Thursday, July 28, 2016

Immigration and Brexit - Jeremy Grantham commentary -

Somalian Refugees/US Navy
Jeremy Grantham, British investor and co-founder of Grantham, Mayo, & van Otterloo - one of the largest fund managers, based in Boston - is well-known as a leading and prudent investor, but also as being prescient regarding economic trends, bubbles, and geo-political risks, such as climate change.

Union Jack and EU Flag
In his  recent quarterly commentary,  "Immigration and Brexit", Grantham discusses the events in the UK (i.e. Brexit) and the US (i.e. Trump as presidential candidate) and the challenges of immigration.

He begins with calling the current economic (i.e. central banks' policies) and political developments (i.e. Brexit) as "Black Hole Experiments in which the further we push them, the more the laws of physics, finance, or politics begin to change in unknowable ways."

Even though we are experiencing these unusual political times, and even though Grantham believes assets are overpriced, he expects the (US) stock market for the time being to keep rising thanks to what he calls the "two remarkable pillars of support", which are the continuing Fed's policy of low interest rates and  the US corporations buying back their stock.

Furthermore, although he believes Brexit will be bad for the UK economy, it could turn out to have a positive effect by stimulating the EU to reconsider its many weaknesses. But more importantly Grantham believes Brexit is an indication of how problematic immigration from outside Europe can become. He then comes up with an in my view very important statement about social cohesion in society. This is something that many European politicians and policymakers seem to forgot about or take for granted. Grantham states:

Friday, July 22, 2016

Kan Trump winnen? Yes, he can! (D.J. Eppink - Volkskrant column)

Volkskrant columnist en senior fellow bj het London Policy Center in New York, Derk Jan Eppink schreef in zijn recente column, Kan Trump Winnen? Yes, he can! dat evenals de Brexit ook een Trump overwinning verrassend zou zijn, maar zeker mogelijk is, "voortgestuwd door dezelfde factoren: anti-immigratie, antiglobalisering en anti-establishment"

Eppink stelt: "Trump voorspelde niet alleen de Brexit, hij is zelf de voortzetting van de onderliggende factoren in Amerika. Vorig jaar lanceerde hij de 'Trump Muur' tussen Mexico en de VS. Hij werd weggehoond door pers en politiek. De 'muur' is intussen razend populair bij lagerbetaalde Amerikanen en prijkt in het Republikeinse programma."

"De basis van de Amerikaanse droom is werkzekerheid. Amerika kent minder sociale zekerheid dan Europa...... De arbeidsparticipatie is met 62,6 procent de laagste sinds 1977. Onder Obama steeg het aantal Amerikanen buiten het arbeidsproces van 80 miljoen naar 94,7 miljoen. De werkloosheid is officieel 4,9 procent. Gezichtsbedrog. Tientallen miljoenen burgers zoeken geen baan meer omdat ze die niet vinden. Zij vallen buiten de statistieken. Maar hun verarming groeit en zij zien Trump als redder die Amerika weer 'Great' maakt."

"Ras doordesemt de Amerikaanse politiek. Onder Obama gingen zwarte Amerikanen erop achteruit. Hun arbeidsparticipatie en besteedbaar inkomen daalden. Het aantal zwarte Amerikanen afhankelijk van voedselbonnen steeg met 58,2 procent: van 7,3 naar 11,6 miljoen. Obama werd in 2008 gekozen als drager van 'hoop'; symbool van verzoening tussen zwart en blank. Hij bereikte het tegendeel. Obama ziet Amerika door het prisma van racisme. Elke schietpartij waarbij een blanke agent een zwarte doodt, geldt voor hem als bewijs. Het is wereldnieuws. Maar 90 procent van de zwarte slachtoffers valt bij zwart op zwart geweld. Zoals in Chicago, Obama's politieke thuisbasis, waar tijdens zijn presidentschap ruim 3.450 mensen zijn vermoord. Bijna allemaal zwart. Obama zwijgt........Zwarte identiteitspolitiek van Obama en Clinton produceert vanzelf blanke identiteitspolitiek waar Trump op inspeelt."

No Matter What You Think of Donald Trump

As Donald Trump is now officially nominated as the Republican Presidential Nominee, let me offer you some views about Trump from insiders and pundits. Trump is being compared to a sociopath, to Turkish President Erdogan, Russian President Putin and representing the biggest upheaval in US politics since Ronald Reagan. No matter what you now think of Donald Trump, read the following excerpts, and decide what you think of Trump's candidacy and of his chances to become U.S. president in the November elections.

Tony Schwartz, the Insider's View: Trump, the Sociopath

Let's start with quite a devastating insider's view of Trump by his ghostwriter Tony Schwartz (who co-authored "The Art of the Deal", which was released in 1987) in The New Yorker's article, "Donald Trump's Ghostwriter Tells All "

“...I put lipstick on a pig,” Schwarz said. “I feel a deep sense of remorse that I contributed to presenting Trump in a way that brought him wider attention and made him more appealing than he is.” He went on, “I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization.”

"..If he were writing “The Art of the Deal” today, Schwartz said, it would be a very different book with a very different title. Asked what he would call it, he answered, “The Sociopath.”

"...I was shocked,” Schwartz told me. “Trump didn’t fit any model of human being I’d ever met. He was obsessed with publicity, and he didn’t care what you wrote.” He went on, “Trump only takes two positions. Either you’re a scummy loser, liar, whatever, or you’re the greatest. "

"..In his (private) journal, Schwartz wrote, “Trump stands for many of the things I abhor: his willingness to run over people, the gaudy, tacky, gigantic obsessions, the absolute lack of interest in anything beyond power and money.”

Thomas Friedman, NYT's Columnist: Trump, Erdogan's Twin

Another telling article is "Trump and the Sultan" by Thomas Friedman in The New York Times, where he states:

Sunday, July 17, 2016

How ABN AMRO Bank Turned from Gold Bear to Bull

Zero Hedge released an article, The Worst Gold Bear Is Now The Most Convinced Bull, where leading Dutch bank ABN AMRO's precious metal analysts are chastised for their gold price forecasts.

"Less than one year ago, Dutch bank ABN AMRO has put itself on the map by being more bearish on gold than Goldman Sachs. Whereas the latter was expecting to see a gold price of $1000/oz, the head analyst responsible for precious metals at ABN AMRO said she was expecting a gold price of $800 per ounce by the end of 2016......."

"Fast forward to today. Gold is trading firmly above the $1300/oz, and almost 70% higher than ABN’s target price. But of course, just like any other ‘analyst’, the bank quickly reversed its course just a few months later when the market started to turn around......."

"ABN Amro has now released an update report with its commodity price projections for the next 18 months, and it’s surprising (but refreshing) to see the bank is now expecting the gold price to end 2017 at $1450/oz...."

There is continued uncertainty economically and geo-politically from extreme low interest rates, to Brexit, a failed Turkish coup, and an ongoing dispute in the South China Sea; let's see how ABN AMRO's latest gold forecast will turn out.

Friday, July 15, 2016

Economics for Everyone

Adam Smith/Wikimedia Commons
The following video cartoon, Economics for Everyone, was brought to my attention by Richard Martin from Richard Martin's Wakeup Call. In it Cambridge University economist Ha-Joon Chang explains why every single person can and should get their head around basic economics. 

He talks about why using one economic theory is not sufficient to understand what's going on in our economies; that we shouldn't always believe experts; the importance of  "audite alteram partem" ("listen to the other side ") as shown at the entrance of the old city hall of the Dutch city of Gouda; and the importance of the old Italian Marxist Antonio Gramsci's motto: pessimism of the intellect, but optimism of the will and much more:

Nice - Bastille Day 2016

Brazilian political cartoonist Carlos Latuff 

Hollande vs. Barroso: The Pot Calling the Kettle Black

RexxS WikiMedia Commons
French President, Francois Hollande, has attacked Jose Manuel Barroso's decision to join Goldman Sachs "claiming that the former EU commission president’s “morally unacceptable” move demonstrated the need to rein in finance." according to The Financial Times

".....Mr Hollande highlighted Goldman’s role in arranging contentious derivatives trades for Greece, which helped Athens massage its public finances at a time when Mr Barroso led the commission. He also noted the bank’s involvement in the US subprime mortgage crisis almost a decade ago. “And we learn a few years later that Mr Barroso is joining Goldman Sachs? Legally, it’s possible,” the French president said. “But morally, and this is about the person, it’s unacceptable.”

As explained in my previous post, "Former EU President Barroso joins Goldman Sachs - Another Nail in the EU Coffin" I do agree with President Hollande. However, it's not very smart to let him be the spokesperson for these views. This same week it had been reported that Hollande's hairdresser is paid almost 10,000 euros a month, which is 166 times the price of an average luxury haircut in Paris and almost five times the average French monthly salary. Hollande accusing Barroso is a bit like the pot calling the kettle black. While European political elites keep showing this kind of behavior, populist forces will gain steam.  One almost has to wonder whether these European leaders are willfully self-destructive or have no moral backbone?

Thursday, July 14, 2016

Voormalig EU Commissaris Barroso naar Goldman Sachs - een nieuwe nagel aan de EU doodskist

The Subsidized Mineowner, 1925
Wikimedia Commons
Vorige week kondigde de voormalige voorzitter van de Europese Commissie, Jose Manuel Barroso, aan dat hij zal toetreden tot de Amerikaanse zakenbank Goldman Sachs als voorzitter van hun internationale divisie .....

Ga uw gang en laat dit bericht even goed op u inwerken: dit is dezelfde Barroso, die gedurende de jaren 2004-2014 voorzitter van de Europese Commissie was, toen Europa de ergste financiële crisis sinds de Grote Depressie doorstond, veroorzaakt door onzorgvuldig en frauduleus gedrag van met name Amerikaanse investeringsbanken, en ook toen Europa te maken kreeg met de Griekse schuldencrisis. Griekenland, dat lid werd van de eurozone dankzij het verhullen van de Griekse overheidsschuld door Goldman Sachs

Dit is ook dezelfde Barroso, die in 2005 een week op het jacht van de Griekse scheepvaartmiljardair Spiro Latsis doorbracht, een maand voordat de Commissie Griekse staatssteun van 10 miljoen  euro voor de Latsis rederij goedkeurde. Het was toen dat de inmiddels welbekende Nigel Farrage, lid van het Europees Parlement voor de Britse UK Independence Party, tevergeefs een motie van wantrouwen tegen Barroso indiende.

Het is ook dezelfde Barroso, die als minister-president van Portugal, en lid van de rechtse Sociaal-Democratische partij, gastheer was van een bijeenkomst op de Azoren in 2003 met de Amerikaanse president George W. Bush en de Spaanse en Britse premiers José María Aznar en Tony Blair, waarbij deze vier leiders gezamenlijk tot de beruchte invasie van Irak besloten, een besluit waarvan we inmiddels weten hoe verwoestend en misplaatst die was. En had ik al verteld dat Barroso ooit

Tuesday, July 12, 2016

Former EU President Barroso joins Goldman Sachs - Another Nail in the EU Coffin

The Subsidised Mineowner, 1925
Wikimedia Commons
Last week, the former President of the European Commission, the executive body of the European Union, Jose Manuel Barroso, announced that he will be joining US investment bank Goldman Sachs as a non-executive chairman of its international operations.....

You may want to ponder over this announcement for a few moments: yes, this is the same Barroso who was President of the European Commission from 2004 to 2014, during which Europe experienced the worst financial crisis since the Great Depression largely caused by careless and fraudulent behavior by US investment banks, and Europe also faced the Greek debt crisis - Greece that became member of the Eurozone by masking its government debt thanks to Goldman Sachs.

This is also the same Barroso who in 2005  had spent a week on the yacht of the Greek shipping billionaire Spiro Latsis, a month before the Commission approved Greek state aid of ten million euros for Latsis's shipping company. It was then that Nigel Farrage, Member of the European Parliament for the British UK Independence Party, filed a motion of no confidence in Barroso, which in the end did not receive majority support.

And this is also the same Barroso, who as Prime Minister of Portugal, and member of the Portuguese right-wing Social Democratic Party, hosted a meeting in the Azores in 2003 with US President George W. Bush,  and the Spanish and British Prime Ministers José María Aznar  and Tony Blair, where these four leaders agreed to the infamous US-led invasion of Iraq, a decision which turned out to be one of the most devastating and misguided wars in modern history.

Oh, and did I mention that Barroso as a student was one of the leaders of

European Football Championship Finally Over

Dutch Team at 1974 World Cup
Last Sunday night, Portugal beat host nation France 1-0 in the European Football Championship finals. A dramatic game, as Portuguese star striker, Christiano Ronaldo, had to leave the game injured after just 20 
minutes. The match then seemed France's to lose. They deserved to win this championship as they had played reasonably well (but not much better than that) during this tournament and had a golden striker in Antoine Griezmann. 

Also, the French deserved a shot in the arm after last year's terrorist strikes and an economic malaise in the country. It didn't happen: the tough defending Portuguese surprisingly managed to score in overtime and that was that. This was Portugal's first European championship, a great achievement for them and for Ronaldo, their leader on the sideline. 

However, there is not much more good news to report after 51 games in this tournament which for the first time had 24 countries participating instead of the usual 16. Iceland was refreshing and surprising in reaching the quarter finals. Wales was even more surprising in reaching the semi-finals. But most games were

Thursday, July 7, 2016

Big Banks Loose Nearly Half a Trillion Dollars in Equity - (The Wall Street Journal)

Storm clouds are forming over Western economies: not only Brexit is causing upheaval, also the world's biggest banks are showing major warning signs, that something is really not well.

As The Wall Street Journal reports:

"....Since the start of 2016, 20 of the world’s bigger banks have lost a quarter of their combined market value. Added up, it equals about $465 billion, according to FactSet data...."

Just have a look at this picture, which speaks for itself: