Never better time than now to read……48 Laws of power

48 Laws of Power is a riveting narrative on the politics of power from bestselling writer Robert Greene. The book focuses on three main aspects of power. The first is observing power in others, while the second thread involves gaining power for oneself. The third element the narrative concerns itself with is defending oneself from the power plays of others. Some critics have pointed to the fact that the book seemingly glorifies unethical ways of advancing oneself in the workplace, or in life. Even if readers do not intend to obtain power, however,

Greene’s book is effective in helping readers combat the abuses of power, and other ills, both in everyday life and in the workplace.
Greene’s book spans three thousand years, thus including the philosophical beliefs on power from Machiavelli, Sun Tzu, Carl Von Clausewitz, and others, such as Henry Kissinger and P.T. Barnum. Greene’s book is also a notable presence in the field of power politics in that it summarizes the philosophical bases at the heart of these great thinkers. After delving into the history of power, Greene then summarizes his findings by placing his knowledge into 48 laws that he claims are essential to understanding, obtaining and wielding power.
The book is written in an easy-to-understand format, with the 48 laws as readily understandable as they are brief. For example, Law 28 says “Enter Action with Boldness,” and is meant to underscore the value one should place in confidence as it relates to power. A seemingly problematic law like Law 15, which states: “Crush Your Enemy Totally,” can shed light on the necessity of self-preservation in power politics. Moreover, Law 1, “Never Outshine the Master,” ( most important law in today’s as people have become more INSECURE)can be viewed as a caution for prudence when conducting affairs. These examples highlight how Greene’s laws, though seemingly elementary in their brevity, can be both easily understood and applied to larger issues at work in power politics.
Some critics have also taken issue with the apparent ruthlessness of the laws, placing Greene in a similar role to Machiavelli with his realistic take on people and politics in Italy. As noted above, though a law like Law 15 might appear ruthless in its simple statement of “crushing one’s enemy totally,” the aim of these laws is to allow readers to not only think about the laws’ place in power politics but to apply them as necessary. This means that people who are seeking to understand bosses or coworkers can see in Law 15 how or why they are being treated a certain way. As such, these laws are powerful tools for observation and understanding. They provide the necessary steps for those seeking to understand power and why (or how) it is used for good and/or ill.
Even for those readers who may be seeking to gain power, Greene’s laws highlight how best to approach a myriad of situations. For the prudent reader, these laws can be “translated” to fit a given situation. For instance, when Greene pronounces Law 8 to be “Make Other People Come to You – Use Bait if Necessary,” while some might take issue with “tricking” or “deceiving” others, in luring them in, the law can be read otherwise. Readers can view this law as a challenge to make the “bait” as appealing as possible. If readers place themselves in the role of the bait, the law can be understood for the advice it gives: make oneself as appealing as possible so that others are attracted without reserve.
Though the 48 laws deal with the undeniable way one can dominate a political situation completely with the right tools, Greene’s assessment of power over the course of the centuries also sheds an interesting light on relationships, morality, truth and love. The laws bear witness to what man has achieved or attempted to achieve over the centuries, and how these attempts and successes often stem from the knowledge, or lack thereof, of how to effectively wield power.

Regardless of one’s intentions, 48 Laws of Power is a delightful, insightful read

https://www.tke.org/files/file/The_48_Laws_of_Power.pdf

Everybody is in the same boat

BOFA does a survey of Fund managers and the following graph should not come as a surprise to investors. Every asset ( EM equities, EM bonds, Commodities) has been sold to buy US equities.

Now that rotation is also almost over.

If dollar index continues to strengthen and DXY break out above 96 levels then US long bond will be the next big beneficiary ,but if US dollar breaks down over here get ready to see fireworks in commodities in general ( they have never been this cheap in last 20 years compared to equities).

India sees a steep drop in public opinion about the state of the economy

Long-term public opinion data on the economic mood in emerging markets is less comprehensive, but it suggests good feelings about the economy may have peaked in some cases. In India, 83% thought the economy was good in 2017; 56% think things are going well in 2018 (Pew’s Spring Poll, published today)

Three macro ideas to play coming unwinding of currency and Financial asset bubble

Crescat Capital letter to investors ….focuses on three key macro ideas that are complementary plays on the unwinding of currency and financial asset bubbles at a likely peak of a global capital cycle, the most leveraged in history:
1.Shorting US stocks at proven, historic-high valuations relative to underlying fundamentals with abundant catalysts for a near-term bear market leading to a US recession;
2.Shorting the overvalued and weakening Chinese yuan and China contagion plays to express the unwinding of a credit bubble that is unprecedented in scale and already bursting; and
3.Buying precious metals commodities at record deep value compared to the global fiat monetary base and related miners at record cheapness to the underlying fundamentals with an increasing number of important new signals showing rising US and global inflationary pressures and a hamstrung Federal Reserve that is unable to stop them.
These themes represent what we believe are the biggest macro imbalances in the world today

https://www.valuewalk.com/wp-content/uploads/2018/09/Crescat-Quarterly-Letter-The-Hamstrung-Fed1.pdf

Just How Wildly Exuberant is the Junk-Credit Market?

Wolf Richter writes that…..The deals in Junk credit market are reminiscent of the kind of deal one would have seen in 2006 and 2007.” They’re still blowing off the Fed.The share of these so-called “covenant-lite” (“cov-lite”) loans compared to all leveraged loans outstanding keeps setting new records. LCD of S&P Global Market Intelligence reported today that cov-lite loans in August accounted for 78.6% of outstanding leveraged loans, and up from 55% in mid-2014:

Read More

https://wolfstreet.com/2018/09/18/just-how-exuberant-is-the-junk-credit-market/

Rupee in a global world: India’s macroeconomic framework is based on an antiquated belief that the economy is closed.

Jahangir Aziz writes in Indian Express… There is an entrenched and widespread belief among the same analysts and policymakers that India is a closed economy protected by its much vaunted regulatory and capital controls. Nothing can be further from the truth. Every time the world sneezes, India catches a cold. It happened in 2008 when Lehman collapsed; in 2011 during the European sovereign debt crisis; in 2013 when hit by the Taper Tantrum; and it is happening now.

The crux of the problem is that India’s macroeconomic framework is based on an antiquated belief that the economy is closed when in reality it is far more open. For example, the RBI has rarely linked its policy decisions to changes in global interest rates even after shifting to an inflation-targeting framework. It is the same with fiscal policy. Every budget document begins with a perfunctory paragraph on “global developments” but neither taxes nor expenditure has been changed in response to what has happened outside of India except when forced by crises. The overall fiscal deficit has remained virtually unchanged around 7 per cent of GDP since 2013-14, the year of the Taper Tantrum, despite the global economy, financial conditions, and oil prices undergoing large cyclical changes.

Consequently, when faced with a global financial shock, neither fiscal nor monetary policy has, as matter of course, adjusted to safeguard the economy. Instead, we have scurried around for ad-hoc solutions, as is gaining currency now with suggestions for more NRI deposits or external bond issuance. I am sure we will come up with another clever scheme and then pat ourselves on the back on how that staved off a crisis. However, we will face the same challenge again the next time global conditions change.

https://indianexpress.com/article/opinion/columns/indian-economy-rupee-vs-dollar-gdp-5361304/

why Global wages will no longer rise?

Companies in matured economies are scrapping annual wage reviews because most employees are  disappointed by meagre increase in wages. As Indian economy gets more matured (few firms having large marketshare in an industry) employees bargaining power is only going to erode.

The next industry in India where employees will loose bargaining power  is Financial services mainly Mutual fund, insurance companies and advisory business.There is technological disruption on one side which alone would have been easy to adopt without big job losses but on other hand the ever changing regulatory framework is aimed at consolidating the industry driving out the marginal players.

Below table from oxford economics enumerate “Many global factors which will hold down global wages”

No, Governments With Monetary Sovereignty Cannot Issue All The Debt They Want

Daniel Lacelle writes in this interesting piece “A country with monetary sovereignty can issue all the currency it needs” is a fallacy.
Monetary sovereignty is not something government decides. Confidence and use of a fiat currency is not dictated by government nor does it give said government the power to do what it wants with monetary policies.There are 152 fiat currencies that have failed due to excess inflation. Their average lifespan was 24.6 years and the median lifespan was 7 years. In fact, 82 of these currencies lasted less than a decade and 15 of them lasted less than 1 year.

Governments always see economic cycles as a problem of lack of demand that they need to “stimulate”. They see debt and asset bubbles as small “collateral damages” worth assuming in the quest for inflation. And crises become more frequent while debt soars & recoveries weaker.

The government benefits the first from new money creation, massively increases its imbalances and blames inflation on the last recipients of the new money created, savers and the private sector, so it “solves” the inflation created by government by taxing citizens again. Inflation is taxation without legislation, as Milton Friedman said.
First, the government policy makes a transfer of wealth from savers to the political sector, and then it increases taxes to the “solve” inflation it created. Double taxation .

which is exactly the case in India till we institutionalized inflation targeting. This did not leave wriggle room for the govt to find its way out of mountain of unproductive debt and the result is Muddle through economy

https://www.dlacalle.com/en/no-governments-with-monetary-sovereignty-cannot-issue-all-the-debt-they-want/

Applying My Debt Template to Now to Try to See What’s Ahead

Ray Dalio Writes…To reiterate where we stand now, a) the short-term debt cycles (also called business cycles) of most developed countries are in the 6th or 7th innings so they are not near their contraction phases. These expansions typically go on about 7-8 years (plus or minus a few years) with the longer ones coming when there is a lot of slack due to the last contraction being a deep one and when growth has been slow. Since the last one was deep, growth has been relatively slow, and debt growth is not high relative to income growth, and since capacity constraints that now exist are not leading to dangerously high inflation and fast tightening, it looks to me that we have a couple more years left in this cycle’s expansion. At the same time b) the long term debt cycles of most developed countries are in their very late stages and their abilities to manage the obligations will be difficult. I say that because the total debt and non-debt (e.g. pension and health care) obligations are large/growing and the ability of central banks to reverse a contraction is limited (because interest rates don’t have much room to be lowered and because the ability to squeeze more growth from “quantitative easing” is limited). For these reasons and because of the size of the wealth/opportunity gap that exists, I am more concerned about the outlook for a couple years out than for the near term. I hope that the template that I explained in the first 64 pages of my template https://www.principles.com/big-debt-crises/ will help you figure things out for yourself. Of course, one has to run the numbers to get as accurate as possible in applying that template to form a good outlook.