Bubblicious

POP! No..not quite yet…but close.The S&P has reached a new high, up 200% less than 5yrs post the “great-recession” of our time...and it's not just the US..FTSE All world index is also up 150% since March 2009. What's that you ask? What crisis? Exactly. Sure, we all enjoy living in a bubble, one that the Fed has gladly blown larger and larger akin to an excited teenager testing the limits of their watermelon-flavoured-bubble-gum, pumping once mind-boggling sums of cash into the petrified financial system. We all love the good times when dancing around in the midst of seemingly endless quantities of monetary protection, relishing the cloak of invincibility, oblivious once again to the potential impending disaster of lackadaisical activity in the world’s still fragile financial markets…but nothing lasts forever – just ask Christine Lagarde. Who would have thought that Dominic Strauss Khan – when sat in his NYC holding cell ashamed by his lust for room (ahem) service with a twist – would have the last laugh..ahh..the wonderful manner in which time always turns the tables.

Hence this piece is predicting a global correction before the end of 2014..but one that will slightly dampen the moods of only those that have been lucky (prudent?) enough to make use of the unprecedented and non-symmetrically focused monetary easing.

Plenty have questioned this approach over the years, plenty will continue to do so. It seems we have only papered over the cracks in an otiose effort to protect the common investor whilst selectively rekindling the risk-loving appetite of the upper-echelons of the wealth-class – is it really fair that 70% of home-owners continue to suffer from negative equity when the likes of Bill Ackman generate new billion-figure profits in just 3 months (the wiley investor managed to grill-himself a handsome $200m in just one day from Burger King’s buy-out) and Buffet’s share price equates to a studio appartment? Hmmm..something is off in this “recovery”. The new world of income disparity we find ourselves in has brought gauges such as the Vix to a seven-year low. Given the feeble state many of the world’s largest economies still find themselves in, this unrestrainedly comfortable approach to investing is illogical. As we all know (yet somehow still ignore) once the warm embrace of these Central Bankers begins to unravel, leaving investors to stand alone in this new financial world environment, the shivering will commence, with risk of many submitting to hypothermia at the shock of being left out in the cold.

For now though, the rich out there are simply not frightened. Cozy and warm in fact they appear. Witness the unbounded joy they express in throwing money into risky asset classes, deceptively unworried by the illusion of a protector in the form of political redress. Those that were cash-rich in 2008 have been disproportionately rewarded for doing what they do anyway..great gig if you can get it! The not-so-rich are confused as to what exactly is going on and simply not participating. Central Bankers are faaaar too relaxed it appears, even Draghi has the gaul to crack a smile during his press conferences – ominous signs all around!

The operose discussions surrounding much of the financial industry were once eagerly followed by even those with zero interest in their bank accounts (pun intended) – that has quickly dissipated as we have returned to less weighty subjects of interest for the masses…such as ice-water being thrown over “celebs”…a worthy original cause, now flyblown by the facetiousness of social-media. Recent capital raises by China’s banks, barely noticed despite the eye-watering amounts (>$50bn in the last several months) indicating a subtle attempt at dealing with otherwise extremely worrying non-performing loans. Asset-price inflation and general madness in Africa manifesting itself with $1,500/night rates for barely 2* hotels in Angola (where there are commodities, there are Chinese and price-hikes!). Latin American nations are mixed between recovery (Colombia) and bankruptcy (Argentina) with standards of living beguiling for what we term 1^st world nations.   

Are we really as safe as we believe? It is not meant for the hard-working individual looking to provide a decent quality of life for his family to worry about when Yellen will raise rates or how many members of the Bank of England’s MPC abstained in the recent vote..but a worrying degree of apathy has returned to the global conscience as far as the financial markets are concerned. Recent stock performances indicate a plethora of only wealthy investors taking part and taking away all the profits to boot!

This is not equality at is finest, the silver-lining possibly only that when the elasticity of our current bubble is finally pushed beyond its natural gooey-limit, bursting in spectacular fashion, it will only splatter over the faces of those doing the blowing. The rich will become slightly less rich, the less well-off will be..well..they don’t really care do they? They were never part of the Fed’s plan in the first place, were overlooked by the ECB and totally ignored by the autocratic Chinese, left to deal with their own pay-cuts and extra working hours to fill the gap of placing bread on the kitchen table. With so little to show for the last 5 years anyway, the less well-off will thankfully come out of the next bubble splatter relatively unscathed.

We are in a very tricky period. There are those that understand we are currently floating in a bubble, there are those that know it yet avoid admitting it and there are (worryingly) those that remain oblivious. In this case, ignorance is not bliss. Central Banks must carefully figure out a way to embark upon the seismic shift from continued intensive care to general recovery.

As any patient knows, the real-pain comes after the initial dosage has been reduced and the tougher task of rehabilitation commences. Immense effort from all involved is necessary to transition from a bed-riddled economy to one that can stand-up of its own accord.

Shoving deliciously fruity, addictive bubble-gum in their mouth and hoping for the best, won’t stick.

Young Blood

The sun may be shining on the glitteringly bronzed bodies of much of the world’s self-proclaimed “elite”, lazing by the many pools dotted across the Mediterranean, sipping on premium alcohol as they thank their lucky stars for living in a part of the world where strife, violence and sheer inhumanity do not blight their every action..yet it’s depressing out there. Things look so bad even seasoned comedic actors are ending it all themselves rather than continue living in such an unjust world!..seriously though..Robin Williams, you were a genius of the comedy world and will be sorely missed.

Let’s have a brief look at what exactly is making us all so unable to enjoy the panoramic views from our Trip-Advisor selected sea-view suites…Iraq cannot admit its prime minister must go in order to save thousands of lives (anyone want to remind Maliki of the notion of self-sacrifice for the greater good?), ISIS (or ISIL..whatever they are being labeled at present by panic-waving Western media) continually threaten to bring those Hollywood disaster movies to life and create entire new territories overnight, Gaza (should that be imposed “concentration camp”) deplorably asphyxiated as they thrash for their lives bombarded by the very same belligerent force with one hand around their neck…modern media ensuring the true aggressor is increasingly unable to hide behind their clever PR machine. Ohh..we haven’t even mentioned Ebola…the tiny little potential problem of a disease that spreads as simply as breathing in at the wrong time an infected individual sneezes, rapidly escalating in number across Western Africa and now pitting the money hungry US pharmaceutical firms against the desperate and pleading medically-lacking nations attempting to avert catastrophic outbreaks. Global markets have rocked and rolled, thin liquidity exacerbating movements and likely making for some profitable trading if anyone is actually working (one can trade from their iPhone these days..pheww!). Most worryingly from a personal perspective…Lebanon thrown into fresh threats of fragmentation as sides must chose between a rather unattractive set of alternatives presented by its “leaders”. 

Natural disasters aside, this is one of the noisiest and bloody summers in recent memory. Where we normally prowl the papers for any news of interest in July/August, 2014 has presented an unwelcome cacophony, drowning out the pleasantness of the usual dulcet classical waffles from the Royal Albert Hall’s Proms. Seems our conductor this summer is filled with panic-inducing evil rather than creative spirit.

I have a proposition that may lessen the global malaise. A law should be passed ensuring global politicians are limited to the male population between the ages of 21-26, and the female population of 18-26 (women mature faster than men..no arguments here please..fact!). Why you ask? Simple really..age and so called “wisdom” have shown themselves to be hindrances on the global desire to progress and our species' ability to harmoniously cohabitate the very world we have been entrusted to. Just look around us..Lebanon and its poitical “elite” a perfect example in fact..the very same forces - in many instances even the very same protagonists - that instigated (and now continue) the atrocities of the civil war from 1975-1991, returning to positions of power amidst their own particular Sects, unable to bury deeply-dividing grudges and never truly forgiving and forgetting. The country (and general Levantine region) has moved forwards in only spits and spurts, constantly aware that the very underlying fabric of animosity still runs profound and veritably aggressive. Surely we would be better off if the old-guard were replaced with fresh faces and even fresher memories, untainted with the horrors of the past and only willing to push forwards. Ignorance, widely derided, can often bring bliss if mixed in the right context.

The viridity of youth versus the highfalutin hubris of wisdom may serve us better. Look around..the young are energetic, full of desire, wet-behind the ears with joy and values mixed with principles that would never be betrayed…well not yet at least..that’s the point. Smarter men out there know of the parable of the mountain climber and his donkey laden with provisions for the climb. As he steadily and mercilessly pushes the donkey along, intent on being the man to make it to the peak, he must drop a number of essential provisions-carrying-bags from the poor donkey’s tiring back – only to find himself at the conclusion of his seemingly successful summit bereft of any of the necessities he had initially accounted for – he may be at the top of the mountain, staring down at the rest from the peak..filled with pride and self-worth, but the road has left him with none of the essentials required to sustain a human soul.

The young still carry all these indispensables. They are happier, less jaded, unable to understand the bitterness that those older than them seem to carry, literally filled with the exuberance and allure of what the elders call naivety – the young do not recognise this trait as they are not filled with it. Sure, they will make mistakes, but those mistakes are no less rippling in their severity than the very same mistakes that are being made by so-called elder-statesmen the world over. A recent example that springs to mind was the positive and life-affirming manner in which JFK and his brother approached one of the world’s major crises in the Cuba Missile Crisis – would a wiser and more hell-bent-on-revenge-leader been able to diffuse such a situation?

The young are responsible for all the good that surrounds us today – they are the driving forces behind technological change and the notion of justice..rallying behind causes they feel strongly about and making their voices (or Tweets as it may now be) heard..all this before they have been burnt by scorn inducing “experience” several times in their lives to submit to the apparent “norm”. There is an invulnerability and sense of infinite potential for achievement amidst the youth – ensuring this can be tapped in positions of power may well serve us all better.

Would the world not be a better place with this type of approach behind the major powers? It would have to be universal – we do not want a couple of grey-haired, black-souled culprits hiding behind their dangerously attuned charismatic smiles and personas, lurking in corners of the world waiting to pour scorn and bitterness over the ideals of the youth surrounding them..envy is a terrible trait. We would need strict rules ensuring that once a certain youthful leader has been “compromised” (i.e. their heart broken due to unrequited love) they be removed from office, lest they direct their hardening hearts to more macabre ostentations of war. Young blood an effective panacea to streets running with bloody violence.

It truly might make for a more Utopian world to live in. Corporations and other facets of society can continue to operate with the sage minds of our elders, understanding trends and mistakes in an automated world of machinery is essential and hardened attitudes to dealing with product cycles a less harmful and more useful skill than a revenge-bent political leader with his finger-on-the-nuclear-trigger..unable to let go of the past and think more clearly of the future and the very aspirations of the young that he no longer represents. Would Gaza truly be bombarded with the same overzealous brutality if the Generals in Tel Aviv were the youth of the country?..cognisant of the fate of their own actions having grown up side by side with the very people they were condemning to death with the push of a button? Would the Chinese be so violent and apathetic towards the attitudes of the new generation if they themselves were the new generation? Would not the entire world embrace change and allow us to develop further and faster, with less hostility and negative influence and manipulation by the begrudged elders? 

The facts speak for themselves. Younger (by demographic) nations are more vibrant and successful if coupled with a strong enough education system. Younger enterprises staffed by the more open-hearted, open-minded and creatively adventurous are materialising our most awe-inspiring innovations..Silicon Valley and other areas of tech-wonder are blessed with the youthful influx of constant immigration, a double positive effect as hopes and young dreams beautifully collide.

The current political status quo may possibly be a blip in our civilisation..where we have provided too much emphasis and grandeur on the elite elder statesmen in the world of politics..we should look deeply into ourselves and remember what the point of being here in the first place is. The young certainly do, contemplating from a fresh, hereto untainted perspective. They are closer to it, they live it day-by-day..well at least until that day arrives where the music being played loses its lustre..then it’s time to simply replace with a younger mind. 

The circle of life…the closed circle of the global political elite would do well to mimic.