and no sense of time.
I was sitting there eating my Fish and Chips and thinking what Benjamin Franklin once said: there are three kinds of people in the world. The immovable, they are stuck in their ways. The movable, who can be excited by ideas and they follow, and then there are the ones who make things move. Take your choice who you are, its not an easy one.
Now to the current world, and how the levee is breaking.
Repo rates have gone through the roof hitting 10% last week forcing the Fed to intervene. As a note, overnight financing (REPO rate) is a basic function, which holds the economy together.
Now, what does that mean? REPO stands for repurchasing rate and this is how it works – say you hold a $100K in government bonds, and now you’re willing to let it go for $90K, just to get back the cold hard cash.
This simply means the shortage of money, lack of trust in the government paper too.
Interest rate shows the demand for credit, the repo rate shows the demand for cash.
The intervention of the Federal Reserve into the REPO market is the result of a global dollar shortage on a monumental scale. We have a liquidity crisis unfolding because of massive uncertainty.
About 70% of physical paper dollars are now circulating outside the USA. There are more $100 bills in circulations than $1.
And most of Swiss 1000 franc bills are held at homes (highest value paper currency there is in the world).
If you pay attention, you should see a pattern.
There is a shortage of understanding what money really is, but only in the media - people on the street seem to get it right away. When money was gold based, you had in your hand a weight of metal with defined value, no matter where you went in the world.
With the introduction of paper (fiat) money, which is really just computer strokes, two risk factors were introduced.
First is the confidence in governments backing it up, second is the confidence in banks not failing.
Both weak arguments, so people hoard cash in times of uncertainty.
The coming boss of the European Central Bank, Christine Lagarde thinks that the solution to Europe’s problem is a cashless society – everything will be electronic, visible and taxable.
Good luck with this idea, lady.
What will happen when the levee breaks?
I believe in a brave new world, which I am actually looking forward to.
For all the world improvers out there, hear me out - sometimes you meet your destiny on a road you chose to avoid.
“Sono Otto, sono Otto di Catania”, or I was trying to be him for the long September weekend after I landed at the Catania airport, the steaming mount Etna visible from the airplane miles ahead.
The city once built a castle strategically located on the seashore. Then the Etna erupted and the lava filled up the bay.
Now the castle is about one kilometer inland.
All this strategic work for nothing, huh? The castle still looks great but clearly there is a zero chance of us against the Mother Nature. At the end we, humans, only occupy about 3% of the planet.
Let me switch to my best Italian to start:
“Cari spettatori”, dear spectators,
“amitci del variete”cabaret lovers,
“calorosissimo pubblico buana sera gia stella matto”, it’s a wild world, but you’re in for a good time.
“Come on in,” said the dark haired guide from the EtnaTribe agency as she opened the door of the van, “get ready for the adventure of your lifetime”. She was Italian in the best quality, Sicilian, she would say. The smile, the temperament, the sense of humor and the body. As a man, I can only say this – the moment you stop looking, you’re dead.
We drove as far up the mountain as we could. We took the teleferico (line car) up and then a custom-made off-road bus, which showed that the rough volcano business worked out swell for Mercedes. And then it was only walking, the “Mama” exploding from time to time creating tension, older craters still fumanti with smoke.
Etna lies above the convergent plate margin between the African Plate and the Eurasian Plate and it explodes easily. The lava from an eruption 17 years ago was still warm if you dig into the ground as I did going up. Imagine all that.
Mount Etna is in a constant state of activity, her name is derived from a Greek word that means "I burn".
Or, as Bruce Springsteen would sing it “I am on fire”, as if “I can take you higher”
which is the premise of the song. A guy promising something to a girl.
The next day, driving south down the coast I stopped in Syracuse, a city founded by ancient Greek Corinthians, a place that became a very powerful state on it’s own. Described by Cicero as "the greatest Greek city and the most beautiful of them all” it equaled Athens in size. It has a Cathedral built around the old Athena temple from five centuries before Jesus. All of the sudden He becomes the new guy, as I realized sitting on the patio in a restaurant in front of the spectacular church.
Like “who? Say that name again. Jesus, yeah, John the Baptist’s cousin. ”
Which is true, by the way.
I went inside, looking at the bright interior, ancient columns, dark top in a combination of honey and brown. The cathedral is dedicated to Santa Lucia, the patron of Syracuse. I was looking at her figurine thinking – “ pay attention to what I say. I choose my words carefully and I never repeat myself. I hope you will mention me when the time comes, but no pressure.”
Now imagine this - the cities on the coast are built of a soft stone, which assumes a honey tonality under sunlight. Have a meal and a glass of local wine in the middle of that and see how you feel.
Later, I was eating dinner in the fishing village of Marzamemi, on the Ionian Sea cost, an Arab settlement from ancient times and the September night came fast.
Then it was time to leave, early in the morning the next day. The smoke from Etna was red in color, but she was quiet that day.
“Amici grazie, grazie per venire”, thanks for reading.
“E' molto special,sono arrivato di mia iniziativa”I am in the place I always wanted to be.
It is good here.
Note: “Otto di Catania” is a song by the long running Swiss duo Yello. The Italian lyrics are from the song. Give it a listen, you will not be disappointed.
As legend has it, Japan was founded around 660BC by a direct descendent of the Sun Goddes, hence the name “Land of the Rising Sun”.
Now, I don’t get excited about China taking over the world; it’s Japan that is important. As I see it, most of us are following the wrong show. While the media was focused on secretary’s Xi’s celebrations, Japanese voters granted Japanese Prime Minster Shinzo Abe an overwhelming parliament majority. Sure, Xi Jinping is disrupting and reshaping Chinese political corruption to better suit him, but Shinzo Abe was able to get his anti-war, Buddhist coalition partners to support his efforts to expand the role of Japan’s military forces. It is Japan, not China that boasts the world’s second most formidable navy, second only to the United States in the number of aircraft carriers floated (Japan claims those carriers are only for helicopters but if you believe it, I have the Eifel tower to sell to you).
Abe is the first Prime Minister who seems likely to become the longest-serving leader in modern times. But perhaps most important is the shift in Japanese society toward a more nationalistic, assertive position both regionally and globally.
Japan is a vibrant democracy with no minorities to speak of that has relocated most of its industrial base to the territories of its foreign customers and boasts a leader who is genuinely popular likely because of his militant stances. What do you make out of that?
Add to the issue the festering hatred of Japan throughout Asia for World War II that simply will not go away. It is even hard to find a Japanese restaurant in anywhere in South East Asia.
The Japanese recently slapped South Korean with export restrictions that will cause delays for materials that are critical to the advanced Korean semiconductor manufactures. And this is unusual, as a trade war is generally initiated by a deficit country, which simply means there is more to it here.
In retaliation Korean boycotts of Japanese goods have sprung up. Both sides have since withdrawn the other from their respective “white lists” – a classification that enables trade in sensitive technologies without the need for time-consuming and cost-intensive permitting. The Koreans are threatening to cease intelligence sharing (the agreement expires in November), and from their side Japanese said that they would not renew it anyway. In the old days the US would told them to cut the nonsense out the day it surfaced, but the days of global US management are going away.
Now, the Indian Summer topic.
Last weekend I drove to Annecy, which is town in southeastern France, where Lake Annecy feeds into the Thiou River. It’s known for its Vieille Ville (old town), with cobbled streets, winding canals and pastel-colored houses.
Overlooking the city is the medieval Château d’Annecy, once home to the Counts of Geneva.
I was staring at the sun sitting on a patio by the river with an espresso cup in my hand, which is a bad habit of mine, the staring part I mean. I never wear sunglasses and sometimes I can no longer tell the difference between things I say and things that I just have in my mind.
Some people call it a gift, but it’s a brain reflection just the same.
“Where are you from?” asked the waitress. She was a dark haired handsome French woman with tasteful tattoos on her arm.
“Toronto, and don’t pronounce the second T, that’s how the city is known to the locals.”
“Got it”, she smiled.
"But by now I am as Swiss as the Pellegrin white wine."
“Do you miss what you’ve left behind?” she asked.
It took me w while to come up with the answer.
“I am trying.”
I rode my motorcycle to Gstaad lately, and it was a beautiful drive through the Alps - take the highway 9 to the end of the Leman Lake and then cross the Alps going east.
The views are fantastic, nothing compares for me and I’ve been around.
Driving in the mountains, I learned to lay low on the motorcycle to take the curves faster. Sounds like a small thing, but it's not, it took me a year to learn.
On the way there I stopped in Vevey for a coffee, which is the city where Charlie Chaplin lived up his retirement, but others had too in this area.
David Bowie was my favorite.
He drove this 262C Bertone Coupe Volvo, which is one of the finest designs in the car business. I think that this is the car he meant singing “it gets me to the church on time”.
And his “Let’s dance” is possibly my all time favorite song.
Put on your red shoes and dance the blues, shall we?
And it doesn’t end there - at some point I was a neighbor with Phil Collins in a village in the hills, I don’t think I ever mentioned that.
Some interesting people live on the Swiss Riviera.
Back home later that weekend I was checking the news, which is a weakness of mine, but also a quest to understand the world. Not much I can do about it.
I am convinced that the Middle East is changing right in front of our eyes, and this is an important region – the energy to run the world is there.
It concerns me a bit, but it could be just a natural progression.
Iran's foreign minister visited China at the end of August to finalize the strategic partnership, of which central pillar is that China will invest $280bn in Iran's oil, gas and petrochemicals sectors. And another $120bn in upgrading Iran's infrastructure. They will send up to 5,000 Chinese security personnel on the ground in Iran to protect Chinese projects, and there will be additional personnel and material available to protect the eventual transit of oil, gas and supply, where necessary.
Anew world is shaping up in Asia too - Hong Kong was under a serious threat lately. Chinese military vehicles had gathered in Shenzhen, a city in Mainland China bordering Hong Kong. But they never went ahead with the invasion, which would be a simple operation for trained troops. I think one needs to appreciate the restraint and willingness to play along.
Let me end with a great scene from a movie coming out this November. It's called "The Irishman".
They were sitting on a patio of a lakeside restaurant having lunch on a nice afternoon.
“Do you believe in God?” she asked.
“I don’t” he said, and she wouldn't let him go with her eyes knowing that this is not the whole story.
“But I am afraid of him.”
“You talk to him sometimes?”
“I talk to someone. Last he said was this – you might be demonstrating the failure to show appreciation”
She laughed quietly.
“What are you saying?” she asked eventually.
“If someone isn’t seen for what they truly are, it could be dangerous.”
“What don’t I know?”
“This life isn’t for me, but now it’s a bit late for that.”
They were leaving the restaurant when the waiter said behind their backs – guy likes to talk, don’t he?
Let me start with Bloomberg news on the US-China trade war. They make it sound like the world is changing, because of Trump and his agenda.
Here it is from my perspective:
The total amount of goods that China sells into the US economy is about $557.9 billion with US exports at about $179.3 billion. That is less than 3% of US annual GDP, the imports, exports less than 1%.
Now, is this worthy of headline news? It’s a meaningless distraction, like a mosquito biting somebody in Alabama. No impact on the economy whatsoever.
On a more serious note, I am convinced that life begins at the edge of your comfort zone. It takes discomfort to grow and here is one way to look at it.
Turn the Audi’s four ring symbol by 90 degrees in your mind, and I credit Bill Eckstrom with this idea. The lowest ring represent stagnation – many rules, steps, permissions and politics. It stifles creativity and action and it happens way too many times.
The top one is chaos – defined as having zero predictability or control over inputs and outcomes.
The second one from the bottom is order, and it feels good, like the sleepers beside your bed, it is knowing that what you do leads to a predictable outcome. But science shows that every time you think of something and do it the same way – you stop growing.
The third one up is most interesting - complexity, which is nothing more than a changed order. But when your order is changed, outcomes are no longer predictable. It doesn’t feel nice, but it’s the only environment where sustained growth can occur.
In 1942 Albert Einstein was teaching at the Oxford University, and one day he gave an exam to his senior physics students, and then he was walking through the campus with his assistant and she said “Dr. Einstein, the exam you just gave, weren’t the questions exactly the same like a year ago to the same class? How can you possibly do that?”
“Well,” said Einstein, “the answers have changed.”
And this is even more true today, the questions didn’t change, but the answers have.
If you want to have results that you never had before, you have to start doing things you’ve never done before.
When it comes to high performance the majority is always wrong, but how you can use that to get everything you can out of everything you’ve got?
Looking at data, approximately 3% of people are even inclined to do different things.
Perhaps the question we need to ask ourselves is this - “what is the purpose of thinking?”
If you ask the question to a brain scientist, she will tell you that the purpose of thinking is to stop thinking. We’re all creatures of habit, most of us don’t like to think, which is a scary thought.
Bottom line is this - if you feel like you’re wasting your life potential – you are, and it takes a lot of courage to grow up and become who you really are.
It takes a life journey, and it’s both – the best of times and the worst of times, as Charles Dickens put it in the “Tale of two cities”. And I know exactly what he meant.
Let’s come down to earth.
I was in Schaffhausen for the weekend, by the beautiful waterfalls, trying to park and the sign said “first 15 minutes free, conditions apply”.
“What are the conditions?” I asked the lady in the uniform.
“You have to pay.”
Let’s face it – it’s a beautiful life, the earth moves nicely and since this time yesterday, you’ve been all around the world. And that you didn’t need to pay for.
The consensus is building that the European Union is a failed project – it is even clear from the TED talks and university lectures on the net - most of the speakers seem to be on the same page. Still, the convenience of having a common currency will keep it together for a while. If Italy was to re-introduce the lira, people with money will open an account in a German bank. It would be a massive flight of capital out of the country.
The European currency union is like Hotel California – you can check in, but you can’t check out.
Europe is a diversified number of nations differing in many things but concentrated on a smallish peninsula. With the history of some of the bloodiest wars in human history, it harbours a lot of distrust between the nations.
This is not America. A Texan person will tell you that he is American, but a German fellow will not introduce himself as European.
The risk of EU disintegrating comes at a time when the US is giving up the role as global security guarantor (and NATO is an institution without much meaning anymore). A new order is coming and with it an opportunity. The current economic system has a shelf life – it consists of constant government borrowing without paying anything back. A kid with a calculator can figure out how this is going to end.
Still, just predicting the going back to nation state building and the conflicts this may bring, is really an intellectual laziness, as it leaves something important out.
People adapt, their quest for survival and success is stronger than cultural heritage, my opinion.
But the system needs to change to foster this attitude. We should reject the neo-classic economic thought, and embrace the 21stcentury idea that economies are complex, adaptive ecosystems. They are not efficient at all, but effective when well managed. Capitalism does not work by actively allocating existing resources. It works by actively creating solutions to human problems - its an evolutionary solution finding system. The difference between a rich country and a poor country is the degree to which the society generated solutions for its citizens.
Still, some people just don’t adapt and I have a respect for this attitude.
Some people just leave their life behind in a plastic bag.
The postcard came in on a rainy Monday and I picked it up from the mailbox on my way back from the station. It was from a friend of mine.
“I couldn't stay and face the music”, she wrote, “you hear?”
“So many reasons why.”
I flipped to the other side.
“I won't be sending more postcards from Paraguay”.
I was holed up in a villa in the province of Algarve, about 300 km south of Lisbon, really hopping to stay away from the world for a bit. I was sitting in my room watching the movie “Frantic” by Roman Polanski, which is a story of a troubled man in the heart of Paris with nobody willing to help him, or even to take seriously.
He just flew in with his wife from San Francisco and she disappeared as he was taking a shower, but police and the US embassy think that she is just having an affair in Paris.
They’re giving him dirty jokes. Finally he says to the diplomat: “you’re talking about my wife here, but it sounds like you’re thinking about yours!”
And then he is on his own in the foreign city.
The story is fascinating, and notice this – Polanski is the master of close ups and the use of light which make the message remarkable.
I’m convinced that this movie is Harrison Ford’s life performance.
Also - the music selection: from Ennio Morricone to Grace Jones, with Paris in the background, is intoxicating.
There are some Polish people who can really tell a story, no?
Polanski has these boyish looks, to the point that back in the day they wouldn’t let him into theaters to watch his own movies.
Just see him in “The Tenant” with Isabelle Adjani, it will rock your world.
On that note, it is the importance of individual performance that makes me distrust the “teamwork” buzzword.
For me, the idea of “teamwork” is not right, for it translates into “joint effort”.
A great movie or a brilliant painting is not a joint effort, a great company isn’t either.
Back to Algarve - it is important to note that Portugal is the world’s former capital. This is the nation that first unlocked the secrets of deep-water navigation. It was Portugal that figured out how to master ship and wind and wave to make landfall anywhere in the known world. From that access, the Portuguese were able to trade anything they wanted.
Shipyards on the River Duoro built the fleets that dominated global trade, with the commercial traffic ultimately flowing to Lisbon. More than any other location in the world, Portugal is a monument about how a change in technology can change everything.
Now the Portuguese economy is booming again, in part because of its aggressive attraction of courting foreign investors. Portuguese citizenship is available after six years of residence, or three years if claiming citizenship by marriage.
There was a massive expulsion of Jews from the Iberian Peninsula in the 15thand 16thcentury, and an interesting initiative was announced just a few years ago. The Spanish and Portuguese governments said that they want to make amends for their past sins, and they’re also in need of productive people to restore their economies. They now offer citizenship – full passports – to the descendants of families expelled from their countries. The governments regard the expulsion as tragedy, or – in the words of Spain’s justice minister – “a historical error”. I guess what goes around, comes around.
Now the Jewish descendants of those expelled can claim a passport, which would allow them to travel freely in 28 EU countries.
I was sitting on the Saturday evening at a small train station under sapphire tinted skies typing this essay and waiting on the last train to Albufeira, where my villa was.
I was thinking how I got where I am in my life, and then it occurred to me: we have two lives, and the second one starts when we realize that we only have one.
I am with Confucius on this one.
Montenegro is a tiny Balkan country with rugged mountains, medieval villages and a narrow strip of beaches along its Adriatic coastline.
The place is a hidden treasure, located roughly opposite the sea from Bari, Italy, and the ferry ride takes about 10 hours, if you are interested in an all night party on the ship.
Famous as the most relaxed and chilled Balkan country, it is a touristy place even though the traveling Germans don’t come here much, you hear some English around, but the huge majority of visitors are Russians.
There are some splendid hotels, especially in Budva, with prices going up to a grand per night, and that’s in Euros, the currency they use here, even though they are not a part of the EU.
Accordingly, the properties are pricey, certainly not for salaried employees from Mother Russia. Whoever is buying them is getting capital out and is permitted to do so. Some 6000 Russians are permanent residents in Montenegro
Accumulated Russian investment reached $1.3 billion in 2016, and this in a sparsely populated country of about 600 thousand, which makes Montenegro’s foreign investment per capita the highest in Europe.
Sign of new times, in my view.
It is clear that what happened in the world in the last 10 years shows how everything works together and is interconnected. The financial crisis of 2008 slowed down the buying power of Europe and US from China, which then weakened so much that they appointed a dictator for life (Xi). Note that strong countries don’t need dictators; they can rely on their political system.
As Chinese demand for raw materials and energy slumped, it destabilized Russia and Saudi Arabia, which is now encircled by Shia countries, led by Iran and has appointed a 34 year old prince with the task to manage. One of his first moves was to gather the rich Arabs under house arrest in a Ritz hotel in Riyadh and shake them down for money. Guess that’s how business is done over there.
In Russia, Putin is still holding to power, but we don’t know what is going on inside the Kremlin and who is in the shadows. So Russia is the wild card.
What we know is that their budget is blown due to the collapse in energy prices.
There is one more domino that has yet to fall – as manufacturers weaken, the orders for industrial machinery drop.
Consider this recent piece of news from Bloomberg:
Thyssenkrupp AG, the steel giant and one the pillars of German economy, looks set to be kicked out of DAX, Germany’s main equity benchmark. The industrial conglomerate has halved its market value during the past twelve months and it is failing to fulfill index membership criteriaof the exchange.
Thyssenkrupp CEO wants to float the company’s elevator unit to generate cash needed to cover unfunded pension liabilities and fix its operations.
Thyssen’s problems demonstrate what ultra low interest rates do to the markets – overinvestment with cheap money and no returns enough to pay out pensions.
The Americans call it a double-whammy.
Montenegro, along with Serbia, has been for a long time in the Russian sphere of influence. The country lies in the region where there are always security challenges, but in stark contrast to, say, Poland, which is easier to conquer with it’s wide-open plains, Montenegro has rugged mountains where only some valleys can be taken, mountains bombed, but that’s it.
During the Balkan war in the 1990’s Montenegro joined Serbia in attacks on Dubrovnik, a city just north along the coast, in Croatia. Subsequently, it was bombed by the US forces flying out of Brindisi, but not as heavily as Serbia.
And you have to be careful in conversations with the locals (and people speak good English here) – you mention the wrong neighboring nation and its bound to send a chill going through the room.
Another problem is the terrible traffic along the coast. I was having a morning coffee on a patio watching a guy with a bag maneuvering between moving cars on a busy street. And it reminded me of a Kevin Hart stand up routine – “I was carrying a bag of chicken and got hit by a car”, he said. “But I never dropped the chicken. If they tell you that these KFC commercials don’t work – don’t believe it.”
Tom Kubiak is the author of The Traveler