Why Brexit Matters


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


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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The power of established parties is eroding fast. So is the political lifespan of politicians. We are on the verge to a dynamic rollercoaster Turbo Democracy.

The name of the latest Austrian ex-chancellor is Kurz or translated into English Short. Today his government collapsed after the shortest period of office for a post-war chancellor in Austria. And while this can be attributed to a purely local phenomenon – a boozed far-right politician promised to sell out Austria to a self-declared niece of a Russian oligarch – the situation is simultaneously characteristic for the current political breeding ground. It took only ten days from the publication of a compromising video to the successful no-confidence vote on a highly popular Austrian Government, which was the first successful no-confidence vote in the post-war Austrian republic (and they tried 185 times before).

Political changes today happen fast and dramatically, the instant public discussion and reaction on all issues is chasing politicians and few are mastering to combine riding the ultimate populist wave with staying in office. Take some numbers of the results of EU parliament elections as a reference point:

  • The only six weeks old Brexit Party of Nigel Farage crushed all established parties and achieved instantly more than 30% of the votes in the UK in EU elections, while the Conservatives did not even come close to 10 % of the vote.
  • Salvini’s Lega Nord in Italy increased their share five-fold from 6 % in 2014 to an estimated 34% in 2019. Noteworthy that in 2014 Social democrats had still achieved 40% of the vote, while in today’s political landscape in Italy they are irrelevant.
  • The left and liberal hate figure Orban is one of the very few who can win an absolute majority of votes in Hungary.
  • Once a shooting star, who was himself able to storm into the Presidency in France, Macron has only received 20 % of support in the EU elections.
  • Social democrat and conservative parties get beaten up in nearly all European countries and in big numbers, they lose together more than 20% of their seats and do not control together – for the first time in history – a majority of seats in the European Parliament.

We are experiencing the rapid transformation of stable Western party-oriented democracies into instantaneous direct voting platforms on leaders and hot topics of the day. Welcome to the rollercoaster turbo democracy. And it promises to be exciting, turbulent and fast. Gone are the times when parties mattered more than people, when believes and values were the foundation of political parties, when people or families, or even whole quarters voted identically over decades for one party. All this has become meaningless. The very same instruments, that can be cornerstones of a fast, livid and direct democratic involvement of the citizens, can also act as the grave digger for stable and democratic societies. Different sides of the very same coin, the old law of polarity. We have an unprecedented level of communication, information, understanding, and exchange and yet we are more controlled, watched and influenced than ever. The ultimate political Instagram show.

Attributes of the rollercoaster turbo democracy are starting to materialize. They are all based on unlimited reach and direct access to people through internet and social media, the mental overflow of citizens through information overload, the speed of events and the immediate global journalistic processing, and the difficulty to differentiate true from fake:

  • From programs and parties to slogans and leaders: in times of rapid changes, parties and programs have proven to be too slow and rigid to adapt to the reality on the ground. Egocentric leaders feel the mood of the day and ride the populist wave. They are not interested in any kid of manifesto, only in approval ratings, media comments and likes from followers. They know how to reduce a message to a simple slogan that is penetrated thousands of times, whether true or false.

  • Short life span of politicians: what goes up, must come down. As the decade long march through party hierarchies is no more necessary for the rise of a politician, the new type of leader is often missing strong and loyal political armies. They are easily and fast recruited while the star is ascending, but support is dwindling once approval rates are going down. As the personal lifecycle of this new type of politician is shortened, naturally there is no interest in any long-term reforms or investments into the country.

  • Rapid rise and fall of political movements: Gifted leaders bypass lengthy party discussions to push their agenda with a direct link to citizens. They board a party or election platform for infrastructure and legitimacy reasons and transform these instantly into a personal election machinery, centered around a common cause and themselves. Failing in delivering the promised results, these movements disappear often faster than they come up.

  • Strong leaders and a trend to authoritarian leadership: in times of perceived insecurity and rapid change, people long for strong leaders to give them orientation. They give themselves an aura of above-the-law, gift-of-god vibe with the respective authoritarian rights to rule and dictate. 

  • Propaganda reigns: The new leaders recognize the importance of direct and robust contact with their constituencies to avoid parliamentary discussion and/or media scrutiny. They build their own communication platform and channels. Once in office, they will avoid all critical discussions with media, the opposition or other critical voices. As demonstrated from Washington to Paris to Vienna, communication with media is then downgraded to a one-way street of personal propaganda and message control. Governmental agencies are abused and transformed into a personal propaganda apparatus, penetrating success stories to the believers.

  • Massive influencing: As the party system is fading as a stabilizer, foreign Governments, NGOs and other players are globally entering the arena to influence massively and directly the political discourse and public opinion on critical issues, and subsequently the outcome of elections. The Russian hoax and Ibiza-Gate in Austria are just the beginning.

  • Truth has no value: From the famous NHS lie during the Brexit campaign to the uncountable proven lies of the stable genius in the White House, leaders are exploiting the fact that people lose interest in political issues fast and are not able to memorize and control past messages. Holding the Guinness world record of lying in office, is no more an obstacle to running the most powerful nation in the World, but in the contrary a tool to retain power.

  • Brutalization of political communication: Avoiding any content-oriented discussion on political objectives and strategies, all communication is personalized. Political opponents and critical journalists are ridiculed and badmouthed. Everything is reduced to a with-me or against-me. Gifted politicians understand the need for entertainment and produce a Game of Thrones narrative for their audience.

With the exception of the global climate movement, this rollercoaster is so far better mastered by the nationalist, right-wing political forces from Trump to Bolsonaro, Duterte and Salvini. This is the main reason for their success! Until we will see a societal shift to more stability, a return to values and integrity, a stronger focus on community than on individuals and a longing for more social justice and cohesion, it can be assumed that it will stay like this. And yet, we should not take our current democratic system for granted. It will need a substantial overhaul and it has to be seen, whether an open, transparent and liberal democratic order can survive the turbo rollercoaster; and whether the parliamentary party system can cope with the post millennial age of ultra-rapid change, robotization and short-termism. Otherwise it will become obsolete. At this very moment, it looks more probable that managed democracies like Singapore or China will perform better and take the lead.

Enjoy the Show.




Volodymyr Zelensky has been elected President of Ukraine in crushing defeat to incumbent Petro Poroshenko

Now it is official. The comedian Volodymyr Zelensky is the next President of Ukraine. While many observers and foreign experts are still astonished about the political experiment and public courage to put an unexperienced TV Star into the highest and most powerful political office in the country, it is first and foremost a demonstration of a powerful, energetic and lively democracy. That is good news. Neither the money, nor the political power or the control of the media, nor the patriotic staging could stop the crushing and deserved defeat of Petro Poroshenko. It is a message of great hope for a country who deserves a better leadership and future. Zelensky was right when he turned to other former Soviet Republics after the victory yesterday by telling them that indeed everything is possible. Accordingly, this election could turn into a harbinger for other countries alike.


As is with all dreams, the morning after a transformation of blurring pictures of hope and glory into purpose and hard work needs to start. And it will crucially depend on the next months, whether the dreams of so many supporters can be turned into a better reality of their lives. By appointing a truly forward-looking Government, by preparing elections to turn Parliament into an arena of trust and commitment and to dis-own it from oligarchs, and by selecting people for key positions in the country gifted and willing to energetically move the country forward.


After the Maidan protests and the ousting of President Yanukovich, Poroschenko had five years to prove that he understood what the people of Ukraine needed and were longing for and to act accordingly. He did not. As a result of his and his Government’s failure, the country today and its inhabitants are poorer, the territory is smaller, the conflict in the East has not ended, the Oligarchy is still in full power, and a selected group of people have amassed more wealth on foreign bank accounts. Another loss of time and betrayal of simple Ukrainians. Zelensky’s rise to power is the shameful sentence of complete failure on Poroschenko’s term.


The US, the European Union, and the international institutions would do well to listen carefully to the messages of the people, too. It is not wise nor efficient to only aim at stabilizing a counterpole and political bulwark against Russia. It is not the artificial language topic that keeps the Ukrainians awake at night, in a country where Russian is a dear mother tongue to many. It is also not the creation of an independent church that advances a country, where many have a decade long relation to their priests and parishes and the proximity to the Russian church is a century-long tradition. It is not even the fighting in the East and the annexation of Crimea by Russia or the demonization of President Putin and the Russian people in a country, where most have family ties to Russia and the Russian culture and traditions are embedded in everyday life. It is also not the accession to the EU or NATO that can rally people behind a common purpose or keep the young and energetic in the country.


No. It is like so often the economy, stupid. The harsh reality of money in the pocket and sheer survival at the end of the month. To get closer to European living standards is what people are dreaming about, and that students and young workers can stay in Ukraine with a perspective of development and modest wealth, and do not have to leave the country in millions to Poland, Canada or other countries to realize a decent life. The things that need to be done, are clear for thirty years, and it will depend on the political will of Zelensky and his key management team of Ukraine, whether they finally take the necessary steps and transform a country of endless potential into a country with a better future for the many and not bigger cash stacks for the few:


  • Bring in politicians who think first about their country
  • Simplify rules and regulations in all areas of society
  • Reduce state administration and bureaucracy on all levels
  • Build an independent judiciary
  • Ensure property rights
  • Stop corruption
  • Break up Oligarchy
  • Clawback unjust profits from corruption and bring criminals to justice
  • Normalize relations with Russia
  • Build the economic and societal foundation prior to a discussion of EU or NATO membership


The first twelve months for Zelensky will be crucial and he will need to be brutal to bring this change to his country against enormous, powerful, well organized and wealthy resistance. The necessary political will and perseverance for such an undertaking cannot and should not be underestimated, as well as the necessary luck and foresight he will need to choose the right people for his team from the many advisors who will come forward now. As a reward and result, Ukraine has the prospect to become more European, with young Ukrainians wanting to build their personal future in this country, and separatists in the East getting under pressure to reunite with a booming Ukraine. In that case, Ukraine can turn into one of the hottest global investment locations for many years to come, and the coming Easter week a herald for the resurrection of the country.



The BIG Short: Fast Forward Into Recession


Dear Friends,


The very dynamic year 2018 comes to an end and the events of this year will shape the coming decade and beyond. We are witnessing a rapid transformation and disruption of our global word order, and the end-game of the domination of Western-style democracies.


Main events of the past 12 months


  • TARIFF MAN hits the Chinese Dragon: The self-proclaimed tariff man has started a full-scale trade war with China. However, the ultimate USG goal is to weaken or at least slowdown China on its path to become a dominant world power, which has started to flex its muscles not only in the South China Sea but also in Cyber Space. More than 90% of all DOJ followed economic espionage cases and 2/3 of all economic theft cases in the US are linked to China, which is accused of a sophisticated “rob, replicate, replace” strategy. The damage of these activities is much bigger than from any unfair trade practice – and the US not willing to tolerate this any longer. Therefore, any wishful thinking of a quick resolution of the trade dispute is an illusion. EU naively watching at the sidelines.
  • The Great Populist Revolution: After the US and France, Italy and Brazil have followed the sweet seduction of populist leaders, more countries will follow. Be attentive – this happened during an economic upturn! Western democratic systems seem to have reached their limits in a largely trend-based, social media-driven society, and we might have reached the end-phase of this form of governance with the renaissance of managed democracies and authoritarian leaders. Assuming an economic downturn in 2019, this development will accelerate. Yellow vests in France are just the beginning.
  • The Fake Avalanche: Led by the US President, the general public and every individual has been filled up with a mountain of fake news, misleading information and lies. The post-truth age is reality and it plays into the hands of government and corporate manipulators. It will lead to an identity crisis of traditional, social media and all types of electronic publications. There is an urgent need for credible answers and the build-up of a quality check/stamp by this industry.
  • The End of the Rules-Based World Order: UNSC Members have finally driven the UN into meaninglessness. Today, the UN has lost all ambition to act as an international body to manage, calm or solve global conflicts. We are completely dependent on the power-based boots on the ground politics of the dominant nations, who deliberately destroy rules-based global systems and processes. UN useless, WTO obsolete, Climate Agreement dead, EU disintegrating – and the results start to materialize: unchained cyber-attacks and warfare, technology and energy used as a power instrument, open chemical attacks, and state-sponsored murders, journalists killed or in prisons, international contracts dumped, resistant superbugs and viruses on the rise. We are entering a truly Darwinian world order.


Other important events in 2018 included the (official) start of Genetically Modified Humans (GMH) in China, the Mueller investigation and economic and reputational cracks in technology giants like Apple, Google, and Facebook.


Review Forecast 2018


We had dared to make a series of forecasts for 2018 at the end of last year – some in stark contrast to banks and other analysts. Without going into the details and the reasoning, the review shows as follows:


  • The Return of the Dollar: Correct
  • US turning against China: Correct
  • Energy Price Surge: Wrong
  • Inflation Reloaded: Neutral
  • Cryptocurrency Breakdown: Correct
  • Bears go Hunting: Correct
  • King BoJo plays Hamlet: Correct
  • French Renaissance: Wrong



Forecast 2019


Now to the more important look into the crystal ball of 2019 developments:


  • The Ugly R-Word on the Wall: US and parts of Europe will move into recession area in the 2nd half of 2019. Trade wars, rising interest rates in USD and EUR, fast de-leveraging, end of quantitative easing, fiscal tightening of many G20 states and the end of the China boom will all happen more or less simultaneously and lead to a contraction of global output and consumption.
  • Continued Confrontation Between US and China: The battle has only started. The US will try to further harm the economic, technological and military rise of China. Interim negotiation results will be celebrated publicly, but not last long.
  • China Economy Faltering: China will not be able to compensate for the abrupt barriers to the US market and the hostile environment for their leading technology companies. We expect the first real and painful contraction in China, with a massive impact on the employment and housing market. New markets, that are currently opened, will not be able to compensate in time. How a generation, which has experienced nothing but double-digit growth will cope with this situation, is yet to be seen.
  • Fake Trump Bubble Bursts: Congress will start impeachment procedures against Donald Trump for alleged criminal behavior. The biggest fake bubble with more than 6.000 officially counted lies and grossly misleading statements, that were published by POTUS while in office, will start to burst and haunt him. And many knives are prepared, both in the US and abroad.
  • The End of Germany’s Golden Decade: Welcome to reality, Germany’s export-oriented engineering, car and machine building industries have driven an employment and tax revenue boom in Germany over the last ten years. With a capex contraction in China and mounting barriers to international trade, Germany will be one of the countries to suffer the most. It will backfire now, that over the past ten years, critical investments into infrastructure, education, and future technologies have not happened, and that necessary structural reforms were neglected.
  • To Brexit or Not to Brexit: The biggest ever national humiliation continues. The most probable scenario is: Theresa May will not bring her Brexit deal through parliament. The UK will ask the EU for a delay/suspension of Article 50 for 6-12 months. A cross-party coalition will agree on a much softer Brexit, with the UK staying in the customs union. Labour will achieve new elections as a bargain price for agreeing to this deal. The Tory party might split.
  • EU under Fire: 2019 will be a year of truth for the EU. Parliamentary elections and the quest for a new Head of the Commission as well as the ECB will bring the big topics to the center stage: austerity vs. free spending, the role of the ECB, liberalism vs. nationalism, depth of integration, solidarity on the borders, budget 2020 without the UK as a payer. A lot will depend on the direction France will take in 2019 and the willingness of net payers to shoulder additional costs in order to contain disintegrative forces.
  • Ukraine and Russia: both the Russian and the Ukrainian leadership might profit from a re-ignited frozen conflict, that turns into open fighting, a real war in Ukraine is close to reality. Putin might use the tiredness of EU member states of going against Russia and the political bombshell of an impeachment process against Trump to test the resilience of the West with a further landgrab in Ukraine. The current schism between Ukrainian and Russian Orthodox church would deliver a perfect pretext for action.
  • Energy Prices: Recession ahead, and Chinese production on the brakes, we expect a further downturn in energy prices towards the 30 USD/barrel price range. Only a middle east war would be a real game changer to this trend.
  • USD: in contrast to this year, we see the USD weakening in the coming 12 months: a fast deteriorating US economy, together with a weakened US President, and international trading partners who try to get at least partially independent from the USD, will lead to less demand for USD. However, an un-orderly no deal Brexit and a new Euro crisis originating in Italian and/or French spending fantasies have the potential to reverse this macro trend.
  • Inflation and Interest Rates: Interest rates will go up, both in the US and Europe – and in our opinion faster and stronger than many believe. Central banks will only stop monetary tightening once the economy has moved into recession at the end of 2019. Until then, tariffs and tight labor markets will lead to a pick-up in inflation.
  • Bear Party: This time bulls will wait in vain for a market rebound. Profound corrections into bearish spheres on all major stock markets in the making, biggest losses in Germany and UK.
  • Cyber Attacks: Prepare for new waves of aggressive cyber attacks. While the US and the UK will be in retaliation mode against China and Russia, respectively, we might see a new dimension of attacks both on the government and corporate level.


The good news: (1) there are many ways to invest successfully during recessions, every risk is an opportunity; (2) nobody can claim that there were no warnings; (3) the catharsis is needed prior to any new lasting and healthy upswing.


Preferred Sectors:


And finally, the sectors on which we are bullish for 2019:


  • Emerging Markets, i.e. Brazil, Argentina, and Turkey
  • Agricultural Goods
  • Gold
  • Selected Real Estate
  • Military and Defense
  • Alternative Energies
  • Robotics
  • Genetic Engineering and Health
  • AI and Cyber


We wish you a great, successful and healthy start into 2019!



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The New Pre-Fascist World Order


Mind September/October for a serious stock market correction


The World is developing fast from a post WW2 liberal world order into a Nationalist Pre-Fascist World Order. Unfortunately, the President of the United States has hijacked the GOP and is leading this movement with an evil determination; the US has effectively stopped to be an advocate of human rights, a liberal world order, free speech, and media, strengthening of the rule of law.


This changing US role in the World will have dramatic consequences in the coming years and decades, and we should be prepared that we are heading into a post-democratic age. It gives an excellent pretext for other political leaders/movements to abolish inconvenient democratic standards. And it will have a significant impact on global trade and investment flows. These developments happen slowly but steadily while being blurred by the amount and speed of new scandals and while societies wrongly and dangerously get accustomed to the new normal.


Typical signs of a Pre-Fascist political order (and recent examples) are:

  • Undermining the Rule of Law and Independence of Courts
    Mueller investigation is a witch hunt, Judges against immigration orders are a shame
  • Abuse of Immigrants/Foreigners as Scapegoats
    Walls shall be built to friendly neighbors, Mexicans are labeled as drug dealers and rapists
  • Use of Aggressive Language and Threats
    Un-cooperative nations shall be erased, former allies are labeled as foes
  • Bashing of Media/Press
    Unpleasant facts become Fake News, Reputable media institutions are the Enemies of the People, journalists are singled out and publicly insulted or humiliated
  • Incriminating/Criminalization of Political Opponents
    Lock her up chants against Hillary Clinton and other opponents
  • Authoritarian Leadership
    Promotion of North Korean Public Administration Culture as the new benchmark for the White House
  • Promotion of Nationalist Framework
    Mega MAGA, US First and Only, Cancellation of Multinational Agreements/Contracts, Undermining WTO, NATO, EU, G7
  • Jeopardizing Due Political Processes
    Governing by Decrees, Inciting Public Pressure via Twitter
  • Direct Communication with Masses
    Using agitation of masses to avoid parliamentary/political discourse


This erosion of global democratic norms and safeguards takes place, while the economy is booming – watch out for the looming recession. On a populist foundation, where masses have smelled blood and have been whipped for aggression against media, foreigners, political opponents, worse developments might happen. Pre-Fascist World Order implies that we are on the verge to a Fascist World Order. Unfortunately, the next recession is written on the wall:

  • We are approaching the end of a nearly decade-long economic and financial market boom-cycle, fueled by excess liquidity from central banks and historically low interests rates;
  • Interest rates are rising across the globe and will pose a real-life stress test to many business and investment models, the liquidity bubble might burst;
  • The US has started an extended trade war with China out of a long-term strategic interest to dominate future core technologies;
  • Energy prices have risen fast over the last 12 months and might continue to rise on the basis of a potential escalation with Iran;
  • Decreasing risk appetite on the basis of stronger US dollar and higher interest rates will deepen a beginning emerging market crisis;
  • Record debt levels on Government, corporate and private level might prove unsustainable;
  • Energy prices, Tariffs, interest rates will start an inflation cycle, that will require an even faster increase in interests5 rates;


Mind September/October for a serious financial market correction. Cash is king. An un-orderly Brexit caused by an incompetent UK Government and a reckless Tory party will only be an additional footnote in this scenario.

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Professore Nebuloso – A comment on the Italian Political Drama


or How to Realize Fast that You Cannot Eat the Pasta and Have It.

The Trumpist revolution of narcissism, denial of reality, national egocentrism, and pre-dominance of lies has reached a new climax in Italy – although admittedly briefly outshined by Trump’s letter to cancel the nuclear summit with North Korea. It looks like Italy did not study the Greek adventures of Professor Varoufakis, another case where a self-declared expert wanted to save the country by denying basic economic laws. Alas, we will take front seats in the Colosseum, watching how Professor Conte – whom a French magazine already attested to show all characteristics of a professional crook – will explain, how Italy can avoid bankruptcy while spending additional billions of Euros on the back of an already bursting deficit and debt status of its public finances. While the German Hausfrau is developing an immediate allergic reaction, even the French are scared big time now. Given this situation, the political life of the Professor might be as short-lived as his academic visits to the US.


Following bigger footsteps from across the Atlantic, the Italy First Movement wants to eat the Pasta and make the World (first Europe) pay for it. This undertaking is doomed to fail dramatically. Obviously, the Italians do not have the USD, the strongest military in the World and also not the consumption power of the US. The bullying potential is limited in this case. Remember the Greek experience of trying to enforce on Europe and the Euro-System a carte blanche spending spree for Greece. It ended in an economic disaster that left the Greeks with a prolonged crisis, a humiliated Government, stronger controls, more unemployment and additional lost years. They had to swallow the savings dictate from Brussels and Frankfurt.


The real choices for Italy are very simple. Restructure profoundly or leave the Euro and devaluate. All else is another aria, that nobody wants to listen to anymore: the French have to look for themselves, the Brits are no more interested, the Germans do not want to pay, and the Spanish have run through the painful experience, why spare the Italians the same? And all Governments face at home the identical outcries of Germany, France, England, Dutch, Whoever First. Nobody is willing or able to come to the rescue. Perhaps the Italian drama will finally enforce on the EU to have the discussion that Macron started, but nobody wanted to lead and decide on: further integration or looser association.


The real scary part of the story is, that the Italian voters wanted to have exactly the Government, that they have received now, implementing the very same agenda, that is now promoted. This is contrary to Brexit, where one could argue, whether voters were just tricked by BoJo and alike. No, this time, all was clear and stated during the campaign, and the announced political program reflects a soft version of the election promises. Here are the main reasons for this situation:


  • The political bunga bunga elite failed completely over the last 20 years to reform the country and work for the long-term success of Italy. This has led to a lost generation of 18/35-year-old people without job, experience, and perspective. A perfect breeding ground for the extremists.
  • The credibility level of traditional parties and established politicians after 20 years of complete mismanagement was below zero. Many Italians preferred to vote for a journey into the unknown than to live on with their un-performing status quo system leading to a slow but steady decline. And they were right.
  • The EU showed no(!) solidarity with Italy to control and manage the refugee invasion on Italian coasts. Colorful declarations to strengthen European maritime commandos or threats to close down the Brenner border, the over-arching symbol of European free movement, have not helped, but have been taken understandably as cynical in Italy.
  • The Italians have a top-line mentality and a tendency to bend rules (in a positive way!), they are revenue, not cost-driven. In this mentality, the system and philosophy of a common, strictly rule-based currency with frugal Dutch and German Protestants, is completely counter-productive; austerity not compatible with Italian lifestyle and drama.


All this has led to a profound change of the political landscape, the Government will stay longer than many expect and implement the will of the voter. However, Italians cannot expect other nations to pay for this emotional overreaction and the following political experiment. What does this all mean for the EU and Italy in specific:


  • ECB directors get nervous in Frankfurt. Their overly relaxed willingness to buy Italian bonds without guarantees for sound state finances is in severe danger of backfiring, it has rendered the ECB too dependent on national Governments and prone to financial blackmailing. The falcons have started to take off their hoods. In case that the situation with Italy would escalate, it could herald an inglorious departure of Mr. Draghi.
  • The new Italian Government will start to implement their program and raise spending levels, putting huge pressure on both the EU Commission and the ECB to relax budget restrictions and grant debt relief/write-offs. Finally, we will see a show-down on the Euro. And while Greece had to surrender, Italy has a much stronger bargaining position: they are a founding member of the EU, they are the third strongest European economy and the ECB has an Italian debt stock-pile on its books. Nevertheless, it is inconceivable that other countries, the commission and the ECB would open the Pandora box of further softening debt ceilings and/or financing Italy through ECB debt write-offs.
  • This situation has all potential for big drama with only two potential outcomes: Italy leaves the Euro or faces new elections very fast. Renzi and Berlusconi could celebrate a surprise comeback in the latter case.

Italians voted for change. They are sick of their political elites. They are sick of the most inefficient public service in Europe. But they lack the strength and perseverance to go through radical reform programs. Spending the way out of this crisis does not work within the Euro System. The departure from this system is, therefore, the only credible, viable and productive way forward. Everything else is a lie and illusion. A devaluated Italy leads to a restructuring of the country through lower standards of living for a certain period (less German cars), a relative reduction of wealth and pain for the old and poor in the country. But after this period of pain and the revaluation of the Italian asset base, it would also lead to much stronger competitiveness, an orientation towards the future and attract big streams of foreign investment into the country, which would, in turn, reduce unemployment.

Other Governments and the ECB need to wake up to this new political reality. If not now, at a certain point in the near future, the economic development of Italy and/or financial markets will force a decision on them. As Turkey and President Erdogan are currently realizing: economic laws cannot be denied ad infinitum. Professore Nebuloso and his masters will soon have to decide, whether they surrender, lead the EU to an institutional crisis or their country out of the Euro. We bet they will first try with the crisis.

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Why Europe will Shine in a Robot Future


Investment Climate and Opportunities in Good Old (New) Europe

This analysis was presented and discussed in a different format by VI2 Partners at the

NUS (National University of Singapore) Medicine International Council Berlin Conference: New Europe and Germany on April 23, 2018


Many political and financial analysts believe, that Europe is doomed to fall behind in the competition with the new economic and technological powerhouse China and the massive talent hoover and technology breeding ground US. We want to argue in a different direction and explain why we believe more in a next level European Renaissance than in Europe turning into a Museum for the World. The reasoning will start on a global level, move on to European developments and give an outlook, on which industries we are particularly bullish for the future.


The Global Arena – War is in the Air


The World is moving fast into diverse armed conflicts, without any power showing significant interest or activity to stop or contain these developments. The political post WWII order is trembling and shuttering and will ultimately make room for a new world order following a big earthquake. War is in the Air everywhere and in multiple dimensions:


  • Twitterman versus Rocketman Saga: Do not trust the fog bombs that both parties are throwing around. While Trump has changed the quality of the North Korean leader from insane to honorable in a minute, and Kim Jong Un is reflecting on de-nuclearization, both players are lying big time. Hangover more probable, than honeymoon (Macron might also be jealous, in case that Trump would start to kiss Kim during their encounter). In any case: good marketing show for both actors.
  • Isolation and Radicalization of Russia: Russia has overplayed his hand and gets punished for this on all levels. Pushed into the corner of the ill-mannered child, more chaos and disruptions in Europe and the Middle East will be targeted. Alienation between NATO and Turkey, sowing disaccord in the EU, conflict between Israel and Iran, and escalation in Syria. The resulting side effect of higher oil prices will over compensate for the sanctions of the West.
  • Iran, Israel and the JCPOA: It is only a question of time, when the Syrian mess will also lead to a bigger clash between Israel and Iran. Israel in this case can be expected to also inflict material damage to the ballistic and nuclear program of Iran. On the JCPOA, we believe that Netanjahu, Pompeo, Bolton and the conservative establishment will win over the European attempt to save the Iran nuclear deal. If not in May, the plan might soon be history.
  • Trade War: As we have discussed in earlier contributions, China will be punished by the US. It is in the long-term economic, political and military interest of the US, to weaken or at least decelerate the economic rise of China. Trade war is coming.
  • Cyber War: is already taking place. All capable countries are increasing their defensive and attack capabilities. More battles to be seen soon.
  • Authoritarian Tendencies: In times of fundamental global and societal changes, people are voting for authoritarian leaders. This can be observed around the globe. With the free press being in recline, political parties as power buffers dissolving, war memories of the population fading and the nation state back in fashion, water temperature is rising in the risk pot of leaders going wild or rogue.


Europe – Renaissance or Museum?


To Europe. Given the global percussions, Europe feels like a safe haven of stability, which will be rewarded. There are signs, that Europe can stay a main player in the future and enjoy a bright economic future:


  • Broad based recovery: finally, after nearly 10 years of disappointing growth, all major EU economies have started last year a broad-based recovery. We will experience over the next 24 months stronger wage growth, decreasing unemployment, reduction of budget deficits, and rise in inflation in all major EU economies.
  • Diversity and Innovation are elements that mutually support each other. Mixed with a tradition and culture of sciences and invention, Europe has the best natural breeding biotope for game changing technologies and research. And the countries in Eastern Europe from Poland to Romania and Ukraine are only starting to join the game by returning to their roots of scientific excellence in engineering, mathematics, information technology, aviation and others. A young generation of scientists and entrepreneurs take over and will lead Europe to a new level of innovation. Check out where the game changing innovations in most natural sciences and technology areas originated over the last 50 years. No wonder the Chinese are out hunting.
  • Re-industrialization: The peak globalization is behind us and the big move of production to Asia is over. Many companies in Europe are considering to re-locate at least parts of the production back to Central Europe. Automatization and robotisation favor excellent skills, rule of law, IP protection. Labor cost becomes close to irrelevant. Increased protectionism, changing tax regimes, and the political will to re-industrialize are increasing this trend.
  • New social models: Europe will be the first region to test new social models of general income and/or general pension. As certain professions will soon become obsolete on a large scale and faster than many can imagine, new social models and contracts will be a necessity, and Europe will profit from its lead.
  • Quality of Life: Europe is the place to be. In a world of robots, VR and constant information and communication, people will long for a place of serenity, nature and pleasure. To offer quality of life will be key to attracting talent in the global arena in the future. Top talent will choose to live in the best places. From the top 10 cities in the world in the latest Mercer Report on Quality of life, eight cities are located in Europe.


Certainly, there are risks around. Brexit, Catalonia secession and traditional Italian political chaos will keep the European capitals and Brussels busy. But in our view the economic impact of Brexit will only be short lived (on the EU side of the Channel), and in the mid-term already prove beneficial to the continent. The constant aging of the population is cause for concern and will require a massive overhaul of social security systems and massive attraction of qualified foreign immigrants against the general mood in the population. Alone in Germany 500.000 qualified immigrants will be needed per year, to keep the pension age at its current level. Europe is falling back in patent applications and industrial production in comparison to Asia, but do not mix up quantity and quality of patents and innovations.


Key Investment Areas – Go and No-Go Zones

Looking to the key investment sectors in Europe for future investments and why we have chosen those:


  • Fashion, Design and Luxury FMCG: The world wants to consume European and mirror European taste. Wherever you travel in the World these days, luxury brands are dominated by European players. The new affluent population and middle classes of the world want to drive Mercedes, wear Prada and Gucci and drink Bordeaux wines. Rising global wealth in China, Russia, the Middle East and other regions will lead to higher demand.
  • Defense: Higher independence from the US, the growing insight that European governments allowed the run-down of their military, the accepted NATO doctrine of 2%-defense spending relative to the GDP, and new global threats, lead to significant modernization and increase of defense spending of all major European countries. Gone are the times, when it was en vogue to decrease the national defense budgets.
  • IT/Cyber: Corporates, Governments and Privates are waking up to the cyber threat in all areas. Huge need to catch up with reality leads to an investment wave into devices, services and processes. No trust into US, Israeli or Russian solutions. Big chance for European players.
  • Clean/Blue/Green Tech: It is the continent of environment freaks, where train tracks and motorways are not built because of rare species, the population turns maniac about nuclear, GMO, pesticides and any type of emission. Innovation in this area will be developed and tested here.
  • MedTech: The fusing of medical technology, IT, robotics and nano engines and machines will prove to be a key sector of European development, bringing together historical key strengths and skills of the continent.
  • Agriculture and Bio-Food: The westernization of eating patterns, increase in wealth and concentration of population in the cities lead to increased demand of animal farming as well as traditional crops, while at the same time fertile agricultural land is shrinking globally. Central Europe from France to Germany via Poland, Russia, Romania and Ukraine has by far the largest black soil agricultural surfaces in the world, and the potential in some Eastern European countries in terms of professional agro management, output efficiency and logistics is by far not fully utilized. We believe in strong price growth both in agro products and land in the near future, especially in the high-end segments of non-GMO food and low pesticide and bioorganic production processes.


NO-GO: Banking (weak capital base and legacy systems in a fintech world) and car Industry (emission scandals, new ownership models, electric vehicles).


COUNTRIES: We would overweigh France, Netherlands, Germany, Austria, Poland and Romania. The risk-takers should have a look into Albania, Serbia and Ukraine.


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Xi Jinping – The Dragon Rider


During the next decade we will experience the technological, political and military rise and transformation of China to a real super-power. And most probably also its first major economic crisis. Constitutional changes in China will enable its current leader Xi Jinping to stay longer in power than the currently foreseen maximum of two Presidential terms. We reflect on the current situation and potential in China, the reasons why a prolonged reign of Xi Jinping is a blessing for China and the World, and the reasons, why the Western world has difficulties to accept this.


Even after 30 years of an incredible economic boom, we still tend to underestimate the power and energy of the Chinese dragon. We take for granted that China is a giant workbench for cheap mass products, not reaching the technological level, design optics, and reliability of Western, i.e. US and European products and services. Just recently, being in Romania, a senior banker told me, they are not interested in leasing offers for Chinese investment goods – because of the risk, that they would have to take these goods to their balance sheet later. Guess what, now the Chinese arrive with their own leasing offers, at much better rates than any Romanian player can offer, of course cross-subsidized by Chinese producers and export-financing agencies. China is slowly, but steadily conquering key markets, through clever and orchestrated market entries and selective acquisitions. Together with the clear path of China to technology leadership in many areas, this entrenchment in other markets will also make China much more resilient for any future domestic downturn. For the fatal under-estimation of the Dragon’s firepower, the next generations of the Western World will pay dearly, some food for thought:


Economic Situation and Development Potential


  • Chinese Universities are graduating more engineers than any other nation, on top more than 300.000 Chinese students are attending leading international universities, concentrating on the subjects that will shape the World of tomorrow. Chinese technical universities, mere underdogs twenty years ago, are counted among the leading academic institutions today.
  • This week, it was announced, that Geely has bought an important stake into the leading luxury car manufacturer Mercedes/Germany, which is one of the innovation powerhouses in the automotive industry. This is only the highly visible tip of the iceberg. Every day transactions take place, that secure critical knowhow and technologies, strategic market shares and key resources. And services are following. Chinese commercial and investment banks are starting to expand rapidly outside of China.
  • WeChat, Tencent, Alibaba and others are transforming the Chinese business and consumer world into themost mobile society in the World, with an unprecedented innovation power in applications.
  • The World’s fastest super-computers are today located in China, built entirely from Chinese components, in stark contrast to a decade ago.
  • While in the US and the EU infrastructure is rotting away, China is building new infrastructure at the speed of light (or nearly) and connecting itself to the World (New Silk Road): With more than 12.000 miles of existing high-speed train tracks, China has more tracks than the rest of the World combined. And it will add a further 16.000 miles over the next decade. Meanwhile California is struggling to put 600 miles between San Francisco and Los Angeles into operation, over a period of 20 years.
  • The challenges for China are well-known to its leadership and they are discussed: transformation of society, countryside vs. cities, pollution and ecological balance, social services, fight against corruption. Better count on these challenges being addressed and solved within Xi’s reign.
  • The managed growth of a tightly interwoven political and business network for the key industries has proven to be very successful and efficient – enabling much faster economic evolution and transformation than traditional free market social economies with a tendency to over-protect minority interests, especially given the size and complexity of the country. This model will be further developed and professionalized under Xi and be a cornerstone of the next level transformation of China into a global super power.


Xi Jinping is the leader of a new global super-power


  • China is rapidly developing into a global super power, the only credible contestant to the US. Following specs:
    economic powerhouse with huge home market, technology leadership, educational excellence, clear political vision and ambition, build-up of economic and financial dependencies, strategic bridgeheads in other countries.
  • Some challenges are so big and important, that they can only be solved by one. China is in front of many internal and external challenges. It will help to have a proven, stable and experienced leader like Xi in charge, who will not have to look at an end-date of his term, but who can embark on the next level evolution of the country. Xi has demonstrated a determined but calm and thoughtful hand in dealing with all sorts of unexpected problems. Although being one of the prime bashing targets during the US election, he was one of the first to build a personal relationship with Donald Trump; and was not following other politicians’ examples to enter into a useless counter-bashing exercise. He used the alienation of Trump with continental Europe to step in as the best friend in town.
  • China is blessed by an absence of raw materials. This is forcing China to promote an open and peaceful world order to keep the country and its economy running, and it is not a miracle that China today is recognized as main promoter of free trade and liberalization of markets (just watch again Xi’s speech in Davos this year). China also has a clear anti-interventionist political and military doctrine, which kept it out of global military conflicts in the past.
  • China does not have any dominating religion or radical evangelist movements that want to act as missionaries or jihadists. It does not want to make the World copy its own model – but concentrates on the maximum success of itself.
  • We should not be naïve: Xi is by far the most strong and powerful leader of China since Mao, and he leads an economic powerhouse. China will use this power to push its agenda selfishly and with enormous self-confidence and work on its global objectives with a clear direction and strong perseverance, but cool-headed. As any nation would in a similar situation.


The envy of Western leaders

  • Western media, commentators and politicians were fast to criticize the additional power for Xi, not taking into account the differences between China and Western democracies.
  • At the same time, it looks like Western democracies are much more on the verge of losing their societal balance: social and generational contracts are no more working, regulatory frameworks are much too complicated for the needs of fast transformation in a tech world, all major countries are experiencing and welcoming authoritarian tendencies with strong leaders.
  • Parliamentary democracies reach their limits in today’s fast changing environments, opinions are easily influenced and pushed into certain directions. Movements replace parties and lead to partially bizarre results. Just watch the current UK tragedy.
  • The US as a guiding torch for human rights, liberal rights and democratic values is awfully missing on the World stage. This void will have long-term implications for the World order and benefit China’s rise.
  • Strong leaders in secret envy the power and possibilities of Xi to follow through on his vision and transformation plans. They struggle with media, unions, minorities in their countries. And while they criticize China and Xi, they slowly try to copy parts of this model to their own countries, results open.


So, despite wide-spread criticism: The signal that the reign of XI Jinping will go beyond the current Government cycle is good news for China – and for the World, at least for all who believe in the sake of a multi-polar World. China will be a stabilizing factor in today’s epic of Twitterman and Rocketman and a strong contributor to global growth and technological progress: The World needs a strong dragon rider.


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Merkel did it again. Another grand coalition between Conservatives and Social Democrats is sealed and will rule Germany for the coming 4 years – should not the youth organization of the Social Democrats be able to mobilize members to reject the coalition contract. While most political commentators are proclaiming the victory of the Social Democrats and the beginning descent of Angela Merkel, I would recommend not to write her off, yet. It is not the first time, that observers and commentators are underestimating her political skills and her brutal instinct for power. Like it or not, Germany has developed into the European powerhouse over the last 12 years of Merkel’s rule with by far the strongest economy and industrial basis, practically no unemployment, budget surplus, and a high reputation in the World. And while Trump and Macron will enter into the competition of the biggest military parade (chased by Putin and Kim), she will continue to do her job, perhaps not at high speed, but silently and steadily. Here are the takeaways what this Government will mean for Germany and the World:



  • Tax Inertia: Do not expect any tax improvements for corporations or the middle class. All will stay as is. Luckily positive economic development in Germany with higher salaries and record employment will make the giant exploitation of the performers less obvious. And Germany can save some fiscal ammunition for tougher times.
  • Spendaholics: Social Democrats have pushed and will further bloat a costly social spending program, that will reach nothing but appease their traditional clientele, that is dreaming of more money for less work. What a pity that this money will not be spent on infrastructure developments, universities, and future industry clusters. Good news for private consumption.
  • Reflation: Germany will be one of the first countries in the EU to experience wage-driven inflation. With record employment and high growth, Germany is finally set to adjust its salary levels (Goldman Sachs is recommending 9% increase!). Less competitive neighbors will welcome this development. But beware an already stretched real estate market, and a possible simultaneous increase of interest rates, stronger dollar or energy prices, and we will experience a dangerous cocktail.
  • Survival:  Bravo! With Mutti’s help, the Left in Germany survived and has a new lifeline. It will keep key power positions in the new Government. However, it has to be seen, whether the Left will use this opportunity for renewal or whether the deadly embrace of Merkel will deal them the final blow within the next four years.
  • Strength: The new Cabinet of Ministers is strong and experienced. It will do a better job than many expect. Against all odds, it was a great move of Merkel to give the Social democrats the Finance ministry (this will restrain the spending spree of their own party) and the Interior Ministry to the Bavarian Conservatives (this will put them in charge on the controversial refugee topic).
  • Stability: Germany will see a stable Government for the coming years. There is a solid majority in Parliament, the actors know each other well from many years of political work, and in major political areas they share identical views. Potential disruptive elements will be the youth organization of the Social Democrats (who are closer to Corbyn than Schulz), the liberal-conservative and business wing of the conservative party, which will cry for innovation, tax reform and liberalization and finally the far right AFD, which will exploit all problems around the critical refugee and immigration agenda.
  • Nationalism: Nationalism and new conservatism have grown stronger, and more people follow the lead of other countries, this time shouting “Germany First”. The German People have elected a Bundestag with 60% members from conservative/liberal parties. The traditional left has been badly beaten. The new Government does not represent this, neither in its composition nor in its policies. It has made losers to victors. This is a dangerous game. The German people, like many other nations, are asking and have voted for stronger national identity, less immigration, more sovereignty, new social balance, guidance, and leadership. In case that the Government cannot or does not want to deliver on these demands, a conservative revolution will be on its way, shaking up the German party system faster than many will consider possible today.



  • The youth and energy of Macron in combination with the cheques appeal and political cleverness of Merkel will lead to a powerful revival of the Axis Berlin-Paris. In an EU without the UK, this Duo will wield the power and seek selective alliances on a case-by-case basis. Romance.
  • Brexit will become even more ugly, as Paris and Berlin will obstruct any easy farewell or special treatment of the Brits. A warm welcome party for UK bankers is prepared in Frankfurt and Paris, there will be no way London will keep unlimited, open access for its services to the EU markets. Illusion.
  • The EU will be braced for more integration and new centralization, and if smaller or Eastern countries will not jump on the train, the famous two-speed EU (which already does exist) will happen. Good news: cash loaded Germany will be ready with its new Government to shoulder the additional cost, investments, and guarantees for the EU. Noise.
  • The dynamics for easing on Russia sanctions will receive a new drive. Trump is keeping them up against his will, but forced by Congress, France is against them, German Social Democrats will convince Merkel to move, and then there is the resurrection of the Italian Cavaliere which could happen in March; he is known to be strongly against the sanctions. The UK as currently the strongest opponent of Russia will be sidelined and marginalized after leaving the EU. The economy, stupid!
  • Trump will have to acknowledge that he will have a strong opponent in the EU (France/Germany/Commission) in case that he will impose any trade measures against Europe. The growing mistrust between the US and the EU will also lead to stronger borderlines in the military and intelligence spheres, the more as the UK is falling away as a bridging factor. From Iran to North Korea, Syria, Palestinians and China, there are now fundamental differences in political strategies and objectives. The transatlantic axis is and will be more weakened, the US will lose influence. Not good!
  • If it plays its game well, China has the potential to develop into a real partner for the EU. All countries are keen to service this giant export market while being hungry for Chinese investments at home (except for high tech). On a global stage, Chinese interests are in many economic areas and even in political areas similar to EU interests. Good Game.
  • Turkey might be the big loser. It has alienated France, Germany and the Netherlands with direct involvement in elections, politicizing the local communities and in prosecuting EU journalists. There is no chance that any Government in Europe would take a battle for getting closer to Turkey at this time, and it would be suicidal given the current nationalist tendencies in Europe. Moreover, Turkey’s former strong supporter US is angered with its military role in Syria/Iraq and has anyway lost its political clout in Europe. Overplayed.


Or in a nutshell: Germany will continue to be a stabilizing factor, for now. The Government is not what the population would prefer today, but it could prove stronger or more popular than expected. European integration will benefit. US and UK relations will be challenging.