Sunday, 16 June 2024

PARLIAMENTARIES IN FRANCE - LATEST at 16 JUNE 2024

16 June 2024

Typical of the french and very amusing:

Macron lost at the EU elections, the right won - Marine Le Pen, Rassemblement National, got an unprecedented just over 30%.

By way of background: France is a semi-presidential representative democratic republic. The President of the Republic is the head of state, and the Prime Minister is the head of government. Elections to the National assembly are on a first past the post system and the majority party or the party that can form a Coalition forms the government and decides the Prime Minister but notice that these are not Presidential elections that we're talking about here.

The main political parties include La République En Marche! (LREM), led by Emmanuel Macron, and the National Rally (Rassemblement National), led by Marine Le Pen. 

Other significant parties are The Republicans (Les Républicains) and the Socialist Party (Parti Socialiste).

Marine Le Pen leads the nationalist and popular National Rally (RN) (formerly called "far-right" and "populist", note). Recently, Le Pen's party won significant victories in the European Parliament elections and several local elections. These successes mark a shift in voter sentiment towards more nationalist and populist or just plain popular as her success was spread pretty evenly across the voting districts.

This victory suggests growing support for RN's policies, which include strict immigration controls and scepticism towards the European Union, as well as greater tolerance of Russia and China and more skeptical attitude towards America. It also reflects discontent with traditional political parties.

Macron quickly decided to call parliamentaries, thinking the electorate would not want a majority Penist NF govt. (They call themselves the National Rally these days.) On the theory that people tend to vote more in protest/more extreme in EU elections as it's a step removed. 

He gave the min. notice possible, three weeks (cf six in rhe UK).

Suddenly parties that had been fighting each other at the proportional representation election in the EU, now found themselves having to make coalition for this First Pass The Post system.

The left and greens and far left group under Melenchon's La France Insoumise, "France Unbowed", despite myriad points of divergence - how long will that hold? Half a million came out on the streets yesterday waving Palestinian flags and wearing checkered keffiyehs, many of them outside La Nation. There were already good-hearted anti US-Israel demos there...see movie n photos below.

You may remember that in 2017, Emmanuel Macron pushed out his boss François Hollande to win the presidency. 

(Hollande was the guy who approved a peace Accord 2014 and Agreement at Minsk in 2015, along with Merkel, to resolve the Maidan coup; and they both admitted in 2022 that the whole thing had been a ruse to buy time for the West to arm Ukraine to fight Russia ... and bombing The Donbas began that same year, after Russia repossessed Crimea.) 

Anyway, never mind all that...Hollande is running again now, in his old constituency; and in the event of a second defeat Macron is more likely to resign, given his self love orgeuil, rather than form a coalition with Le Pen (never) or the LR (who are they?).

As there's a whole disgraceful (to some) story of the leader of Les Republicains, Eric Ciotti,  which is the party of Chirac and Sarkozy, doing just such a deal with the National Front - sorry, "National Rally" - Le Pen, by which one or t'other would withdraw from a seat in the second round, the result of which is that Ciotti has been holed up in his bedroom by the other half of his much-shrunken party and now there'll be two candidates from Les Reps running in the same seat!

The flags are out again at La Nation....and they're not Tricolore.

Thursday, 13 June 2024

HOW AI WILL SUPPORT THE INVESTMENT FUNCTION

13 June 2024

Overview

AI has significant disruptive potential but but cannot replace the value of human skills and social interactions in investing.


1. AI's Role and Benefits
    - AI can assist humans in investment by enhancing speed, accuracy, and reducing costs.
    - It's a labour-saving tool, eliminating unhelpful biases and focusing on data.

2. Impact on Jobs
    - AI might replace many roles in investment analysis, similar to how automation changed other industries.
    - A study showed that AI could predict corporate earnings better than humans, threatening more senior jobs.

3. Potential Pitfalls
    - AI simplifies complex financial decisions, making them seem easier than they are.
    - There is a risk of over-reliance on AI, which could lead to less critical questioning.

4. Trust and Transparency
    - Earlier, investors trusted data because they knew the sources. Now, with AI, the process is less transparent.
    - Stevenson's experience underscores the need for human interaction and trust in financial advice.

5. Social and Economic Implications
    - AI's benefits will likely favour a small, skilled elite while many others may find their roles devalued.
    - This shift could lead to greater social division.

Stevenson concludes by acknowledging AI's disruptive potential but emphasises the irreplaceable value of human skills and social interactions in investing.

ARTICLE
I’m relieved AI has come at the end of my investing career.
Modern tech feeds our predilection for shortcuts – but it isn’t a quick-fix to getting rich.

TOM STEVENSON

As with many conversations I have with investors these days, this one quickly turned to AI. The recently retired fund manager I was talking to put it well: “A car won’t go by itself; it needs to be driven or at least to be told where to go. But if you want to get to Manchester, it’s a lot easier by car than on foot.”

And that is the nub of the AI question for high-value-added intellectual activities like investment. It’s not really about whether the AI can do it better than the human, but how the AI can help the human to do it faster, more accurately or at lower cost.

A lawyer at the same lunch added that, when he started out, a key part of the trainee’s job was “discovery” – poring over reams of documents to find the information for their boss to interpret.

Same thing in investment where, quaintly it now seems, a company I used to work for had the catchphrase “the information advantage”. By that, it meant a big team of numerate but relatively unskilled youngsters trawling through annual reports to populate a database with financial ratios that in turn enabled investors to do the real work of picking stocks.

One of the most interesting potential uses of AI is in the expensive, resource-heavy business of investment analysis. Can the machines really do it better? The answer is both yes and no.

The reality of that “information advantage” was that it was the difference between a little bit of pretty basic knowledge and none at all. The effort that went into generating that marginal edge was significant, expensive and time-consuming. It is work that AI promises to do in a fraction of the time for a fraction of the cost. Like the thousands of people who used to work with horses in 19th century London or New York, those data grunts will have to find a new way to earn a living.

So, AI is potentially a labour-saving device – a multi-purpose vacuum cleaner or dishwasher. Another way in which it could improve our lives as investors is by eliminating many of the unhelpful behavioural biases that cloud our ability to make good decisions. People are generally more interested in stories than data. AI doesn’t care.

A recent study of AI and stock picking from Chicago University’s business school tested whether the revolution could move yet further up the food chain than the data gathering that provided my former employer’s information advantage. It looked to see if artificial intelligence could take on the analysts looking to turn basic financial data into predictions about the future direction of corporate earnings.

This is a key part of the investment process for active fund managers, providing the raw material for their stock selections. The study found that machines did it slightly better.

More interestingly, it found that portfolios constructed using those earnings predictions performed better in a statistically significant way too. It’s early days yet but the jobs at risk in a whole range of professional settings are getting progressively more senior – and worryingly quickly.

One danger of AI is that it makes the complex business of managing our money seem easier than it probably is. Ask a simple question of an AI tool and it will, as if by magic, come back with an answer that appears to be your silver bullet. You want 10 income stocks with a dividend yield above that on a cash fund? Here you go. A portfolio of growth stocks trading at less than 10 times expected earnings? Try these.

Actually, this is not new. Thirty years ago, the first screening software emerged that allowed investors to plug in a set of criteria and spit out a shortlist of potential investments. The problem for most of us was the cost of these services. AI democratises the process. But it also turns it into a black box.

I trusted the numbers that underpinned my Online REFS stock screening software because I could see my young colleagues putting them into the system. When I ask ChatGPT a question, I have absolutely no idea where it has gone to find the answer.

AI plays on our predilection for shortcuts. We want that list of 10 stocks to be the answer, so it is tempting not to ask too many questions. But as they used to say in the earlier days of computing: garbage in, garbage out.

I am excited by what AI promises for investors, but I am also relieved it arrived at the end of my career and not the beginning. Many of the things I have been paid to do over the past 35 years or so are of little value today. To continue the horsey analogy, I’ve adjusted a lot of bridles and cleared out plenty of stables. Now I need to understand internal combustion, or move aside.

I am confident, however, that there will always be things that people do better. We are social animals. I want the investors managing my money to be AI-enabled but human. I want my financial adviser to ask after my kids. I don’t just want the car, I want someone to show me how to drive it.

The AI revolution is at least as disruptive as the internet boom that preceded it. It will be divisive. It is great news for a small number of people who are already highly skilled and highly paid. It will be painful for a much greater number whose contribution is no longer so highly valued. Winner takes all is not a recipe for social cohesion. But it’s not going away.

Tom Stevenson is an investment director at Fidelity International. The views are his own.

Tuesday, 11 June 2024

REVEALED : THE INNER WORKINGS OF THE AMERICAN SUPER POWER

11 June 2024

  The mask has slipped

An interesting video and I'd never heard of these guys before.

1. America is a global superpower

Does America have colonies ? Is it an Empire? 

Surely by its military bases worldwide, its economic dominance, and its cultural influence, America is an empire in all but name, exercising control through its global presence. Yet supporters claim America promotes democracy and freedom rather than direct control.

John J Mearsheimer says that you cannot call America an empire, I couldn't find why he says this, but it must be because traditionally we think of empires as having direct rule over the local governments of a number of peoples ("empire" is from the Latin ""imperare", to rule or command, think Caesar and German Kaiser). The emperor extracts tax and tribute, and decides on borders. 

America uses its reserve currency to in effect tax the world and its reach, in terms of territory it controls, has until recently been global.

But if you do not want to call America an empire, talking in terms of its global power and influence, then you could call it a "global superpower". 

So to avoid too much linguistic disagreement, we call it a global superpower, exercising control through military bases, protection and alliances; economic controls on trade agreements, subsidies, taxes and tariffs and volume limits; and cultural through its media, movies, music, technologies, education, and cultural exchanges, shaping not just the behaviour, but the the values and norms of other nations. 

2. Control through rules and institutions

America's dominance amounted to effective imperial control, but Joe explains that this is done indirectly, through an open door to any country sharing its liberal democratic capitalist globalist values.  

America offers a rules-based international  "Order". An order being a set of Rules actualised in institutions. Exclusion implying anarchy and chaos.

These rules are found in international and domestic law and treaties, trade agreements, financial aid packages, as well as protection on global maritime routes, even alliances; with sanctions and "interference" and exclusions if a local govt won't join. 

Control is materialised in these rules that are managed by international institutions.

For International Laws and Treaties, there are organisations like the United Nations (UN), World Trade Organisation (WTO, formerly GATT), and the International Monetary Fund (IMF). They create rules and frameworks that regulate interactions between nations.

The U.S. implements its foreign policy through laws passed by Congress (see another article titled "Who controls the US Congress?") usually involving trade, immigration, and defence.

Then there are the operating institutions, each playing its key role in maintaining these rules.

United Nations: Promotes international cooperation and peace.

NATO (North Atlantic Treaty Organisation): a military alliance supposedly focused on  the protection of the European region.

World Bank and IMF: Provide financial aid and influence the economic policies of developing countries.

U.S. DoS and DoD, pentagon, CIA: the Department of State and Department of Defence formulate and implement foreign policy.

US Treasury: sells and buys government debt.

Federal Reserve: uses interest rates and money supply to control employment and inflation.

3. Controlling the MSM and the public

Then Joe explains how the government controls the media and the public. In effect local governments owe allegiance to Washington and America's demands, rather than to their own people and national interest.

If you're working for the media, you have access to information sources and distribution channels, which can be withdrawn; if you don't follow the D-notices for example of how control is effected. Thus, we are fed propaganda rather than facts. 

Interesting to see how this system of soft power works, operationally, with for example meetings between media and MoD in the UK, where permission is given to publish on certain subjects but withdrawn for others.... soft power can be very personal recruiting through school fees for the kids or international meetings in fashionable ski resorts... 

Also interesting how opinions are moulded, by the use of language. For examole, "this unprovoked invasion". Noam Chomsky calls this "the manufacture of consent". Chomsky is the pioneer in this area of what Joe calls "linguistic tics" (some people call it a form of Tourette's Syndrome, ha ha!).

4.There is a free press

Some consolation to see that Joe believes it is a Free Press. Free, in the sense that questions can be asked of officials and information is available for digging out on weakly-patrolled social media channels, but that there are ultimately limits to the extent of information sharing - this is part of what some people call "bounded pluralism", a sub-form of democracy. There are bounds or limits set on what policies candidates can compete on. For example, UK PM Truss was removed from government by the markets within three days of her policy to raise spending without a balancing tax mechanism.

5. "Deep State"

Joe also mentions the British American Project. What he says is that units in the "deep state" admin have been set up to manufacture events and to control what and how things are seen. So there is this upstream interference, as well as downstream plain censorship and propaganda. Here we are into the territory of Black Ops.

6. Growing public skepticism

He then points out that there is a growing awareness on the part of the public, ie the non-elite, of the extent to which governments attempt to control events in ways that are not in the national interest and to manipulate our perceptions of what is going on. More and more for example, we hear this refrain, "but look, the emperor has no clothes".

It would be good to have somewhere a discussion of what is an elite, what are its functions, what are the entry and exit rules, what is the size of the membership needed for effective governance and management of a society (are managers part of the elite?). 

According to this organisational view, society (public and private sectors combined - big state, small state, same same) is a pyramid composed of four functional layers: governing, managing, operating, supporting: 

- Governing elite that sets and reviews the rules framework, goals and strategies 

- an army of Managers to control operating processes

- the Operations themselves that produce tradeable goods and services 

- and a Supporting layer of lawyers and accountants and HR and IT specialists and consultants etc... 

That would be one way of identifying the functions (job descriptions, if you prefer), positions and numbers...write a book about it.

7. The Platform

Then interestingly he paints a picture of the local oligarchy, as part of a global governance elite, with its goals and values and its methods of operation. 

There would normally in a democracy be two political parties, taking their cues from the elite's "policy platform" (you might call it this, tagline 'you will have nothing and you will be happy'), and these two parties compete with each other for power and public support, within this globally-defined policy framework. 

And if that sounds conspiratorial, explain how so many participants, so many spokespersons of the US and EU central and national elites, ring out almost identical messaging.

Joe points out that the system is open to contrarian views (though not too much, as Michael Foot and Jeremy Corbyn got red cards and were sent off) and to contrarian policies. But to get into power, a contrarian would need to form a new political party from scratch, from the outside.... historically, methods have included acts of terrorism and revolution.

For example, Farage and his Reform party have been bombarding the elite for some time now, and have laid siege to it since Brexit, and are likely shortly to get into the citadel itself.

8. It's a game of musical chairs, but with a gate-crasher

I agree completely with that picture and I would add that the oligarchy (the governors) breaks down into three groups : there is a game of musical chairs going on here. 

- Those in government, where Pinky is sitting down; 

- then there's Perky humming around and waiting for the music to stop; 

- and then there is this third group that wants to gatecrash the party, kick the occupants off their chairs and overthrow the existing hold on power of the two parties.  

Will that overthrow be done in the parliament or the street? Depends on how mature and inclusive is the democracy, whether they see the dialectical march of history, smell the gas in the mine in time, and can adapt ....or die. Our leaders do have a choice to make there - Macron, chief canary, has made his choice [menacing music].

9. Colourful language

Some of Joe's language was quite colourful!! I especially liked when he said that "the horrors are live-streamed onto our phones every day". 

And I reckon this is part of the tools available for a public to eventually overthrow a government that ignores it. It doesn't really matter whether you call that government democratic or authoritarian, it makes no difference, governments can't function without the support of the governed, not for long...."you can fool ...", as we say.

10. The End, beautiful friend, the end, the end

Of the West? No. 

Joe is commenting on, rather than making, the news.

List of contrarian voices - this contains a list of media personalities holding contrarian views.

 

I have to admit I switched off when they got talking about daily news and why Israel is an illegitimate government. I follow all that stuff and while he believes that the only possible answer in Palestine is a one state solution, I think there's also the possibility of a zero state solution, at least for the doos. The subject of another video?

Monday, 10 June 2024

EU ELECTIONS - RESULTS, EFFECTS ON ECONOMY AND RELATIONS WITH AMERICA

10 June 2024

1. Summary of EU Election Results

The recent EU elections have resulted in significant shifts within the European Parliament:

- Far-right Gains: The far-right National Rally in France, led by Jordan Bardella, achieved a historic victory with 31.5% of the vote, prompting President Emmanuel Macron to call for fresh legislative elections.



- Centre-right Dominance in Germany: The CDU/CSU emerged as the leading party in Germany, benefiting from the weaknesses of Chancellor Olaf Scholz's coalition.


- Overall Shift to the Right: Across Europe, right-wing parties made substantial gains, continuing the trend observed in previous elections.


2. Economic and International Policies

 a) Economic Policies

- Fiscal Conservatism: Many right-wing parties advocate for reduced public spending and lower taxes. This approach aims to stimulate economic growth through private sector investment but might reduce social welfare programs.

- Economic Nationalism: Policies promoting local industries and limiting foreign competition are likely to be emphasised. This can involve tariffs and other trade barriers to protect domestic jobs and industries.

 b) International Policies

- Tighter Immigration Controls: Right-wing gains suggest a push towards stricter immigration policies, focusing on border security and reducing the number of immigrants.

- EU Skepticism: Increased influence of Eurosceptic parties could lead to challenges in EU integration policies, with potential for more countries questioning their commitments to EU regulations and agreements.

3. Effects of New Policies

 a) Economic Policies on Europe's Economy

- Growth vs. Social Stability: While tax cuts and reduced public spending could boost economic growth, they may also widen economic inequalities and reduce funding for public services. This can lead to social unrest, especially in economically weaker member states.

- Trade Relations: Protectionist measures might protect local industries but can provoke retaliatory tariffs from trading partners, potentially leading to trade wars that could harm European exports.

 b) Foreign Policy Attitudes on Relations with America

- Strained Transatlantic Relations: More nationalist and protectionist policies in Europe could lead to tensions with the United States, especially if trade barriers are erected. This could impact NATO cooperation and other strategic alliances.

- Diplomatic Shifts: Eurosceptic and nationalist parties may seek to reduce reliance on the US, possibly fostering closer ties and more conciliatory attitudes towards other global powers in particular China or Russia, shifting the geopolitical balance away from America and towards greater European independence.

Conclusion

The recent EU election results indicate a significant shift towards the right, with implications for both economic and international policies. The adoption of conservative fiscal policies and more nationalist stances could lead to economic growth but also potential social unrest and strained international relations, particularly with the United States. These developments will need careful management to maintain stability within the EU and its global partnerships.

Further Reading




EFFECTS OF TRUMP ECONOMIC POLICIES

10 June 2024

Trump economic policy would be to cheapen the dollar, lower interest rates, and weaken the Independence of the Fed. What would the effects of such an American policy on the economy?



1. Introduction

An American policy aimed at cheapening the dollar, lowering interest rates, and weakening the independence of the Federal Reserve (Fed) would have far-reaching implications. This policy approach could affect various sectors of the economy, international trade, and the financial markets.

2. Impact on the Dollar

- Cheapening the Dollar: A weaker dollar makes American exports cheaper and more competitive abroad but increases the cost of imports. This could help reduce the trade deficit but might lead to inflationary pressures domestically.

3. Lowering Interest Rates

- Economic Stimulus: Lower interest rates typically encourage borrowing and spending, stimulating economic growth. This can be beneficial during economic downturns.
  
- Inflation Risk: Prolonged low interest rates can lead to higher inflation as demand outstrips supply.
  
- Savings and Investments: Lower rates reduce the returns on savings, potentially hurting retirees and others who rely on fixed incomes. It can also lead to a search for higher-yield investments, increasing risk-taking in the financial markets.

4. Weakened Independence of the Fed

- Monetary Policy: The Fed’s independence ensures that monetary policy decisions are made based on economic conditions, not political pressures. Undermining this independence could lead to short-term politically motivated decisions that might not align with long-term economic stability.
  
- Market Confidence: Investors place a high value on the credibility and predictability of the Fed. Weakening its independence could lead to uncertainty, volatility in financial markets, short-term crash up (sic, up) of the stock market, but longer term a loss of confidence, especially among international investors.

5. Potential Outcomes

- Short-term Gains: The policy might produce short-term economic gains, such as increased employment and growth, due to cheaper exports and higher domestic spending.
  
- Long-term Risks: The long-term risks include higher inflation, increased debt levels, potential asset bubbles, and reduced trust in the U.S. financial system. Over time, these risks could lead to economic instability and a loss of global financial leadership.

6. International Implications

- Global Trade: A weaker dollar can lead to competitive devaluations as other countries try to protect their export markets, potentially leading to trade tensions and currency wars.
  
- Emerging Markets: Countries with debts denominated in dollars could face increased repayment burdens, leading to financial stress and instability in these markets.

7. Conclusion

While the policy of cheapening the dollar, lowering interest rates, and weakening the Fed’s independence might offer immediate economic benefits, it poses significant long-term risks. These include inflation, financial instability, and loss of market confidence. A balanced approach, considering both short-term needs and long-term consequences, is essential for sustainable economic health.

Glossary of Terms

- Dollar cheapening: Reducing the value of the U.S. dollar relative to other currencies.
- Interest rates: The cost of borrowing money, usually expressed as a percentage.
- Fed’s independence: The ability of the Federal Reserve to operate without political interference.

Further Reading

Sunday, 9 June 2024

TOP TIPS FOR MANAGING JETLAG

9 June 2024

Here are some tips for adjusting to a new time zone after a long flight bear in mind that you would normally take a day per hour difference but here you can collapse the time.

1. Change Your Clocks


- Adjust all clock faces (laptop, watch, etc.) to the destination's local time as soon as you board the plane.
- This helps you mentally prepare and operate on the new time zone.

2. Sleep Strategy

- Sleep during the first half of a long flight.
- If the flight leaves in the middle of the day, try to fall asleep early.
- Stay awake for at least 12 hours after waking up on the plane to align with the new time zone.
- Use eye masks and earplugs to facilitate rest on the plane.
3. Avoid Alcohol

- Alcohol can disturb sleep patterns and cause drowsiness the next day.
- Avoid alcohol and caffeine to help reset your circadian rhythm.

4. Bright Light Exposure

- Get daylight exposure upon arrival.
- Spend 20-30 minutes outside, exercising or walking.
- Avoid wearing shades in the morning to maximise sunlight exposure and reduce melatonin production.

5. Adjust to New Schedule

- Resist eating when you're hungry if it’s not meal time in the new time zone.
- Align meals with local standard times to help reset your internal clock.

6. Nap Strategically

- Take short naps (10-20 minutes) early in the day if needed.
- Avoid long naps to maintain healthy sleepiness for the night.

Glossary of Terms

- Circadian rhythm: The body's natural 24-hour cycle.
- Melatonin: A hormone that regulates sleep.

Further Reading

WHAT WOULD A TRUMP LANDSLIDE MEAN FOR MARKETS

9 June 2024

What would be the effect of an American policy to cheapen the dollar, lower interest rates, and weaken the Independence of the Fed?

First, in Part I we will examine the effects on US markets and then in Part II on European markets.

MARKETS WEEKLY

For those interested in their personal finance and Investment strategy, here is another of Joseph Wang's three-point summaries of market movements for this week.

Joseph always has great insights to help us "navigate through these crazy times".

You can listen to it all - they only ever last a quarter of an hour or so - but I appreciate that if you have limited time, you could go to offset 11 minutes. You'll be surprised at Joseph's conclusions:


COMMENT

I. EFFECTS IN AMERICA

1. Introduction

An American policy aimed at cheapening the dollar, lowering interest rates, and weakening the independence of the Federal Reserve (Fed) would have far-reaching implications. This policy approach could affect various sectors of the economy, international trade, and the financial markets.

2. Impact on the Dollar

A weaker dollar makes American exports cheaper and more competitive abroad but increases the cost of imports. This could help reduce the trade deficit, but could also lead to inflationary pressures domestically.

3. Lowering Interest Rates

- Economic Stimulus: Lower interest rates typically encourage borrowing and spending, stimulating economic growth. This can be beneficial during economic downturns. Is America in an economic downturn or is one threatening?
  
- Inflation Risk: Prolonged low interest rates can lead to higher inflation as demand outstrips supply.


- Savings and Investments: Lower rates reduce the returns on savings, potentially hurting retirees and others who rely on fixed incomes. It can also lead to a search for higher-yield investments, increasing risk-taking in the financial markets, favouring higher yield companies despite their debt.

4. Weakened Independence of the Fed

- Monetary Policy: The Fed’s independence ensures that monetary policy decisions are made based on economic and the data, not political pressures. Undermining this independence could lead to short-term politically motivated decisions that might not align with a long-term interest in economic stability.
  
- Market Confidence: Investors place a high value on the credibility and predictability of the Fed. Weakening its independence could lead to uncertainty, volatility in financial markets, and a loss of confidence among international investors. Already foreign investors have got cold feet on the US dollar - what would be the effect of this policy and in particular lower interest rates?

5. Potential Outcomes

- Short-term Gains: The policy might produce short-term economic gains, such as increased employment and growth, due to cheaper exports and higher domestic spending. It might very well also, as Joseph Wang argues, set the stock markets on fire.
  
- Long-term Risks: The long-term risks however include higher inflation, still higher debt levels, potential asset bubbles, and further reduced trust in the U.S. financial system. Over time, these risks could lead to economic instability and a loss of global financial leadership. If these policy changes would seem to favour the rich elite, then what effect might this have on equality and the social stability of American society?

6. International Implications

- Global Trade: A weaker dollar can lead to competitive devaluations as other countries try to protect their export markets, potentially leading to trade tensions and currency wars.

- Euroland: See separate section below.
  
- Emerging Markets: Countries with debts denominated in dollars could face increased repayment burdens, leading to financial stress and instability in these markets.


7. Conclusion

While the policy of cheapening the dollar, lowering interest rates, and weakening the Fed’s independence might offer immediate economic benefits, it poses significant long-term risks. These include inflation, financial instability, and loss of market confidence. A balanced approach, considering both short-term needs and long-term consequences, is essential for sustainable economic health.

II. EFFECTS IN EUROPE

1. Introduction

A U.S. policy aimed at cheapening the dollar, lowering interest rates, and weakening the independence of the Federal Reserve could have significant repercussions for the Euro and the Eurozone. Understanding these potential effects requires examining how such policies would impact the global financial system and the specific vulnerabilities of the Eurozone.

2. Currency Valuation Dynamics

- Stronger Euro: A cheaper dollar typically leads to a stronger Euro, as currencies often move in opposite directions. A significantly stronger Euro could hurt Eurozone exports by making them more expensive on the global market, leading to reduced competitiveness for European goods and services.

3. Impact on Eurozone Exports

- Trade Deficits: A stronger Euro can widen trade deficits in the Eurozone, as exports decrease and imports become cheaper. This can slow economic growth in export-dependent Eurozone countries like Germany.

4. Economic Divergence within the Eurozone

- North-South Divide: The Eurozone consists of diverse economies with varying levels of competitiveness and debt. A stronger Euro could exacerbate the economic divide between the more robust Northern economies (like Germany and the Netherlands) and the weaker Southern economies (like Greece, Italy, and Spain). The latter could struggle more with increased borrowing costs and lower export revenues.

5. Financial Stability Risks

- Debt Burdens: Many Eurozone countries have high levels of public and private debt. A stronger Euro can increase the real burden of this debt, particularly if it is denominated in foreign currencies. Additionally, if lower U.S. interest rates drive global investors towards Euro-denominated assets, it could create asset bubbles in European markets.
  
- Banking Sector: Eurozone banks could face increased pressure due to reduced profitability from lending activities and potential losses from non-performing loans in a slower growth environment.

6. Capital Flows and Investment Shifts

- Investment Shift to the U.S.: Lower U.S. interest rates could make American investments more attractive, leading to capital outflows from the Eurozone. This can reduce the availability of capital for European businesses and governments, further hampering economic growth.
  
- Market Volatility: Increased market volatility due to uncertainty in U.S. monetary policy could spill over into European financial markets, destabilising the Euro and European economies.

7. Political and Social Tensions

- Austerity Measures: Struggling Eurozone economies might need to implement austerity measures to cope with economic challenges, potentially leading to social unrest and political instability. This could weaken the cohesion of the Eurozone and its political institutions.
  
- EU Cohesion: Economic strain can fuel euroscepticism and populism, leading to calls for reforms or even exits from the Eurozone (e.g., the potential for another "Grexit" or "Italexit").

8. Conclusion

The U.S. policy of cheapening the dollar, lowering interest rates, and weakening the Fed's independence could severely impact the Euro and the Eurozone. These changes could exacerbate economic disparities, increase financial instability, and strain political unity within the Eurozone, potentially threatening the stability and viability of the Euro 

Glossary of Terms

- Dollar cheapening: Reducing the value of the U.S. dollar relative to other currencies.
- Interest rates: The cost of borrowing money, usually expressed as a percentage.
- Fed’s independence: The ability of the Federal Reserve to operate without political interference.

- Eurozone: The group of European Union countries that have adopted the Euro as their currency.
- Trade deficits: When a country's imports exceed its exports, leading to a negative balance of trade.
- Austerity measures: Economic policies aimed at reducing government deficits through spending cuts and tax increases.

Further Reading

- US:

- [Federal Reserve Independence](https://www.federalreserve.gov/faqs/independence.htm)
- [Impact of Exchange Rates on Trade](https://www.investopedia.com/articles/investing/071515/how-currency-exchange-rates-work.asp)
- [Monetary Policy and Inflation](https://www.imf.org/external/pubs/ft/fandd/basics/monpol.htm)

-Europe:

- [The Impact of Exchange Rates on the Eurozone](https://www.ecb.europa.eu/home/html/index.en.html)
- [Eurozone Debt Crisis](https://www.investopedia.com/terms/e/eurozone-debt-crisis.asp)
- [Currency Wars and Their Impact](https://www.ft.com/content/0a7b914c-b512-11e9-8cb2-799a3a8cf37b)


Wednesday, 5 June 2024

WHAT COLOUR CLOTHES FOR SOMEONE WITH LIGHT BROWN SKIN

5 June 2024

So the general question might be, "what are the best colours for clothes for me - I have a light brown skin?".

In particular, you ask about the effect of purple on you.

First, you have to recognise that your skin has a warm undertone to it. "Warm" means the skin is golden, peachy, yellow.

Compare with a caucasian, their skin has a cool undertone to it. "Cool" is pink or bluish or even red.

So skin can be warm or cool or even neutral. 

Now we want to consider what effect different coloured clothes might have set on top of a warm ie light-brown, skin.

This is about the effect of the clothes that you choose, and so what effect do you want to create? How can we think about "effects"?

The colour of your clothes could be complimentary to your skin colour or it could contrast with your skin colour. 

So if it's complimentary, it's going to bring out the warmth in your natural skin undertone and perhaps speak of a healthy glow, even a certain sophistication. 

Whereas if it contrasts with your skin, then it will give a cooler look, meaning fresh appearance, you'll look bright, alert and vibrant.

For a warm skin undertone like yours, warm colours might be "earthy", enhancing your warmth; "olive or khaki", to give a slightly more sophisticated look; or you could even try "coral or peach", to bring out your natural glow. 

There aren't any right answers here! But it is good to kniw what effect you want to create. You would have to think about this. The effect you want to create will depend on the day. It will depend on the occasion, the weather even, how you feel, who you're meeting what you're doing! But as a general rule, we want to highlight our natural glow and create a harmonious look. ... Harmony would also mean avoiding a clash of different patterns. You don't want to unnecessarily confuse people and you don't want to alarm them, nor make them laugh !"

So what about purple?

Purple is warm and you could wear silver accessories like a silver clip or earrings with it. Purple will give you a healthy glow. A darker shade of purple will bring out more of your warmth. Lighter will give a more striking, standout effect.

Purple is certainly a colour that will look good on you. But there are some colours that will not look good on a light brown skin.

You definitely don't want very bright primary colours because they might give you a tired or washed-out look... they might do.... they'd look good on black skin.

And you don't want to wear the kind of pastel colours that look good on a caucasian because while they bring out a caucasian's pinkish hue and the blue in their eyes and bring newness and definition; for you, they would look dull and by consequence make you seem dull, like the clothes, if not yourself, had been through the wringer too many times.

Saturday, 1 June 2024

NEOCON CRITIQUE OF RUSSIAN ACTIONS IN UKRAINE

1 June 2024


https://www.telegraph.co.uk/news/2024/05/31/europe-see-the-worst-genocide-since-holocaust/


A quite astonishing title.

SUMMARY

The article is saying that Russia wants to take Ukrainian land, kill or reformat its people and destroy Ukrainian identity.

It cites Putin's 2021 speech and stuff about the Russian Orthodox church to assert that Putin believes that, because Ukrainians and Russians are brothers and Ukraine is a fake country, so there is no national identity to preserve or destroy, and Ukraine - the Donbas at least - is in fact Russian.

It quotes Ukrainian government figures to say that twenty thousand children have been deported and that Putin’s Commissioner on Children’s Rights, Maria Lvova-Belova, is facing an arrest warrant from the ICC.

Russia is using the schools in Ukraine, Hurd claims, to reformat the kids with Russian language, history, culture and attitude.

Russia is russifying the Ukrainians administratively as well by giving them Russian passports and even russifying their names.

Russia has moved a huge chunk of the Ukrainian population, five million people including seven hundred thousand children, from Ukraine into Russia.

According to Hird, international legal procedures have documented war crimes, including executions and mass graves, in Bucha, Kherson city and Izyum.

So the allegations are clearly documented and evidenced, even if they are not balanced out by more reliable accounts.

COMMENT

It's not quite the same as Gaza because there are no deportations and no reformatting in Gaza, just murder.

Karolina Hird does stuff for the Inst for the Study of War - Dr. Kimberly Kagan, Founder & President, General David H. Petraeus, Kagan family, described as "neocon conservatives".

No gov.t funding, core funding is provided by a group of US defense contractors.

This Instutute has been around all America's large-scale wars since 2007.

Hird writes daily briefings on the situation in Ukraine, the audience can only be deeply ground in russophobes.

Anyway, point being that this is the garbage that the U. S.  administration reads and of course this is why they are so hubristic and confident, in spite of what we know, about the outcome of this conflict.

At all levels of government, there are juniors who prepare reports for their bosses and the bosses are busy guys and they probably only ever read these reports and do not inform themselves on what goes on outside in the real world, filled as it is by the dramas of defeat and the voices of dissent.

Seems that even in the final defeat, when these people get out and face, perhaps for the first - and last - time, the reality of what they've done, they still learn nothing. 

Eg, look (or don't bother, the title is enough!) at this article that Hird wrote just before the Russians defeated Ukraine's summer offensive last year:

https://time.com/6300772/ukraine-counteroffensive-can-still-succeed/

And then they move onto the next neocon war and don't have time to write up lessons from the previous failure. Either the reports are written but not read, or they're never written in the first place.... It is just one defeat after another for America, that's the reality of all these sad wars.

So it seems that these wars keep the economy going, keep the contractors in business and keep the congressmen flush, but they must all know that in a conventional war, America would most certainly fail against any serious military  adversary. 

And herein lies the danger, because finally understanding that, the neocons running the show in the "deep state" also know they will have a final choice between either the collapse of their empire, or use of nuclear weapons....and ...

###

Karolina Hird writes for the Inst for the Study of War - Dr. Kimberly Kagan, Founder & President, General David H. Petraeus, Kagan family, it is a well-known neocon Washington rhink tank.

The IoW receives no govt funding, its core funding is provided by a group of US defense contractors. This Instutute has been around all America's large-scale wars since 2007.

Hird does daily briefings on the situation in Ukraine, the audience can only be deeply ground in Russophobes.

Anyway, point being that this is the analysis that the U. S. administration reads and of course this is why they are so hubristic and confident, in spite of facts on the front line And America's reputation abroad in the global South., about the outcome of this conflict.

At all levels of government, there are juniors who prepare reports for their bosses and the bosses are busy guys and they probably only ever read these reports and do not inform themselves on what goes on outside in the real world, filled as it is by the dramas of defeat and the voices of dissent.

STOCK PICKING FOR BEGINNERS

1 June 2024
 

An interesting read on top 100 UK dividend payers

Here is the methodology for a dividend strategy that beats the index:

And here:

The method requires selecting a diversified set of stocks, yielding above three percent and checking the portfolio monthly.

The big frame from which all stocks seem to be selected is developed markets.

Then filter down to stocks yielding more than three percent.

Then filter further looking at valuation. Here it starts to get a bit complicated because the fair value of a stock is decided using discounted cash flow DCF, or possibly discounted dividend flow DDF. The method might discount at the company's weighted average cost of capital WACC, or it might discount at an investor's required return of return - say 7% or 10%.

So at this point you've got higher yielding stocks of good value in developed markets. But that's just a snapshot.

What about the quality of dividend payments overtime? As well as the yield, you want to look at dividend quality. Take the ten year history of dividend payments. Has the divi risen each year? And what has been the 5 and 10 year CAGR?

Then you want to look at the future sustainability of the dividend - there may be a good past record, but what is there to support optimism that that record continue? That's been covered in part by looking at the valuation, but it would be good to know that it's payout ratio - which is dividend over earnings per share - leaves some retained earnings for investment in the future; and also look at earnings prospects since at some point, the share price will follow earnings, down or hopefully up.... after all, dividends come out of earnings and price follows earnings. So we looked at the current yield, We looked at the history that got us here. And now we have looked at earnings prospects and dividend cover, supporting a bright future.

By this time, starting from all developed markets, you've picked out companies yielding more than 3%, they are good value because they are trading at a price below your estimate of value, the company has a good dividend track record, and the future looks rosy, as the rising earnings will assure a rising dividend. This is all around the income and cash statements.

You might like to check the financial health of the company. Are its liabilities covered by the sum of its cash and near term receivables? Is debt a threat relative to its earnings power, EBITDA? Interest payments over EBIT give an idea of the company's ability to cover its payment obligations and debt over equity gives an idea of its ability to raise a loan in times of difficulty. These four measures will give you a handle on the company's debt management.

And finally for the fundamental analysis, the real key to making money in the stock market is not so much stock selection as it is diversification. So we would want to pick a leading company in each industry and tune the size of the positions we take, as sectors rotate through the business cycle.

But that's not all because after dividend, value, quality and business cycle weighting, comes the fine timing of each buy sell transactions. By looking at the trend and momentum of the share price, you can sell at the crest of a wave and then reinvest at the trough. And maybe you should begin your busy schedule by taking a look at markets daily for swings in sentiment and news updates.

Anyway, that's what I understand so far. Which shows that any stock picking method is going to be hard work and a successful divided strategy is no exception. As you can imagine, simply getting all that data together in the first place is a full-time job-and-a-half that defeats 80% off fund managers.

Conclusions

Stock picking can be as difficult as you like, if you want to beat the index, and so for an easy life, Especially, if you are already quite busy with work and family, it would make sense to go for a tracker. Or at the limit, go for this guy's canned methodology, above in this article.

But if you want to chance it against the index, this is the best lecture I've seen so far, Aswath Damodaran is widely consulted and he makes it seem easy:
  

Otherwise, stick with Ramin, founder of Pensioncraft, he's pretty good:






Good luck everybody.

Wednesday, 29 May 2024

WHAT IS A DEMAGOGUE

29 May 2024

How to explain why a former British Prime Minister and someone still active in political affairs, should attend a meeting in Washington and canvas for weapons to attack the Russian hinterland; and call the Azov Brigade, a well known neo-jazzy outfit, "heroes" And get the support of local political leaderships?

If Russia is such a threat and the potential for nuclear escalation is real, wouldn't it make sense for Europe to build its own defences, rather than encourage Ukraine to attack "the Beast"?

How to explain the appeal of the demagogue? The leader who takes power for himself by appealing to popular desires and prejudices, rather than through rational argument? The guy (for it is usually a man) exploits nationalistic,  xenophobic or religious sentiments, he focuses on perceived threats from outside the group, in order to rally support for his often murderous policies, he unites the weak-headed (which is about 90% of the population) against a supposed common enemy, he creates a sense of unity and purpose based on hatred and fear. 

All for his own personal gain, oblivious of the cost, and the damage, he does to the country's real interests.

The effect of an emotional-only appeal, a case built on false beliefs and values, is to further stir up the emotions of the crowd. This is pure demagoguery, by definition.

So this is just the demagogue, stirring up the madness of the crowd. Churchill was a great speaker like this, but he had a point. Can the same be said of 88 or Muscleleeni and the others like them, playing the crowd, like that evil Boris Johnson, or Bin Netanyaho.

All our leaders have their fingers in the pie in some way or another. All we can hope for is that "as we navigate through these crazy times", the people will come to realise how they've been had. And they will string up these guys, starting with the easiest, which is zollenski.... if they can catch him at the airport!