Posts in Politics and society
Raise the bar

I have been warming up to this post for a few weeks, even if what’s being said mostly isn’t me saying it. As I have argued on previous occasions, it has become customary to claim that the world is going to hell in a hurry, and that the only solution to this problem is to tear civilisation down, and start anew. I am on record for rejecting both these hypotheses, though for the sake of argument, let’s say that I concede the former. Let’s say that I accept the premise that the way we’re doing things—capitalism, globalisation etc—is in need of fundamental re-design. What would be the most important prerequisite for such a project to succeed?

I’d argue that at whatever level of society such an endeavour is made, it can only prevail if everyone shares an objective method for sorting fact from fiction, truth from false, and sense from nonsense. Without such tools, any such project, at any degree of ambition, would fail. Luckily, humanity has powerful tools at its disposal for such inquiries in the form of science, technology and epistemology. Coupled with good faith, tolerance, compassion and mutual respect, I think that we could achieve just about anything that we set out to achieve. So, what are our chances? Based on the recent evidence, I’d say; slim to none.

Read More
Politics and societyclaus vistesenSam Harris, Bret Weinstein, Heather Heying, DarkHorsePodcast, BlackLivesMatter, BLM, protests, ANTIFA, Gad Saad
Off the fence

One of the enduring discourses of our time is the idea that something is terribly wrong, with political and cultural life, with the economy, and with nature itself. The message varies, but the main message is the same. The (liberal) world order—as we have come to know it since WW2, and latterly 1989—is coming to an end, a message usually delivered with a ‘good riddance’ attached at the end, for effect. The edifice, we are told, is imploding under the weight of the decadence and complacency of centrists, citizens of nowhere, and globalists, and other similarly-spirited foul. They have dominated for too long, and must now do one thing, and one thing only; repent, and pay, for their sins. The story looks different depending on the perspective from which it is being told, though I reckon it’s possible to identify two broad categories, which have, by now, become clichés in their own right. The left-wing critique tends to home in on two scourges of our time; inequality and climate change. These can be solved by expropriating the wealth of the haves, which will be distributed to the have-nots, and by halting damaging economic activity to protect the planet. The right-wing version is a nationalist protest, rallying in opposition to hitherto staples of global prosperity such as globalisation, international interdependence and multilateralism. The election of Trump and the Brexit referendum in the U.K. are most often trotted out as examples of this movement.

Read More
Politics and society, European politics and society, US politics and societyclaus vistesenphilosophy, ideology, socialism, conservatism
Look Ahead

It is tough to look beyond the depressing daily death dispatches from around the world detailing the tally of the Covid-19 epidemic. Yet that is exactly what investors must to do, if they want to have a fighting chance to figure out what happens next. These data are undeniably terrible, but they are known quantities for markets, even in the U.S. and the U.K., where the numbers are rising too fast for their own good. They will continue to rise, for at least a few more weeks, at least. Meanwhile in the world as a whole, two immovable objects are now crashing into each other. We can’t return our economies to normal operation due to the risk of an uncontrollable public health crisis, but equally, we can’t maintain economic lockdowns indefinitely. The circuit-breaker in the form of a coordinated monetary and fiscal stimulus program to the tune of nearly 20% of global GDP is a stop-gap solution at best. This is because that is arguably the level of GDP that developed economies are set to lose through H1 alone. Contrary to popular belief, you can’t just freeze the economy, and then re-start at zero six months later after having printed trillions of dollars. Anyone who makes claims to this effect are, in my view, getting a little too excited about the second-order effects of our present misery, which is the economic shutdown itself, and the associated open invitation to unleash the MMT experiment. Don’t get me wrong, it is the right thing to do, but as I said, it is a second-order effect.

Read More
Markets and Trading, Politics and societyclaus vistesenCovid-19, coronavirus, S&P 500, Equities, Bonds, yield curve
Eulogy for a cycle

This essay is full of contradictions and loose ends, so I might as well start with one in the title. This cycle is not over yet, and I am not sure that I have the definitive answer for when it will end. It is, however, well advanced with some themes and narratives. I am writing this in an attempt to make sense of and to explain, a world, which to my despair is increasingly devoid of reason. As a finance geek, I can’t get anywhere without first establishing the state of play in the economy and markets. The most salient feature since the financial crisis has been the unprecedented activism of monetary policy. In 2006, Alan Blinder described central banking in the 21st century. It is a brilliant paper but in dire need of an update given actions taken by policymakers since 2008.  Central bankers were first called into action to prevent a collapse. The destruction in markets after Lehman’s failure showed that timidity or firmness in the face of moral hazard risk was impossible. Interbank markets were seizing up, banks were running out of liquidity, and the chaos quickly was spreading to the real economy.  Decisive action was needed to avoid the situation spiralling out of control. Central banks had to take their role as lenders of last resort seriously.

Read More
Markets and Trading, Monetary Policy, Politics and society, Something Differentclaus vistesenNihilism, declinism, monetary policy, Corporate Bonds, equities, bull market, demographics, ageing