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The War on Equality

 8 min read / 

“When the Rich Wage War, It’s the Poor Who Die”

This quotation from Jean-Paul Sartre’s The Devil and the Good Lord was used by Linkin Park in their song Hands Held High. It was released about the time of the war in Iraq and intended, it seemed, to be an indictment of the Bush doctrine in the Middle East. Sartre’s play, first published in 1960, predates the song by over forty-five years. It illustrates that little has changed in the power dynamics of waging war. Death comes in many forms: the sudden, horrific death associated with war; and the slow attrition of being ground down by economic adversity. This article takes a look at both and reflects on their connection.

Blueprint for Armageddon

Dan Carlin, something of a prolific podcaster, recorded an epic series of podcasts – six totalling approximately twenty-four hours – on the First World War. Much has been written on this war. There are many things worth remembering from this podcast series. One of Carlin’s focal points is that this war marked a change from the battles of the previous century when, typically, battles started in the morning and were done by the evening.

Battles in the First World War went on for months, years and produced human suffering on a scale never before witnessed. This war brought barbed wire, massive artillery power, tanks, aircraft, poison gas and millions of casualties. Its survivors took the scars of the experience back to their societies and influenced a generation of politics, art, culture and offspring. It was supposed to be the war to end all wars. If war ever had romantic notions of a higher calling – service of one’s country, a glorious adventure – this war swept those notions away.

Carlin talks in detail of the horrors suffered by individual soldiers. His simplest illustration is to suggest the listener go into their garden, dig a hole and sit there, regardless of the weather, for months. He suggests imagining adding artillery fire and the need to get out of the hole to run toward enemy fire moments after watching one’s fellow soldiers be mown down. He talks of soldiers drowning in shell craters filled with mud, their comrades unable to pull them out. He talks of trenches filled with dead bodies and body parts with no prospect of removal or burial.

He contrasts the generals many miles from the front lines, sitting in chateaux, eating solid food and drinking fine wine, planning strategy that fails to take account of the toll that strategy takes on the troops that are supposed to execute it. He remarks on the politicians on the home front trying to manage the evolving emotions of their electorates.

The failure of the campaign involving the battle of Gallipoli caused a change in the British government. Winston Churchill, who was at the time First Lord of the Admiralty and one of the architects of the naval campaign that led to (but was not intended to involve) the ground campaign, was forced to resign. Upon resignation, Churchill joined the British war effort on the front lines, before making his eventual return to politics and playing a pivotal role in the Second World War.

The Politics of the Modern War

US troops are still in harm’s way, most conspicuously in Afghanistan and one wonders why, according to what strategy and with what end in sight. Decisions to commit troops are political. Those decisions involve casualty calculations and those calculations have political consequences. Of course, they also involve lives and families. The political toll of returning body bags was felt acutely during the Vietnam War. The role of the press in chronicling the horrors of that war in real time was to connect vividly the consequences of political decisions to the casualties on the battlefield.

President Trump got in a spat with President Obama (it was a one-sided contest because Obama chose not to participate) about who had done a better job of offering condolences to the family members of deceased combatants. It was a remarkable demonstration of how not to handle such a sensitive topic. It was also a reminder that the era of presidents who have served in the military has passed. One of President Trump’s many awful moments was his comment about his preference for war veterans who had managed to avoid capture rather than be captured – his focus was Senator John McCain.

Votes for Sale

Tax reform was signed into law by President Trump on December 22, 2017. It is the most sweeping tax reform since 1986 and will have a real impact on people’s lives. The GOP believes that impact will be a positive one and felt as an increase in most people’s pay packet. Corporations, however, are the biggest beneficiaries, together with those who invest in real estate through pass-through entities.

It is not the purpose of this article to analyse the Tax Cut and Jobs Act 2017 – that will come later – but rather to point out that decisions that take place in Washington DC, legislative actions, have profound consequences in the lives of regular people who for the most part, do not understand the underlying policy.

The shocking thing about this legislative act is that most politicians do not understand – may not even have read – this legislation. What was important to most was the fact of a tax bill having been passed into law with substantial tax cuts for the most important constituency – well-funded corporate donors.

The lone holdout when the bill was passed in the Senate, before it went to the conference committee for consideration, was Senator Bob Corker. His principled stand was based on concern that the tax cuts produced an increase in the deficit – that this was not prudent and not consistent with GOP principles.

His change of heart is a little mysterious. Perhaps the change in legislative language creating an additional deduction for taxpayers such as Senator Corker who own significant amounts of real estate was a factor. The same language, of course, is beneficial to many in the Trump administration, including the President himself. Perhaps it was simply convenient to tarnish Senator Corker with the implication of self-dealing as punishment for his earlier protest vote. If there were those doubting the absence of principle in the political class, they need look no further than this tawdry example of vote buying.

A Delicate Balance

Bad politics leads to wars. The tight web of national interdependencies built up by Otto von Bismark in the mid-to-late nineteenth century to establish the newly emerged unified German state’s preeminence was beyond the power and skill of Kaiser Wilhelm II to manage after he removed Bismark. It took one simple shot – the assassination of the Archduke Franz Ferdinand by Gavrilo Princip – to bring the whole edifice crashing down.

To release forces concentrated on fighting the Russians, Germany provided money and logistical support to bring Vladimir Lenin back from Switzerland to lead the Bolshevik Revolution. The tactic had the desired effect, though it only prolonged the German war struggle at the cost of many more lives and did not bring about the victory that German General Ludendorff had assured his political sponsors. It also sparked a movement which sacrificed millions more lives at the altar of communism. The allegiance that Ludendorff hoped for was short-lived and Russia returned as a formidable enemy of Germany in World War II.

The Consequences of Bad Legislation

Political victories can be short-lived. The Trump administration is riding high perhaps for the first time since the flush of initial victory at the beginning of 2017. Passage of tax reform is likely to be a short-term political victory. When withholding tables are recalculated in early 2018, many will see an increase in their after-tax income. As the longer-term impact becomes clearer; as entitlements are cut – Speaker Paul Ryan has already advertised this initiative for 2018 – and the initiative to improve the nation’s infrastructure stalls for lack of funds; as taxpayers realize that the benefits of the massive corporate tax cut flows not to employees but rather to shareholders through increased dividends and share buybacks exacerbating the unequal distribution of wealth; then the disaffection will grow.

Speculation concerning the longer-term consequences of this poorly crafted legislation is inevitably subject to personal bias. President Trump has no strategic goals other than self-aggrandizement and poking those whose discomfort will amuse and energize his base. He lacks the ability of Otto von Bismark to use his power to extend US influence in ways that will place America first as opposed to alone.

This is dangerous. When the rich make laws, it’s the poor who pay.

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An Update on Trumptopia: What’s Going on in the USA?

 5 min read / 

Whiskey Tango Foxtrot (WTF)

This 2016 movie, produced by and starring Tina Fey, is based on a book that was written as a memoir by the main character, Kim Barker. It follows a period of three years between 2003 and 2006 – it was initially supposed to be a three-month assignment – when Kim takes an assignment to be a war reporter in Afghanistan.

The premise of the movie is that one’s perspective shifts to adapt to the circumstances, however bizarre, in the manner of the proverbial frog in increasingly hot water. Kim exits before she is boiled, but only just. The most poignant moment in the movie (there are not that many – the emotional tone is mostly flat), is when Kim returns home to visit a marine who lost his legs to an IED in Helmand Province. She had been told by a fellow reporter that the marine’s assignment to Helmand resulted from a segment she reported where he discussed his habit of keeping his weapon unloaded. He had greater fear of an accidental discharge than of an engagement with the enemy.

Barker felt guilty and wanted to give him the opportunity to reproach her. His response was not to blame her at all: “You embrace the suck. You move the f**k forward. What other choice do we have?” He gives her a brief history lesson on the murky issue of causation of the war in Afghanistan and the Middle East.

It is a telling lesson on the complexity of the human condition, people’s tendency to overestimate the magnitude of their own causal contribution to world events and a reminder that there are fewer easy answers than might be desirable.

Fire and Fury

The recent book by Michael Wolff is an excellent read not because it reveals anything the reader has not already heard or suspected, but rather as a sober chronicle of dysfunction and a reminder of what government should be about and what it should not be, but all too often is about.

There was drama in the LBJ administration. There was inappropriate behaviour; foul language; manipulation; ego. LBJ’s time as Vice President was a marked contrast to his stature as Master of the Senate. The transition to President in the wake of JFK’s assassination was remarkable. As the world watched, wondering how this would go, Johnson worked the levers of power to bring in a budget below the level of $100bn demanded by Harry Byrd, Chairman of the Senate Finance Committee as the price for releasing JFK’s tax cut bill that was holding up consideration of the Civil Rights Bill. LBJ continued to work his inside the ropes knowledge of the legislative process to get the Civil Rights Bill passed into law. This was American government at its best.

The picture Wolff presents is American government at its worst. The legislative initiatives that have been undertaken by the current administration are healthcare reform; tax reform; immigration reform. Healthcare struggled and failed; tax reform passed and immigration reform is caught up in the politics of funding the government.

The President’s approval ratings are in the doldrums; he is forced to deny the racism revealed by his vulgar language and he is fighting with his Chief of Staff via twitter. In the meantime, those whose deportation hangs on immigration reform live in fear of arrest and infrastructure reform is on hold.

Unified Field Theory

Steve Bannon, the early architect of the Trump administration policy (since ousted and discredited by the President) and the author of the President’s Inaugural Address, was widely considered to be a proponent of a comprehensive policy to take the country back – a kind of unified field theory. His premise was that the American people had spoken through the election of Donald Trump. His organizing philosophy was a robust ‘America First’ policy on trade; a very restrictive immigration policy (widely interpreted as White Nationalist and anti-Muslim) and generally tearing down the administrative state to restore power into the hands of the executive branch.

This political philosophy was well targeted to flatter the ego of the President. Wolff’s book reveals that the President does not read and rarely listens. His attention wanders quickly and the passage to his understanding is apparently a narrow window defined by short-burst images and soundbites frequently played out on his favourite cable news network, Fox News.

There could not be a sharper contrast to the skill set required to approach the long-term issue of, for example, infrastructure repair. There could not be a sharper contrast to the achievement marked by the Civil Rights Act. There is no unified field theory of human progress. It is about hard work, incremental steps and the occasional watershed victory. Bannon was short-lived.

How Hot is the Water Right Now?

Kim Barker refers in her book and in the movie to the concept of “Kabubble”, the world in which the reporters are analogized to frogs in boiling water. The need to keep the war top of the media’s mind at home requires ever more extreme assignments at increasing levels of risk to the reporters and their teams.

The US is currently living in its own Kabubble: Trumptopia, a land where hours of media coverage are devoted to discussions of whether the President used the word “shithole” or “shithouse” to describe certain countries whose populations are considered unsuitable for immigration by the President on the basis simply of their geography (and perhaps, coincidentally, the colour of their skin).

Senators sacrifice their credibility in the cause of loyalty to a President who never repays it. If the key issue is which word was used, the story has missed its mark. If the public wishes the coverage would end because, not surprisingly, it is tired of the noise, then the essence of Trumptopia is revealed: the use of the bizarre to distract from the appalling.

Heads are spinning, and the frog has only a little time left…

Keep reading |  5 min read


2018: A Bullish Year for Greece?

 4 min read / 

Greece Economy 2018

Two things of importance have recently occurred. The yield on Greek bonds has reached a new low (though, just in time to participate in a potential bear market) and the Syriza led government has enacted measures likely to secure the next tranche of euros. With the Greek economy heading towards achieving 2.5% growth YoY in 2018 and hopefully ending its Sisyphean 10-year cycle of bailouts this summer, the economy is starting to look ripe for foreign investment.

As Q4 2017 approached, things were starting to look up. Either because, as some have thought, after almost 10 years of crisis we’ve reached Greece-fatigue with comparatively lesser news coverage or because, as some notable commentators (such as Deutsche CEO John Cryan or American ambassador to Greece Geoffrey Pyatt) have argued, conditions are genuinely ameliorating.

With return linked to risk, the lowering of the Greek bond yield (which has fallen from more than 7% at the start of the year to 3.92% at the time of writing) is the market’s way of telling us that the outlook is improving.

Equity markets in Greece aren’t doing too shabbily either: Athens Composite Index (ASE: ATH) is up 32.24% at the time of writing, compared to last year. On one hand, it’s tempting to ignore the performance of the index. After all, since the shares have started trading again following the 2015 debacle, most of the companies included in the index – Greek banks, largely – had nowhere to go but up. On the other, reports on Greek industry are surprisingly positive, with the latest IHS PMI report on the region conveying high confidence in the sector and the ‘most marked growth in over nine and a half years’.

The reportage of the past few weeks has been centred on the possibility of Greece exiting its bailout successfully this August, on what it would take to do that and even what success might look like. This past Monday, amongst a furore of protests, the Syriza government moved to enact several fiscal and industrial reforms aimed at hopefully bringing Greece more in line with the criteria of its debtors (more here) in hopes of securing its next tranche of monies.

The vehemence of the protests (with some claiming new quorum rules on strikes are akin to slavery) seems to be inversely correlated with efficacy: Prime minister Tsipras and Finance minister Tsakalotos must surely be looking ahead to Monday the 22nd and up towards mitteleuropa in hope of approval. Whether this is a democratic stance to take is irrelevant, and with the party having a mandate to rule until 2019, they are surely gambling on a return to borrowing at European market levels and financial normalcy without too many stringent conditions. It’s a gamble, yes, but a politically expedient – and perhaps even an astute – one.

Greece offers a tempting arena for investment, but it will take more than access to the European purse to improve things, especially if SMEs and startups – surely an indicator of health in any economy – are to get off the ground. Gone are the days described in Michael Lewis’ Boomerang with its tableau of incognito meetings in hotels with tax collectors who were reprimanded for being too good at their jobs: taxation in Greece has become stringent enough to seriously affect entrepreneurs:

‘For an employee to receive over 2,000 euros net per month, their employer must pay more to the state – in taxes and contributions – than to the worker. When an employee collects 3,000 euros, their final cost to their employer each month is 7,127 euros, of which 4,134 euros goes to the state (58 percent of the total).’ Source

Even maritime activity, traditionally a staple of the Greek economy, is being affected by these strict taxation measures. Despite stirrings amongst Greece’s nascent venture capital community, Syriza-led Greece is hardly shaping up to be entrepreneur friendly and it may well be that we’re looking at an environment better suited to quick-witted, short-term speculators than investors hoping for long-term growth.

More than money is needed for the kind of recovery and environment beloved by investors.

The minotaur is still in the labyrinth, but perhaps 2018 may just turn bullish.

Keep reading |  4 min read


Brexit Phase Two: EU-UK Trade Talks

 4 min read / 

What unites European political parties across the political spectrum is a demand that while Britain discusses its future with the EU, it adheres to the principle of freedom of movement throughout the phase two transitional period. This is together with all the other rules of EU membership, including compliance with decisions of the European Court of Justice (ECJ).

EU Solidarity

While Brussels conducts day to day negotiations, it will fall to rotating EU presidents to secure cohesion and solidarity among EU27 member states holding diverse agendas for the conduct of Brexit talks. For the next six months, this leadership task falls to Bulgaria. Romania – the EU’s fastest growing economy (in 2017) – takes on the role in January 2019 at what will be a critical time when Britain (finally) leaves the European Union.

On the 29th March next year, Britain will become a ‘third country’ putting its relationship with the EU on a par with Turkey subject to any refinements on single market entry or a ‘bespoke’ customs union granting limited rights for its financial services sector. Business confidence continues to focus on going concerns that without regulatory alignment with the EU, few benefits will be provided from Brexit. It lobbies for ‘frictionless’ trade, which effectively must keep it in line with single market rules for both goods and services.

Car manufacturers have constantly reminded government ministers of potential damage to supply lines by the imposition of trade barriers. They would assert that decades of foreign investment (FDI) in the UK car industry was made in good faith in the knowledge that Britain, with its flexible and liberalized economy, provided the best entry point for the more lucrative EU market. In fairness, other factors also played a part – not least that UK employment laws were less restrictive than in mainland Europe as a result of the Thatcher government’s reforms in the 1980s.

No Deal?

There is still a question whether Britain leaves next year without a deal. Although this looks unlikely, Michel Barnier’s team at the EU Commission prepares for this scenario – taking repeated threats from the hard Brexit camp at face value. Tracking progress for the shape of an eventual deal is not easy, but clues are already appearing. French President Macron’s visit to London on Thursday 18th January helped to re-invigorate the ‘Entent Cordiale’ which historically focused on European military defence cooperation. A renewed Calais Agreement to maintain a tight border on migration would also help to improve Franco-Anglo relations.

But on a post- Brexit trade agreement Macron stands firm in stating:

“If you want access to the single market – including financial services be – my guest. But you need to contribute to the budget and acknowledge European Jurisdiction. There will be no hypocrisy in this respect otherwise it would not work. It would destroy the single market.”

It is hard to see from this statement that the EU27 will weaken from this stance, or that France can be persuaded of a more pragmatic approach by other EU members.

However, this did not stop PM Theresa May from re-iterating her desire for a deep and special partnership with the EU: “I believe it should cover goods and services.” She went on to say “I think the city of London will continue to be a major global financial centre… That is an advantage not just for the UK, it’s actually good for Europe and good for the global financial system.”


In the coming months, understandably, Britain will seek to pick off different EU states to push forward its vision of future trade relations. It is unlikely this “divide-and-rule” strategy will ultimately succeed, and it may well delay the satisfactory outcome of negotiations within the agreed timeline. It is in the interest of both sides to hammer out a deal for the stability of the EU and UK economies.

Keep reading |  4 min read


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