Blain’s Morning Porridge – 7th November 2018
“Even the rats became hysterical. They came into our flimsy shelters to seek refuge from the artillery. Seven day and seven nights shell after shell burst upon us. And then the British Army came over the top.”
In the headlines this morning: www.morningporridge.com
Lots of commentary about how the Blue Wave failed to drench the Red Wall. The analysis is all about how markets are set to rise on the back of less uncertainty. It’s time for a more fundamental reassessment.
We live in “The Age of Political Failure”
It isn’t just Trump. Its Brazil. Its Italy. Its Brexit. Its European elections next year. Its France, Germany, Hungary, and just about anywhere else where populists are getting in because political systems have failed to deliver. Around the globe the mounting failures to deliver clean environments, education, honour human rights, create jobs and foster equality are going to challenge future markets.
Trump is just a symptom. Populism and a break down in decency and the rule of law threaten to take us down a very well worn track….
While politicians blather about real and fake news, did anyone notice real scientists, (people who actually observe and think, rather than just shout loudest), are warning we have less than 12 years to fix climate change? As a distinguished US Economics professor told me yesterday: “Debt doesn’t kill anyone. It will be global warming..” Income inequality is higher today than any time in modern history.
Yet, Markets are reacting with a sigh of relief this morning because US politics look a little more… er.. balanced? There is a balance, but this isn’t it.
Move on higher, say the pundits. Nothing to worry about. The Democrats have taken the House of Representatives with a thin majority, while the Republicans hold the Senate – meaning we’re back into the well-established Washington gridlock folk foolishly think makes the world safer.
The US Mid-terms should be raising a host of questions – not least on how financial market practitioners are complicit in the failures and dangers of this new political age. The fact it looks a record-turn out should leave us thinking about voter polarisation. We should be asking why. We should be screaming our questions!
Over the past few weeks, I’ve been as guilty as anyone else in the way I’ve looked at how markets are likely to react to the US mid-term results from a purely short-term perspective. I’ve predicted how markets will lap up a continuation of tax-bribes and spending, or how a constrained Trump could stem market gains.
I’ve barely touched on the long-term implications and damage Trump, and all the other waves of populist claptrap, are doing to long-term prospects for global markets.
Maybe it’s time to focus on the Long-Term Consequences of Trump.
So let’s stop fooling ourselves and pretending it’s not happening. Let’s not be blind to what Trump’s doing in the Whitehouse – the way he’s stacked in his own family, the deals he’s been brokering in darkened rooms, his apparent willingness to lie and dump partners, or his blatant scratch-my-back approach. His administration reeks of nepotism, cronyism and inducement. It reads like something out of I Claudius.
Things no serious investor would tolerate in the management of any stock we owned have become commonplace. Failings we’d be quick to criticise in any other corrupt third world leader pass without a comment. As least the Democratic House should be able to ask for his tax-returns.
And would we tolerate the way talks about women if it was our daughter he was talking about? Should we let him bluster and bull-doze thru legitimate questions as fake-news just because he’s a presidential bully? How long will let him wrap his racism in “valid immigration concerns”.
It’s too easy to say “all it takes is a few good men to say nothing”, but it’s absolutely true. What’s the point in the last 10-years of draconian financial regulation if it’s now perfectly acceptable to lie, cheat, swindle and bribe our way through business.
Fish Rot From The Head.
I’m as guilty as anyone else of letting it happen. So are my many good and honest friends who call themselves Republican. Trump, and the surge in populist politics around the globe are essentially a simple phenomenon – promise voters what they think they want; jobs and fuel imaginary fears like immigration, then sit back, wallow in the power and reap the rewards.
Markets are complicit in Trump. We’ve welcomed his tax-cut bribery and pro-business noise, hoping to coat-tail on the corporate riches he generates. Yet, the dangers to markets are legion. You can guarantee they will bite us back.
Here endeth today’s rant. Normal service tomorrow.