Monday, September 19, 2011

On Ideologies, and making politics sexy and sensible

Ideology as a concept seem under sustained klieg lights of late; in some places, the emptiness of the politics is based on the theory of a lack of it e.g. Nigeria, in other democracies the seeming polar ideologies of conservatism and liberalism seem determined to drive the world to the precipice of economic abyss. Ideology was blamed for the debt downgrade of America, and is why Greece may as well default! Ideology is the bad child for nothing making himself so available, or for just being there too much.

Oh well, what is ideology? Well, let us check Wikipedia, where it is defined as:

An ideology is a set of ideas that constitutes one's goals, expectations, and actions. An ideology can be thought of as a comprehensive vision, as a way of looking at things (compare worldview), as in common sense (see Ideology in everyday society below) and several philosophical tendencies (see Political ideologies), or a set of ideas proposed by the dominant class of a society to all members of this society (a "received consciousness" or product ofsocialization). 

I think here is an example of Wikii being wrong. For indeed ideology is commonsense, then why is ideology driving our world mad? Well, I submit here is the kernel of the problem. Ideology as it is currently constituted or contrived is simply not common sense? Does it make sense to claim to be pro-life, yet be so pro-war? Does it make sense to support welfare payments, and resist drug testing and tough on crime actions that will get folks out of a lifestyle of dependency or ask them to behave given the freebies? Does it make sense to advocate small government for your corporate buddies yet see nothing wrong in using the central national government to promote your views on gays and marriage? Does it make sense to advocate wealth distribution, yet advocate economic policies that put heavy burden on the richest that create such wealth?

Rather, a new ideology makes sense to me. Perhaps once I indoctrinate enough people on my idea of progressive libertarianism then the word "politics" will become sensible and sexy again. Here we go:

1. It make sense to support robust public infrastructure, education , health and welfare spending  as well as being tough on crime: including a tough stance on death penalty. When you spend money on welfare, you expect less crime. Anyone that runs foul of the law must be dealt with with a heavy hand. Progressive Libertarianism advocates this common sense provision.

2. It makes sense to support low regulation but high taxes to fund these robust social safety nets. Low environmental, safety and other regulations will ensure business thrive, but high taxes will ensure those who thrive by imposing these "dirty or risky" conditions on the collective pay it off in high progressive taxes as high as 60%. Ensuring our ability to clean up after their capitalist mess, and support the weakest links in our society. One for the PLs.

3. It makes sense to support, as Progressive Libertarians do, a relaxed social atmosphere. No regulation on business means no regulation on gays, alcohol, prostitution and gambling. These will also generate more revenues for government, ensure more welfare can be provided as well as more prisons built to ensure even the slightest criminal is locked up or electrocuted.

Progressive Libertarianism makes sense. Dump the current politics. 

Saturday, September 10, 2011

Dump Stocks, Invest in Frontier Markets Entrepreneurs

The next few years present few opportunities but great dangers for common stock holders in the stock market: especially those of the US, EU & Japan. It is simply put: the age of High Volatility, Low Growth due to mostly political imposed conditions in the US, European Union, Japan and China (yes, read China). The unsaid truth of those buy and hold disciples, and angels of long term economic proposition to buy stocks is the sad fact of the low creep economic outlook for the globe under these conditions. 
In the US, the deepening ideological divide will mean next to no reform on public spending, required investment in public infrastructure and reforms in education/health will be made in the next few years. As the meanness pervades the political atmosphere, one new congress will stifle the next new executive and the structurally defective economy foisted by two decades of stupidity at the top cannot be changed. This will ensure policy inadequacies leading to low growth and uncertainties due to circus like disagreements leading to high volatility.

In the EU, the situation is not different as different countries struggle under the burden of unified currency with no unified government or debt offering instrument (Eurobond); essentially ensuring volatility while the mad austerity culture stifles growth. In Japan, the incessant change of guard under the burden of aging population and low growth will lead to high volatility. 

The crazy one is China, where unlike the West or Japan does not suffer from the disease of policy indecision and low growth, but is unlikely to bail out the rest of the world as it looks increasingly inwards as the economic disease ravages her partners and customers. To this end, Africa & South America represents the free lunch.

This is why it will be crazy to get sucked into the idea that now that the market is collapsing is the time to buy...well, it depends on what you are buying! Fact is, I expect corporate profit to continue to balloon as the governments are driven comatose, but I also expect no investment in growth due to volatility and uncertainty which nearly will ensure common stocks will continue to crash. Capital preservations my friends...or may be not. 

This is not a moment to compare your luck to that of Warren Buffet ; you're simply not Uncle Warren. Preferred shares will beat ordinary shares; warrants/royalties will beat dividends. Private equity ownership in small growing businesses and young smart entrepreneurs in isolated sectors like Technology, Healthcare and Energy, as well as Agriculture will beat index investing.

Investing directly in frontier markets like West Africa in small start-up firms not their stock market will beat investing in any emerging or developed economy. The next 50 000 bagger is in a small country, small village and a very young mind that will upend the cart of innovation. Question is, have the world found the vehicle to make such investment? Will you help create such vehicle? Have you got the guts to make the bold bet on next wave innovation? 


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