Saturday, 14 January 2017

Weekend Update 14/01/2017 – Davos Week - The Elite Fix.

The statesman [Davos man] who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a [Davos] man who had folly and presumption enough to fancy himself fit to exercise it.
Adam Smith. The Wealth of Nations. 1776.

This weekend we take a break from Trumpmania. As the great and not so good add to the planets man-made global warming by flying in their corporate jets to Swiss airports, before helicoptering on to Davos, to strut, preen, and pout in the five star Davos affluence, some of the global elite are just waking up to the fact that they are part of the problem, not the solution. Never fear, it won’t stop them from trying to game the system in their favour for yet another year.  To this old dinosaur observer, they’d do better to stay home and re-read  “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776,) assuming that they had ever read it before. They might start by taking note of the quotes above and below. Remind me again of what happened to old Joe Ackermann and the ongoing calamity still called Deutsche Bank.

"We shouldn't pour cold water on everything.  We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

Davos Wonders If It’s Part of the Problem

Did the global elite’s devotion to borderless capitalism sow the seeds of a populist backlash?

by Matthew Campbell and Simon Kennedy
13 January 2017, 00:00 GMT
Kenneth Rogoff can pinpoint the moment he started to grow concerned Donald Trump would be the next U.S. president: It was when Rogoff’s fellow attendees at the World Economic Forum’s annual meeting last January said it could never happen. “A joke I’ve told 1,000 people in the months since leaving Davos is that the conventional wisdom of Davos is always wrong,” says the Harvard professor and former chief economist of the International Monetary Fund. “No matter how improbable, the event most likely to happen is the opposite of whatever the Davos consensus is.”

The repeated failure of business and political elites to predict what’s coming—last year, that included the U.K.’s vote to leave the European Union—doesn’t strike those returning this month to the Swiss Alps as very funny. After a year in which political upsets roiled financial markets and killed off the careers of once-dominant Davos-going politicians, the concern for delegates attending this year’s meeting isn’t that their forecasts are often wrong, but that their worldview is.

In its four decades of existence, the WEF has nurtured a broad consensus in favor of globalization and open markets. At its core is the notion that capital, goods, and people should be able to move freely across borders, a principle that can deliver huge benefits to those with education and money but seems terrifying to those without either. For the 3,000 people who will convene in the small Swiss town from Jan. 17 to 20, the 2017 event could be a moment of reckoning. At speakers’ podiums, coffee bars, and the ubiquitous late-night parties, they’ll be asking themselves whether Davos has become, at best, the world’s most expensive intellectual feedback loop—and, at worst, part of the problem. “Since the recession, the boom has benefited the upper-income earners and done little for those in the middle or on less. That’s the backlash,” says Nariman Behravesh, the chief economist for research provider IHS Markit. “The Davos vision of the world has not delivered a broad-based economic recovery.”

That the world is entering an era of populism that could tear apart long-established global bonds is beyond question. The result of the Brexit vote threatens the U.K.’s most important trading relationships. In the U.S., Trump will take office this month having pledged to reopen trade deals and reevaluate bedrock foreign policy principles such as the so-called One China policy. Italian Prime Minister Matteo Renzi resigned in December after voters rejected proposed constitutional changes.

In France, hard-right leader Marine Le Pen leads opinion polls going into this spring’s presidential election. And in Germany, where elections also loom, the anti-immigrant Alternative for Germany party has sought to capitalize on mounting opposition to Chancellor Angela Merkel’s open-door policy for refugees fleeing Mideast war zones, which some believe has left the country vulnerable to terrorist attacks such as the one in Berlin on Dec. 19. Almost a third of bond investors surveyed last month by Bank of America Merrill Lynch identified populism as their biggest concern, up from 9 percent in October.

Collectively, anti-establishment forces may represent the greatest threat to what historian Samuel Huntington called “Davos Man,” a cross-border species whose values and interests are often divorced from those of more insular compatriots. While each populist movement is unique, all share a generalized disdain for elites, however defined—and by extension, the economic prescriptions they promote. Huntington, who died in 2008, may have divined the future when he said Americans might eventually rebel against rising immigration, especially from Mexico, and the growing influence of multinational businesses and intellectuals.

Some Davos regulars worry those sentiments will lead the U.S. and other nations down a dark path. “The last time that we had a convergence of fear of globalization, fear of economic stagnation and poverty, fear of the international, it was after the 1929 crash,” says Ngaire Woods, dean of the Blavatnik School of Government at Oxford University and a frequent Davos visitor. “We really have to learn the lessons of the 1930s.”

This year’s conference agenda makes clear the degree of anxiety. Sessions include a panel of psychology experts offering thoughts on “cultivating appropriate emotions in a time of nationalist populism.” Another, titled “Squeezed and Angry: How to Fix the Middle Class Crisis,” will star International Monetary Fund chief Christine Lagarde alongside hedge fund billionaire Ray Dalio. Separately, Facebook executive Sheryl Sandberg and Meg Whitman, chief executive officer of Hewlett Packard Enterprise, will try to stoke optimism in a chat about shaping “a positive narrative for the global community.”

The Deutsche Bank Downfall How a Pillar of German Banking Lost Its Way

For most of its 146 years, Deutsche Bank was the embodiment of German values: reliable and safe. Now, the once-proud institution is facing the abyss. SPIEGEL tells the story of how Deutsche's 1990s rush to join the world banking elite paved the way for its own downfall.

Bone-Chilling Winter From Berlin to Davos Causes Energy Scramble

14 January 2017, 00:01 GMT
From the rivers criss-crossing eastern Europe to the Mediterranean ports of Greece and France, everyone is hunting for energy supplies.

Blizzards, gale force winds, arctic temperatures and river ice thicker than a house has left the stewards of the European energy business frenzied. Prices of natural gas, primarily a heating fuel, has soared to the highest in more than two years. Blackouts across Eastern Europe caused electricity rates to spike to record levels.
It’s chaotic, but yet familiar. While energy grid operators, producers and traders prepare for winter’s chill every year, they tend to rely on meteorological forecasts that sometimes turn out to be dead wrong. So when a winter that’s expected to be mild develops into an extended deep freeze, a mad dash to meet demand ensues.

---- January will be one of Europe’s coldest months of the past five years and the chill will linger for at least another two weeks, according to Giacomo Masato, a meteorologist at energy broker Marex Spectron Group Ltd. in London.

“The more you go inland, the more likely it will be that even maximum temperatures will be around zero,” Masato said. “That’s cold.”

---- For Europe’s natural gas traders, this winter was supposed to be boring, with a glut damping any potential for wild price swings. Norway and Russia exported at record levels, while the increasingly global liquefied natural gas trade gave utilities a cushion. By September, prices from gas to power were still near six-year lows.

But gas ended the year with its biggest bull run in a decade as Centrica Plc delayed the return of the U.K.’s biggest gas store by more than two months after the start of the heating season. Long-term reserves in the region’s biggest gas market are now only about half of normal.

Every individual... neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Adam Smith. The Wealth of Nations. 1776.

In other interesting news this weekend.

50 Years Of Teaching Math In 'Exceptional' America

by Tyler Durden Jan 13, 2017 2:45 AM
How America became 'exceptional'...

2017 has 2 Friday the 13ths

By Bruce McClure in | January 13, 2017
January 13, 2017 is a Friday, ushering the first of two Friday the 13ths in 2017. Any calendar year has at least one Friday the 13th, but no more than three Friday the 13ths. The last time we had only one Friday the 13th in a calendar year was in May 2016 and the next time won’t be until August 2021. Three Friday the 13ths last took place in 2015 (February, March, November), and will next happen in 2026. This year, in 2017, there are two Friday the 13ths (January and October).

Not that we at EarthSky suffer from friggatriskaidekaphobia – an irrational fear of Friday the 13th – but, gosh darn, this year’s first Friday the 13th on January 13, 2017 happens exactly 39 weeks (3 x 13 weeks) before the next Friday the 13th in October 2017. But that’s hardly the end of it. Next year, in 2018 (which also has two Friday the 13ths), the first of the two comes on April 13, 2018, exactly 26 weeks (2 x 13 weeks) after the Friday the 13th in October 2017. Then the second Friday the 13th of 2018 falls on July 13, 2018, exactly 13 weeks after the Friday the 13th in April 2018.

Yikes, that’s quite a few of coincidences involving the number 13 … though we could cite many more!
Follow the links below to learn more about why some people fear this day and about the intriguing mathematics of Friday the 13th and the calendar.

As usual, we close with an update from Jason in stormy California.

Series of prolonged storms, including “atmospheric river” bring end to official drought conditions in Northern California, but are a case of “too much of a good thing”
N. Jason Jencka   January 13th, 2017 11:00 pm ET

The first half of January has been marked by rainfall and snowfall totals of historic proportions to a region that had been stricken by a remarkably persistent drought. In the first 13 days of January the Mt. Rose ski resort northeast of Lake Tahoe and 25 miles south of Reno recorded 212 inches of snow on its upper slopes while Squaw Valley, California received 180 inches or 15 feet. For context, the Squaw figure represents 90% of the snowfall reported for the entire 2013-2014 season. Meanwhile, the Mt. Rose Highway, which is the highest elevation year-round Sierra pass was repeatedly closed due to avalanches. At lower elevations closer to Lake Tahoe (which received ~ 100 inches of snow during the same period) residents were plagued by power outages as tree-limbs weighed down with heavy, wet snow (due to the tropical origin of “atmospheric river” systems) snapped power lines. In a region accustomed to heavy snows and with a tourism-driven economy that depends on snow for winter recreation and snow-melt to recharge lakes and reservoirs, these storms proved “too much-too fast” for most residents and visitors.

As of this writing, the near term forecast holds just long enough of a break in storms for roads to be re-opened, ski lifts to  begin operating and grocery shelves to be restocked. Towards the middle of next week the potential exists for an active pattern to return with possibly several additional feet of snow and inches of rain at lower elevations. With the northern third of the state rather fully saturated, California officials and residents will certainly be keeping an eye toward the sky hoping that precipitation shifts south towards the Los Angeles area which remains in severe, unrelenting multiyear drought.
Brian Allegretto Tahoe Daily Snow/Open Snow January 13th, 2017:

N. Jason Jencka is presently studying Finance and Economics at Sierra Nevada College, located near the shores of Lake Tahoe on the border of California and Nevada. His interests include the interplay between world markets and the global political sphere, with a focus on developments of both sides of the Atlantic in North America and Europe. In his leisure time he enjoys connecting with those people that have an interesting story to tell and a genuine desire to make an impact in the world.

No comments:

Post a Comment