EU exit vote by Britain could be a big deal

At the moment, the thought here is that the financial market's negative reaction to the British vote will mitigate soon, and we will settle down into value trading.  Growth trading will not be prevalent soon.  There has been much investor chatter about the monetary and fiscal implications of this vote, but briefly here are three that are most interesting here.

--- The most frightening aspect is what it does to the alliance that pretends to keep Vladmir Putin in check.  Most don't read about it, but the Russian backed push into Ukraine continues even today. Given the disarray in the European Union and Obama's aloof attitude, some would say lame attitude, toward any foreign policy action(note what is said is "action", is not words).  Is this the time for Putin to push further into Ukraine and make some inroads into the Baltic states that the EU will make excuses for(retaking real Russian citizens for example).

---What will Scotland do?  Their vote suggested that they want no part of separation from the EU. Will this lead to a break up of the U.K.(not to mention Northern Ireland's same thoughts and votes).
While dated now, I traveled to Edinburgh at least twice a year from the mid-1980's to the early 2000's, and know that it is a completely different culture from England, especially London where business often required my body four or five times each year.  From a financial point of view London was and now continues to be a financial hub of global trading.  Edinburgh and Glasgow were always viewed as havens for long term investment, pensions funds, and private trusts.  They were always a pleasure to visit although the long term historians there at dinners could overwhelm this less historically experienced calling investment analyst easily.  The conclusions of those types almost always were wrong, but everyone was so polite there despite that. Golf and sitting by a hotel fireplace talking with others with a glass of precious single malt in hand was also an attraction.

London was a place that required work to get into an accepted space.  For me, that was at least five years, with some firms as long as ten.  There was an arrogance that was not hidden in the least by those London Brits.  Some were so smart that they could pull it off and deserved to do so, but many were just phony, barely financially literate snobs of their realm.

If the financial relationship between London and Scotland breaks, this will be a huge financial event, an opinion here.  They complemented each other in a complex way, but they were part of one calling universe and it was a real trip to do both places one after the other.  Truthfully, the Brits and the Scots knew their roles and what was going on, even as they competed royally.  Rarely did a Scot ever move to a Brit firm, and vice versa. At this moment there is not one instance of that can be remembered here.

---So now what about London?  After the next two years of dealing with this vote, could it simply, of course not so simply, divorce itself from the U.K., and become a Monaco, Zurich, or Geneva.  Many of their banks most innovative trading types come from the best university in France.  Everyone likes living in London, but could that change for financial reasons.  If government mandates reflecting Brexit voters become dominant, will London's leading global financial liquidity be questioned, or damaged?


There is much more to come.   These are thoughts here that have not necessarily been given enough attention yet, as the dwindling white middle class of England, much like that of this country, sits on their couches in the evenings watching television, while knowing that they will somehow be taken care of, minimal literate study required.

The other 1%

Much is written about the probable 1% of the U.S. population, probably world population, that controls such a disproportionate amount of the world's wealth.  The divide is so wide that the middle class is being hollowed out, by all accounts, here in the U.S.  There are many who still have middle class values and images of themselves as middle class, but from a wealth point of view are on week to week budgets with little or no excess.

In fact, a significant number of Americans pay little or no taxes other than the regressive social security tax, local regulatory taxes, and whatever sales taxes exist wherever they live.  Some statistics suggest that this may be as many as 40% of all Americans, some even say more, some of course less. When the top 1% are deemed to have so much(and the top .01% have such massive wealth), and so much of the population lives from paycheck to paycheck, or worse, the suggestion that things are out of kilter is legitimate.  What to do about this is less clear, as what is needed cannot be solved by just taxing the wealthy more.  That might feel right, but it would not come close to solving the problem.  What that requires is real growth in our economy and a more principled approach to worker compensation.

The "other 1%" mentioned in the title applies to corporations.  They are the small percentage of corporations with massive amounts of cash, both in this country and money made legitimately overseas.  Most of these companies are related to the tech industry and some are simply long term conservative cash cows.  With borrowing costs historically low, however, many more corporations are on the surface cash rich, and they use that cash to buy back stock, offer senior employees large stock option plans, and pay attractive dividends.  This all serves to help raise their stock price over time, even often in the near term, but one could make the argument that is not a productive use of capital.  One could also say with certainty that this could be dangerous if there were any significant economic downturn.

Making large stock buybacks, paying such attractive dividends, and rewarding executive employees so generously, often with borrowed money, can suggest that these companies have no ideas or opportunities for new capital investments, the type of investments that lead to hiring more employees, paying rank and file employees better wages, providing more training for research and development, and generally all things that a company that aspires to future growth would do.  Instead, much of what could be used for capital investment for future growth is spent to reward existing shareholders and senior executives as soon as possible.

That certainly does not seem like what is best for our economy long term, but it is not really as simple as that.  What is said next here is nothing new.  Globalization of business activities has changed the economic landscape in a way that is not changing anytime soon.  Technology, with all of its benefits, has reduced the need for hands on workers relative to the past.  Product cycles move much more quickly due to massive advertising, omnipresent social media, and ever changing consumer preferences, and that makes it difficult for businesses, especially small businesses, to take risks on innovation.

There are no answers in this comment.  What can be highlighted is that the U.S. economy is still among the most resilient and creative in the world.  Old paradigms are in the process of changing and that does not happen quickly.  The angst that is felt today could very well eventually lead to a period of greater prosperity, or more importantly greater optimism and opportunity.  During this election season, the negative seems to be front and center of almost all debates and pundit commentary.  Much of that should be ignored, and taken for what it is.  That is that they are simply scare tactics to attract votes. The economy has at times in the past been much better, at times much worse.  Relatively speaking the U.S. should do well, but that may not be in a satisfying enough way to many in the next few years.  In fact, it is unlikely to be the case, even if all is headed in the right direction.

"The Mulberry Bush", the latest novel by Charles McCarry

This book was a welcome find.  Written last year when McCarry was 86, it was a  surprise to find.  His finest novels were written in the 1980's and were totally focused on the period from the early beginnings of World War II up until the time of President Kennedy.  A former CIA officer, his knowledge of the ins  and outs of espionage was stellar, and the historical fiction that he wrote in this genre was better than any other writer.

"The Mulberry Bush" is about the activities of the CIA, the Russians, and others in Argentina during the significant turmoil and carnage there in the late 20th century.  Once again, historical fiction is at work, and the story is convincing, and easily kept the attention of this reader.  One could say that the ending of the book was somewhat flat, allowing no conclusions and really losing any of the historical meaning that was evident in his earlier books. Maybe that was all there was to that conflict, just personal and family vendettas and of little real political meaning.  While ideological disputes and age old tribal loyalties resonate in disputes in much of the world, in Central and South America family fiefdoms are center stage.

It was nice to find that McCarry is still writing, and writing well.   Another recent book from McCarry is on the way from Amazon Prime, an amazing service.

Student loans and Bernie Sanders

Last night a major factor in the youth movement for Sanders became clear.  In an interview, an early twenties type explained how Sanders would relieve his college debt.  In another a current college student said he would allow her to go to college for free.

So, youth vote for yourselves of course.  That is not the only issue.  Whether Sanders, Clinton, or Trump, there are a huge range of issues being voted on.

A young person who is a friend on mine is an Americorps  volunteer in Texas.  There were 78 of the volunteers in a class called "College Forward".  When in training they were asked how many had student loans to repay, and all but my friend raised their hands.  She was shocked.

One could say that there is no, absolutely no, resolute idealogical choice by many young people around Bernie's ideas, half hatched as they are.  It is a pure economic choice, one that was made as an agreement and they want to completely give up on.

"Before The Fall"... a book by the creator of "Fargo"

This was an entertaining book with a bit of a muted ending, as is common in many books that are read but not written about here.  Stuck now with being on the cusp of having something to write about Trump, soon I hope, that is even a little different from the volumes of interpretation that have already been written, it occurred to me that something should put into print to keep the non-U.S. readership alive, close to half of the followers here for whatever reason.

"Before The Fall" is written by Noah Hawley, who in his mid-thirties, unknown here until three days ago, and has built a large writing business in books, screenplays, and television, including Fargo.  The story in this book starts with a small private airplane crash with mostly wealthy people on board, and then proceeds to detail the lives of each of the passengers.  That seems like a good way to outline and segment the writing of a book.

Hawley is a talented writer.  He manages to say in new ways many things that should be shared wisdom, and he occasionally might even come up with some himself.  The important thing about the book is that it is entertaining and will be perfect for many a beach read, airplane ride, or train trip where a book should be semi-intelligent and absorbing, if not ever lasting.  If what has been written here is understood, read this book.  It has great recent reviews.  It was read here in two days.  It was engaging, but the ending seemed a little flat.  Try it from a library, not meant for the shelves.

Buying new stuff

It often does not seem to be the time to buy new things here.  Why not just use the old stuff.  There are, however, at times good reasons to make some purchases and there have been some here recently. The biggest was a new washer and dryer about two years ago.  It seemed like that kind of purchase was made at some sort of life changing event, like buying a new house, or moving.  In actuality, ours just were not working well after 16 years of constant use of  Mayfair items.  The new LG ones have many more features, like a water amount gauge that somehow measures just what one needs.  Want to wash just one pair of muddy jeans after an afternoon of planting flowers.  No problem, water will not be wasted.  Still, it seemed odd to be buying new ones while just staying in place.

Recently, three new Teflon skillets were bought online from Williams Sonoma.  The older ones worked fine but in recent years have been scratched by multiple users, some seemingly unaware that scrambling eggs in a Teflon skillet with a fork pressed down was not a good idea.  Two were needed replacements and one was a larger one that may not have been needed --- but I was shopping.  If time to do real cooking presents itself, this large skillet with a glass cover will be a good addition, if.

A new small toaster oven is on the way.  For the last two years, the one that we have had for a long time had a dial that is difficult to place in any definite position and one that is lost and requires a pair of pliers to set.  We use it for toast every morning and often at lunch to warm up sandwiches.  Just ignoring the problems was not necessary, and we look forward to the new one tomorrow.

Then there are jeans, which are almost exclusively the pants worn here.  Frayed cuffs, too much fade, and at times stains have been ignored.  They are just jeans.  But worn constantly it was becoming obvious that new ones would look much nicer and even feel better.  Four new pairs have been purchased online from Levis in recent months.  The same size has been worn for the last 20 years so the fit is fine.  They look good.  Did looking poor seem like a good idea?

Those are some examples of recent purchases that I have have finally had the minimal foresight to make.  Of course, some blunders have been made.  Just a few, but did we really need an iced coffee maker?  It was not expensive but was one more thing to put in the kitchen necessary, and is it worth the trouble.  I think not, and this will go down as a mistake and as summer begins we will know soon. Buying polo shirts from different brands online is next to impossible.  Despite measurements,  a large in one brand can be far to tight and in another far too long.  Mistakes have been made and at times ignored as sending the stuff back is more trouble than it is worth sometimes.

As we age our stuff ages, but it always seems like a surprise that we need more when we have so much.  Deliveries to the non-profit thrift store in a neighboring town need to be stepped up again.


Postscript:   Tonight the new 12 inch Teflon skillet with glass cover was used to cook two big pork chops.   Perfect.  The new iced coffee maker was put in a low cabinet to hide my mistake.

"The Fractured Republic"

This book by Yuval Levin is subtitled "Renewing America's Social Contract in the Age of Individualism".  Levin was not familiar here until a column by David Brooks was read that praised this book.  Brooks, in his op-ed columns in the New York Times and in his appearances on PBS News Hour, is viewed by some as a resident conservative for those media outlets.  That said, he comes across as a intellectual moderate with views that many could agree with, especially when compared to the radical race to the right of the just completed Republican presidential primary campaign.

Levin is editor of "National Affairs" and a contributing editor to "National Review" and the "Weekly Standard".  Jacket cover praise for this book comes, as is not unexpected, from Paul Ryan and Peggy Noonan, but also from George Packer.  "The Fractured Republic" details the divided U.S. society that exists today, economically, socially, culturally, and politically.  That supposed bedrock of U.S. society, the middle class, has been significantly diminished in the last 20 years and in some ways only exists, according to Levin, in the minds of the right and left with a sense of nostalgia, a type of nostalgia that leads nowhere but to frustration. This book could have been written by a combination of the minds of a seriously right wing conservative intellectual and Robert Putnam.

It suggests that we are now faced with a schism in society of either an individualistic approach to our lives or a statist approach.  The already hollowed out middle class and the middle mediating layers of society have lost influence, whether that be families, communities, churches, charities, civic associations, really any organization that drives change through local or personal contact.  Solutions to many of society's problem could come from the ground up if these aspects of society could be rebuilt, into many solutions for many problems as opposed to individual solutions or central government approved or directed ones which are unlikely to be satisfying to many in our increasingly diverse culture.  The drift of the book is clear.

This is a thoughtful book, and it seems at times that there is not much to disagree with.  Levin acknowledges that he is a Republican conservative and the only politician that he regularly singles out for criticism is President Obama.  He comes off as striving to be even handed and almost apolitical in his analysis, but the elephant in the room is the outright intransigence of the Republican Congress to seriously consider anything the President proposes, even something as widely approved of by huge margins of the public such as infrastructure spending, which is becoming absolutely necessary(anyone who travels to other parts of the world know this for certain) and which would be sound fiscal policy to produce better paying jobs.  Levin somehow sees a dysfunctional Congress as a completely shared event and cites the many executive orders by Obama as an example of his unwillingness to compromise.

One other aspect of this book is Levin's constant pounding home his main themes, in many articulate ways but to the point of beating a dead horse.  This book can be almost mind numbingly repetitive at times.

With those caveats, and with a willingness to read fast at times, this is a constructive and thoughtful book.  Most of it is not new thought, but it is so much better and more studied than much of what comes out in book form from the right wing.  It makes an effort in its own way to be balanced.  There are important facts in the book that were important and not familiar here.  It was worth reading for those interested in our current deadlocked and "fractured" society.


Postscript---6/5---aspects of this book are pertinent to interpreting the strange election season of 2016.