Vive la France – or not?

The first round of the French Presidential election is finally over. International press and investors are relieved and cheering, basing their enthusiasm on the following points:
  • The worst case, a run-off between the extreme right (Le Pen) and the extreme left (Melenchon) has not materialized
  • Everybody is counting on a home-run for Macron to beat Le Pen in the run-off in two weeks
  • And, omg, the researchers have been right in their forecasts this time (btw the first time in a major election since 2015)
In reality, the situation is far worse, than it looks at first glance. This election will be a further burden on France, which has already been punished by Hollande’s Presidency for the last five years, and it is doubtful whether the French population is yet ready for any serious improvement. Here is why:
  • France for the first time since WWII has nearly half of their voters who are blinded by either nationalist or communist ideas, and are openly against membership in the European Union. They are against all long needed reforms of the French economic system, in which today the bloated civil service is acting as an iron wall against any performance oriented reforms, in which the focus would have to be more on give and do than on take. This is a bad foreboding both for up-coming parliamentary elections and any reforms that would have to be explained to the population.
  • Macron, in case that he will win the run-off, will be a President without the Parliament’s backing, and it would be a miracle if he could engineer with his new movement a solid majority in the upcoming Parliamentary elections. The Co-habitation between President and Parliament from different parties had already proven very bad for political progress in France in the past, and is very hard to imagine how major reforms in France (which always co-incide with the „Misérables“ inspired burning of tires and blocking of roads, that is unfortunately enshrined in the French genetic code) could be executed in this setting. He will be a President who can only rely on the public vote, but if nearly half of the population will be on the barricades ..?
  • It is not yet clear, whether Macron will really win so clearly in the end. The voters from the extreme left might be tempted to vote for Le Pen and also some voters from the conservative party might not be amused to vote for a Mini-Hollande. And then …, there is still the chance of foreign meddling in the election, and the uncovering of a media hyped scandal. Francois Fillon has shown how fast a leading contender can burn to ashes.
France is in urgent need of a strong President, seconded by a strong Parliamentary majority, who can re-design the French societal contract to be able to cope with the challenges of the next decades. Illusions of an endless growth of the state have to be burned, and it will hurt. It will hurt the many people who believe that it is normal to start a pension at the age of 55, after having been exploited for decades by working 35 hours per week. The longer this illusion is kept, the more radical and revolutionary the answer will be one day in the not so far future.
The election result is a drastic outcry of the population, strengthening the extreme parties and weakening the established left and right, who have led France into the current disaster. As in other countries the middle class and the working people in the private sector have been sucked out by a bloated public sector and over-spending, state regulation, over-administered social systems which are in addition strained by too high un-employment, and a growing feeling that French politicians lack the courage for real reforms. The global role and importance of „la Grande Nation“ is diminishing fast and this is hurting the French ego. Someone has to tell the French, that greater wealth, higher employment and sound state finances, will only result from hard work, more flexibility, greater innovation, attraction of the best minds and entrepreneurs, rewarding and not punishing performance; and that it will not result from ever more taxes, more state employees, higher welfare benefits, more tricolore flags, less globalization, more deficits and state spending. Imitating Trump in a „France First“ movement will work even less with a home market the size of France and the top-down, Paris-centric corporate and industrial French culture.
We will see whether Mr. Macron is up to this task. It is definitely too early to cheer.
State of the Nation Comments Off on Vive la France – or not?

The Divorce Battle has Finally Started

What a pity that Donald Trump is not residing in Downing Street No 10 but in the White House.
Otherwise there could be hope, that the execution of the mother of all divorces between the UK and the EU could still fail due to hasty, lousy or legally weak administrative action. But with the daughter of an Anglican priest at the helm of Britannia, there should be no doubt, that a clear and clean separation will be delivered at all cost for the family, or as she puts it: Brexit means Brexit!
For now, bullish stock markets and collective self-delusion, the illusion of regained independence and identity are keeping the spirits up. This will change rapidly.
Soon the public mudslinging will start and the hard numbers bite. Have a look at some very interesting numbers:
Time to hand over divorce papers 29/3: 1 Minute
Divorce Payment asked by EU: > EUR
Annual Net UK Payment into EU so far: EUR
Food Price Increase due to border controls: 8%
Number of Scots Against Brexit: 62%
UK Exports into EU of all Exports: 45%
Number of Trade Negotiators (pre Brexit) UK: 20
Hiring Gap New UK Trade Negotiators: 300
Number of Trade Negotiators (pre Brexit) EU: > 600
Number of EU Members in Top 10 UK Trading Partners: 8
For the rationale spectator, it is very hard to understand how the UK will be able to achieve in 18 months successful negotiations with the EU on terminating its membership and starting a new trade deal, with only a handful of experienced trade negotiators. And to make this job more difficult, Theresa May has raised high expectation for new trade deals with the US, China, India, Australia and many more. Btw. the EU is leading trade deal discussions with India for more than 10 years now, stalemating among others due to UK concerns on immigration.
Many fear the hard Brexit will end in a hard landing into reality. The financial services sector is already relocating, prices are increasing and will further do so, investment from EU countries into the UK has come to a standstill, political cohesion of the UK is rapidly eroding, the London real estate market is dead. Theresa May is well advised to call a general election and secure a comfortable majority before these effects will become visible.
In case that negotiations will turn sour, and if you look at the sheer numbers and the political significance for the UK and the EU, there will be a 80 % chance of just this happening, the relation between the EU and Great Britain will be seriously damaged, probably for a whole generation. This is the real danger for Europe and for each European, far worse than any economic downturn. Rapid lecture of Jane Austen’s „Pride and Prejudice“ should be mandatory for Liam Fox and the UK Trade Negotiators as „The Parable of the Lost Son“ for Michel Barnier and the EU Trade Team. Only a combination of less UK hybris and more EU generosity and tolerance, and a grand political gesture of good-will for the sake of the greater good can save us now from a centennial hangover. Probably we will first see a dramatic escalation and darkening of the negotiation process and results before any significant and productive process will gain ground.
The divorce battle has finally started. Let the mudslinging begin!


State of the Nation Comments Off on The Divorce Battle has Finally Started

7 days in office – who will call the bluff?

The RealDonald proves to be very real. 7 days in office, and the world order is already shaking. The world is paralyzed, and in utter disbelief what is happening and how fast and how un-contested. Whoever had hoped or feared that the behavior of the President is different to the behavior of the President-Elect and to the the behavior of the Candidate has been proven tremendously wrong. What do we learn from the first days of the new President:
  • Election promises will be executed, fast and without compromise
  • The media will be bashed and intimidated
  • Twitter will remain the most important tool for policy announcement
  • White House and President will be ruthless providers of alternative facts
  • Policies are based on Presidential gut-feelings (the master dealer)
  • Whoever dares to criticize will immediately be publicly punished
  • The White House is dominating if not enslaving the GOP, the House and the Senate.
  • A desperate Theresa May is ready to prostitute the UK and its beliefs and values for the sake of a free-trade deal with the US
The humiliating treatment of the Mexican State and the Mexican President is un-precedented, and it sends a clear warning to other leaders and countries, who will be next in the line of fire: China, Japan, Germany, Iran and many more. The frightening thing about Donald Trump is that he has behavioral patterns of a narcissist gambler. He will march on without pity and fear, and will raise the stakes, until someone has the courage and power to call the bluff. The longer he can go on without resistance, the more dangerous the game will be for the US and for the World. The faster he will be forced into compromise and truth by US or international players, the better the outcome will be.


As Donald Trump is an enormously energetic change agent, he has a great potential to change the US, the economy, even the World for the better. But only if he will be contained, channeled, managed. This is unfortunately where the doubt comes into the play, as we have seen some patterns evolve over the past days that should be reason for concern. So who can call the bluff?
  • The GOPunlikely, they are recovering from the ashes of a divisive campaign and sun bathing in the glory of dominating house and senate, Paul Ryan has become a puppet.
  • The Democratsunlikely, the party is completely in shatters and powerless, and the message of taking care for the forgotten man and woman goes down well with many Dems
  • The Senatemore likely, Marco Rubio and Ted Cruz are waiting for their revenge and to position themselves as potential successors
  • The Pressvery likely, investigative journalists from the US will put a lot of energy into shedding light on Trump’s taxes, scandals, un-proper deals, lies. Every bashing will make them more hungry for the story
  • Russiaunlikely, they will ride this wave as long as possible and exploit the situation, that Trump has promised to improve the relationship
  • Europeunlikely, completely divided, in the middle of election campaigns, on the brink of EU collapse
  • Chinamore likely, after ending TPP, China is the partner of choice, and the economic power enormous, they will not be intimidated by Trump
  • CIAmore likely, huge mistake of Trump to alienate publicly the services, they have a life of their own and they can be dangerous
  • The Economyvery likely, It’s the economy, stupid! Impulsive actions and un-necessary trade wars might lead to more debt, weaker dollar and recession. The bluff would then be called by reality!
Donald Trump is one of the greatest marketing geniuses in the World. From the organization of his campaign, the public crushing and humiliation of his opponents, the brutal crippling of the truth and the admirable mastering of direct communication with his fans and the general public via Twitter, it is clear that he is a brilliant sales man and marketeer. We have bought him and his ideas, and we will continue to cheer, as everyone is hungry for simple answers, fast solutions, pride and love for the nation, strength of the military and rising wages for the forgotten people, and let us not forget: we love to be entertained.


The problem is, there are no simple answers and solutions in our complex world of today. And the big danger is, that we are buying into simple, often unreflected answers and concepts, that will prove very costly and damaging in the end. The US and the World will pay dearly: in case we will get into a trade war with Mexico and China, in case the US will further destabilize the European Union or in case the US is ceasing to be the leading torch of the free world. Fake concepts, fake news, alternative facts and outright denials, when proven wrong, will lead at a certain point to an enormous crash – like building a great casino with a grand opening, and ending in bankruptcy. It is time that someone calls the bluff. The stakes keep raising.
State of the Nation Comments Off on 7 days in office – who will call the bluff?

Kompromat – the new IT world order


Kompromat – Wikipedia

Kompromat ( Russian: компромат, short for компрометирующий материал) is the Russian term for compromising materials about a politician or other public figure. Such materials can be used to create negative publicity, for blackmail, or for ensuring loyalty. Kompromat can be acquired from various security services, or outright forged, and then publicized by paying off a journalist.

Yesterday, news outlets around the World were eager to spread the news about compromising facts (in Russian called Kompromat) that had been collected by the Russian secret service (and without doubt also by other services) on Donald Trump. Immediately speculations were brought up, fed by opponents and hungered for by sensation and scandal paparazzi, that the future most powerful person in the World could be potentially blackmailed, and immediately confidential parts of intelligence reports are publicly available on the internet and could be the storyline for a new James Bond movie (see below). Whether these reports are real Kompromat or fake news, we will never know.
The good news first: it can be seriously doubted that Donald Trump can be blackmailed. In German there is  the famous saying, that once you have been publicly embarrassed, you can behave as you wish, there is no danger of further embarrassment, in other words you have received a kind of carte blanche on public shame. We can agree, that as Donald Trump is the incarnation of political incorrectness, he has long time ago earned this carte blanche, and his followers will further cheer revelations on Russian honey traps and deal sweeteners. In reality this will kill any potential for blackmail. Even the toughest kompromat will not compromise the new President. For sure, this situation would have been much more serious given a party animal, political correct or even Mormon President would be in office.
Now to the more serious part of the story. We are seeing the tipping point, where our dependence on IT in every sector of our life is rapidly becoming our biggest threat, the Achilles heel of both the safety of the general public, but also of every individual. Influence Meddling with US elections, hacking of DNC and the kompromat on Donald Trump are just the tip of the iceberg, In reality, there is no protection of the state and by the state, there is barely any meaningful regulation and inter-country co-operation to increase the IT safety levels of our countries and us as citizens. I am convinced that this will be seen in very short time as one of the biggest scandals and acts of naivety of global politics and as a great failure of political as well as corporate leaders.
We invite you to reflect on the following topics:
  • Global criminal groups and terrorists will hit: the next big terror attack will be a cyber attack. Last year we have seen many tests for attacks – on telecom infrastructure, energy grids, banking systems and hijacking of devices. Although these were already impressive attacks, many experts believe that they were only test balloons for future, much more massive attacks.
  • Increased influence meddling in international political and corporate affairs: Do not believe it is only Russia. All(!) Governments who have the technological capabilities, use cyber activities to support their international policy agenda. This will increase dramatically, as the barriers for meddling go down and the tools and techniques get more refined. Whatever you see on the Government level, you will also see with a certain delay in the corporate sector.
  • Loss of authenticity of information: Nobody can say or verify, whether any piece of information, news or report is authentic or not. The proliferation of so-called fake news and the labelling of true news as fake news is on the extreme rise and the individual has practically no possibility to verify any received information.
  • Hostile activities against individuals and corporations: stealing of information and knowledge, break-ins into bank accounts and all other private data areas, diffamation with fake news or illegally placed documents and traces into your private areas, will be a serious threat to all individuals and corporates who are not extremely careful and/or protected.
  • Dark web transactions: We are aware and we allow parts of the internet to act openly and completely outside of any legislation, and to be used for national and international drugs, narcotics and arms proliferation as well as all other kinds of illegal activities. This is a time bomb for the future.
How can one react and prepare against these threats? Practically not much. A lot of time has been lost, and the global IT/Web architecture is open and fragile. So for now, protection seems to be the best available option. On the macro level this means:
  • Expect a massive international arms race in cyber war and IT defense measures
  • Expect the IT security industry will finally get the real big boost
  • Hopefully, the UN will start  to engage and found UNITA or similar, as a special UN agency for IT regulation and protection against abuse of the global web.
And on the micro-level?  As even Angela Merkels phone can be listened, consider that all phone calls, all emails, all SMS and even your Vibers and Whatsapps are hacked, listened to and surveilled and might be used against you by your own or foreign Governments, by criminals and by political or business opponents. In this case hold it with Donald Trump: write and talk less sensitive information on phone/internet. Get invested commercially into IT security and apply it for yourself, and do not put too much trust in any news, in the political or economic arena, it could be fake, or fake fake, or verified fake, or falsified truth, or simply a kompromat. You name it.
State of the Nation Comments Off on Kompromat – the new IT world order

The civilized world must change thinking!

Not all President-elect Tweets in the past have proven so spot-on as the one, Donald Trump tweeted yesterday following the presumably islamistic terror attack on a German christmas market in Berlin, and further terror attacks in Istanbul and Zurich the very same day.
The civilized world must change thinking!
He could be right. By now, we know the symbolic public and state procedures that have followed similar attacks in Paris, Nice, Brussels, Istanbul and elsewhere: We condemn the attacks, we stand in solidarity with the families of the victims and the traumatized cities, we vow to protect our open societies and democratic values, we will not allow terrorism to influence our daily behavior and we will make intelligence and security services around the globe co-operate more closely.
But is this really enough? Debatable.
The real danger that we face today is, that by applying a too soft and open view on the terrorist threat, we will undermine the very basis of our democratic systems: the monopoly of power of the state in combination with the state responsibility to protect our safety. In case that a democratic Government cannot render this guarantee, people will start to go for the extreme. And select a leader who can deliver on the process without any compromise or as a Philippine citizen had put it yesterday: Duterte (President of the Philippines) is bad for human rights, but the people can walk safely in the streets again. The problem with these leaders is that once they are unleashed, it is very difficult to tame them back.
In order to find a cure for the current threats, we have to first face the ugly face of reality, throwing all political correctness overboard. Do not start the blame game of past events, actions or political decisions, but simply take a clear view of the current situation:
  1. By allowing millions of islamic refugees and former islamist fighters uncontrolled from crisis regions into our countries, we have imported a real security threat
  2. Terrorists can freely move within Europe and supply themselves with weapons. They hate us and want to harm and kill us
  3. Islam has a serious problem if it cannot control extremist movements and terror. Terror today is not buddhist, hindu, jewish or christian; we have seen 100% islam background
  4. There is a series of Governments, who openly or covertly (but known to our Governments) support islamist and terror organizations around the World
  5. Some countries are better than others in protecting their citizens
Accepting these truths, one can work to find and execute a cure, for which logically there have to be the following cornerstones:
The objective must be total eradication and fight on all fronts. Half-hearted responses will not work.
  1. 100% registration of all refugees and returnees from war zones. Regular security checks. Maximum surveillance. Check of identities with home countries. Lots of surprise checks and controls. 100 % surveillance of any islamist movement. Zero tolerance for islamist ghettos or no-go zones for police and security forces.
  2. Immediate two year suspension of Schengen agreement for all countries. Military grade fight agains trafficking groups in EU and abroad. Immediate repression against all open and covert market places for weapons within Europe. Create European centers of excellence to strongly oppose terrorism: finance, cyber, trafficking, identities. This could be a great European project, better than building new armies.
  3. Serious discussion with islamist leaders around the world to make them understand their responsibility for peace and to motivate them for strong and sustained messages against war, terrorism, hate. If they do not comply,  immediately blacklist them and their followers, and fight them financially and electronically.
  4. Out and highlight Governments and leaders loud and clearly who support, finance or tolerate terrorism or provide hiding space for terrorists. Stop immediate co-operation with countries who are not complying, even if this comes with an economic impact for us. Start UN Security council initiative to fight terrorism jointly with all veto powers in the UN: US, Russia, UK, France and China all have a shared interest in stopping this danger for humanity.
  5. Learn from countries like Israel, who live for decades with enormous terrorist threats how to protect, prevent and enjoy life at the same time. It is possible. But surveillance and protection have to start much earlier and at different inflection points, and the European countries have to learn a lot.
Although helpful in the long-term it does not help now to talk about development aid or peace initiatives for crisis regions. The enemy has already arrived and moves within our societies, as all terror attacks in the past have painfully proven. We need to act in our countries.
State of the Nation Comments Off on The civilized world must change thinking!

Europe Must Not Die!


Good Morning to the New Normal.

Italy has voted to remain in a political deadlock and to protest against the ugly truth of necessary reforms. Austria and the shatters of the European old guard are celebrating the defeat of the Austrian (Far-)Right with a convincing (?) 53-47 score, while the country itself remains hugely divided. In the mean-time the RealDonald has decided to save on the US diplomatic corps and to solve all urgent international matters by President-elect Tweets. But no worry, if things turn sour, the European Central Bank is ready to drown us in ever more money and to punish any type of cash hoarding or positive bank balances.

Stock and Currency markets take account of this new normalcy, major stock indices and the Euro rise. One is inclined to keep calm and think “So What?”. In reality we are witnessing the rapid dissolution of the European Union, and if politicians do not find fast any common and stable ground to put the European institutions onto, the noble-prize of peace awarded project will soon be history, blown away in an ugly, and un-controlled way. Of course there is rightfully some “Angst” going around, but things might in the end turn out much better than what they look like, and this is perhaps what financial markets already predict. An old wisdom is saying, “You have to face reality, before you can shape the future”.

Political leaders in line with an un-critical media/press (in Europe often still state financed), both in the US and in Europe, have lived in denial over major realities for a very long time and branded everybody either populist or extremist, who was naming these realities. However, the broader population has a very sensitive feeling for these realities, and is turning more and more to the people who name these realities, although in most cases they have no answers to these realities, too. Let us share at least some of these Lord Voldemort type of realities (“You Know Which realities”), that have been systematically denied over the last 10-15 years:

  • Some countries cannot survive in the Euro, their countries suffer. Italy is the most prominent example.
  • Europeans do not want more economic or political integration, they want to stay in charge of their own countries. There is no wish for a United States of Europe.
  • Greece without other tax payers bleeding, is bankrupt.
  • The economic spread is rising and fast and the chill factor is enormous: poor and rich people are not paying taxes at all (see football leak), our Governments are accepting it. Middle income clusters are strangled and cannot build any long-term wealth.
  • Pensions are not safe at all. When generations of people live until 90years+ and young people do not reproduce, we cannot go into retirement with 60-65 years. We need to increase age of entry into retirement and decrease pension payments, and drastically, or: create other source of tax income to pay for it.
  • The Central Banks have created the mother of all bubbles. They have no idea how to come back to normal interest rates and state financing.
  • We have too many immigrants and we do not want more. We will not be able to integrate the immigrants smoothly into our labor markets.
  • Interventionism and change of regime activities for the sake of democracy and human rights have led to a complete Middle East chaos, instability and rise of global terrorism.
  • Transgender toilets and adoption rights for gay couples are not burning issues for most of the people.
  • Whoever tells a truth, is not a populist or an extremist.

Once the ugly truths are digested and acknowledged, we will realize that the future is bright. First, Europe is much more than the European Union, and the friendship and respect and interrelations between the countries are enormous and lasting, and that vast diversity is the real asset of the continent. Second, there is a real chance, that we re-discuss the areas in which more integration is needed (like defense, fight of terrorism, border protection, climate control), and the areas where less integration can do a lot of good (daily life, monetary policy, taxation).

Let us not forget, that Europe is not the European Union, it is the European idea of peace, friendship and diversity, stability of borders and human rights that make up Europe.

State of the Nation Comments Off on Europe Must Not Die!

The Donald Has Trumped Everybody!!


A lot of people in Europe start their morning coffee, partially in frustration over US election results. Let us look on the bright side of this election results, that will rock the world at least in the same way that Brexit did. As Nigel Farage put it: „2016 has brought two revolution to us“ or the Ryanair CEO „At least it will be entertaining“ or famous US rapper Snoop Dog, reflecting on legalization of Marihuana in California (that was also voted vor tonight): „let us all take a spliff and relax“.

But: Congratulations to The Donald. The most powerful office in the World is won by a man, who has beaten main street, wall street, media, and last but not least his own party. He has put an end to Bush and Clinton family clan dominance and an end to an 8 year period that has turned the world more un-stable. It is a clear victory for democracy, and I predict, Trump will be a strong President. The people have voted to take their Government back, against all odds.

After nearly 18 months of an extremely entertaining election campaign, here are our main take-aways, of course purely subjective, but being a result from talking to many leaders and great minds:

(1) Trump will be a strong President: presumably winning not only Oval office, but also House and Senate, Trump will have a strong backing to push the political agenda and bring real change. He will turn the energy of all systems to make the US stronger economically, and that will not only be good for the US, but for the whole world. The GOP will be a slave to Trump, as it is purely thanks to him, that they are still in business.

(2) Endgame of party dominated representative democracies: Both Trump and Sanders have proven, that in today’s instant information world, parties have become obsolete. An authentic candidate can gather and engage masses of followers without big infrastructure, party apparatus and political experience. This has also been confirmed in other countries in the recent past. Given the fact that the multipolar party systems have been a stabilizing factor in post WW2 Western democracies, we are only starting to realize what impact this can have on the future of public governance, policy shaping and decision making.

(3) New negative levels of trust: Complete and instant global transparency on mistakes, failures, betrayals and inconsistencies have led to an incredible deterioration of people’s trust in institutions. We do not trust any more, and often we even hate: the establishment, the parties, the leaders, companies (Volkswagen), Islam, immigrants, even the Church. Authenticity and brutal personal branding will be the key political success factors of the future, an Eldorado for the new Populists in this world. But also an enormous potential for changing rigid political structures and red tape bureaucracies, bringing power back to the people. Trump, at least, has not held back with his views, with his flaws, with the human side of him, and he has a personal brand, that is of course not appreciated by everybody, but it is authentic, and that has made him President.

(4) Elections are influenced from outside powers: Media and IT based democracies are very vulnerable for outside influence meddling. As we know, everybody is spying on everybody and now everybody is hacking everybody. Our IT infrastructures and social media are dominated by a handful of players. Both foreign powers and NGOs/companies with IT capabilities wield power in this respect as we have seen in the US elections – and they are ready to use this power for their political objectives. This will be for sure one of the top IT security topics in the coming years.

(5) World will be safer: The world needs a strong US and a strong US leader. In the 8 years of Obama’s (and Hillary’s) foreign policy mess the world has become less safe. It was characterized by a complete lack of political and military coherence and the readiness to throw even long term allies under the bus for short-term PR gain. The Middle East is exploding, the Pacific Strategy imploding and the relation with Russia in a cold war state. Even for creative minds it is difficult to understand how Hillary with her Egypt, Libya and Syria legacy and her failed Russian re-boot could have improved this for the better. Trump will concentrate on the US, and he will only interfere where he sees a long-term benefit for the US. Now there is real opportunity to come to terms with Russia and solve at least some of the burning conflicts. He will however demand stronger contributions from US allies. Arms producers and defense services providers can prepare the champagne.

(6) Economy and Investing: Financial markets will go down in the short-term, perhaps even significantly. This should be welcome, as we have been in a mega bubble state of financial markets, and any development of deflating this bubble without complete crash, should be welcome. There is hope for a re-surrection of real industries, and the containment of financial markets and central banks. With interest rates set to rise (hopefully), Brexit to materialize, China slowing down, and political risk increasing everywhere, there is a high risk that the mother of all bubbles will now find an inflection point to slowly deflate. In the mid-term we would clearly overweight: US, EU (Germany, Spain, CEE), USD/Gold/real estate/industrial assets/agriculture, and preferably direct investments. Avoid: China, Mexico, Latin America, Middle East, UK, Oil.

(7) One last word: We credit the US to be one of the most stable and admired democracies. This was a victory for democracy. Clinton, Bush and Kennedy family clans and all administration and financial market elites have dominated the political establishment for too long. This is a real-world win over cnn, google, mainstream media; and again the polling industry should seriously review its business model. Many players will lose huge money thanks to their forecasts. Now, all eyes on Trump. He has to demonstrate, that he is not a Bully, but a President for all Americans. And he will.

Enjoy your day, God bless America, and may Donald Trump prove all critics wrong and become the best President ever in US history!

State of the Nation Comments Off on The Donald Has Trumped Everybody!!

The Storm

Dear Friends,
Whoever I talk to these days in politics or business, has a feeling of uncertainty and risk, kind of doom in the back of his mind. And this is accelerating. Not a good omen for financial markets in the coming months and years. We have approached and discussed the topic with some of our partners systematically and wanted to share this with you for your personal consideration. We call it: the perfect storm.
Actually, we see a series of inter-related mega trends, that all threaten financial markets in the short to mid term, but more fundamentally could also mean the end of the capital markets pre-dominance, that we have experienced for the last 25 years. The simultaneous hit/realization of some of these trends, could lead to very serious distortions on capital markets. And these trends, as you can see in the chart, can mutually enhance each other. The perfect storm.
(1) Central Banks have created the biggest financial market bubble of all times with QE, no or negative interest rates and by establishing with financial market players and governments the feeling, that with the slightest cough of market or economies, central banks will just increase the dose of liquidity medication. Dare to stop or decrease this dose, and financial markets will tremble.
(2) Technical possibilities and aspirations/desires from the generation entering the employment market, lead to an un-precendented level of labor mobility, flexibility, independence. The situation, where capital could flow wherever it wanted, free and untaxed, while labor had to stay at its workplace and bear the brunt of national taxation and social security payments is over, and we will experience the beginning of a revolution. Labor is catching up in bargaining power over capital.
(3) This is enhanced by the (justified) feeling of many people, that global growth and wealth concentration, the cream on the global profit soup, had been eaten up by the ultra rich and the big corporates. We will see much higher demands for re-distribution of income and wealth. And more violent.
(4) No good news for big corporates. The EU ruling on Apple is just the beginning. The times of zero taxation (to be precise, Apple had an effective tax rate of 0,005 % in the EU) are definitely over, this will nag on corporate profits and consequently on valuations of companies.
(5) The EU is close to break-up or complete stalemate. South against North, East against West, All against Brussels. And the Brexit talks did not even start. This will definitely have a strong negative impact on stability, growth and peace in the region.
(6) In the US elections we see the two most disliked and distrusted candidates ever competing to become President and to lead the most powerful nation of the World. Any outcome will not help markets. Trump has an out-spoken anti Wall street bias. His motto of “America First“ will lead to more isolation and disputes. Should Clinton win, she will have to move against Wall Street just to show that she is not the pure establishment breed, she indeed is. In any case, for the foreseeable future, the US will be less easy with Wall Street, more US focussed and more demanding with friends and allies.
(7) Ever higher globalization, which was the driver for global growth in the past years, has come to an abrupt end. All talks of TTIP, CETA and others are mere face-saving events than real discussions, and there will be for sure no real outcome. We are on the verge of de-globalization and the re-surrection of the nation state. Wherever you look, national, anti-establishment, anti-globalization, national pride and independence movements are advancing: Britain was leading, but Trump will trump this, but there are also elections in France, Germany, Italy and other nations coming, which all lead into the same direction. With global trade agreements and supra-national integration on the political agenda, politicians do not even dare to apply for office these days. 
(8) Last but not least, the level of military and terrorist escalation is not only frightening, but a serious risk for global stability. In Syria, we experience for the first time since WW2, that not only the main world powers US and Russia, but also all regional powers like Turkey, Iran, Iraq and Saudi Arabia are involved with money, boots on the ground and more. Danger for escalation granted. And not only there. We still have Libya, Afghanistan, South China Sea, Ukraine and many more. Governments will increase over the next ten years significantly military and defense budgets. The peace premium that national budgets, consumers and financial markets have enjoyed with the end of the cold war will turn into the contrary.
Good news: the World has survived worse, and not all must come true. And there is still time for politicians and global leaders to wake up, and for us to prepare.
State of the Nation Comments Off on The Storm

Why the World is falling for Trumpism, and fast.


To put the important things first: I m a profound European, from my mind-set an unconditional liberal person and my family lives close to Nice/France.

We are going to bed with yet another terror attack in France. With an incredible number of innocent people dead and thousands of inhabitants and tourists who were present at the site heavily traumatized. Whoever is still astonished, shocked, afraid or excited about Trump becoming presidential candidate, Britain leaving the EU or Rome being led by an anti-establishment populist movement: prepare for more and faster. Welcome to a period of an in-depth mid-life crisis of Western democracies after an un-precedented period of post WW2 stability. Poor economic development, uncontrolled immigration, terror attacks and weak Western leadership, all is somehow linked with each other. In one point Trump is a 100% right: We need to declare unconditional war on terrorism.

Although fundamentally against these developments, there is one part of me, which is welcoming and flirting with the recent Brexit vote, hoping for a right wing President in Austria and welcoming the cry for stronger Government. Sounds familiar to you? How is this possible? Because we need and we deserve better political leadership in our countries, to address the real problems in our societies and not shy away from conflicts. We are sick of posing another solidarity message on the diverse social media, in the meantime I am Charlie, Paris, Nice, Brussels, Istanbul, who is next in the line of the fire??

Political elites need to address three main developments, otherwise we will see more and stronger nationalist movements destroy the very foundation of our liberal world:

(1) Failure of delivering on the Better-Off promise.
An ever smaller percentage of the population is bearing the burden of tax and social security payments. It is the ones who cannot move their work, income or capital our of their country, who are the betrayed ones. The famous middle class is losing out fast, no chance to build a home, no chance to build a wealth cushion fro retirement. Same on corporate side: The local, small and mid size companies, who cannot move their operations or income streams to tax havens, are the ones who are paying. The Googles, Amazons, and Apples are denying to pay their share for the development of our societies.
We need to have a major overhaul of tax and social security systems to bring back perceived justice to the ordinary tax payer.

(2) Failure of delivering on the Power Monopoly promise.
The citizens have a constitutional right of protection. If the Government gives up the monopoly of power, there is no right for it to continue and people will vote for strong leaders, automatically. How can it be, that we accept uncontrolled immigration? How can it be, that police does not dare to enter certain quarters in Brussels/Belgium, Paris/France or Cologne/Germany? Why do we still allow hate preachers in our countries? Why do we have open borders while our intelligence services and police of the diverse countries are still to proud and closed to co-operate? Why are home and street burglaries increasing so much, without counter-measures? Why is it so easy to buy explosives and firearms ons street markets in the heart of Europe and drugs through the internet?
Liberal rights an open-minded thinking can only flourish in an environment of perceived safety. And we need that perceived safety back fast.
We need to strengthen our security and safety on all levels. We need to solve conflicts to the end and not create deeper conflicts by lacking the perseverance to go through to the end.
Liberalism does not mean to allow other people destroy your home.

(3) Lack of Enthusiasm
The rise of populist leaders and movements is exploiting these two truths as they promise quick fixes, which of course do not exist. We can and should expect from political leaders answers to these truths, otherwise they will be swiped away (and right so), and we will see more and more Brexit and Nice wake-up calls. Trump, Farage and Le Pen have another common feature. They bring their agenda forward with energy and enthusiasm, and they fight for it, and they play with old and new media. They occupy the news stream and dominate the discussions. In our times, personalities and psychology matter more than political parties. The traditional party systems will lose more and more ground until they realize this development, it might be too late.
We deserve better leaders, who are not softened through twenty years of party hierarchy, but combine common sense, with energy, courage and vision. Western democracies are in a mid life crisis and if we do not address the underlying developments and try to build a next generation modern societal contract, we might see development we would not have thought possible a few years ago. But do not forget, we are all part of it.