WAR : THE WAY FORWARD

30 November 2023

https://youtu.be/BJx7xoR70h4?si=3Kc6mbqVO1fHcSuM

You've read the panchatantra and understand that war is the natural condition of our species. In  different way, Jan Oberg is saying the same thing from a different point of view. 

https://youtu.be/D_3itcQ9wqQ?si=WuYYi-z1M0ZXLVRq

Salman Rushdie too.

https://www.youtube.com/live/2cmAISDWnL4?si=r6byPknnAf3w6ty4

Mearsheimer is as perplexed as all normally-adjusted people. Despite Rushdie's condensing a thousand years of human  history and wisdom into a hundred words, noone has an answer to making or finding peace today.

1. I follow the news. It seems the neocon narratives are being exposed everywhere across geopolitical histories, eg Minsk and Istanbul are now being unpicked, Israel is seen as having no plan, only a thirst for vengeance's plan. 

The American people won't be had again and next year could present a surprise peace candidate. That's a realistic option and hope.

America doesn't have the initiative on the battlefield in Ukraine, it looks pretty obvious that Ukraine will be fairly and squarely beaten, and with them NATO and America. This will be a sea change for the West and for Russia too. Russia will undoubtedly incorporate Ukraine as it has done with Belarus into its family of nations...Putin is eyeing Transnistria incidentally, something new.

2. The Middle East seems to be overtaking events in Ukraine in the race to see who can get us to WW3 first.

We could see the Arab nations surrounding Israel finally running out of patience and overrunning that place, dragging in America with its fleet anchored offshore. 

Possibly starting in Syria: if America starts in Syria, where it has illegally positioned its forces, then Russia will be affected and may take action; if Russia takes action to defend its interests in Syria and is directly attacked by America, then this will bring in Iran and China.

3. As to Israel and its future, there is no way that Israel could ever accept a two-state solution as it would lose its strategic hinterland in the West Bank and the next day be overrun by its neighbours. It's only options for its security and survival are do peace or die, even though this is not accepted in Israel and never has been. 

I would like to know, how come if there are so many clever people in Israel, they have not learnt how to get on with their neighbours and they do not understand that it's a binary world they accept peace or they die in war.

4. We need a change of leadership and a European security conference and a new Bretton Woods, if we are to avoid the next World War.

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PANCHATANTRA STORIES

30 November 2023

Have you heard of the Panchatantra stories?

I hadn't until I listened to Salman Rushie

https://youtu.be/D_3itcQ9wqQ?si=Z19zsmSlj97KoKnz

https://chat.openai.com/share/bb113c9f-af65-4a40-a6a8-ad48ec4b8a6c

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LOY KRATONG

27 November 2023

The river is full of tiny "kraton" they are called, little mini boats made from a slice of banana trunk, with a candle and a couple of sticks of incense and a few flower heads. 

It's like an Armada of tiny ships floating down the river, there are hundreds and hundreds of them. 

People go to the temple opposite my block to "make merit". Temples are very often built on land by the river. The faithful say a prayer and push out their mini banana boat.

Meanwhile, the sky is filled with these "sky lanterns", a squadron of floating "kourms" they"re called, slowly floating across in bobbing formation.

All set to the continuous crackle of fireworks.

All very lovely.

But the streets are 100% rammed with people, scooters and cars, all over the roads and pavements, no room at all.

Ron and Steward, who run my regular restau called OMG, are beside themselves - they haven't taken a salary in four years!, they live off their UK pension and feed their Thai partners and kids. But now, this will be the third day on which they take 60,000 baht - it's a lot.

Can you imagine what it's like ?!

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REASONS FOR DOLLAR DEVALUATION

24 November 2023

Government debt 33t just a shade below 140% of GDP.

Total country debt a shade below 400% of GDP. Debts that will never be fully paid.

Unfunded government liabilities is at $212 trillion.

$1.8 trillion student loans seeing increasing default, the $2.7 trillion auto and credit card loans likewise.

Commercial real estate collapsing.

Soaring zombie companies bankruptcies.

CLO defaults,

Small and medium regional banks in serious trouble.

Collapsing household savings.

Over stretched household balance sheet.

Stagnant population growth and aging population.

Shortage of skilled workers.

Low labor participation rate.

Stagnant work week hours.

Inflation eating up wage increases.

Sticky inflation.

Reversing fiscal and monetary largesse.

Recession probably already here.

Political chaos next year.

Want more reasons for US dollar devaluation?

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BIDEN CORRUPTION - HOW IS IT BIDEN IS STILL POTUS?

16 November 2023

How come this charlo is still POTUS?

is.gd/hHPhuZ

"Our mission statement is to ensure the efficiency, effectiveness, and accountability of the federal government and all its agencies. We provide a check and balance on the role and power of Washington - and a voice to the people it serves."

The detail summarised:

In February 2014, a Russian Oligarch Sent $3.5 Million to a Shell Company Associated with Hunter Biden and Devon Archer: Russian billionaire Yelena Baturina transferred $3.5 million to Rosemont Seneca Thornton, a shell company.

Hunter Biden was initially hired by Burisma to work as counsel for the company, and Pozharsky and Zlochevsky met with Hunter Biden at a conference in Lake Como in Italy where they decided Hunter Biden would work on the board of directors with Devon Archer.

In April 2014, a Kazakhstani Oligarch Wired the Exact Price of Biden’s Sportscar to a Bank Account Used by Archer and Biden: In February 2014, Hunter Biden met with Kenes Rakishev at a Washington, D.C. hotel.

Hunter Biden received millions of dollars in payments from Yelena Baturina, Burisma, and Kenes Rakishev.

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IS WESTERN SUPPORT FOR ISRAEL AND UKRAINE SUCCEEDING?

13 November 2023

Things are looking very bad. The Russians are butchering the Ukrainians, and along comes Hamas with a jolly trap for Israel. Israel fell in straight away so now we have another bloodbath.

The circumstances are horrific, although this is a military confrontation. What might happen when hostilies cease?

Let's take a look at what these ongoing massacres mean through three lenses. The scale is global: these conflicts are local, between nation-states, almost you might see them as civil wars, but they regional and most importantly, global repercussions. Second, the timeline started five centuries ago: today, we are looking at the West in decline, the unravelling of colonisation. Of course thirdly, there is a moral dimension: we should ask if supporting these causes is ethically correct as our actions will impact our credibility in the negotiating and implementation phases of resolving these conflicts.

THE DECLINE OF THE WEST

Back in the late 60s, we had Edward Säid who captured the West's attitude to Asia in the wor "Orientalism". Orientalism is the idea that the Middle East and Asia was one clump of mysterious underdevelopment that would never change. But now after five centuries of running their worlds, and ober 2,500 years of a culture dating back to the Greeks, it is the turn of "the Global South" to look at "Westernism" and see our decline, see the failures of America and NATO against Russia, see the wasted trillions in failed foreign adventures. 

Meanwhile China finishes off its belt and road and Russia re-industrialises.

America is no longer the "indispensable nation", it has failed at policing conflict situations, indeed it has created them, it has no manifest destiny or ability to rule over us in the name of global security. It listens to no-one, it just sends in the military (rarely its own).

INJUSTICE

Not just bloodbaths and Western decline,  once we were the beacon of justice and fair play, and now we indict Putin while Natanyahu gets a free pass, we sanction Russia for non-respect of Intl law while Israel flouts 70 years of UN resolutions. What was once a boundary dispute is now a war of religion, a clash of civilisations: in the one a negotiated solution was possible, but Islam demands total surrender and Zionism is colonisation of biblical lands for the coming of the messiah. Before 7 October we could have fixed what is for the Arabs and Persians united, the mother of battles to come. But look now at the dogs we've woken up with such complacent and brutal kicks, to the point where now it is uncontrollable. And then there's "the enemy within".

GLOBAL 

It's not obvious that ordinary people nor our elites truly realise that the West is now in the minority and facing an increasingly organised and powerful global majority. These aren't just "talking points". It's not just the Middle East, the Arabs and the Persians: now it's Africa and the rest of Asia and Russia too. It means the West cannot force through to the touchline. America can no longer do what it has been trying to do since the last war which is force its internal policies onto the rest of the world.

Here's a tape of a speech by indonesia's representative to the UN. Indonesia! Who normally wouldn't say boo to a goose!

ONLY SOLUTION IS MILITARY

It is not just military. It's not 48, 67 or 73. Today Israel is risking its homeland, sure, and losing the moral battle, the battle of ideas. Netanyahu has no plan that we know of other than his own salvation, his promise to keep Israel safe is false, and he is up against an organised and global enemy with ideology, strategy, plan, actions and results. 

So it is a time for diplomacy, cooperation, working to find agreed solutions. The military is not the end, it is in service to politics and diplomacy. But I don't think there's anyone in Washington who could state what is the role of a diplomat. I don't think they understand diplomacy. And their goal of world domination is madness these days, I mean ... isn't that obvious? Same same for Israel's revenge.

Because the Middle East had been quiet, as Jake Sullivan observed, doesn't mean that the Israel-Palestine conflict wasn't ruminating away. But even if America would agree to a two-state solution, there are no moderate voices in Israel nor Gaza to lead the negotiations - they are dead or radicalised. And even if a two-state solution were agreed and the 700,000 illegal settlers in the West Bank were cleared things have come to a pretty pass and I think the Arab nations would wipe out the lesser Israel the day after it was reformed, because America will be too weak to back it.

ISRAEL CANNOT SUCCEED ITS MISSION

More practically, the aim of the Israeli operation in Gaza is to destroy Hamas. Really? There's no way they can pull this off unless they commit genocide and kill all Palestinians in Greater Israel.

THE RESULT LONG-TERM WILL BE MORE TERRORISTS AND LESS SECURITY

For each Hamas member that they kill, they create ten more.

This operation gets revenge but doesn't improve Israel's security problem. It just unites the Arab world and the Global Majority against Israel and The West.

The number one priority of any country is its security, but this operation will only reduce Israeli security. 

America's top generals have come through the fighting in Iraq and Afghanistan and they know that the longer this goes on, the more children and women especially that are killed, the more terrorists are recruited.

THE RISK OF WORLD WAR INCREASES

America has forward deployed huge numbers of men and equipment to the area what does this do for the prospects of a third world war?

We can seek a permanent resolution in line with UN Security Council resolutions, or we can seek military solutions.

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UKRAINE IS LOST TO EUROPE

13 November 2023

Ukraine is lost to Europe and the dying EU should conserve contributions from member states for worthwhile projects that enhance our peace and prosperity.

Ukraine has lost this war. It foolishly rejected peace in 2015 and in 2022 and now faces the consequences. The people of Ukraine will realise how idiotic has been their president, who has cost them half a million lives. They will rise up against him. He will flee the country to one of his numerous villas bought with money from American and European taxpayers or from Arms sold into other conflict areas around the world by members of his corrupt oligarchy.

The number one purpose of this war was to get Ukraine into NATO: that will never happen. The idea of Ukraine joining the EU is completely absurd and purely another political dream from our leaders very far out of touch with reality, since Ukraine is at war and in any case is economically completely unviable. Frankly, who would want to take on the burden of Ukraine? And where would they find the money?

The answer is that only Russia is in a position to offer Ukraine a prosperous and peaceful future. There is plenty of room for optimism. Ukraine's future lies in some kind of a rebuild and reindustrialization arrangement with Russia. Russia will see to Ukraine as it did in the 18th century when Katherine the Great and her architect Potemkin built Novo Rossiya.

I would imagine that the east from Odessa up to Kiev will be reintegrated into Russia and the portion that is left, the"rump", can be given to the Poles or can attempt to continue limping along as a state dependent on Moscow.

How can anyone ever have the slightest confidence in our foolhardy politicians? They have put us into the greatest debt we have ever known, they have taken us to two wars now, they have sullied our culture with mass immigration, they struggle with solutions for climate change and they are unable to deal with almost daily civil war in our societies.

We live in poverty, inflation and violence; our health service is non-existent, our schools are falling apart, our defenses are not up to it.

Failure after failure after failure. We need serious politicians who represent our interests. W need a 20 year program to find independence from America and its collapsing Order.

AND EUROPE WILL RISE AGAIN

Amen

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WHY INTELLECTUALS ARE MOSTLY LEFTIES

6 November 2023

This is the title of an extract from a conversation between Roger Scruton and Hamza Yusuf.

https://youtu.be/FYo4KMhUx9c?si=Wfj6jcH9797jumbQ

It's a very good presentation by Roger. He is talking about the appeal of left-wing ideologies today to those seeking a solid framework for their beliefs and ideas, pegs on which they can hang their knowledge. Like the leaves on a tree, if the leaves are the bits of knowledge, an ideology connects all through eventually to one central trunk, which is their ideological belief system. 

This is inevitably lefty thinking, or Marxism if you prefer. Roger says that the day will one day come to anyone with a living brain when that person is able to look back at the time when they had an ideology and realise that today they do not need reasons to explain the way things: things are simply the way they are. Someone who doesn't need reasons any longer is someone who we might call a Conservative.

I think it's not only the attraction of a coherent system of thought for navigating a complex topic - politics, political behaviour -  that pulls in younger people and those with intellectual questions at university.

But I think as well there's this thing called Group Think, which is a bit like an equivalent in the financial world to FOMO, fear of missing out - if you don't join the group then you're likely to be ostracised and see your career cut down. So newbies at the margin join up, for fear others in the core will think they "don't understand", ie have puny intellects, and after that initial commitment they just go into the subject deeper and deeper.

It's a bit like walking into a forest. It gets darker and darker and darker and then eventually you start to walk out of the forest and eventually the daylight begins to return and you start to see the world as it really is, as it always was, when you were a child, you see more objectively, and you can start to make connections and associations of your own.

This FOMO thing is part of how soft power works, as well. If you don't join the neocons then your career as a journalist or a teacher or in high administration or in politics, your career will be shortened because you have ideas that oppose those of the ruling elite, you are therefore against them. There's not much room for nuance lower down in the hierarchy.

It must be annoying to non-extremist contrarians like Roger, never to get a proper hearing for his ideas. Dead now poor chap, coming up to his 4th annif' this Jan24.

Group Think and the lack of diversity of perspectives - not the same things - is very dangerous  ... look at the mess we're in today, for example. Look at the Central Banks. They are all staffed by hundreds upon hundreds of PhDs in economics, all of whom pretty much are neo-Keynesian ie they all think that debt is not so important because the job of the government is to intervene in the market with fiscal and monetary policies that will smooth out short term irregularities, but in reality they can't see the consequences of their Grand Designs of untested ideas, like QE, and hence the mess we're in today. 

It's just the same with all these lefties who think the individual is unimportant and the interests of workers worldwide, as they see them, should prime over the liberty of the individual.

We know that the interests of the individual and the nation will out against the collectivists and the internationalists. We know that you build a wall from the ground up, brick by brick, and don't start at the top!

And we know that the neoclassicists in economics are right when they talk about the need for a balanced budget and for letting individuals in the market combine to decide, each blindly, the way forward.

As to Hegel's "Labour of the Negative", that Roger talks about, yes it's true that Roger's negativists think that the world is all wrong and the only way to put it right is to seize power in order to put into practice your  blueprint for your New Utopia, that's true.

But as I recall Edmund Burke when he looked at the French Revolution in 1789, just like Roger did his in 1968, he concluded that Revolution will fail just as Grand Designs fail, and progress can only really come from incremental change, "in-flight corrections", if you prefer. Roger says he spent his life trying to find out what he didn't like about the mess those students were making of policemen's helmets back in 1968.

The real trouble with the left is its collectivist thinking. It makes grand designs for the future, ignoring present realities and ignoring human nature ; and then when things go wrong it realises that it was because it didn't have perfect knowledge, that is the problem. It's the lack of perfect knowledge that you would need for Grand Designs to work out as planned.

So that's me for the day...

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LES ROUDOUDOUX

31 October 2023

(Version française en bas)

                                                  Roudoudoux

Strange how the mind works, leading you along country roads ...

Where does the word "Mistral" come from?

What is "Le Mistral Gagnant"?

My grandchildren to-be.

Where does the word "Mistral" come from?

"Mistral" ("Master" in Occitan) 

As everyone knows, the Mistral, originally, is the name of a cold wind that blows for a few strong days at a time down the Rhone river and out into the Med., the Gulf of Lion, reaching the Balearics and Palma. It's one of eight winds blowing across the Med from the eight points of the compass.

If you travel Provence, you'll notice the farmhouses mostly face South, not for the sea, but to have your back to the wind. And the belfries and bell towers are often of wrought iron to let this wind through!!

What is "Le Mistral Gagnant"?

There was a French singer-songwriter, Renaud, still around today, surprising as he's a right alkie-alcoholic. He was very popular in the 1970s 80s 90s.

He wrote a very sentimental song for his little daughter, all about his memories from when he was her age, stealing sweets from his sweet shop. It was published in 1985, the year I arrived in France.

Anyway, one of those sweets was a kind of sherbet dip, sherbet that you sucked up through a liquorice straw so it fizzled and exploded and sent a rush of cool across your tongue. And the name the sweetmaker gave to that bonbon was "mistral gagnant", hence the name of Renaud's song.

Another favourite were "les roudoudoux" - a dob of brightly coloured sugar syrup served in a seashell that the girls would lick out and so doing often cut their little pink tongues.

My grandchildren to-be.

Well that's a very nostalgic song of memories past, but for me it's a song about the future. I have two wonderful sons, no daughters as it happens, so I am looking forward to having grandchildren.

Le Mistral gagnant

https://youtu.be/_YqzuE-5RE8?si=mlzMrxbfHZWqeLpI

Lyrics

(Click to see lyrics in original and translation)

===

31 octobre 2023

 D'où vient le mot « Mistral » ?

 Qu'est-ce que "Le Mistral Gagnant" ?

 Mes futurs petits-enfants.

 D'où vient le mot « Mistral » ?

"Mistral" ("Maitre" en Occitan) 

 Comme chacun le sait, le Mistral, à l'origine, est le nom d'un vent froid qui souffle pendant quelques jours forts à la fois sur le Rhône et dans la Méditerranée, le Golfe du Lion, pour atteindre les Baléares et Palma.  C'est l'un des huit vents qui soufflent sur la Méditerranée depuis les huit points cardinaux.

 Si vous voyagez en Provence, vous remarquerez que les mas sont pour la plupart orientés plein sud, non pas pour la mer, mais pour tourner le dos au vent.  Et les beffrois et clochers sont souvent en fer forgé pour laisser passer ce vent !!

 Qu'est-ce que "Le Mistral Gagnant" ?

 Il y avait un auteur-compositeur-interprète français, Renaud, toujours là aujourd'hui, surprenant car il est un vrai alcoolique.  Il était très populaire dans les années 1970, 80 et 90.

 Il a écrit une chanson très sentimentale pour sa petite fille, qui raconte ses souvenirs quand il avait son âge, lorsqu'il volait des bonbons dans sa confiserie du coin.  Ce chanson fut publié en 1985, l'année de mon arrivée en France, comme par hasard.

 Quoi qu'il en soit, l'un de ces bonbons était une sorte de trempette au sorbet, un sorbet qu'on aspirait avec une paille de réglisse pour qu'il pétille et explose et envoie un flot de fraîcheur sur ta langue.  Et le nom que le confiseur a donné à ce bonbon était « mistral gagnant », d'où le nom de la chanson de Renaud.

 Un autre favori était "les roudoudoux" - une dose de sirop de sucre aux couleurs vives, servi dans un vrai coquillage que les filles léchaient et se coupaient ainsi souvent leur petite langue rose.

 Mes futurs petits-enfants.

 Eh bien, c'est une chanson très nostalgique sur les souvenirs du passé, mais pour moi, c'est une chanson sur le futur.  J'ai deux merveilleux fils, mais pas de filles, donc j'ai hâte d'avoir des petits-enfants.

 Le Mistral gagnant

 https://youtu.be/_YqzuE-5RE8?si=mlzMrxbfHZWqeLpI

 Lyrics

 (Cliquez pour voir les paroles en original et en traduction)

===

Saka ngendi asale tembung "Mistral"?

"Mistral" ("Master" ing basa Occitan)

 Minangka everyone mangerténi, Mistral, Originally, iku jeneng angin kadhemen sing ngunekke kanggo sawetara dina kuwat ing wektu mudhun kali Rhone lan metu menyang Med., Teluk Singa, tekan Balearics lan Palma.  Iki minangka salah siji saka wolung angin sing nyabrang Med saka wolung titik kompas.

 Yen sampeyan lelungan Provence, sampeyan bakal sok dong mirsani farmhouses biasane ngadhepi South, ora kanggo segara, nanging duwe bali menyang angin.  Lan lonceng lan menara lonceng asring saka wesi tempa supaya angin iki liwat!!

 Apa "Le Mistral Gagnant"?

 Ana penyanyi-penulis lagu Prancis, Renaud, isih ana nganti saiki, nggumunake amarga dheweke alkohol alkohol sing bener.  Dheweke misuwur banget ing taun 1970-an 80-an 90-an.

 Dheweke nulis lagu sing sentimental banget kanggo putrine sing cilik, kabeh babagan kenangan nalika umure, nyolong permen saka toko manise.  Iki diterbitake ing taun 1985, taun aku teka ing Prancis.

 Oalah, salah siji saka manisan iku jenis sherbet dip, sherbet sing sampeyan nyedhot munggah liwat liquorice kang dipercoyo supaya fizzled lan mbledhos lan dikirim rush saka kelangan liwat ilat.  Lan jeneng sing diparingake dening tukang manis kanggo bonbon kasebut yaiku "mistral gagnant", mula jenenge lagu Renaud.

 Favorit liyane yaiku "les roudoudoux" - sirup gula sing warnane cerah sing disuguhake ing cangkang sing bakal didilat bocah-bocah wadon lan mula asring ngethok ilat jambon cilik.

 Calon putuku.

 Lha kuwi lagu kenangan masa lalu sing nostalgia banget, nanging kanggoku lagu masa depan.  Aku duwe anak lanang loro sing apik-apik, ora ana anak wadon kaya sing kedadeyan, mula aku ngarep-arep duwe putu.

 Le Mistral gagnant

 https://youtu.be/_YqzuE-5RE8?si=mlzMrxbfHZWqeLpI

Lyrics Lirik

 (Klik kanggo ndeleng lirik ing asli lan terjemahan)

 

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BY POPULAR REVOLT

Why isn't Europe doing anything practical to prevent israeli war crimes?

It is obvious to any cynic that the coming israeli clearout of gaza is in line with the historic orthodox intention of reoccupying holy land. Bibi is ready to risk everything in the service of this goal - his own personal future is a chip he is playing as well.

The stakes are raised in every domain of human activity on this planet. That sounds v dramatic, but the risks faced by peoples everywhere and the lies being told are without precedent.

===

The MSM prevents any comment on this subject.

Take stock of the severity of political and military positions taken by leaders everywhere across Earth, we see high stakes the stakes are raised in every domain of human activity. That sounds v dramatic, but the risks faced by peoples everywhere and the lies being told are without precedent.

While I cannot imagine my fellow countryman taking to the streets in the millions, history shows that these desperate situations are always resolved by what you might call popular revolt.

I would only say that comment is about the only safety valve at the moment and the FT is not showing much wisdom for the long term by bottling up the legitimateconcerns of ordinary thinking folk like me.

It's the same everywhere and without giving a fair hearing to both sides and without responding to people's demands it will all end in blood and tears.

Europe by its wealth and its population is bigger than America, but Europe is in shackles to America. What is needed is a long-term plan to redress or remove American influence.

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Europe by its wealth and its population is bigger than America, but Europe is in shackles to America. What is needed is a long-term plan to redress or remove American influence.

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ARE NATWEST SHARES A BARGAIN?

29 October 2023

Banks often trade at less than book value, ie the market cap is below the book value, book value is assets minus liabilities.

So the questions today are: why do banks often trade below their book value and are NatWest shares currently a bargain or is NatWest a value trap?

In general, banks may trade below book value for many reasons. Geopolitical uncertainties that threaten global peace and the price of oil, is one factor. Investors are uncertain about the quality and valuation of the bank's assets - its  loans, securities, or derivatives. Banks face many risks - credit risk, interest rate risk, regulatory risk. Then there are macroeconomic conditions, such as interest rates, economic growth, and inflation, that can influence a bank's profitability and so its market valuation. As to the regulatory environment around operations and capital requirements, these may limit the bank's ability to generate high returns on equity.

The special problem at this time is how the sudden rise in interest rates and promise of "higher for longer" has impaired the quality of bank loans and reduced their valuation. Not just banks but insurance companies too insurance companies try to match their future liabilities with future income from safe and stable assets usually government bonds but owing to the very low interest rate regime insurance companies have had to move into the equities and derivatives market in order to do this matching.

Today, let's look at just one factor: derivatives trading. This is not widely understood and so often overlooked. Typically, of a bank's total earning, half or more would come from the interest on making loans, while another 25% might come from derivatives trading.

When you look at the amounts the bank puts at risk from this trading, they are totally crazy, and can be as much as 50 times the bank's market cap.

What are derivatives? What is hedging? Derivatives are just agreeing a future price on for example a commodity like wheat, old as the hills this was farmers securing next year's income, and then when the time comes the differences are settled and someone wins it all and someone loses it all. A bank will buy a bunch of assets that it considers are ever so slightly undervalued and then it will hedge its bet by shorting similar assets that it considers slightly overvalued; and it will wait for those differences, or valuation gaps, to close and pocket the money. That is how hedge funds use derivatives to make money.

That sounds risky, who can predict the weather? Uncertain, even though the differences between the future price and the present price may be quite small.

But that's nothing risky. What really makes it risky is that because those differences are so small, the banks weigh in really heavily using borrowed money to magnify their expected gain - this kind of leverage makes for a hugely risky game, one that can produce spectacular gains or of course catastrophic losses. 

What leverage multiplier? LTCM Long Term Capital Management is the usual quoted example. It leveraged 25 times so its market cap of four billion was turned into a bet of a hundred billion, which it could have lost, which would have devastated its creditors and its lenders and brought down the system. Lehman brothers went bankrupt when the government allowed the sub-prime crisis to collapse Lehman bringing on the 2008 financial crisis. Its leverage was 30 to 1. Thirty to one. Just consider that, set in the context of "too big to fail" and "moral hazard". The profits are pocketed but the losses are mutualised with taxpayers.

Risks at that level explain why banks often trade at below par and especially at this moment in the financial system where everything seems to be going pear-shaped...

But as Joseph Wang said today,

 https://youtu.be/TU423lhdNng?si=UMrUHyaN42lAfgrD 

things seem to be past their worst, in which case those Natwest shares, now trading at 72% of book value, may be very cheap indeed! And compared with their peers, this is cheap. 

NatWest's 3rd quarter revenues and earnings missed analysts' expectations by 3.3 and 3.8 pc, and earnings are expected to decline by 5.8pc per year for the next three years, but were impressive - revenue up 9.3pc, net income up 64pc, EPS 10GBp as against 5.9 3Q2022, profit margin 29pc up from 20pc a year earlier - mainly from the higher revenue. PEG 5-yr expected is just 0.38.

The share price declined 17pc on these results, leaving the stock trading on a forward PE of 4x as against 5x in the UK banking industry. Total returns to shareholders have been 68pc over the past three years. 

The current yield is 8.5%, 15.5 GBp, as against an average of 6pc for banking as a whole, on a payout ratio of just 31pc, EPS were 52 GBp. An unreliable divi record, though applying the same payout ratio, are forecast to reach 11.3pc in three years.

shareholder returns incl dividends

 

Luke Gromen tells a very different story from Joseph Wang,

https://youtu.be/jJ3ajrsz-IY?si=TNzvRfoy9no-8oPq

He argues that the bond market will collapse (ie the entire economy) if the US dollar and oil remain high.

Impossible to say whether NatWest shares are a buy or an avoid with all this uncertainty, but in general financials are not a part of the economy where many contrarian analysts would choose to be, better to be in hard assets, precious metals, commodities, manufacturing possibly, industries connected with renewal of infrastructure and utilities.

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