LANNA DANCE "FUSION"

27 April 2022

It was quite a challenging show. It started off easy, traditional Lanna dance, albeit in a scrap yard.

Then it started. First a series of motifs, numbered instructions such as "dance while eating", "while doing the housework" ...

I began to feel uncomfortable.

She started pulling clouds of sequins out of her bosom. And the stage was obscured in flutters of dollar bills.

I got the message, but heavier were to come.

She began machine-gunning her two sisters sitting peacefully on the coach. And thus began a long long dance, the three of them. They weren't sisters, it was her husband and child, the slow and painful break-up of a family, the mother eventually kicking out the husband, putting her daughter into the care of parents in the village, while she goes to seek work in the city, any work.

Difficult to understand the penultimate sequence, involving her and her freelance assistants.

Ultimately, all our dreams came true, as she took of her clothes for  a final burst of the most beautiful Lanna dance, she is a perfection of the art, and we are asked to vote our applause with a trinkle of money in the donation box. Bringing us nicely back to earth, to the start, we wake up.

All very clever, very arty, very true, very beautiful.

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HERE IS WHERE THE NEXT CRISIS WILL START

25 March 2022

After the last sub-prime crisis and 15 years of QE, Brexit dislocation from UK's main market, climate change and the Energy Transition away from fossil fuels, Covid and yet more very serious business disruption, now war in Europe with sanctions ejecting the world's only full-spectrum commodity and agri producer ... where will the next crisis come from? 

Many have savings in stock markets. There seems to be a growing problem in the credit markets. 

If you look at household and corporate debt, by region (US, Euroland and China), there are some serious hotspots in companies' debts in the US; Euroland and the UK are not great but OK;  though in China, both company debt to assets ratio, and profits to interest payments ratios, as well as household debt to household income, are all really worrisome with spreads (see below) averaging 12%.

The ratings agencies tell you the confidence you can have in a loanee. And central banks publish heat maps.

The yield on a bond or loan is made up of a fixed risk-free rate that everyone gets, unless a floating rate which is regularily reset, then add on a credit risk (the risk of the company defaulting) and a liquidity risk (the difficulty of selling the loan), according to the investment grade. It is the latter two that make up the credit spread, so zero for gilts and t-bonds, but increasing with decreasing loan quality or "investment grade".

"Investment grade" is BBB or above. Most funds have a policy that says only investment grade is permitted. Or you can buy high yield. Half the loans in a fund are in the bottom triple-B tranche, just above junk, reflecting the reality of corporate quality.

There is a real problem in leveraged floating loans. There is a real problem when these loans are bundled up. They will contain mostly triple B because that is the quality of most loans, but in a recession, these would be downgraded to junk ("high yield", if you prefer ha ha), obliging fund managers to sell  these bonds...

Seeing a recession, many will start heading for the exit, anticipating company downgrades by the rating agencies.

Companies will face higher rollover rates, increasing their costs ... so lowering their profits ... the company gets a downgrade ... so rollover rates go up again ... and the problem compounds across equity markets from bad to good companies. 

Share price follows expected earnings, at least in the short term. Earnings downgrades and we have a stock market crash as everyone heads for the exits.

So if analysts begin to anticipate a recession - the war, no, but inflation and higher lending rates, yes - then we'd be in this "downgrade cascade" and there is little or nothing central banks could do.

The next crisis could well be a stock market crash and it would start in the credit markets. . 

So it means we must at a minimum check debt levels of any companies we own and sell before a downgrade.

Questions: 

Cannot withdraw to cash because inflation will devalue your savings, so what do "safe" assets look like?

What is a reasonable ratio of debt/equity or a EBIT/interest payments? 

Will Value outperform Growth? 

What of unexciting stocks with safe balance sheets paying say a GT 4% divi?

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KALININGRAD

25 March 2022

We hear nothing of Kaliningrad (formerly Prussian Konigsberg). This "exclave" was included in the German Empire in 1871 and then as part of the WW2 settlement, Konigsberg was given to Russia and renamed.

In March 1999, Poland joined NATO and the Baltic States followed in 2004. This left K high and dry outside Russia, enclave turned exclave. The map shows this strange situation very clearly.

If you take a look at the map you'll notice three things of great strategic importance: 

- how K is on the Baltic sea, with Russia's ice-free naval base in Baltiysk and a helicopter force at the Chkalovsk naval air base

- how K connects to Belarus and thus Russia along the Suwalki Corridor

- and how K is the border between Poland and Lithuania.

Kaliningrad is on the Baltic Sea, as we've seen, meaning that if American or NATO forces become involved, Russia would plant mines along the small passable straits and passageways, closing off the corridor to the Baltic Sea and preventing NATO troop movements into Russia. 

The Suwałki Gap is of great strategic importance to Russia. If you take a look at the map again, you'll see that the Suwalki Gap is just 90 kilometers long and is the only way K can connect with Russia. 

Whoever controls it, commands access to the Baltic states. If Russia, it would cut off the Baltic States geographically from their NATO allies. So Russia and Belarus could quickly overrun the Baltics in any horizontal escalation of this present Ukraine war, leaving NATO no time to defend them.

(Horizontal: spread geographically. Vertical: spread through chem and bio to nuclear.)

This is similar to the importance that attaches to Crimea. There are nine such easy-access gateways that Russia must control. Enemies have invaded in the past through these gateways, most notably Napoleon and Hitler and Russia must control them for its security. This is most of the explanation for today's troubles.

So now today, Kaliningrad is heavily militarised, in response to NATO taking in the countries mentioned above. 

A very agreeable tour of Kaliningrad:

https://youtu.be/Y6M14rLIhV0

Kaliningrad could be where Putin retires to when this war is over. He keeps one of his yachts, the ''Graceful'' there too. It is there now, allegedly.....

Moscow has at least an entire division in Kaliningrad, 10,000-20,000 troops permanently stationed in the oblast.

America's plan would presumably be the color revolution (color, eh) idea again, although K's half million population is 85% ethnic Russian, repopulated after WW2. If prosperity is a stronger political force than nationalism, America could send in its advisors and NGOs to build up social and cultural ties between K's inhabitants and its NATO neighbours, give the people of K a strong desire to join the EU for prosperity and NATO for protection. But of course that could only happen once Russia is crippled and potential nuclear resistance overcome as a result of proceedings in the Ukraine theatre.

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ANOTHER EPIC AMERICAN DISASTER

 25 March 2022

                I have been pushing the peace line in these columns for a couple of years. Until, I would say, this week, 99% of comment has been from football-hooligan types and CSA has been treated to abuse and called a Russian troll.

Sense is starting to filter through. There are really only two arguments. One is the justice angle, as evidenced for example in this youtube.

https://www.youtube.com/watch?v=TzgPJeYZaOU

The other is America's record as it has lost every engagement since the end of the cold war, plus it has also trashed its economy with debt, negative interest rates and 30 trillion dollars of money-printing.

Anyone with half a brain can see that NATO expansion and this Ukraine war - which means American world domination by brute force in the name of Democracy and Human Rights - is going to be another epic American disaster.

===

 Look at what is happening under our nose. NATO and America organise these colour revolutions. It was Ukraine's turn in 2004 and when that didn't work, a tougher revolution was organised in 2014.

Cities are being ground to rubble. This includes non-military public infrastructure as well as private residential.

This is Europe 21st century. And remember NATO - which is America essentially - stayed post 1991 because the Europeans couldnt be trusted not to restart fighting. 

Now today, we have fighting, and although Putin pulled the trigger 24 Feb 22, NATO and America started this.       

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DEALING WITH WESTERN PROPAGANDA

24 March 2022

https://youtu.be/11q9dir2Nts

"There is a faction that has a geopolitical strategy that is happy to drain Russia of power and if it comes at the expense of Ukraine, they're OK doing that". 

The "faction" is the blob, which returned, having got rid of Trump. Hilary Clinton is  making the same case as them, that's all. I notice that it is purely tactical / operational, the how-to of bleeding Russia dry - you never get into the why, except that Putin invaded a so-so sovereign country, true but that's the tail end of a story going back to the early 90s ... but it's enough to start with Maidan in 2014 (the second attempt, Orange Rev was 2004) and Donbas shelling and Crimea after the coup and even Syria in 2015.

It is all straight geo-political stuff on Putin's part. You just need a map and a bit of history to understand where a search for security takes Russia.

The late Zbigniew Brzezinski, former National Security Advisor to Jimmy Carter, in his 1997 book “The Grand Chessboard,” explained why Ukraine is essential to Russia:

“Without Ukraine, Russia ceases to be a Eurasian empire…. However, if Moscow regains control over Ukraine, with its 52 million people [☆] and major resources as well as its access to the Black Sea, Russia automatically again regains the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

Anyway, this video makes a good analysis except for not explaining Crimea as Sebastopol home to Russia's fleet, in the Azov Sea....being realistic, Russia would launch its nukes before giving that up and everyone knows this.

99% of public comment is uninformed. It is just like the spectators on the terraces, a heartbeat, literally, away from what's happening on the pitch. All gobbing the propaganda and cheering on the action. This is how a govt would get even The Woke to the front line in any future conflict  And it is fine if our existence is threatened. But as always in neocon wargames, you get the liberal justification (democracy and human rights) on the surface, while underneath it is grab the land and assets of your neighbours and balance-of-power politics.

But with a map, a bit of history, some demographics; and assuming states will always seek first security and dont know what their neighbours have in mind for them; with that you can get enough perspective for a reasonable rational analysis, avoid the emotions, avoid being someone who cheers at each batch of gov.t propaganda.

[☆Note: Since the 1990s, Ukraine's and Russia's populations have been declining due to high emigration rates, low birth rates, and high death rate from HIV, alcoholism, violence. What we are looking at is almost a case of native Indians that America is trying to finish off before taking over their lands.] 

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FRANCE WONT BE QUITTING RUSSIA

22 March 2022

https://en.m.wikipedia.org/wiki/Sabetta

15% of the world's natural gas and 80% of Russia's are found here. 

This is the Yamal LNG project, opened by Putin on 8 Dec 2017. It is an LNG plant, a port, a railway, an airport, and residential. It's a JV between Novatek, which Total owns 20%, China's CNPC another 20% so they wont be best pleased either, and the Russian govt.

There is also Artic-2, opened in 2018 with Macron attending.

TotalEnergies is the fourth largest company in the CAC40. This project is a huge part of their accounts. If they pull out, their share of this plant would be nationalised, it would fall into competitors' hands; and there'd be more troubles in the already highly-stressed energy market. Maybe this would bankrupt Total and you can guess the rest.

France's Macron talks regularily with Putin, enduring lengthy lectures on European history.

Isn't all this stupidity part of a wider plot to seize Russia and its commodities and extend the life of the debt-soaked American Order?

The reasons given are that European liberty is under attack and a sovereign nation has been invaded. Although Patrick Pouyanné, CEO, met Macron earlier this month and received encouragement not to quit Russia.

Engie, Renault, Safran, Leroy Merlin (Auchan), Bonduelle, Danone...they refuse to leave. The Fr unions support this. These companies are responsible for hundreds of thousands of jobs in Russia - what would happen to these workers and their families and the wider Russian society?

And how will Humpty be put back together after all this nonsense? Nationalising Western assets would be a pretext for war with Russia - that's the way wars work: you seize the land and assets of a competitor.

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