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Friday 5 June 2015

By Whatever Name "Geopolitics" Is Still A Market Risk

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.

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