The most important role of a leader is to give his people confidence.
Not the management of the country - there is an army of bureaucrats who do just that and are happy to stretch it until retirement. And there is nothing wrong with it.
The leader needs to say what will stir people’s souls.
We may have lost a bit in that area – Reagan was a leader, FDR was one too (“the only thing to fear is fear itself), as is president Trump and I am surprised how this man still stays alive - his security unit should get a Nobel prize for efficiency.
John F. Kennedy tried to introduce similar reforms in his time and got quickly blown to that great struggle in the sky, the surprise of his life, I’m sure.
Strong leaders always polarize societies, but they bring balance to the technocrats, the experts, who attempt to rule the world since pretty much the end of World War II.
One thing that expertise does, is the suspension of common sense. There is nobody to say: “guys, you can’t have anything that complicated”.
US healthcare plan is 15,000 pages and I guarantee no one read the whole thing, but boy, the people who wrote the specific chapters, they really knew their stuff.
But the citizens have no idea what’s in there and that’s a direct threat to democracy.
And don’t let me start with EU, where they pump out new legislation at a frantic speed.
There are ways to stop this madness and here is my favorite one – any new legislation comes into effect 10 years after it is voted on and passed.
This would simply increase the quality of law.
In truth, 10 years is nothing in business and social life, the planning and execution span in both is longer than that, so why rush it? I don’t question the good intentions to improve the world, but at that speed the legislators do more harm than good.
“Don’t crash the ambulance”, as Mark Knopfler would say, “whatever you do”.
The covid crisis is a failure of technocracy to do what they’re supposed to do – be competent. It’s a failure that will be in history books for ages.
Also - this is the first event in history when both, the social cycle and the institutional cycle bottom out at the same time. I see this as a tremendous opportunity for the societies to reset. The normal business cycle has been traditionally altered by central banks with interest rate manipulation and open purchases in the bond and stock markets (it used to be that the word “fraud” would describe it, but now I have to use the whole sentence to explain what I mean).
As I said before, when words lose their meaning, people lose their freedoms.
But it seems that the nature is taking care of that, or is it the wisdom of crowds, which is the same thing in my mind, accelerating the great reset.
During the Second World War the world stock indexes bottomed out in the darkest moment, when Hitler was at the peak of his military power. Looking back at the graphs, the markets had it down precisely to a day. Then the tide turned and the stocks started rising as Hitler was losing ground. The mystery of his rise and fall was never properly explained in history books, my opinion. The emotions were too strong to focus on the human factor, plus it’s always the winners who write history.
As an end note: a nonsense from recent days – Christine Lagarde, the president of European Central Bank announced that the bank will get involved in climate change activities (selling “green bonds”).
Mrs. Lagarde can never stop being the entertainment factor.
Can they service my swimming pool too?
Hot evenings on the deck, with a cold beer in hand, make my mind flow freely.
As the old song goes – you fog your mind, you free your soul.
So here it is for tonight:
Europeans conquered the world and created humanity, connected the peoples.
The Chinese or the Aztecs didn’t do it, no other culture did either for that matter, and you may ask yourself why. The answer will show you how different we are.
European people were not afraid of risking their future exploring the world, we eventually came and conquered North America. I consider myself one of them; I came to Toronto a long time ago in the middle of a cold winter, with two suitcases not speaking English. Four years later I was able to buy my first house.
These days we are in process of eradicating what made us, Europeans, so successful.
There is no need to create laws that specifically guarantee any right to any specific group. The core of a successful civilization is that all groups are treated equally. Ethnicity, creed, race, religion or gender share common rights of equality. They do not share God-given talents, but the right to pursue whatever talent they possess.
We started having doubts about it, and this is making us week.
There is a reason for it - in the last century Europe and the European culture destroyed itself - between 1914 and 1945, 100 million people died in wars on a continent of less than 500M inhabitants.
What emerged after 1945 was a Europe without the sovereignty, being divided between countries under US and Russian control.
This arrangement is now in the process of change, as the Americans don’t care anymore and the Russians just want to be left alone. The question is what’s next?
We must remember that the most vulnerable country in Europe is Germany, with their GDP being dependent on foreign customers. This simple fact drives German foreign politic to no end, not easy to manage, but they took some heavy-handed steps not exactly good for the peoples of Europe.
The way the European Union was created was to limit entrepreneurship – the level of taxation and regulation there is extremely high, the workers councils are powerful to the point you don’t really hire a worker, you adopt him. And you couldn’t shake lose from a mere bankruptcy. Europe is still with 1950’s style corporations and they’re paying the price for it.
There is a reason that no Apple, Google or Cisco emerged from there. Interestingly, Switzerland (not a part of the EU) is more open and flexible to what business needs, even though the richest family here are the guys who run IKEA.
Things happen without apparent consequences, which bother me, and I understand that to be human is to be dogged by your own thoughts.
By now I am totally confused with the Covid-19 story. We had a saying back in the day in Eastern Europe – “if I didn’t know its stupidity, I would think it’s a conspiracy,” but the sad part is the damage to the economy and peoples lives.
Like Hemingway’s old quip about a man going broke slowly and then all-at-once.
Get this: none of these things now wobbling and staggering in society will be resurrected, so maybe there is something perversely good coming out of this so called “pandemic”.
Back to real life.
Wherever I go on my new black bike, people stop and ask what is it. “Limited production” I say, “heavy and fast.”
“And the insurance?”
“Okay for me, young lady, but I am old, like George Clooney.”
“You look like him a bit”, she said before driving off.
There you go – me and the slick George, but he drives a scooter around the lake Como and I am good for 200 horsepower.
When it comes to the covid-19 problem, the media in the western world all tweet with the same key, which usually means they’re paid from the same pocket.
Not that there is anything wrong with it, it’s just how the power works.
This is the first deadly virus in human history you need be tested for to find out if you have it.
Some aspects of it are amusing - if you start coughing hard in a line up you will clear the store in seconds.
But what’s most important is invisible to the eye, and this is a quote from the “Little Prince”, a book by Antoine de Saint-Exupéry. I remember reading it with a flashlight under the blanket after my mother sent me to bed, way back in Eastern Europe.
What has disappeared? For starters face expressions under the masks, we are no longer interacting as humans, which is what has created our culture.
I had no idea that this will bother me so much, but it does.
With the remote working regime I could be in Switzerland, or on the Amalfi coast on my motorcycle, I could be in the beautiful city of Warsaw, or up North in Ontario with my computer and headsets for calls and I will do my job.
I may have done most of it.
A few hints about transatlantic travel - they encourage you to buy food and drinks in the terminal and bring in onboard as the service during the flight is limited. What they don’t say is that for the night flight there is just water, no glass of wine before sleeping and you can’t bring you own. No pillows or blankets either.
The flight attendants are fully gowned up and look like doctors. I felt like I’m about to get a colonoscopy (recent memory) so I was sitting straight the whole night.
When words lose their meaning, people lose their freedoms, you know. The media and the governments are doing a terrible job handling this crisis, and the worst part is how this will destroy confidence of the people.
Negative interest rates demonstrate just how bad the confidence level of investors is, meaning they prefer to pile money into governments debt, facing certain loss, then in the real economy.
It also means that too much money was created, way above the needs of the economies to function. The argument always is – how do you know how much money in the system is enough? Well, there is actually a good answer to it – the retirement funds need about 8% annual return to meet their obligations. By law, they have limitations not to play with risky assets, so they are primarily invested in government paper.
So, here it is: a 30 year bond should yield about 8% per annum to make us safe in our golden years.
It yields minus 0.317% in Switzerland as of today, this is how far away we are from normal. This is a big deal, don’t take it lightly.
In the past, when people felt that the tax oppression and income inequality was to high, it would result in a rebellion on some scale, revolution even, and the French are always first to do it.
So, people would go after the real estate, land and gold of the rich, but the point is - it doesn’t make sense anymore.
Bill Gates’ house is not even in the first 50 most expensive properties, gold is a shallow, tiny market and the assets of this world are represented by entries in computers, be it stocks or bonds. What will happen if you go after it if you’re a rebel? Distribute the digital assets among the people, so they’ll try to sell it causing prices to collapse? And who will buy?
To end with an AC/DC moment, I got it all from a sweet woman and she was telling me no lies.
In politics, the men and women who are elected to public offices have the feel of what their country needs and wants, and that knowledge is indispensible.
This is very different from professional expertise, which is very helpful only when controlled and managed.
In that sense Donald Trump is different, and right too, because he doesn’t trust experts.
It’s not that he doesn’t believe them; he thinks they don’t understand the consequences of what they’re saying. The clash here is that the technocrats believe that the management of the country should come from experts. Trump believes it should come from the understanding of the public.
Put another way – the question is if the solutions should be imposed on the public, or should they be negotiated with the public.
The latter attitude is called “populism” in the current media lingo, a really wrong take on life.
The fundamental truth is that a country is composed of people with different views, if you don’t understand that, you’re either a dictator or incompetent.
A good example is China - they elected a technocrat to manage the country, and for life term no less – meaning his life or the life of united China, whichever ends first.
So far president Xi has failed on all fronts – he is a massive failure as a politician in internal and foreign affairs.
Another aspect that is seldom understood is that different countries require different level of oppression to function. Iraq was once a place where people went to work, then retired, kids went to school and play sports, the life was normal.
Was Saddam a tyrant? Yes he was, but a tyrant was needed to make the country function.
Now with the imposed democracy it’s a failed state, you leave your house in the morning not sure if you will come back in the evening. You or your kids.
Russia is a similar example – president Putin has support from the public at the level western leaders can only dream of. And he is tough on the opposition, makes deals with the oligarchs and likely with the mafia too, but this is what it takes to keep the country together, this is the only way you go. People there know and accept that.
Looking at the demographics, the western world is a retirement community with the exception of the US. The average American became younger than the average Chinese some four years ago. The one-child policy imposed over there about 30 years ago means that they’re running out of 30 year olds, because that is how the math works. Meaning even less domestic demand at the time they need it the most, at a time when the population is shrinking (China replacement ratio is 1.7 kid per family and they need 2.1 to keep the population steady).
As you can gather from the above, I think that I am right and the rest of the world is not marching in sync. This comes from the fact that my logic is as clear as an Alpine waterfall.
However, what I learned in life is that logic alone doesn’t bring you far.
It feels good, but it’s useful when solving crosswords and that’s about it.
Things that run life are grey, and the cool name to navigate through them is now called “emotional intelligence”.
Or, if you a stubborn, thinking person – it means, “giving up on what made you”, or at least on a significant part of you.
The emotional intelligence is not worth your time – applying it is how we become mediocre. One needs to be real, sometimes controversial, to matter in life.
Try that, don’t try the other new thing.
It can’t be all-smooth - real life experience will leave you breathless or with a nasty scar, but you will know that something important happened before you’re gone.
It’s either that or just the therapy talking.
There is a massive market for high-level intellectual engagement. The narrow band of TV made us feel stupider then we are, and people have a real hunger for deep intellectual dialog. I know that I do, which is why I am typing these essays every week and I don’t even consider selling any advertisements, even though the readership is through the roof, from Japan to São Paulo and everything in between. It’s free of commercials and always will be.
A good example of the TV narrow band came just in recent days again. Chancellor Merkel announced that it’s time for Germany to take more of a leadership role in Europe. Now, Germany is already the most dominate economical and political power in Europe. They also control the currency through the European Central Bank in Frankfurt, so what other increased leadership is she talking about?
Not in the movie making, I hope.
She is talking about the military build up.
With the US withdrawing from managing Europe, and the world at large, the problem that Germany has is plain to see. Their supplies of energy and raw materials are from outside of the EU, hence outside of their control. The same holds true for the markets they sell to (the automotive market alone exports 80% of what they make, there is hardly any domestic demand).
The obvious way forward for them is first to get close with Russia to secure the supply side, but they don’t have a great history in doing that – the last pact lasted only 22 months before they started shooting at each other (Ribbentrop – Molotow in 1939).
There is also an internal problem that Germany has, and it’s the collapsing demographic.
This is the reason for their desperate attempts to bring people from outside, the Turks back in the day and the Syrian refugees recently.
As for the access to oversees market part of the equation, Germany needs to develop a serious naval power to secure it and in doing so, it will face fierce pushback from Great Britain.
They say that history doesn’t repeat, but it rhymes, and we will see how close the rhyme comes this time around.
Not the time yet for red shoes dancing the blues, I will say my two cents on the economy first.
The markets are massively overvalued. In fact – a recent Bank of America survey had 78% of fund managers saying that stocks are overvalued higher than ever in the history of the survey, and it includes the Internet bubble from 20 years ago too. More importantly – we never saw a stock bubble like this in times of such political and social uncertainty. Now add the covid disaster to top it off.
The one thing that surprises some market players is that gold isn’t reacting to the super massive money printing by the central banks.
I subscribe to some Swiss gold promoter’s websites (physical bullion selling and storage services) and lately they’re getting plain angry, as they don’t understand what’s going on. Well, boys and ladies, the concept of money is changing, and since it has zero connection to gold since 1971, you’re left behind.
May as well leave the gold in the tunnels drilled in Swiss Alps - nobody is going to come and look for it anytime soon.
The important point is that this covid crisis is different enough to matter. We haven’t have a lockdown of the global macro economy for any pandemic - the polio epidemic of the 50s, for War World I, World War II, for the Spanish flu, this one now is a first. It’s the biggest disruption by far to the economy since the Great Depression (and even back then we didn’t have a lock down of businesses).
The decision to shut down the economy was a political one and it will be studied for years as an example what not to do.
Now, did you want to hear about the deal?
Let's dance, she said, while colour lights up your face.
For fear your grace should fall
For fear tonight is all *
And all this happened, more or less.
* Lyrics by David Bowie
Tom Kubiak is the author of The Traveler