The game of life.
I was my old self, riding motorcycle back from work on a beautiful Tuesday evening, and I knew that there are some things that riders can experience and car drivers can’t.
I will give you a couple of examples.
First is the morning – you ride down into a valley and the air is still cool from the night, you get up in the sun and the air is getting hot in a nice sensation, which you can’t recreate anywhere else.
You have to experience it yourself.
Second is how they water the fields along the highway, with the big water spraying set so it won’t wet anything beyond. Well, you feel the humidity on your face as you ride through; it brings you close to reality, and I like it.
It’s a visceral connection to the world, which is one of my two favorite English expressions.
The other one is pristine.
I am convinced that this tells you more about me that my two page CV.
So, this is what came to my mind riding along the Leman Lake towards Geneva.
I watched Trump’s press conference in full following his meeting with Russian President Vladimir Putin in Helsinki and I liked what I saw.
While most normal and balanced people would like to see a state of peace and concord between Russia and the United States, that is not what the Military Industrial complex and the Neocons want – they want Russia as an adversary, because they need a bogeyman, an enemy. So, I expected the media hostile reaction to Trump’s remarks, but it was more than that: they went into full attack mode against the President.
Stop and think about that for a minute – Trump makes the effort to defuse a dangerous escalation of tensions with Russia, and he gets called treasonous for his pains, which is a gross disrespect to the democratically elected President of the United States and his supporters.
I believe there is a solid reason why the US elites are against any improvement of the US – Russian relations.
It has been estimated that a military budget of $200 billion per year would be more than adequate to defend the Homeland of the United States against all who might try to threaten or overrun it militarily. However, the Military and the Pentagon bleeds the American taxpayer to the tune of $800 billion per year - $600 billion more than what is required to get the job done. If I’m right, then there is a $600 billion price tag that kind of explains the hysteria.
But the event that shook me this week was the fact that Sergio Marchionne died on Wednesday at a Zurich hospital. He was one of the captains of the industry who was bigger than life. Famous for making Lonza and Fiat profitable, taking Ferrari public and saving Chrysler. His performance, like making Fiat 10 times more valuable during his tenure, is nothing short of amazing.
And he was a Toronto boy, moved there with his parents when he was a kid, got his education and professional start right in my town.
He wrecked his Ferrari Enzo on a Switzerland highway once. Asked about it he said “you live hard, you crash hard, it is sometimes like that.” He wanted to retire next year, said he was tired of life, but death got to him first. He was only 66.
Rest in peace man, you have my respect.
There is a good chance that people make important life decisions based on their confidence in how the future will be. I know that I do.
This type of thinking may not get much attention in the media but it’s common among pretty much everybody, which means it’s human nature.
A good example is the fact that the environment of low (even negative) interest rates didn’t produce inflation the central banks were hoping for.
And it’s not that difficult to figure out why – whether you save for a house, for your child’s education or for the retirement – lower interest rates mean that you have to save more and spend less. How does this align with ambitious inflation targets?
People know that instinctively and don’t need a degree in economics to figure it out. Maybe the central bankers need a degree in psychology, or a dose of common sense. Not a law degree, which is so common in governments these days. Lawyers are trained to think that once they pass a legislation people must follow.
They tend to miss on the human nature thing. How many of us drive the speed limit on the highway, huh?
The change in comprehension of how the world works goes back to an important date in August 1971, when president Nixon took the dollar off the gold correlation, which was mandated since the end of the second world war. Dollar was backed by gold and the western currencies were tied to the dollar.
The situation was very serious at the time, and this being a vacation season, Nixon and his people were keenly observing if US dollars spent by tourists are still accepted in Europe.
They were, which thought everyone a valuable lesson – that confidence in currency is more important than gold backing of it.
And that confidence in currency really means the confidence in government that is behind it.
A new era began, only scarcely understood to this day.
The value of money is no longer based on anything tangible, it is based on the faith in the people who rule the country. And the might of the army, frankly.
You trust them, you spend. You don’t, then you hoard.
It’s always the feeling that takes precedence to knowledge, no? I don’t think it’s new, but fascinating still.
In the business world, it’s not the level of interest that drives investment decisions. If the cost of money is 10%, but I can make 20% off the project, I’ll go for it in a heartbeat. But if I can borrow at 2% and can hardly break even because of taxes, tariffs, unions and regulations, I’ll pass.
On that note, looking through history, the revolutions and uprisings of any kind seem to be always caused by excessive taxation. If we look at the business of war, it historically didn’t involve the population. People would be working in the fields, armies marching to battle and back, not really impacting anybody. It was about taxation – a king would look at the next country and figure how much he can make there in taxes before people revolt. Then he would calculate the cost of war, find a good general, and if the business case was strong, he would go for it. It’s no different in business world today. If a company is mismanaged and the stock price reflects it, it will be taken over by a competitor.
It was this observation that prompted de Tocqueville to state that war is caused by the weakness of a country.
So where is the confidence today?
There are three areas to consider in my view – one is big money, also called “smart”, as it would not be big otherwise, another is retail (individual investors), and then the government market interventions, which are huge, but there is not one person accountable at the end of the day.
The big money flows into US stock and bond market. Where else would you park a trillion dollars? Not is China, not in Europe (the biggest European bank, Deutsche Bank is flirting with a single digit stock price) not anywhere else. Only US markets are deep and liquid enough.
Retail participation is the stock market is low at present, people go into cash and hoard.
The governments, specially in Japan and the EU are basically the market makers when it comes to bonds (also corporate bonds). They have really destroyed the bond market with the huge buying spree. At present, there is not one good idea how to stop buying. Mr. Mario Draghi will leave his post in October 2019 and I’m sure it’s not soon enough for him.
Perhaps the conclusion is this: the confidence is backed by a government with the biggest army. How else US dollar would be the reserve currency of the world?
The USA will be the last to fold and is holding the world economy intact.
Think about it in that perspective next time you hear president Trump calling for increased defense spending.
On my ride in Lichtenstein this past weekend, I was blinded Saturday evening by a red camera light in Triesen. It was hidden well on a private property, nabbing me for making maybe a 5 km/h over the limit after the long day of riding. Think about it what you want, but I’m not impressed.
It could be “fuhrershein weg” said the hotel owner talking to me over the breakfast the next morning. And there was a strange satisfaction in his statement.
And I have more than one driving license, the EU clearly at loss what to do with people like me. Fine, I’ll survive, will pay the fine too. But the experience just sucks.
That was about the motorcycle, now the NATO summit.
President Trump just stated the fact that is obvious to anybody with thinking capability , namely that the US is protecting Germany and gets nothing in return. The Germans do business with Russia happily; don’t spend much on defense, relying on US protection.
What is wrong with this picture? Well, a lot – and it took the Donald to point it out.
My hat down for the man.
There is something sinister going on in Germany, and the media will never investigate it, which makes it more sinister still. Angela Merkel was born in Hamburg, and that’s West Germany. Her father moved the family to East Germany when she was a child.
Just think about it for a moment. He was a communist.
You are at the height of the cold war, and you have a family moving from Germany’s West to the East. What level of interest do you think this would raise in Russia? What was the environment she grew up with?
She is fluent in Russian, but then Putin is fluent in German, and Donald Trump says that they’re too close. Draw your own conclusions.
Angela told this about her past -“I may not remember everything, so if I get something not right, I apologise.”
Now the Donald claims that Germany is controlled by Russia.
Now, the bigger question – is NATO justified at all?
No it isn’t, it a waste of money every year and Trump is right kicking them where it hurts.
Is Russia a threat to the United States?
Not even slightly. They have no capacity to mount an attack and they’re not suicidal to start a nuclear war.
Russia is not a thread to America in a million years. It just doesn’t make any sense.
Now back to the motorcycle riding.
The line splitting is totally illegal in Toronto, but very common here. I learned to do it every evening riding back from work when the traffic slows down. But riding in the high Alps is the experience of a lifetime. There is a stretch between Lucerne and Interlaken where the vistas are breathtaking, even though one needs to be focused on making the turns to survive and has little time for the views. The effort requires both hands and feet. On the motorbike is the right side for stopping and the left for riding.
You get focused on that and may miss some amazing views, but it"s still worth a ride, got to love Switzerland.
The Marc Rich legacy.
The U.S. corruption and money-laundering probe into Glencore Plc represents the sum of all fears for the world’s largest commodity trader. The possibility that the Justice Department would add to the dizzying array of regulatory and legal headaches the Swiss company is facing around the globe -- from Russia to Africa and South America -- has been a major worry for both executives and shareholders for a while now.
The most obvious risk from the U.S. investigation is a hefty fine or settlement, but the stock plunge, which erased $5 billion of market value, far exceeded the largest penalty ever imposed under the Foreign Corrupt Practices Act. That suggests investors have deeper apprehensions, which makes it interesting.
But something else the name Glencore still triggers in mind of many: his founder was Marc Rich, born in Antwerp to a Jewish family, but raised in the United States. He dropped out of New York University to go to work for Philip Brothers, now known as PhiBro LLC, where he became a dealer in metals. He helped to run operations of the company in Cuba, Bolivia and Spain, securing citizenships in the process, always a useful thing for a person leaving on the edge, in more than one sense of the word.
Rich has expanded the spot market for crude oil in the early 1970s, drawing business away from the larger established oil companies that had relied on traditional long-term contracts for future purchases. This was a key insight and claim to fame. One of his biggest market coups came during the 1973-1974 Arab Embargo when he used his Middle Eastern contacts to circumvent the embargo and buy crude oil from Iran and Iraq.
He was always thought to be a Mossad asset, who helped Israel to get contacts in Iran.
In 1983 Rich and partner Pincus Green were indicted in the US on 65 criminal counts, including income tax evasion, wire fraud, racketeering and trading with Iran during the oil embargo (at a time when Iranian revolutionaries were still holding American citizens hostage). The charges would have led to a sentence of more than 300 years in prison had Rich been convicted on all counts. At the time it was the biggest tax evasion case in U.S. history
Conveniently Rich was in Switzerland when this all went down. He never went back to the United States, even when his daughter was dying of cancer in California.
On January 20, 2001, hours before leaving office, U.S. President Bill Clinton granted Rich a highly controversial presidential pardon. Some allege that Rich's pardon had been bought, as his ex-wife, Denise Rich had given more than $1 million to Clinton's political party, including more than $100,000 to the Senate campaign of the president's wife, Hillary Rodham Clinton, and $450,000 to the Clinton Library foundation during Clinton's time in office.
Rich moved to Meggen, a city in the Canton of Lucerne Switzerland, residing in a house called "La villa rose" (the pink villa) on the shores of Swiss Lake Lucerne, where he zealously guarded his privacy. Rich owned property in the ski resort of St. Moritz. Switzerland, and in Marbella, Spain. He was an art collector and friends said he lived surrounded by Renoirs, Monets and Picassos. He died there of stroke in 2013 and was buried in Israel.
But there is a kind of ending to the story. It happened just yesterday.
Glencore Plc’s announcement of a $1 billion stock buyback on Thursday was short on both wit and color. So allow me to hazard a rough translation: “Don’t worry, we’re rich and our share price should be much higher.”
Faced with the unwelcome attention of the U.S. Department of Justice, most companies would be inclined to batten down the hatches. But just a couple of days after being ordered to hand over a decades’s worth of documents related to its activities in the Democratic Republic of Congo, Venezuela and Nigeria, the world’s top commodities trader is splashing its cash.
That shows guts, the spirit of Rich lives on. A tough man who made it his way, and he left an organization modelled after him.
Tom Kubiak is the author of The Traveler