Wednesday, 25 March 2015

Investment tip: Go long on Jackboots

The clock is ticking for Greece, a new tranche of bailouts has been agreed on the caveat that Alexis Tsipras’ reforms are up to scratch, not something he managed last time. When the money runs out the banks will implode and Greece will default and fall out of Merkel's merry little club and start printing drachma, right? Wrong. My investment tip is go long on jackboots because there are groups in the sidelines rubbing their hands together for a chance to begin their own ‘Project Mayhem’. A wave is coming and it smells of smoke.


Greece's new government will be successful just so long as it can maintain some stability. At the moment, the people are behind them in sufficient numbers, 47% according to a recent Metro analysis poll (but since when have polls been bankable), because they are trying to stand their ground against the austerity measures that have brought the country economically and socially to its knees. But if Varoufakis’ game theory ultimately turns out to be Candy Crush vs Eurogroup’s World of Warcraft, things will change and fast.

The country’s neo-nazi group, Golden Dawn has had its head a little low of late. Its leaders have been in prison and it has fallen back a little in the polls but that does not mean their support has waned. The thing with single policy groups is that they always attract floaters who will align with whoever satisfies that need at that time. The need at the moment is HOPE and Syriza is selling it by the bushel. But, If their ring turns brass, as is inevitably will, the need will be ANGER and for that the far-right is one-stop shopping.

In Germany, the war of words between the Greeks and the Germans has stoked the fires of xenophobia. The German government has been running a surplus which has called for a its own brand of austerity. Wages have not been keeping up with inflation and many are feeling the pinch. The obvious cause of this turn of fortunes is the lazy Mediterraneans and the French who have not been pulling their weight. Many Germans are tired of bailing out the rest of Europe and neo-nazi groups have gained ground.

Nigel Farage’s Ukip seem to be talking to the people despite the derision in the media, they are saying something the people need to hear. The ‘squeeze on the middle’ has made the middle-classes less affluent in real terms and house prices are taking a huge chunk from their incomes. At the lower end, eastern Europeans are believed to be taking unskilled and semi-skilled positions driving wages down to a point where the minimum wage is a standard not a safety net.

In France, Marine Le Pen’s Front National took 25% of the votes in the recent local elections. This is largely due to the Charlie Hebdo and related attacks as well as the struggling economy. The people are looking for action not words, they don’t feel safe and could easily fall into getting more protection than they bargained for.

The right-wing Sweden Democrats have been maintaining a steady presence and are now the third party with 13% of the vote.

So why the comment at the beginning of this article about ‘going long’ on jackboots.

It seems that the current obsession with finance and economics, the bond markets, going long, going short, currency markets and yields has detracted for the reason for their existence. Adam Smith, the grandfather of capitalism in his 1776 seminal work “The Wealth of Nations” focuses on the people, population’s role in wealth and prosperity. Marx built his thesis around the needs of the people vs the aims of industry, JM Keynes with JF Roosevelt built a ‘New Deal’ that focused on putting liquidity into the market (shops and industry) through the workers’ pockets and even Milton Friedman recognised the fundamental role of the population.

‘The markets’ have become narcissistic in their Hubris, a self-serving Matrix with the right to all and responsibility to none. But, worse of all, we and especially the world’s leaders are buying into it. The Banks must be firewalled at all cost and market value is the only value. Our young entrepreneurs are told to seek out venture capitalists, Dragons den and Shark tanks. Work, build and form an exit strategy. Investment is the only real goal. The markets are betting on the Eurozone’s demise and in the bond markets they are trading sovereignty futures.The system is no longer serving anyone but the system.

And, while the world is looking the wrong way, certain groups are flourishing in the peripheral vision. Building networks, brewing hate and offering solutions.

It is often said that Europe sleepwalked into WWI but we couldn’t make that mistake again, after all, we all learned from the past mistakes, didn’t we. Could it be said in the future that we were not asleep just blindsided by the markets and the pursuit of a unified European trading platform.


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