Who is running the country?

It isn't you...

On July 4th every year the US celebrates independence from the UK Crown and Parliament in 1776. With fireworks. Meanwhile, on November 5th every year the UK traditionally celebrates the failure of a ‘Gunpowder Treason Plot’ to overthrow the Crown and Parliament in 1605. Also with fireworks (as well as some rather pagan burning of effigies). The fact that those days are both Elections this year raises a wry smile, as does the fact that most of the fireworks are likely hand made in China.

But as Rishi Sunak’s snap election on July 4th looks like he is heading for the exit this week (his Comms team are either knaves or fools for that official photo, along with the press conference in the middle of a cloudburst debacle) so too President Macron’s snap election call is also appearing to backfire badly. While many will be setting off fireworks in celebration, many investors are less happy. In particular they are increasingly concerned about the stability of western investment environments.

Good investment conditions: Stability of institutions, Leadership, a Vision for the future, a Plan to make it happen. And Money.

Institutional investors always talk about wanting low volatility and even though this is often artificially manufactured (and leads to poor resource allocation) the underlying truth is that, if we define risk more as uncertainty, then higher levels of uncertainty require a higher risk premium and currently, western politics is throwing up increasing levels of uncertainty.

At a recent Bloomberg Investor conference in Doha, the key message that came through from the many C-suite executives on stage was the one outlined above; what they need to invest is a combination of stability, leadership, vision and a plan. And of course the money to make it happen. Qatar has it, as indeed does much of the Gulf. So, of course, does China. Rather awkwardly, the countries who most avidly tout ‘democracy over autocracy’ have few if any of the attributes cited, most notably the first two. A large part of the appeal of populism is that gap.

UK voters are said to be unhappy that Rishi, like Liz Truss before him, was not elected but appointed. Teresa May was also installed, but at least went to the polls (and barely won). Perhaps more importantly, Gordon Brown who took over unelected from Tony Blair failed to establish his own mandate, but is waiting, like a Cicada, to reappear as an eminence gris behind a new Labour Government and many believe that neither he nor Tony Blair ever really went away. Shadowy figures behind bland frontmen increase uncertainty rather than reduce it.

European electorates are generally less bothered, having a long history of coalition governments - Angela Merkel for example never won a popular majority - and of course despite the recent ‘rout’ in the EU Elections, Ursula Von de Layen and the technocrats remain ‘in charge’ regardless. Perhaps only the French feel they vote for a Leader, due to their Presidential system, but in Macron they have clearly decided in response to his implicit question of “who runs the country” that just as the British look to be saying to Rishi, the answer is “It isn’t you”.

The people don’t like this form of ‘democracy’ … and neither do investors

This is part of a push back against the incumbents by a populous that doesn’t believe the spin of how much better everything has got. Sure, in the gilded bubble of grace and favour housing, a permanent staff, no energy bills, personal security, instant access to state services, private jets, helicopters and a constant round of glad-handing ‘Global Summits’ in exotic places, things look just fine. But in the real world of rising mortgage costs, failing services, queues for everything, sky high energy prices and spiralling street crime, the populous have had enough.

Macron has a small supper with a few friends

Meanwhile, for investors, if ‘democracy’ is producing instability in taxes and systems - in particular around energy - and there is no clear leadership with either a vision, or more importantly a credible plan to execute on it (looking at you net zero), then it’s easy to see why direct investment is going to flow to places that do. Shouting from the sidelines that they are ‘autocracies’ is not going to cut through to the hard economics.

It’s not Sunak and it’s not Macron. And it’s not Biden either.

With Sunak and Macron likely to be punished by the electorate over the weekend, the gaze inevitably turns to the US and following the debate debacle last week, the key takeaway has to be: ‘So who exactly is running the country then?’

No answer sits particularly comfortably. One thing we now know for sure is that it isn’t the titular President and while many of us are not surprised to see our long held suspicions confirmed, the fact that the entire Democrat Party machine - which effectively includes most of the mainstream media - have insisted for months that Joe Biden has ‘never been sharper’ is revealed as Gaslighting on an epic scale. A lot of people who got their news (and opinions) from the New York Times, Washington Post, CNN and MSNBC are having a “Say, What?” moment. Constantly warning about Fake News while delivering it yourself is not, as they say, a good look. The betting markets agree and now put Biden as low as 7:1 to win (now for the first time behind Kamala Harris).

So who is running the country? We know it’s not Joe, and our preferred answer - in the US at least - is lobbyists, primarily for big business and finance, looking to policy makers to ensure high margins through legislating for monopoly or quasi monopoly positions. We illustrated this back in January when talking about the return of populism (Populism will come from both the left and the right), showing that both Government and Corporates are too dominant compared to the household sector and arguing that we need both more socialism and more capitalism. What we need less of is Crony Capitalism. Regular readers may remember the diagram we constructed.

We know it’s, at least partly, corporate lobbyists

The Gilded Bubble of Neo Feudal Globalists

But while the lobbyists work for the corporate would-be monopolists, who could be managed with a dose of actual capitalism, they also work for the Globalists, the Davos men and women in consultancies and think tanks funded by the foundations of Billionaires aiming to ‘reshape society’. And they will prove much harder to shift. It is they who are behind the two key policies of open borders and net zero, policies that are being imposed regardless of country or notional political party and which are the key focus of the populist push back. Living, like the politicians, high on a hill in a Gilded Bubble of Private Equity. Private Credit and Private Jets, their intentions may be good, but their outcomes are certainly not. Just as the Crony Capitalist Corporates need a does of real Capitalism, so the Faux Socialist Billionaires need a dose of real Socialism.

In Europe, resisting the neo feudalists is manifesting itself in what is being referred to (by the same gaslighting media) as ‘extreme left’ and ‘extreme right’ wing populism, especially in France, where the decision by Globalist President Macron to call an early General Election appears to already be backfiring. In a classic example of utilising multiple logical fallacies (the go-to technique for Globalist Gaslighters) Macron’s media is presenting a slippery slope, a false dichotomy and a false middle as well as Ad Hom attacks, and appeals to emotion. By positioning his opponents as ‘extreme’ he seeks to position himself as the ‘strong and stable middle’, when in fact the radicalism is in the claimed ‘centre’. As we pointed out in a recent note : the Centre can hold (just), the actual centre is the views of the so-called far right; it is the radical Globalists currently in power across the west, with their society altering ideas on open borders and Net Zero that are the real extremists.

So as those in the Anglosphere outside the gilded bubble when now asked ‘Who is running the country?’ deliver their answer of “It isn’t you” to the incompetent incumbents like Sunak, Macron and soon Trudeau (Arden and Morrison having already gone from NZ and Australia respectively, as have Varadkar in Ireland, Sturgeon in Scotland and Drakeford in Wales) and having seen through the spin they know it isn’t Biden. But it isn’t them either. Yet.