The ‘C’ Word in Capitalism: Crash!

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On dismissing financial analysis behind, due to ‘GIGO’ principles based on corrupted manipulated statistics, and spotlighting policy makers’ move we hit on Greece. Yes, Greece is one of the pertinent factors to markets’ animal ‘spirits’ as is Climate Change issues (gargantuan impact on energy, airline and consumer industries). The saga is dragging on and unsettling the predictive market participants, whom are both directionless and intuitively awaiting the big catalyst for secular economic progression. From FPM’s last post “By Whatever Name Geopolitics Is Still Market Risk” we are underpinning Greece as the big ideological catalyst for the much heralded economic fundamental shifts, that happens in 25-30 years cycles[1].

Yet another date, Tuesday June 30, is due for Greece to repay IMF’s stranglehold debts. Make no mistake, it is “stranglehold” by the scrotum or neck! As ‘troika’ threatens Greece with dire financial / bankruptcy consequences if it does not cooperate with modus operandi of the last thirty years[2] of runaway excessive capitalism by the moneylender / financier classes organising, in effect our daily lives. And through ever-pervasive globalist trade pacts (GATT, CETA, TTIP and TTP), these powerful pullers of the strings behind the scene, which are corporations and their billionaire entrepreneurs, aim to shore up status quo and control money, hence the world.

Greece represents a more than the proverbial spanner in the works to the last 30 years of deregulated business climate – remember ‘openskies agreements’. In a way, The Reagan / Thatcher era shift has left nation-states without identities and suckered into a mode of capitalism, which as its sickly insidious terminal side-effect, is causing climate change, great wealth inequalities and essentially re-organising humanity and society run by stealth global plutocracy. Not democracy at all – wake up people! Hence, back to Greece being an epochal and pivotal policy maker in the global theatre of socio-economic politics, once again 3000 years or so later. If you don't believe our interpretation, look at the market indicator of volatility spike, ^VIX.

Volatility S&P 500 (^VIX) -June 30th at Open

For example, we mentioned the ‘Open-Skies Agreements’ which degregulated nationalistic ‘flag-carrier’ airlines starting in the 1980s and henceforth; well we can see the consequences of that towards international tourism, where holiday-makers and other various travellers are merrily zig-zagging the planet as ‘strangers R us’ pulling along their wheelie luggage, and ferrying around by taxi, plane, boat etcetra. Happy days one may think – yet more burning of carbon fossil fuels, in this mass people transport business dubbed tourism, has well-known dire ecological consequences. Those inconsiderate enough to not bear, or take responsible mitigation for the chain of climate catastrophe events that is impending, are selfishly ignorant. Yet the corporations and media communicators peddling this and other type of ‘consumerism’, are and were always ruthlessly and exploitative. Similarly tobacco giants were long-ago aware that selling cigarettes causes harm and death.

The secular economic progression or investment theme / trend FPM espouses reverses or roles back the last 30 or so years of greed-capitalism. An enterprise crafted and forge lovingly patiently towards evolving a more humane ethical equitable and sustainable enterprise ecology. The business climate is changing undoubtedly and perpetually through a healthy process of creative-destruction. New age entrepreneurs should NOT accept being like the blinkered content horse that was portrayed by human liberationist George Orwell in his satirical comment on humanity via “Animal Farm”. Small- and Mid-sized Enterprise (SME) proprietors should understand that the global and regional trade pacts only serve to preserve the higher-up capitalists’ status quo of big business executive profitability with lure of trickle-down impression.

For example, if you’re an entrepreneur who bought into the idea of fracking for fossil fuels as alternative energy source to supplement dwindling oil / gas reserves, then you’ve been manipulatively had! The reality-check is that if we use JUST USE 20% of the OPEC and big-oil cartel reported EXISTING reserves of oil / gas, or other forms of fossil fuels, we will irreversibly exacerbate the ecological balance of planet Earth. Average global temperatures have risen by one Celsius degree since the industrial revolution, with “democracy” levels of consumption of the Earth’s resources, by just a few western nations[3]. One does not need to be a ‘rocket-scientist’ or fortune-teller to imagine and extrapolate the future impact from the current Western brand of democracy and capitalism. Aside of weighed-up benefits of travel, a model of wasteful and excessive consumption, increasingly foisted on the new and developing countries and, sponsored by self-vested oil-rich countries, which can ultimately and willfully lead to a scorched Earth or few habitable parts of planet earth. This dire  doomsday ecological predication is evidently possible within 50 years henceforth.

Enough doom merchant forecasting let us see what we can do with the the next 10-20 years, of ecological foresight. In order to make an omelet you have to break some eggs, so we believe some bad old habits of Western way of life has to be broken and entirely abandoned. The prospect of these similar habits being continued by the 3 to 4 billion new capitalists of the BRIC nations i.e. capitalistic consumption via fridges, air conditioners, heater, cars, travel etc is the game changer. Pretext of globalisation in trade has resulted in this widespread consumption malaise. A cross-fertilization through global television and media, supported by multilateral agency oversight is the underpinning of our cross-fertilised culture.  Unsustainable lifestyle habits will inevitably have to be disregarded, sooner or later. The sooner the global transition to sustainable living standards the better for everyone! Naturally, the status quo of big oil and big retail etc will not necessarily relinquish their prominent position built nationally and expanded overseas in their respective industries easily. Instigated by American hegemony billionaire status quo class, who are scrambling to do secret deals inter-regionally around the globe via positive-sounding international trade agreements, such as “Trans-Atlantic Trade and Investment Partnership” (TTIP) aligning USA and European Union legislation to favour corporatism over statesmanship. Trade agreements or pacts are designed to shore up countries from operating as independent jurisdiction of law. And therefore bought under some multilateral agency supervisory control. Done as altruism but effectively to enrich the already rich and preserve status quo global wealth inequalities – sheer satanic evil! Otherwise IMF, World Bank, WTO, GATT, NAFTA, UN etcetra would have eradicated world food hunger by now – duh! To see this vivid and blatant harm done, with auspices of doing good, enquire in microcosm at your local food supermarket chain about the daily wastage of food stuff casually thrown away by migrant worker from poor countries – fostering Western hypocrisy globally.

The will for this great change in the face of impending raping of the planet earth should expectedly come from western politicians. Sadly these and other politicians have become blatant captive audience of the “greed-is-good” corporate capitalists, and to their lobbying / pressure-group arms towards cosy employment prospects or ‘revolving-door’ relationships. Asserting 'politicians are criminals' who are corrupted from their noble and elected ideals of representing the people – see Dame Vivienne Westwood's campaign slogan here.

In terms of FPM’s secular economic progressive investment themes, these transitions will result in Western public policy alignment in many sectors of business and lifestyles, at least in these following sectors:

Oil and coal divestment

Carbon Capture and Storage

Nuclear and Solar Technologies

Tourism and Migration

Generational Lifestyle Changes

GMO Foods

International Trade and Transport

As we digress on the exposition about ‘C’ in Capitalism is for ‘Crash’, we have joined-up what a Greek exit from the European Union would be in terms of impact for reversing globalist economic capitalistic trends. Economic inertia and impact, as much as the break-up of 300 years-old uncomfortable union of Scotland and England forming United Kingdom, would have likely had. Their Union divestment ideal was narrowly defeated in the September 2014 Referandum. So no need for Scottish people now to be mockingly re-dubbed “Brave Farts”, as play on traditional heroic reputation of “Brave Hearts”.

So FPM hope the Greeks play-out a drama which is ultimately to their benefit.

“This is not about politics, it’s about math.” Puerto Rico’s governor, Alejandro Garcia Padilla on June 29^th, 2015 on pondering about his American Commonwealth country’s $72 billion debt default with a population of 3.5 million people.

Puerto Rico and the bigger nation Argentina have defaulted on their sovereign debts. Iceland also faced braved decision and decided NOT to bail-out capitalism – see here  Cyprus had ‘bail-in’ to the detriment of mostly Russian savers in its country’s bank via ‘hair-cuts’ from deposits. So on and so on is expected of sovereign debt default in the Great Crash of Capitalism, as anticipated by FPM’s polemic assertion. This worsening of the current Great Recession into a something as grotesque as the Great Depression of the 1930s was sensationally peddled in financial circles by economist, authour and ex-banker Satyajit Das a few years back: where he suggested individual and corporate debt default and insolvency was expected to spread into sovereign debt problems and so on. So while Greece and Puerto Rico sovereign debt problems maybe small-change, the contagion effects of debt default on France and Italy would be significantly monumental.

To reiterate, making an omelette requires ‘crashing’ some eggs: we think Greece and its proud people, as a historically veritable proud nation, can re-assert it epoch making touch-paper. We are talking about that catalyst event in the Referendum on 5^th July 2015, on how to respond to EU’s terms of debt stranglehold. Any such default has significant market impact – see above Pre-Open US Market price of Greece proxy ETF and intraday, 29^th June, down from US$11.78 to US$9.93 at FPM’s data capture plays. The Greece investment fund proxy closed the day US$9.42, down more than 20%. FPM bought stock as panic selling from Greek exit from EU, but realising that in the intermediate term that exit is which will structurally and fundamentally fix the ailing basket-case economy of Greece.

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[1] Kondratieff Cycle

[2] FPM have been validated by Iceland President

[3] See Bill McKibben “Do the Maths” and Naomi Klein “This Changes Everthing”

By Whatever Name "Geopolitics" Is Still A Market Risk

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While informing select clients about FPM’s idiosyncratic-risk vested three vehicles, as introduced here, we are constantly assessing systemic-wide risks. In general we understand that the global pump-and-prime mechanism of the U.S.-government led policies, are driving the liquidity, and in some cases the solvency, of capital markets referencing underlying economic companies. The new-norm of low productivity economies, especially in the mature developed countries; from public and private entities continuing to de-leverage from stifling debt levels, while job and profit growth remains mediocre, is veritably characteristic and wholly acceptable of Great Recessions.

Yet what is incongruous is the gloss and polish airbrushing policies of the sick and ailing fundamentals of stalled mercantile economies. The last vestige of the current mode of capitalism, characterised by lethargic corporate activity and near zero cost of capital, has uncanny parallels with the duration of 1929-started Great Depression. More recently, Japan long described as a zombie economy during the 1990s is now not a lone status. FPM understand that the intrinsic corruption of capitalism from its founding ideals, through blatant cronyism and self-vested pursuits in office by public administrators / politicians and other public-serving functionaries is the ultimate ingrained societal malaise. Those supposedly overseeing imbalances and excesses of a system, such as the regulators as enforcement, and courts as justice, have been absentia, worse still complicit bedfellows of economic financiers. 

The demised state of capitalism will only be resuscitated by the meaningful alignment of neglected public interests with long pampered corporate ones. Reform of the socio-economic balance, which is so out of kilter after 30-years of full throttle free market capitalism. And longer beyond, of creating wealth inequalities and social imbalances, with only a pretense at harmonizing forces for economic value. This would shift focus away from legislators’ subservience to the corporate-vitality mantra. A political mantra which is deceptively kowtowing to the deep-wallated “big pharma” or “big oil” etc, at expense of wider social ecological concerns. 

Multinational companies cynically organized for a select cabal of owners and executives, driven only by vested-interests, rather than long-term socially mutual goals, MUST end - “es muss sein”! We believe the impending market risks forcing stock or bond corrections greater than 10%-20% is imminent. Further, we believe the new cause for concern / risks, since the last collapse, where economies were quick-fix resuscitated with money-printing monetarist policies, is in the form of GEOPOLITICAL ones. The fundamental underpinning for this is connected with monetarist globalist government policies which created and sustains the Great Financial Crash – GFC.

Wealth and income inequality, public spending austerity, mass populous migration, catalytic climate change and broken socio-economic infrastructure could should and will lead to escalated geopolitical tensions internally between regions and countries internationally. This is dangerously true if plutocratic capitalists and their on-string puppets insist on forcing through their status-quo preserving secretive regional trade agreements in the form of USA-Asia’s Trans-Pacific Partnership (TPP), and USA-EU’s TransAtlantic Trade and Investment Partnership (TTIP). Do NOT be fooled by PR / lobby propaganda, nothing about these trans-national deals is in our public interest – read more here! As a case in point of clashing economic and social interests from the recent past, which averted such geopolitical risk manifestation, we mention the Scottish Independence Referendum in September 2014.

This narrow democratic defeat of basically revolutionary proportional ideology reflects the level of discontent in the socio-economic status quo. That the Scottish people voted narrowly to maintain its uncomfortable 300-years old union with the seat of national power in London Westminister is merely a testament to strategic demographic voting; effected by an increasingly larger elderly population not wishing to upset the apple cart in their twilight years. Even that Scotchmen’ separatist or secessionist movement has emboldened itself for the next round, through their unanimous decision to identify with local political party, the Scottish National Party in 2015 General Elections – watch this space!

From the past to the present and similar ongoing concern is the “Greek Tragedy”. A vogue basket-case economy in the midst of the largest economic bloc in the world is arguably just one geopolitical uncertainty producing a drag on ‘normalised’ capital markets functioning. Moving from discussing the United Kingdom union in microsm to deciphering the consequences for the European Union mess is not a leap too far in terms of geopolitics. As with US-coordinated global policy solutions to date, the plaster-fixes to deal with real deep seated structural problems is not going to eradicate them, only alleviate them.

Eventually, Greece and the EU will have to be realistically radical about its economic health, than its rhetorical appeasement. An public relations appeasement that preserves stratified social status quo, with rich getting richer exploiting their poorer brethren, and the poor getting poorer – despite the duped burgeoning middle-classes; A world wide phenominon. So far the Syriza Party with Tsipiras and Varoufakis are holding to their voter elected manifesto of 1) end to austerity 2) anti EU stance and 3) resisting privatisation reforms. All these stances are socially beneficial ambitions and are fundamentally worthy, for the wider public interest. 

Comparably, while the City of London, as an oligarchs’ seat of capitalist financial power, becomes a mercantile whore to the highest bidder, selling or monetising its taxpayer-paid real assets into private ownership (see below pictures of South West London police stations); Greece ought to be bold and spearhead independent socialist democratic values, while bucking the corrupt global capitalist takeover. In insidious global capital markets fashion, even the said taxpayers themselves are indentured through capitalists’ bedfellows misallocated and wasteful ballooning national  debts. Should other nations follow suit for being in the thrall of current mode of global capitalist? Clearly not – we should be one for all and all for one in holistic evolution of civilization.

A New Police Station in S.W. London

An Old Police Station (now sold to private developers) in S.W. London

Where the people of Scotland failed in breaking an umbilical cord maybe Greece can succeed, and thereby become a catalyst for real global change. Rather than change for change-sake, the monumental trigger would be an inflexion point for reeling back some of the excesses of the last 30-years or so of capitalist exploitation. Appropriate it would be then, that the Greeks were once before heralded as the “Cradle of Western Civilisation”. Greek’s preminent prominence can once again be that, rather than the “Begging-Bowl in Hand Basket-Case” of the rashly convened European Union structure.