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by Bertie

Youth employment is not a problem!

May 15, 2013 in Euro Crisis

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Well it certainly is in southern Europe and most emerging markets and especially South Africa.

BUT NOT in Germany.

The Frankfurter Allgemeine Zeitung (FAZ for short), which regular readers will by now know is my current favourite Sunday reading, had the most remarkable open letter two weeks ago by their editor Winand von Petersdorff (aged 49) to his son Jost (aged 19).

His advice to his son, you generation will be assured of jobs. You can take your time to pick the best opportunity.

Absolutely remarkable. No editor of a Spanish or French or Greek or South African newspaper can write the same. The German economy is on the brink of full employment! Already four of the German Länder (Provinces) have full employment.

How did this happen? First of all demography. The Baby Boomers are on the verge or retiring and the German Baby Boomers had fewer children than their equivalents in the rest of Europe and the emerging world. The potential work force is so much diminshed.

Secondly the German economy took the pain before the crisis began. In an era where people are by default cynical about politicians, the previous German Chancellor, Gerhard Schröder stands out as unique in sacrificing his political career for the future well-being of Germany. He negotiated a new treaty with the unions, benefits were contained, all the things Germany now demand from southern Europe, before the crisis struck. That is why the German economy can now carry its able working population and the future for German youth looks so rosy.

If Angela Merkel is so imposing a leader (and she must rank as far as female statesmen go with Catherine the Great, Elizabeth I and Margaret Thatcher) it is because she is standing on the shoulder of giant, Gerhard Schröder (to take a quote from Isaac Newton).

Looking for a job? Learn German my young friend!

 

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by Bertie

For sure the richest philosopher in the world

April 16, 2013 in Euro Crisis

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That is how Die Frankfurter Allgemeine Zeitung, Germany’s premier pro Merkel newspaper,  my favourite reading on a Sunday morning describes George Soros.

Two issues in the interview intrigued me.

The first is the topic of forecasts. The first question asked of Soros: “How sure are you that you are right in your opinion?” He answers: “It is part of my philosophy that I can be wrong. I can only be as sure as I can, given my background and my experience… in fact it is part and parcel of my philosophy that I must be wrong from time to time.”  To which the interviewer retorts: ” You have been wrong in the past with some of your forecasts.”  To which Soros replies: “I am definitely aware of the fact.” (Das ist mir vollkommen bewusst).  How refreshing compared to the Krugmans, the Stieglitzes and the Rubins of this world whom Taleb so rightly brand the fragilistas who never admit to being wrong and always re-interpret the past to make them seem prescient.

The the interviewer prompts him by saying that he is indeed seen as a kind or oracle. To which Soros replies that this very fact, the esteem in which he is held has made it impossible for him to continue as an investor. That is why he is not involved in the day to day running of his investment funds.

But then we get to the meat of the interview:

Soros admits to have intervened in the management of his fund in participating in the weakening of the yen and the falling gold price. Somewhat coyly Soros admits that he may have understood something that others did not in evaluating the yen (and gold).

And it ends with a real nugget: Soros originally went to the US after his studies at the LSE to make a $100,000 dollars to allow him to spend the rest of his life as a philosopher.  (in today’s money I guess about $10,000.)  And then his plans went awry: “I over performed somewhat…” He so quickly so far exceeded his target of $100,000 that he decided the financial markets were a wonderful laboratory in which to test his philosophical ideas.

I loved it!

 

 

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by Bertie

The logic of the market

August 6, 2012 in Euro Crisis, Investment, Smart thinking

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The market may not be rational – that we now know – but it has an inexorable logic.  In this third and last post on the mental toolkit we need to be responsible managers (from ” This will make you smarter”   click back to the previous blog, please) let’s look at Nigel Goldenfeld, professor of physics at the University of Illinois’s contribution, with the wonderful title: If you’re facing in the wrong direction, progress means walking backward.”

We need to understand causality he says. What really are causes and effects? And he uses our reasoning on the rise and fall of the stock market as his example. This is where the inexorable logic comes in:

The pundits on Bloomberg may blithely remark that the market went down because people were taking profit, or because of the ECB’s statement on the Euro. But for every stock sold there was a buyer with a diametrically opposite view of the market.  This inexorable logic, that there must be a buyer for every seller, makes a single reason given, a single cause offered for market fluctuation simply illogical and therefore wrong. Says Goldenfeld ” To assign a single dominant cause to most market moves is to ignore the multitude of market outlooks and fail to recognize the nature and dynamics of the temporary imbalances between a number of traders who hold differing views.”

 

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by Bertie

Too much History Channel makes a monster of Merkel

June 26, 2012 in Euro Crisis, Media

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Too much of the History Channel on DStv let you see the world in black and white, like all those World War II documentaries! Maybe that’s where the German bashing in the Anglo-Saxon media comes from when commenting on the euro crisis. They want to convince us that Angela is a  amonster with a funny black mustache disguised as a woman.

The editor of Die Zeit , Josef Joffe put this into perspective in an article in the FT last week.

Look at the facts:

    • German labour costs rose by 7%

in the decade of the Euro.

  • Guess what? Labour costs soared by 30% in Italy since the inception of the Euro!
  • And by 35% in Spain and
  • 42% in Greece.  

No brainer why Germany is a success and the others are not. How much austerity is it when you expect them to cut down on those wages? Seems to me Ms Merkel is not the Empress of Austerity, only the Queen of Sobriety.

When will the Anglo Saxon media realize World War II is over and done with? Herr Joffe also has a couple of other interesting points to make – but this should be enough to have us thinking for now, not?!

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