It has been quite some time since T&B put fingers to keyboard to enlighten, enthral, provoke, irritate…
Facebook is partially to blame – updating the Truth and Beauty page on Facebook is so much faster and easier than writing an entire opus. But there is more to it than that – quite frankly, we had grown a bit tired of hearing ourselves write; there was little new to say, and we were encountering increasing difficulty in working up enough righteous anger to fill another tirade with the requisite quantity of Sturm und Drang – we have beaten the dead horses of the consensus long enough so that there is little satisfaction to be gained from another couple of strokes of the cane.
But life is change, and at long last we do have some new things to say:
-In particular, we are belatedly conceding as regards the long-term viability of the Euro. We continue to believe that the common currency is an excellent idea, very necessary for the future of Europe, but, alas, it is simply not viable in the current politico-economic framework and is thus likely to prove another victim of the system of modern representative democracy – not a system in which we have any great faith (yes, we know, democracy is the absolute apple pie/motherhood of modern political theology, but we are not buyers).
Simply put, however traumatic would be an exit from the Euro, the sole alternatives are either a (very unlikely) German-led mutualisation of debt and common deposit insurance in return for a substantial loss of economic sovereignty by the PIIGS, or a (perhaps more likely) monetary policy aimed at inflating away the debt, coupled with substantial fiscal repression.
-As regards Russia, we are concerned with the gradual slowdown in growth, and are appalled by the most recent abuse of minority investors following the Rosneft takeover of TNK-BP. We must enquire whether the degree of sheer uncertainty and arbitrariness allows rational investment in the Russian equity space. Yes, our friends at Prosperity Capital have a long record of doing so quite successfully, but, for outside investors, it remains something of a crapshoot. On the other hand, we reiterate our strongly constructive views on the Russian fixed income space, one of the few market segments still to offer excellent risk-rewards.
We invite our readers to forward the present paper around to anyone who might be interested – from maiden aunts to professional counterparties. We write to be read!
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For the latest newsletter – in FULL (the above was just the entrée) – click on the link below: