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2020 Q3/Q4 UKRAINE NEWSLETTER

Sep
22

Dear Friends and Partners,

VI2 Partners is happy to share with you our recent newsletter on the most important developments in Ukraine against the backdrop of COVID-19 pandemic.

Kindly check our new section on some interesting key assets to be put up for auction by the State Property Fund of Ukraine.

Ukraine Newsletter

Please check our website  www.vi2partners.com for more information. 

Best

Dr. Marc-Milo Lube

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2020 Q1/Q2 UKRAINE NEWSLETTER

May
18

Dear Friends and Partners,

Please find attached our current Newsletter on Ukraine. We have hesitated with the publication of the Newsletter as current developments of the COVID-19 pandemic lead to a very dynamic situation of key political and economic parameters. While Ukraine has been hit severely by COVID-19, it has managed the pandemic until now convincingly and with early countermeasures. Once the COVID-19 storm has passed, we expect a V-shape recovery in Ukraine, as both local reforms (like the reform on agricultural land), international investors, and supranational institutions stand ready to support the political leadership and the business community.

Ukraine Newsletter Q1/Q2 2020

Please check our new website  www.vi2partners.com and our blog www.alt-think.com for more information. 

Best

Dr. Marc-Milo Lube

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WELCOME TO A DECADE OF SOCIALISM

May
13

The sudden and unexpected detonation of Covid-19 in our societies has turbo-charged the reverse of the unchained globalization of the last decades. And regardless of vaccines, cures, V-shaped or U-shaped recoveries, or whether we will be able to spend our summer vacation at the sea-side, regardless of trillions that will be uselessly spent on failing businesses, countries that might go bankrupt, regardless of financial bubbles being further bloated by central banks who have long lost control, some developments are here to stay, to expand and to take control of us and the communities we live in – with huge implications for the global political world order and the economic foundation of each country.

It will also lead to an end of political and economic absurdities that have been kept alive on ventilators over the past years and typical for the final stage of an era, e.g. useless mass movements of people and goods at costs that do not reflect the real cost for our environment and health; provision of money for free and the abolition of the cleaning and efficiency effects of recessions and downturns; allowing big capital to evade taxation; letting other countries take possession of our technologies and markets; and many others. 

Having talked to many political and economic leaders and having looked at all the business and academic discussions, analysis, and gossip, we see five big game-changers for our personal and business lives. And while many will not be happy about these game-changers or even try to deny them, we believe it is only a question on how intensely they will materialize, not if they will be there at all. And while many go against our own values and political belief, we have to acknowledge them to adapt and to fight back. Even to benefit and to exploit them commercially. Freedom is not for free.

Nationalism is back

The complete and unprecedented failure of both UN and EU institutions to play any, even insignificant role in coordinating efforts to contain, control and steer activities in the Covid-19 fight, on medical, regulatory and economic levels has proven to citizens that in the moment of need and crisis, there are only your own national Government and state bodies who protect you. While supranational agencies are used for partisan and propaganda battles, friendship and solidarity between nations are forgotten when the virus comes to town.

Incredible how fast EU states were closing borders, hoarding medical equipment, and prohibiting export, everybody fighting his own individual battle. The UN is in for a massive overhaul once the virus has passed to stop falling into complete insignificance. The EU will have to prove whether there are a long-term added value and any political purpose, having failed in the two most important events of this decade in a row, the refugee crisis, and the corona pandemic. Clearly the nation-state is on a further rise, and once the economic price to pay for the hysterical lock-down will be transparent for the taxpayer, nationalism will see a rapid comeback.

Big Government to stay

The sweet drug of big government that was quickly introduced by most of the states will be with us for the long run. Never in living memory was it easier for governments to restrict individual freedom, to rule into our daily lives with regulations, to spend money unchallenged, and to put future tax burdens on generations to come.

Our basic rights of movement, convening, working, praying and spending was severely restricted, harmed and our activities closely monitored. Nearly unlimited and unchallenged powers for authoritative and neo-authoritative regimes to control and limit us.

Do not believe that governments will hand back these powers fast or without contest. Fear and panic will be kept alive with the populations to cling to these powers. Government influence in all social areas will stay with us for the long-term, camouflaged in a PPE suit, pretending to protect us.

Value chains repatriated

Many citizens and also governments had an abrupt and rough awakening. Thanks to corona we have realized how dependent core value chains for our national security and for our supply chains with critical goods have become over the past two decades. It is incomprehensible how the supply with life-saving antibiotics or anesthetics, spare parts for nuclear power plants, or key parts in the aviation or machine tool industries can be crippled within two weeks of a pandemic.

And how it was possible to hand out the production of these crucial parts beyond our own borders or beyond the borders of our close allies. The global just in time machinery is based on a seamless and cheap transportation framework keeping production overseas and warehouses on the ocean, the road or in the air; and assumes operations in a non-political, friendly geopolitical set-up. Proven wrong.

It is clear that this pandemic will lead to a major re-think of global value chains and lead to the repatriation of critical products and production capabilities within the borders of major nations. The next wave of industrialization with decentralized, localized, and smaller production units driven by robots and AI will arrive faster. 2019 might have been the year of peak transportation. RIP globalization.

Socialist decade coming

Today, the municipal government of Vienna decided to hand out restaurant vouchers to the citizens of Vienna. And while appealing at first glance, you tend to ask yourself: “Hey, they are giving me the money that they first take in taxing me.” Basically, they are giving you your own money, but with a regulated utilization and brand it in addition as a generous act. Welcome to a decade of socialism.

The politician’s paradise of taxing more, redistributing and self-branded beneficence is coming true after a long period of prevailing lean state and austerity paradigm. We will see massive taxation of income, wealth and inheritance to finance the current spending sprees, massive public shareholding in key assets as a consequence of bailouts and the build-up of national productions of key products, a “justice”-driven setting of wages rather than a market-driven one, general income concepts will be implemented and regulation, regulation, regulation.

The state-controlled share in GDP will rise substantially. A thirty-year era of dominance of capital has ended, which led us to an amazing growth of global wealth but admittedly also to huge wealth imbalances, destructive exploitation of our environment, and a too-high share in GDP of banks/financial services. Welcome to a socialist decade or more. We will see higher wages, a re-valuation of public servants, nationalization of key assets, increased taxation of higher incomes and wealth, the end of cash payments, and a strong determination to end tax loopholes for the corporate and private sector.

It will need time, the clear materialization of limits and drawbacks of socialism, and last but not least the rise of the next generation Reagans and Thatchers to swing back this dynamic pendulum.

Adieu Liberté

Tracking and tracing all your moves is the new accepted standard of society. Piggybacking on fears, national defense and justice and exploiting new technological possibilities and behaviors, governments will eagerly embrace the once in a generation opportunity to get transparency and control on citizen moves, activities, and contributions.

For the greater good authorities will acquire and build full transparency of how, when and where you use your money and other resources, where and with whom you are and what you are doing and be able to rate your fulfillment in line with a set of social standards (your individual social score). The reality in China and other parts of Asia, and heavily knocking on the doors of our societies. Individual freedom as we have known it in the past is history.

The ever-swinging pendulum of history and societal development has changed direction. Therefore, we are indeed entering a new era. New thinking and new business models will be needed to ride this trend successfully and to profit from the new risk/rewards constellations. Every risk is an opportunity. And every single one of the above-mentioned areas will unleash enormous economic and political potential!

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CORONA PANIC

Mar
11

Dear all!

Who would have thought that a small virus from a wild animal market in China could lead us rapidly into a global health, economic and political crisis? Not so many.

This is a crisis of uncertainty and fear, the unknown that ordinary people in the streets fear the same as global financial markets. While first ones go for a toilet paper shopping frenzy, the second go for an equity sell-off. Promising not to bore you with another instruction how to wash hands effectively or what the required physical distance should be to avoid infection, here are some observations from the tumultuous beginning of 2020 (btw the year of the rat, remember which animals brought the plague …):

  • CHINA did the right thing to lock down rigorously the region where the epidemic started and spread. It saved the country and the World from a much larger scale infection rate by sacrificing an entire region and risking its economy. It was also able to provide medical support with a unique ramp-up of medical infrastructure, including building new hospitals and reorganizing health workers with speed and efficiency unheard of so far. By doing this, China also granted the rest of the World a preparation time of ca. 6 weeks. Sadly, this time was not used efficiently by most of the countries. Current new infection and death rates seem to confirm the success of China’s strategy and emergency management. The Chinese victory lap would be justified, but will not be granted.

  • The second wave hit Korea, Japan and a little bit later Iran. While Korea was hit by a master spreading event, it was able to contain the consequences for the country, again through hard lockdown, control, and mass-testing of the population in the affected area. The numbers are going down, finally. Japan was less hit and showed one of the lowest growth rates of new cases and one of the lowest mortality ratios. Might it be the notorious fear of microbes and viruses in Japan or the good health management (hopefully not fake numbers), they must have done something right. To be seen. Finally, Iran. A classical example of how denying facts and truth, a lack of resources, determination and transparency to avoid political backlashes are backfiring badly in a health crisis. Late, for too many people too late, also Iran and the surrounding countries have finally started to attack the epidemic. Success not guaranteed.

  • Comes Italy. The Corona Virus (ironically corona means crown in Italian) does not love Italy. Yesterday there was a number of 10,149 confirmed Corona cases and a fatality number of 631. That is a mortality rate of 6,2 %. There was no other epidemic in Europe since the Spanish Flu in 1918 that had a similar mortality rate. That is frightening numbers. What is more frightening: nobody knows why the mortality rate is so high in Italy. Since yesterday Italy is in total lock-down. Probably much too late, and much too porous. Other countries should learn from this failure rapidly.

  • Germany, France, Spain, and the UK: Numbers are rising fast. An analysis of infection numbers and clusters (most originated from Italy) from the University of London shows that Germany and France are probably 9 days behind Italy in the spread of the virus, Spain 10,5 days, USA 11,5 days and Switzerland and UK approximately 13 days. The lock-down of these countries is a matter of days.

  • US: The big virus deniers will be hit hard. Much too late US authorities started to take the potential spread in the US seriously. Even today there are not enough testing kits and the process seems to be in chaos. Yesterday more than 1.000 cases have been reported, but the real number must be significantly higher. And we are still 11,5 days behind Italy. 

So big-time for doomsters and gloomsters. And this time they might be right. We face the following situation and potential outlook:

  1. Nobody knows where the future spread of the virus will lead. We still do not know with certainty where the virus originated. We have no idea why the mortality rate in Italy is currently above 6% while below 1% in South Korea or Germany.
  2. Vaccines are a minimum of 12 months away from us. There is no certainty on how fast the virus is mutating and to what degree.
  3. Hopes that the virus will spread less with spring and summer season are based on comparison with flu waves, but not based on any scientific proof or evidence. In any case, it would come back to us in autumn.
  4. Comparisons with flu are completely out of logic. First, it is a different type of virus, second for flu we have both vaccines, medicines and decades of proven therapies. Third, we have a much higher mortality rate with Corona, only matched by the famous Spanish flu 1918. And last, but not least, numbers show that up to 10 % of the Corona cases need treatment in ICU units. That is why the medical system in the countries with high infection numbers are collapsing, and that is why it is so important to contain or stop the spread of the virus in its early stage. And, not every country is able to build new hospitals in 10 days.

The consequences:

  • All countries who are not yet hit hard, should go as early as possible into lock-down, take the economic hit early, but contain the spread. Do not wait until the virus is spread too much and containment no longer an option. Italy and Iran show the result of that strategy. Follow Israel’s lead, be smarter.
  • Recession will hit most countries, at least those who have high infection rates.
  • Forget V Shape theories of economy and stock exchanges. This is an overdue correction of an overvalued, monetary policy-induced asset bubble, that was in urgent need of an event like Corona to get back in touch with reality. Unfortunately, brutal corrections like we are facing now, do always lead to distortions in both debt and equity markets (and we have high volumes of doubtful assets in circulation) and to collateral damage in many areas.
  • IT Industry, Media and Video conferencing, Online and Automated Sales to profit.
  • Fear and panic in the population will rise and questions on more strict measures will have to be discussed. The next 12-18 months will be turbulent and painful.
  • Managed democracies seem capable of dealing much better with this emergency than open societies.
  • Trump will soon be in quarantine and/or political history.
  • The good news: Mankind will survive, we are much faster today to develop vaccines and therapies than at any time before, our innovation power will beat the virus soon.

Ironically, a little virus has proven more effective to start a re-think of global value chains, national sovereignty, need for an independent supply of the population with critical goods, transportation and travel overkill than any of the Trumpian tariffs, impeachment processes or anti-globalization and climate change movements. And it might prove more effective to bring down regimes than the CIA who tried for decades.

Get prepared for rough times and stay away from Corona.

Best

Dr. Marc-Milo Lube
Managing Partner

Investment Company VI2PARTNERS
Goldenes Quartier, Tuchlauben 7
A-1010 Wien

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2019/Q4 Ukraine Newsletter

Dec
16

Dear Friends and Partners,

VI2 Partners is happy to share with you our recent newsletter on the most important developments and economic trends in Ukraine.

Please check our new website  www.vi2partners.com and our blog www.alt-think.com for more information. 

VI2 Partners would like to express the warmest season’s greetings and to wish you and your families a successful and healthy 2020!

We look forward to our continued co-operation in the New Year.

Ukraine Newsletter Q4/2019
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Corbynism is Dead – Long Live King BoJo

Dec
14

Finally, a clear sign from the other side of the Channel. Britain has overwhelmingly voted for Boris Johnson and his promise to Get Brexit Done. It has essentially run an overdue referendum on Brexit, based on the transparent, oven-ready deal negotiated between Johnson and the EU. The Remain camp is in shatters and nobody can claim anymore that the population would lean to staying in the EU if they would only know the details of the deal. The unofficial people’s vote on Brexit is loud and clear and King BoJo will deliver. The tiring Brexit limbo will soon be history, as will be the membership of the UK in the European Union. Without the stubborn Scots and the looming risk to the Union, the election triumph would have been unmatched. Whether UK, EU or US: all will be relieved that after nearly 4 years of confusing holding patterns there is a clear path forward to landing a British exit from the EU on January 31, 2020. But the UK election result is also good news for Donald Trump on the other side of the Atlantic. Next to a welcome distraction from nasty impeachment headlines, he can definitely laud himself for being one of the early promotors of Boris Johnson and for having acquired a new member of the chaotic brotherhood of narcissist world leaders.

While the next steps in the Brexit process seem to be clear for now and welcome, it has to be seen how the British public will cope in the coming months with a Prime Minister whose character did not change with the election and whose personal flaws have been widely discussed. It can be assumed that emboldened by the election victory and copying the success pattern of the big brother from the US, Johnson will rather double down on his views, enslave the Conservative party and celebrate his personal eccentricity. Integrity, truthfulness, and decency have been thrown under the bus a long time ago and the coercion of the GOP by Trump shows the way forward. Although, this must not be to the disadvantage of the economy, as proven in the US.

Looking beyond the election day and Brexit, we see the following underlying bigger picture and developments ahead, that will be with us for the coming years:

  • UK Development: The UK is embarking on one of the biggest economic adventures in recent European history. Having avoided a socialist trap, it will now practice real-time surgery on a living organism, which will fill economic textbooks for many generations to come and set an interesting benchmark for other countries in their national economic strategies. With his successful power grab, it is now Johnson’s task to prove the doomsters and gloomsters wrong and lead the UK to new economic glory. Our prediction is that he can succeed, but only if and when he goes the reform path to the end with radical liberalization, free-market extremism, and competitive taxation. He has the character and power to do it. But it will be exactly the way the European Union does not want the UK to take, so further massive clashes with the EU are coming. If played smart, Dutch, Scandinavians, Germans and Eastern Europeans will use the British liberalization movement to put some liberalization issues on the EU agenda, too and more importantly, to counter French ambitions of further EU centralization and transfer of sovereign power to Brussels 

  • US Elections: President Trump can rightfully open a box of champagne to celebrate the UK election results (it can be assumed that he will find a way to circumvent his new import duties on French champagne). Next to his sponsorship to Johnson, it shows clearly that the modern electorate does value Trump’s key strengths – a clear and simple message, a focus on the economy and prioritizing a national agenda – more than his flaws – integrity, transparency, truth, and fairness. It should also be a clear and loud warning to the Democrats, that a leftist agenda and candidate will not win them an election, in the US even less than in the UK. Impeachment alone paired with negativism and without a credible economic story and message of hope will fail brutally, Corbynism is dead – for now. 

  • European Union: For the EU, a moment of truth will arrive, that was postponed by unexpected unanimousness and solidarity during the Brexit negotiation. No envy for Mrs. von der Leyen’s job to keep together centrifugal forces between North and South and East and West of the EU. It has yet to be proven that the newly found sexiness of the EU with Governments and citizens will survive a next economic downturn and a potential Brexit success story, as national agendas gain ground in many member states.

  • Russia: Chapeau. The winning streak for Putin and his team seems to continue. The full implementation of Brexit (to which the Russians can claim some helpful contribution) will weaken the EU, take out a big opponent to Russia from the EU governing bodies, and further deteriorate EU support to keep sanctions against Russia in place. After Merkel’s foreseeable departure, more Russia friendly forces can be expected to take power in Germany which will unite with Macron to normalize relations with the biggest Eastern neighbor.

  • New Conservatism: The UK elections confirm the trend in Western societies to a New Conservatism. The center of the population has moved to the right and quite significantly. Whether caused by an overreach of egalitarian ideas and concepts, too fast and deep globalization, the rapid change of the work environment, the uncertainty of future job and economic safety, or the information overflow, people cry for strong and simple messages, leadership instead of endless discussions, resurrection of national values and symbols and messages of hope and glory. A New Conservatism is gaining rapidly ground that puts the Nation-State and national interests first. Simultaneously social democratic parties are losing voters at an incredible pace. It is too obvious, that their recipes of the past, which focus on re-distribution of wealth and taxation of the rich, fail to give answers to new challenges in the skills and labor market, the erosion of pension and other social security systems and the flexibility of capital flows in globalised financial markets. Without radical re-invention and new answers, social democrats will fall into complete insignificance.

  • How to Win Elections: Last, but not least the UK elections should be used as a textbook for winning elections in modern times: Winning Ugly as a guideline has been successfully practiced by many populist leaders over the past years and has proven to be for the moment the one and only path to winning majorities. marieMain specs of this strategy can be found in all of the election campaigns:
    provide a simple and clear message and focus everything on this message, do not answer any other content related questions or provide detailed political concepts, avoid at all cost scrutiny of media, concentrate on friendly media, provoke and dominate, train your memory to be short and lie extensively and repeatedly, create and promote your own fan club and direct access to the electorate.

With these reflections, we wish you a relaxing and peaceful 2019 endgame and a pleasant start into a successful and enriching year 2020.

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Why Brexit Matters

Oct
29

Our Partner Dr. Marc-Milo Lube was invited by Taras Shevchenko National University of Kyiv to discuss the development of the European idea.

He spoke about the European idea, its development, and the current development surrounding the Brexit.

Did the Brexit show the first cracks in the EU success story? Will the EU become more German centric and less Atlantic?

OR will there be new dynamics within the EU towards a stronger integration, which will also open up opportunities for candidates in Eastern and Central Europe?

See yourself in the presentation:

Why Brexit Matters - Dr. Marc-Milo Lube at Taras Shevchenko National University of Kyiv
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2019/Q3 Ukraine Newsletter

Sep
10

Dear Friends and Partners,

please find attached our latest newsletter on economic developments in Ukraine. After the convincing double election win of President Zelenskiy and his team, we are very optimistically looking into the coming years in Ukraine. For the first time in more than a decade, a substantial change for the better across many industries can be expected in a country with a huge catch-up potential. The first activities of the new political team give hope for a fast-track implementation of a courageous reform and liberalization agenda. It could be the final trigger to jumpstart the urgently needed investment stream into key industries and to end the chronic equity shortage of the corporate sector.

Any interest to enter or expand in Ukraine? Please do not hesitate to contact us for an in-depth discussion.

Please check our new website  www.vi2partners.com and our blog www.alt-think.com for more information. 

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ETON MESS – King BoJo is Eating the Cake and Having it – Or Not?

Jul
25

Finally, we are, where we could have been 3 years ago, would the then panicking Brexiteers not have fled from the responsibility of executing a Brexit being fought and won on massive lies, false promises and probably Russian support. King BoJo has entered Downing Street, and he has a mere 100 days to fulfill his Do-Or-Die Promise of leaving the European Union by October 31. And he will deliver. Another notorious liar, narcissist, and racist at the top of an atomic power, G7 country and permanent member of the UNSC. Another ruthless populist at the top of a should be guiding torch for democratic values and honest discourse. Inspired by President Trump in the US.

Should we be afraid? Not really. Having survived the Tariff Man in the White House, the Clown in Downing Street will be easy stuff to swallow. After three years of endless negotiations and complete stalemate, both Macron and Johnson are right in claiming that No Deal is not the end of the World. On the contrary, it could prove healthy to make a clear, fast and ugly break instead of dragging on for years. The German smallest denominator biggest compromise way would only lead to a slow, but steady decline and national humiliation and frustration of the UK. The Eton(ian) Mess that has been amassed since Cameron entered the kitchen is beating the German Bratwurst, as long as it is ruthlessly prepared and eaten fast. BoJo has fully understood this dynamic and will drive the British tanker full steam into No Deal while pretending to have his eyes set on an improved Brexit Deal. The composition of his new cabinet underlines his willingness for a fast and brutal implementation of Vote Leave. He has assembled a very gifted, dynamic team and the best campaigners in the country, preparing for an election if need be. We are assuming to see the following developments:

  • Brexit will happen on October 31 with No Deal or a largely stripped-down deal. The EU will be blamed for failure. The Tories will ultimately follow BoJo to avoid an election, the dissolution of the Conservative Party and complete chaos. Theresa May as Brexit Don Quijote with Philipp Hammond as her Sancho Panza will be forgotten fast.
  • The Brexit war cabinet will restore trust and confidence in the UK and Tory leadership, Nigel Farage might join the forces soon.
  • BoJo will imitate the success of Trump’s weaponization of social media and use a direct and intense link to voters and followers to chase Parliament and force MPs support.
  • The EU, led by Macron and Barnier, will not blink in the last minute. Disgust for BoJo, unwillingness to grant him any success, self-protection and complete Brexit Fatigue will guarantee this result.
  • After short term collapse and disruptions in some areas, recovery could be faster than expected and the country might profit from a new liberalization boom, fired by an economic policy of low taxes, no customs/tariffs, and less regulation. An economic head-on collision course with the EU. The London property market will go further down with the fear of No Deal consequences and a looming sterling crash, a perfect buying opportunity.
  • The Real Donald and BoJo will become the BFF couple of the year, cheering achievements of each other and booing opponents.
  • The Iran Nuclear Deal will be thrown under the bus by BoJo for the relationship with Trump, as will be the prospects of Huawei to supply 5G networks in the UK. 

Turbulent times ahead in the UK. But finally, things are moving. Every end is a beginning! Hopefully, a wakeup-call for continental leaders to step out of the Merkel area lethargy.

God Save the Queen and good luck for all our British friends on the bumpy ride ahead.

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2019/Q2 UKRAINE NEWSLETTER

Jun
19

Dear Friends and Partners,

VI2 Partners is happy to share with you our recent newsletter on the most important developments and economic trends in Ukraine.

Please check our new website  www.vi2partners.com and our blog www.alt-think.com for more information. 

Ukraine Newsletter Q2 2019
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