The Philippines must be feeling at least a little better healthwise since the media—social and traditional—and the press are coming back with a taste of the “old normal.” It’s been almost non-stop politics since the New Year celebration, with occasional trips into forensic pathology expertise and the question of what a nation’s constitution should include.
North Korea’s leader, Kim Jong-un, called the US his nation’s “biggest enemy” and revealed plans for a nuclear-powered submarine are complete. Further, Kim said his country fully intends to develop smaller, more adaptable nuclear warheads.
Iran increased its uranium enrichment program and seized a South Korean chemical tanker because Seoul won’t give back the $7 billion it froze in 2019 under US sanctions. Iran will expel UN nuclear inspectors unless those sanctions are lifted.
Japan has reinstituted “Sakoku” from the Tokugawa shogunate (1639 to 1853), banning all foreigners at least until the end of January. The UK and the European Union are like a divorced couple trying to figure out who gets the rice cooker (fishing rights) and who gets the toaster oven (financial services) while neither one wants custody of the children—“guest workers” and “refugees.”
Not even the raging Covid pandemic can stop geopolitics. However, by the time we are ready for 2022, there is a good chance that the pandemic will not be on the top of our list of concerns.
It is beyond all rational thinking that we are facing such crazy political times. But people everywhere are being distracted by the left/right, globalist/nationalist, and populist/establishment rhetoric and divide. The press and both governments and the so-called opposition are driving the “divide.” “So-called” because in most cases, the administration and opposition are two sides of the same coin. Why?
Were it not for the pandemic and the politics, people might be looking at the global economic situation. But we do not have time for that and governments and the press have constantly told us that any economic distress is all because of Covid.
Except, what is going on is that we have reached the end of perpetual government borrowing. Both Europe and Japan have destroyed their bond markets. In Denmark you can buy a house just like renting a hotel room on a nightly basis. Denmark moved to negative interest rates in 2012 and is now offering mortgages at zero interest rates after eight years of failed policy.
That Denmark policy sounds great until you consider this. “The downside is that the old idea of saving and living off the interest for retirement is gone. The foundation of credit has been wiped out. There is no longer profit in lending money, which means the only other option will be to invest. Debt is dead.” Buy the stock market. Buy commodities. Buy cryptos.
Lending interest rates are the “price” of money. If the price of a kilo of pork is P5.00, that means pork is relatively worthless in comparison to cash. If you are willing to “sell” (loan) me cash for “free”—zero interest—that means cash is relatively worthless in comparison to a tangible asset.
But here is the kicker. If you knew absolutely that eating pork would kill you in 24 hours, you would “lose confidence” in pork and the value would disappear. Cash also has value based only on confidence in the government that issues it. First goes the confidence. Then goes the value of cash. Then the economy collapses.
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities, Inc.”