Dear Subscribers,
Welcome back and a happy 2024 to you all. It’s still the tail-end of the school holidays, so commendations to my trusty zoomer colleague Dario Garcia Giner, who has done the heavy lifting on this week’s edition.
I don’t know about you, but I did try to properly unplug this Christmas season. I think it’s done me a world of good and I thank you all for the timeout.
Of course, as is always the way with my body, as soon as it knows it has some downtime in store, it decides that’s the perfect time to succumb to whatever seasonal lurgies are going around. Predictably, my whole family got struck down with an intensive coughing chest infection thing right at the peak of Christmas.
We are finally all recovered, but what the episode did impart on me is the shocking shortage of out of hours urgent care in West London, which is hardly the sticks.
Like many, I’ve become entirely disillusioned with the U.K. health service and do my best to avoid going to the doctor as much as possible. But sometimes, you just need antibiotics or a scan, or stitches. Not quite an emergency that justifies an ambulance, but certainly something that needs treatment or else risks becoming an emergency.
The fact that in London that means sending someone in peak fever mode who should really be in bed to sit 8 hours+ in an NHS waiting room beggars belief. What’s more, this is a solvable problem, whether that’s through the provision of mobile doctor units or other private alternatives. [If we can bring packages, food and groceries to the door, why can’t we bring doctors to the door?]
Just throwing more money at the NHS doesn’t seem to be the solution. Perhaps it’s time to give deregulation and liberalisation a go? We have to try something new. If we don’t, the NHS will likely go down the same path the Polish communist health care system went down in the 1980s. I still remember my granny preparing for a hospital stay by sorting cash into about 20 different brown envelopes, because that was the only way you could ensure getting any attention from staff.
Aside from that, when it comes to reflections for the year ahead, I have no clear outlook. Like Sarah Connor looking into the future having terminated the Terminator, the pathway for the global economy seems bereft of any tradable trends. Perhaps the big shock will come out of Japan with BoJ normalisation? Perhaps the soft landing will turn into a hard landing? Perhaps the Red Sea troubles will revive inflationary trends? Perhaps the migration crisis will take a more militant turn? Perhaps both Trump and Biden finally move on to the great hereafter? But then again, perhaps not.
It’s very hard at the start of this year to get an inkling for what the system is not seeing. Of course, since there’s rarely a better counter indicator than what Davos Man is thinking (only Jim Cramer can challenge the jet set on crap market timing), it’s worth noting this year’s WEF theme is “rebuilding trust”.
Also notable: one of the star guests at the forum will be OpenAI’s Sam Altman.
That suggests to me this might be the year trust totally collapses in weird and disruptive ways, not least because AI technology that allows the average Joe to create interactive AI Avatar versions of themselves is now affordably available to most (even if access to actual doctors isn’t).
That brings to mind the scene from the South Park’s Pandemic special where Cartman creates a virtual screensaver of himself to dupe his teachers that he is really attending remote school sessions. I daresay, the temptation to release an Avatar version to partake in all those remote corporate health and safety or DEI trainings will be extremely great.
If that becomes a thing, soon enough the WFH and flexible working bubble will burst entirely, unwinding any efficiencies gained from reducing commute time. Robert Solow’s productivity paradox (RIP) will then be back with a vengeance.
We’re already seeing the beginnings of the potential chaos. This week it was revealed that Steven Reece Lewis, the chief executive officer of a now-shuttered cryptocurrency hedge fund called HyperVerse, never existed. The company’s collapse caused $1.3 billion in losses, and yet, how do you hold a non-person to account?
Moreover, is it actually illegal to appoint a non-person as CEO? And even if it is, how do you do the due diligence on that? Our governance systems can’t even process the identities of migrants or Visa applicants. Most physical bank branches are shutting down, meaning banks rarely meet their clients. And there are so many other services that now rely on remote trust.
The biggest trend of 2024 might just be proliferation of companies and scams headed by non-existent people and the regulatory challenge this poses to our system.
Other than that, consider this week’s newsletter a big picture sweep of the news you might have missed if you were taking a proper break over the holidays like us.
Have a wonderful weekend. Izabella
| BUSINESS, ECONOMICS, FINANCE ETC … |
XI JINPING UNEXPECTEDLY ACKNOWLEDGED CHINESE ECONOMIC TROUBLES during his 2024 New Year’s speech, with the Chinese leader noting that China’s businesses were struggling and job seekers were having trouble finding work.
APPLE COULD ACQUIRE PELOTON, according to Deepwater Asset Management. The asset manager predicted that acquiring Peloton, valued at around $12-15bn, would make “strategic sense” for Apple as it seeks to grow its Apple Fitness+ subscription and health tracking services.
BNP PARIBAS WILL SETTLE WITH CUSTOMERS over risky Swiss franc mortgages. BNP has stated it will pay up to €600m to customers who claim they were misled over the home loan currency risk.
A SMART WALLSTREETBETS REDDITOR CALLED OUT the renaissance of Abercrombie and Fitch two years ago, calling it “grossly undervalued”. And now, all of a sudden, the 90s apparel superstore that defined the Dawson’s Creek generation is back with a vengeance:
HSBC DEBUTED AN INTERNATIONAL PAYMENTS app that is set to compete with the likes of Revolut and Wise PLC. The new app will offer retail customers cheap foreign exchange services, much like the wave of fintech companies have been doing to dramatically increase their customer base over the last decade.
$1TN IN REVERSE REPO DRAINED $190BN IN LIQUIDITY after a sudden spike in the SOFT rate pushed it to an all-time high of 5.4 percent. Zerohedge claimed two factors were the likely culprits: the year-end liquidity crunch and the recent sharp increase in the Fed’s reverse repo facility. The story followed a previous Bloomberg piece which outlined the repo benchmark hit all-time highs in volatile funding markets on December 29.
CHINA’S MOST PROMINENT BUSINESS ANALYSTS were subjected to restrictions which limit their ability to comment on the country’s ailing stock markets and struggling economy by impeding their unrestricted access to social media, according to CNN.
SLOVAKIA IMPOSED A WINDFALL TAX ON BANKS despite protests from Erste Bank and CitiBank. The banks claimed the 30 percent windfall tax would stifle credit to companies and households.
UNIQLO’S BRILLIANT SELF-CHECKOUT system works like a charm, and customers reportedly love it. What makes it work so well? Tried and tested technology and simplicity. It depends on RFID chips.
MICHAEL O’LEARY’S BONUS NEARED €100M as Ryanair’s shares hit weekly records last Friday. O’Leary’s bonus is set to be among the biggest in European corporate history.
TRAFIGURA WAS SLAPPED WITH BRIBERY CHARGES by Swiss prosecutors, after its former COO was accused of helping to funnel millions of dollars to an Angolan official.
OIL AND GAS SANCTIONS NEVER HAD A CHANCE of working, stressed an article in OilPrice, which cited the continued trade of Russian oil above $60.
| FISCAL AFFAIRS |
SIR KEIR STARMER’S LABOUR PARTY IS CONSIDERING TAX CUTS as the party mulls options to become a ‘party of aspiration’ and further erode the Conservative voter base, millions of which are now being forced into a higher tax threshold due to higher inflation.
ALMOST TWO MILLION VOTERS IN TORY HEARTLANDS are set to pay additional tax in a ‘stealth tax hit’ owing to the taxation threshold freeze that will push an estimated 2mn voters in London and the South East into a higher tax bracket.
| CRYPTOCURRENCY EVANGELISM |
JPMORGAN IS SET TO BECOME AN AUTHORISED PARTICIPANT alongside Jane Street to BlackRock’s Bitcoin ETF, despite years of Jamie Dimon’s outspoken criticism, where he called Bitcoin a “hyped up fraud” on numerous occasions.
BITCOIN MAY BE “ONE BAD CHESS MOVE AWAY FROM PROBLEMS” now that two mining pools (both of them force all miners to KYC) comprise 55 percent of the bitcoin hash rate, according to crypto researcher Chris Blec. What’s more, nobody wants to talk about the problem.
NOURIEL’S CRYPTO HYPOCRISY? One of the world’s most outspoken crypto critics took to the Financial Times to seemingly shill his own version of a crypto token, which he has dubbed “a flatcoin”. Roubini’s tokens will supposedly “merge the benefits of blockchain and fintech by providing a hedge against inflation while doing social good.” Good luck with that.
| MEDIA MATTERS |
DISNEY’S COPYRIGHT ON EARLY MICKEY MOUSE expired on Jan 1, 2024, with the imagery entering the public domain.
WHY WAS THE WUHAN LAB-LEAK HYPOTHESIS ignored by major newsrooms for so long after it became a plausible theory? Though the lab-leak hypothesis is not yet proven, neither is the natural origin theory, leading skeptical journalists to question what led so many to automatically dismiss the former and promote the latter.
THE EUROPEAN UNION CLAIMED X BREACHED rules regarding illegal content and disinformation, specifically regarding the spread of terrorist and violent content, as well as hate speech, which followed Hamas’ attack on Israel.
A CANADIAN WHISTLEBLOWER ALLEGED A COVERUP by the Canadian government over a report on a green-tech funding agency’s potential conflicts of interest, which was done to protect the federal agency’s senior leadership.
| POLITICS, POLITICS, POLITICS |
WILL DEMOCRACY SURVIVE 2024? The FT’s Alec Russell worried that the spread of autocracy and the increasing numbers of young people who reject the democratic status quo clearly shows the “spirit of the times” is no longer democratic. That’s ahead of a historic number of elections that are set to take place in 2024.
The prevailing message from Russell is that the system is only truly democratic if people vote for candidates who defend democratic values, as defined by the power elite. Be that as it may, is it really a free election if only parties that subscribe to a certain set of values (notably those that reject conservatism, patriotism or old fashioned family values) are allowed to participate? — IK
ROBERT GEORGE’S X THREAD on the downfall of old-school liberalism and the rise of left-wing wokeness. George tied the rise of wokeness to the growth of ‘expressive individualism’ adding that old-school liberals who reject wokeism ignore their own contribution to the problem. “There is truth in the idea that Woke ideology is betrayal of liberal values. But it’s not the whole story. The whole story will require old-school liberals to engage in some serious self-critical reflection. There are respects in which they themselves bear responsibility,” he wrote on X.
A FAR-RIGHT BELGIAN PARTY EXPELLED an alleged Chinese spy. Frank Creyelman is said to have worked for a Chinese spy agency for three years, and influenced discussions in Europe on issues ranging from China’s crackdown on democracy in Hong Kong to its Uyghur persecution.
WHO IS DOUGIE SMITH? The shady political advisor who was immediately removed by Liz Truss the day she entered No10 was quickly reinstated by Rishi Sunak, it transpires. Adding to the mystery surrounding this advisor’s power, “some who sent texts to Rishi on the day he became PM received their replies directly back from Smith. The message was ‘I’m back in charge’.”
BILL ACKMAN, MARK CUBAN AND ELON MUSK exchanged views on the importance of Diversity, Equity & Inclusion policies for American businesses on X/Twitter.
| AMERICAN POLITICAL DRAMA/span |
VIVEK RAMASWAMY provided a viral, concise, and cutting answer to a Washington Post journalist who asked the Republican presidential candidate whether he condemned white supremacy centred on “definitions”.
REPUBLICANS ARE TRYING TO VINDICATE RICHARD NIXON in efforts to make Trump look ‘normal’, claimed Politico Magazine.
Apropos: Adam Curtis on ‘how we all became Richard Nixon’. — IK
ICYMI: THE U.S. SUPREME COURT WILL TAKE THE FISCHER V. UNITED STATES CASE which dealt with the misapplication of ‘obstruction of official proceeding’ charges to January 6 cases. The case could result in a major victory for Trump if the court strikes down the Department of Justice’s charges against the January 6 defendants.
| TEUTONIC TAILSPIN |
FAR-RIGHT GERMANS ARE GRABBING LANDS across rural areas in Germany to create communities independent of the state. These groups aim to create parallel structures and institutions including schools, clubs and public offices.
This is another of those fear-inducing headlines that a quick gander through the article rapidly contextualises as a (near)-non-story.
Three paragraphs down, it’s revealed that this so-called “strategic rural land grab by right-wing extremists” consisted of… 40 properties purchased across Germany over the last two years.
Rather than panic and fret at the rise of right-wing extremism, German media should be more concerned about why their point of view is gaining traction.
These extremists consider that modern Germany is an illegitimate state, a colony to international elites and the United States.
Some might say it’s surprising they haven’t garnered more support. After three years of consistent self-ownage, you’d be hard pressed to claim current German elites aren’t trying their best to topple the country’s power and authority.
I (Dario) disagree with the notion that Merkel’s dismantling of nuclear power began this German self-owning trend.
Tying Germany and, by extension, Europe, to Russia via gas pipelines seemed a guaranteed method for peace in the East, and a funnel for German power to continue extending peacefully eastwards alongside the expansion of the European Union.
German expansionism in Europe relied on good products for trade, and domination of the sustainable energy industry, something Russia (and other emerging markets) were unable to combat.
I still remember doing several jobs at Kroll that involved very angry Polish industrial and municipal sources decrying a German conspiracy to push for sustainable power at the EU and world stage while mostly German companies stood to benefit, and watching helplessly as German conglomerates ate up Polish land for wind and solar power projects.
This policy seemed a guarantee that Germany would emerge as a self-standing polity that could remain independent from the grasp of the United States.
In fact, until the rise of Scholz’s government, and the willing butting of heads caused by the United States’ fast-paced adventurism in Ukraine and Russia’s nervous and brutally old-fashioned response, and the self-owning sanctions on energy which followed, I was convinced Germany was the world’s most underestimated global power — and a true competitor to the United States.
Considering the lengths to which American policy has almost directly caused its hollowing out, it feels like we could have been on the money. And that at least part of this extremist outlook on the capture of German elites by foreign powers is likely to be validated. — DGG
GERMANY SAID IT IS MULLING THE REINTRODUCTION OF COMPULSORY military service, following reports the Bundeswehr is suffering from a chronic dramatic shortage of personnel.
| GEOPOLITICAL HOT SPOTS |
THE BIDEN ADMINISTRATION KICKED OUT Niger, Gabon, the Central African Republic and Uganda from the African Growth and Opportunity Act, while it brought Mauritania back in. While the CAR was removed from the AGOA for growing human rights abuses, Uganda was removed because it enacted its Anti-Homosexuality Act last year. Meanwhile, Gabon and Niger were expelled since both countries are now under full military rule.
THE UNITED STATES HAS CLAIMED A CHUNK OF SEABED in the Arctic and Atlantic Oceans, which added approximately a million square kilometres to its continental shelf claim.
ETHIOPIA RECOGNISED SOMALILAND IN EXCHANGE for 20 km of coastline, meaning Abiy Ahmed’s 2023 wishes for a coastline have been granted sooner than expected.
THE UNITED STATES CONDEMNED ETHIOPIAN RECOGNITION OF SOMALILAND as a Biden Administration spokesperson described Ethiopia’s actions as ‘illegal’.
HOUTHI ATTACKS ON THE RED SEA CHANGED TRADE routes for container ships, which now transit through the Cape of Good Hope as shown in the picture below:
SERBIA RECOGNISED KOSOVAN LICENCE PLATES, which ended a long-running dispute that had proved highly incendiary for years. The decision came after a wave of protesters attacked the Serbian government following its latest elections, in a move the Serbian government condemned as an “attempted violent takeover.”
MADURO CONDEMNED THE DEPLOYMENT OF A BRITISH patrol ship in Guyanese waters amid the simmering border dispute over Essequibo, and called the move by Britain an “act of hostile provocation”.
A MOSCOW-OWNED PENTHOUSE OVERLOOKED MI6’s HEADQUARTERS in London, which prompted public concern from the Secret Intelligence Services.
PUTIN WILL RUN AS AN INDEPENDENT for upcoming Russian elections, though he (naturally) received the full backing of the ruling United Russia party and state-owned media.
THE KREMLIN TESTED MISSILES NEAR THE FINNISH BORDER. This comes after the Nordic country joined the NATO military alliance, with Russia also announcing the creation of a neighbouring military district near the country’s border.
| MILITARY MATTERS |
LEONARDO CALLS FOR EU DEFENCE REFORM. The Italian aerospace group’s chief claimed that EU member states should focus on creating continent-wide champions and defence projects to remain competitive on the world defence stage, rather than focusing on national projects.
THE UNITED STATES IS UNPREPARED for a prolonged conflict with Yemen’s Houthi forces, due primarily to decisions from the late 1990s, which turned the U.S. Navy from an expeditionary navy to a forward-based navy.
The ill-fitted nature of Western militaries to modern conflicts is an oft-mentioned topic at The Blind Spot. Little wonder that, following years of Western triumphalism vis-a-vis Russian equipment in Ukraine, some serious head-scratching is now taking place.
Hubris: The Tragedy of War in the Twentieth Century is a decent book by Alistair Horne with an excellent premise; that major military disasters in oft-victorious powers tend to emerge precisely due to a normalisation of the powers’ supposedly heightened status vs. an underestimated enemy.
The case and point of such a conflict is the Russo-Japanese war of 1905. After a century of Russian victories against the Ottoman Empire so steep they led to the forced intervention of Western powers to keep the balance of power, puny little Japan trounced and humiliated the Eastern Beast and submerged it into a year of revolutionary upheaval.
And now, with the American-led expeditionary fleet already in place in the Red Sea seemingly laying quietly by as global shipping routes continue to shift towards the Cape of Good Hope, American military analysts are wondering what’s taking the U.S. Navy so long to intervene?
An article by CIMSEC from September went viral again this week, reposted by military analysts as a potential explanation.
Titled “Rebalance the fleet toward being a truly expeditionary Navy”, the article explained how the U.S. Navy dramatically changed its nature following the victory in the Cold War.
Today, the article explained, the United States has a “forward-based navy” rather than an “expeditionary navy”. The distinction is significant: while both navies allow the U.S. to project power overseas, their staying power is dramatically different.
An expeditionary navy is a naval power that has enough support and maintenance ships to allow for extremely long periods at sea, since naval groups can replenish their own supplies and conduct repairs while on mission.
On the other hand, a forward-based navy is a navy that relies on allied ports overseas to replenish supplies and carry out repairs.
There are many benefits to a forward-based navy, factors which undoubtedly pushed the U.S. Navy towards this composition.
Firstly, it’s much cheaper to carry out repairs and supplies in ports.
Secondly, you can significantly reduce the size of your naval groups by transferring these capabilities away from ships and towards facilities operated and run by allies overseas.
These factors led the Navy to decommission most of its submarine tenders, all of its repair ships, and all of its destroyer tenders.
Key in this decision was also that Vertical Launch Systems, a modern surface fleet’s primary anti-air, anti-submarine and land-attack weapons, which became the mainstay of the U.S. Navy in the 90s, are very expensive and problematic to reload at sea.
Unlike aircraft carriers, whose aircraft-based missiles are relatively small and inexpensive to onboard.
“The modern fleet is top-heavy in large surface combatants, light in smaller combatants, and insufficient in auxiliary ships.”
The primary issue comes when we consider the long-range capability of Houthi missiles and drones.
Until very recently, only top powers had access to long-rang precision weapons — an ability which is now democratised. As such, each U.S. destroyer only carries an estimated 90 missiles — costing around $2m each — to shield the U.S. aircraft carrier they are protecting.
This leads to a very uncomfortable situation where a large number of cheap Houthi missiles and drones could very quickly force U.S. Destroyers to run to port for resupplies, forcing their aircraft carriers to leave the engagement area.
Anybody who claims the Houthis may successfully beat the U.S. Navy is naturally engaging in (un)wishful thinking.
But an unconventional force has never come even close to threatening the staying power of the U.S. Navy like them. Perhaps this explains why the American fleet has been relatively quiet. One way or another, it clearly outlines that the U.S. Navy, and by consequence, all major powers, need to think again about how they deploy, maintain, and fit out their ships for the decades of facing cheap, autonomous long-range offensive systems which lie ahead. — DGG
| YOU’RE EITHER IN POWER OR IN PRISON |
CHINESE ANTI-CORRUPTION PURGE targeted a record number of senior Chinese officials in 2024. This followed on from a record 45 high-ranking officials being arrested in 2023, the most since the corruption crackdown commenced in 2013.
| POLSKA |
FORMER PM MATEUSZ MORAWIECKI CONDEMNED NEW PM DONALD TUSK’S actions against the state broadcaster in Poland, and called them violations of the constitution, while claiming the new government is endangering Poland’s security by agreeing to the migration pact.
THE DISPUTE OVER POLAND’S STATE-OWNED MEDIA continued as Tusk’s new government sought to replace its management with allied governmental appointees by shortening the predecessors’ appointees’ terms of office.
Notes From Poland is emerging a formidable source for neutral and non-partisan Polish news. This particular piece does a great job of recounting both perspectives on Poland’s state media bias problem. The under appreciated point is that the vast majority of independent Polish media is critical of the PiS government, meaning (as PiS argues at least) that there isn’t really a pluralistic media without the state media correcting for that bias. Of course, since it’s supposedly a free market, why don’t right wing Polish groups just start their own independent media outlet? (If you believe the PiS narrative, that’s because access to private capital is constrained for conservative ventures) — IK
| EDU-CASH-ON |
BILL ACKMAN’S EPIC ESSAY ON THE FAILURE OF DIVERSITY, EQUITY AND INCLUSION (DEI), which he posted on X following the resignation of Harvard President Claudine Gay, reflected his concerns about the university student bodies’ support for Hamas’ actions in Israel on October 7.
A NOBEL PRIZE-WINNING ECONOMIST WARNED young people to stay away from STEM subjects and argued that “empathetic” and creative skills will thrive in a world dominated by Artificial Intelligence.
| METAPHYSICAL |
THE HOLY SEE’S POOR LONDON INVESTMENT is a non-story, claimed Church Life Journal. When the Vatican undertook a property purchase in Sloane Square, which then turned sour, global media took turns crafting lurid headlines surrounding a deal that would have attracted little to no attention had it been carried out by a traditional hedge fund, the journal wrote.
NO SINGULARITIES IN BLACK HOLES, claimed a well-renown physicist, in comments which may overturn decades of work on this phenomena.
ASSEMBLY THEORY explains and quantifies selection and evolution, according to Nature.
| POST-COVID |
SOME SCIENTISTS ADMITTED COVID-ERA FAULTS, notably Francis Collins, the former head of the National Institutes of Health, who confessed that “many of the people considered closed-minded and anti-science during Covid were advancing an appropriately balanced view of the trade-offs inherent in the pandemic response.” However, this is too little, too late, wrote the National Review.
THE FACT BRITAIN’S COVID INQUIRY REFUSED TO ACKNOWLEDGE the lab-leak theory was both ‘insulting’ and ‘suspicious’, claimed Matt Ridley for Spiked Magazine. Why would an inquiry designed to investigate a calamitous health crisis insist on ignoring the increasingly plausible ‘lab-leak’ hypothesis?
RISHI SUNAK HIGHLIGHTED THAT LOCKDOWNS may have caused more harm than good, citing QALY analyses which found they did more harm than good, was promptly shut down by the inquiry’s Chair, who doesn’t understand what QALY means, calling them ‘quality life assurance models.’
WHY SWEDEN NEVER IMPOSED LOCKDOWNS. Unknown to most, Sweden’s constitution prohibited a suspension of fundamental rights via emergency powers, except in the case of war. This meant that, despite public pressure on governmental ministers, it was still constitutionally forbidden to interfere in the actions of super-powered health technocrats, such as Anders Tegnell, when they took a softer approach to Covid-19.
