Select Page

France: Countdown to General Election, June 12

Here we are a few days away from the first round of the general elections in France. As you know, we had presidential elections at the end of April which reelected President Macron for a second 5 year term (listen further here).

Now we have to go through general elections which are meant to renew the lower house which is called the National Assembly here in France. This election is especially important because it will allow the newly re-elected President Macron to rely on a majority that will allow him to implement his program.

This election is becoming even more important since the length for the presidential mandate has been reduced from seven years to five years and has started to coincide with presidential elections. Prior to the 5 year mandate, presidents would stay 7 years in power. So the general elections at the National Assembly would not necessarily coincide with the Presidential Elections. Prior to that 5 year mandate, France was used to witnessing a majority that was shaping itself according to the more traditional left/right political streams of influence. This new mandate is shattering that traditional way of political practice.

Moreover, this year’s presidential election revealed a surprising fragmentation of the political pillars of influence. Rather than the traditional left and right pillars both closer to the center, the second round of the presidential election showed three clearly defined forces with a distinct polarization for a radical form of action, to the left and to the right. The third man of the election to the left, Jean-Luc Mélenchon, realized that the new context at the National Assembly is offering an opportunity for a left wing coalition to garner the needed 290 seats for an outright majority. The latest polls confirm that the left wing coalition, also known as NUPES, is very close to achieving such a result. This is indeed where we are heading, only one week ahead of the first round of the General Election.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.    (listen further here)


“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”(III)

One of the images that struck me the most in the movie HOME by Yann Arthus-Bertrand is when witnessing the declining levels of rivers and water tables. Only to learn that the water feeds oranges or other fruits. In order to increase the level of hard currency reserves, the water of many rivers or lakes has to be shipped away through oranges, avocados, fruits and so on.

Indeed, you can apply it to so many other examples; avocados to be exported for the sake of increasing revenues in hard currencies, potatoes to be exported for the sake of increased revenues in hard currencies, kiwis to be exported for the sake of increased revenues in hard currencies, fancy tropical fruits to be exported for the sake of increased revenues in hard currencies, and I can go on and on.

That aha moment was a shock for me. All of a sudden, I started to see any field of fruits or produce anywhere in the world, as a displacement of water. When I take the train here in France and look out through the window at the landscape, all I see are these vast farming fields that are just water to be shipped away far to other lands in the world. And all that displacement of water has only one single goal: to increase revenues in hard currencies in order to improve that country’s ability to pay for its oil or gas bill.

No wonder food production and agricultural production is going through massive standardization for the sake of increased profits and efficiencies. That is reflected in the form of larger and larger farms all around the world. Large-scale land acquisitions are indeed on the increase in the last few years. This race towards the creation of larger commercial farms at the expense of smaller facilities is indeed hurting smaller communities. Many of these projects are initiated precisely to create more efficient channels of exports that will bring larger revenues in hard currency. At the same time, these larger farms have a tendency to impact the distribution of water to smaller communities. Indeed, while the larger farms expand their footprint, smaller communities then find it harder to cohabit and access water supplies. Hence the need for entire populations to move and migrate.

You see, there is a chain of cause and effect between all these moving pieces, from reserve currencies to food production. From food production to water supplies. From water supplies to climate change. From climate change to migration. From migration to war. On and on and on. And so goes the cycle.

Frankly speaking, our economic thinking right now is much closer to the Confucius warning centuries ago.

“When a wise man points at the moon the imbecile examines the finger” ― Confucius

And I must admit, we’ve all been acting like imbeciles all these last decades and centuries, trying to act smart, when the broader picture is a lot bigger.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.

“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”… (II)

We talked about four movies in my previous post. And now you might be wondering where the fifth one is.

The fifth one is ARRIVAL which came on the screens in 2016.

It shook my perception of the world as well and probably will leave a long lasting mark for quite a while. Since 2016, I actually saw it 10 times. Now you might be wondering why it is related to economics.

Well, I don’t want to spoil it for you, but the central theme of the movie is about time. Especially linear time. I myself come from a financial background professionally, and finance is all about time. But I won’t too much here beyond what I really need to say to make my point. What this movie helped me realize is how our whole society, its monetary systems and its institutional paradigm are all organized around a linear perception of time. Even more, it’s not just linear, it’s exponential…Exponentially linear.

There will come a point in the future when we will look back at this movie and realize how this single movie helped us realize how humanity’s commitment to a linear progression was a mistake.

That’s all I need to say for the time being, because you need to watch that movie first before we can talk further.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.


“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”… (I)

For the next few days, I am inviting you to a movie exploration. The kind of exploration that you probably have not heard about anywhere else.

The five movies I am about to elaborate around have made a major impact on my understanding of the world that we live in. Of course, there are many more movies that impacted my life, but I am focusing on these five especially because of the specific realizations they triggered inside my mind through the lens of economics and history. In hindsight, I am now realizing how they provided a bedrock for the worldview that shaped my perception of the world around us.

At the beginning of the eighties, I was walking down the streets of Paris, on my way back home, after a well deserved day during my internship as a student in business and economics. And then I saw a giant poster with a title on it; KOYAANISKATSI (1981). The movie was showing at a very special movie theater then, called the KINO PANORAMA of Paris, a special place in the history of cinema, but that will be a later topic of discussion. The cinematic experience I then felt watching KOYAANISKATSI that day comes very close to what the President of the Jury at the Cannes Festival described during his opening speech this year, few days ago. Vincent Lindon, in the current context of war, wanted to remind us about the special role of movies, and he declared that “cinema, is a weapon of massive emotions to awaken our consciousness.”

That’s exactly what KOYAANISKATSI did to my mind. And I have to admit that to this day, there is a lot about the world and the economy that I would not have understood if I had not watched that very special movie. The ideas and emotions that I felt that year were reverberated by BARAKA, a little more than 10 years later, that I watched in New York City. Both movies are non narrative and shown as documentaries. Thanks to a mesmerizing soundtrack, every single image in both of them pulls you into a multidimensional universe made of speed, acceleration, disjunction, dysfunctionality and disconnection. The emotional whirlwind of emotions created a permanent state of disruption, the very disruption that I was precisely bathed into during those formative years where I was starting my career as a financial analyst in the Middle East, Paris, Frankfurt and New York for leading financial institutions. It just so happened that the very state of overwhelming confusion stood right at the heart of what a famous economist, called “creative destruction.” Every single text of economic theory at that time was hailing it as a mantra of righteousness. Every single politician and policy maker had to make a lateral reference to that creative destruction, because it was a promise for the future that justified the very sacrifice that nature and societies had to endure in the present moment. Saying otherwise was absolutely tabou. No government, institution, project initiative, could get financing if it didn’t bear that implicit seal of rightful thinking.

Right at the time KOYAANISKATSI was released, another important movie came up, ROLLOVER (1981). I did not get to see it until later in the early 2010’s, as if it was meant to act as a book end to a transition that would lead us to where we are now in the world. From ROLLOVER, I learned about how  nature’s gifts and resources get to be transformed into a simple piece of paper that represents money. We can now say that the transformation into paper money is now represented by digital bits, electronic blips that only exist in cyberspace. Nature, our natural world, ends up into digital bits. It is vaporized through the power of powerful computational machines, transforming the present into promises made of electronic blips, all stored into silicon chips extracted from Mother Earth.

The transformation of nature into money, Chief Seattle already had a vision of it, more than a century ago; “Only when the last tree has died and the last river has been poisoned and the last fish has been caught will we realize that we can not eat money.”

Indeed, are these electronic blips going to feed us when everything disappears?

In the documentary HOME (2012), that’s exactly was we are witnessing;  water transformed into $’s, air transformed into $’s, trees transformed into $, mountains transformed into $. The whole documentary shows us right in our face how we are converting nature into money. You know how sometimes, when we are training our puppies to not pee and poop all over the house. Sometimes, the most efficient way to train them is to grab them nicely by the collar and put their face right in front of their misdeed. That’s what Yann Arthus-Bertrand did in that movie. The scenarist of that movie ended up writing a book all about “symbiotic economics” (“Symbiotic Economics” by Isabelle DELANNOY).

And finally, my list also includes ONCE UPON A TIME IN THE WEST (1971). That movie revealed its essence only after several viewings over several years. I then could see through a fictional story inspired by reality, how money can spread from one area to another. As the saying goes, “If you want to be rich , build a road”, and I can see how this movie, over the years, can help get a lot better perspective of what is happening in the world nowadays…

So as you can see, there was a kind of premonition in these five movies. A premonition that goes far beyond the kind of control or manipulative hidden hands that would be too easy to fall into.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.


From Reserve Currencies to the The Cannes Festival

I have been telling you a lot about the technical aspects of the economy and money in the last few weeks. I have also been sharing a lot of thoughts about supply chains and how they are on the verge of reshaping the world. These are indeed all aspects of a world in mutation, of paradigms disintegrating. Other models are shaping themselves up and are in the process of emerging. We just are not able to perceive them.

Money and finance make the world flow, they provide energy and momentum to the world. The different modalities money and finance take and structure themselves around percolate throughout the economy and eventually society, including each and everyone of us. They even reach out into our minds. We just don’t realize it and cannot fathom to which extent they shape our thoughts and inner being.

In the last decades, the US$ as a reserve currency  provided the structural backbones of the world, allowing at the same time American culture, also known as the “American Way” to reach out throughout the world. Without the $ as a core currency, American goods and services wouldn’t have reached every single corner of the planet. American universities wouldn’t have attracted so many talents from all around the world and trained them. And American movies wouldn’t have reached every single pair of eye balls in the last 100 years. It’s the US$ as a global currency that allowed the iPhone and smartphones to be placed in the palms of the hands of as many people as possible.

And if you want to look at a link about how this happens, just look at cinema.

Let me elaborate a little bit more at this juncture.

One of the cultural dynamics that we are all familiar with, all of us, is cinema. In fact, the other week I had an appointment at the ophthalmologist. He confirmed to me that eye sight remains our dominant form of perception, far ahead of sound and any other sense.

And festivals of cinema, throughout the world, play that role. Indeed what a better time to talk about the Cannes Festival that is just opening in the South of France and which will also shine throughout the world. I have always looked at that Festival as a barometer of what is happening in the world. And this year marks a very special moment in Cannes. Ukraine’s president realized that by talking directly to the artists live on the giant screen of Cannes.

Yet, when you look at every single award winner of the last decades in Cannes, you realize how every single year was a snapshot of what was unfolding on the planet. It is a living memory of the planet. Together with many other serious film festivals on the planet, these movies provide a timeline of a reality that we would not have been able to capture with our conventional perceptions. You need that kind of suspension of conventional reality to be able to observe what is really happening.

I used to follow it very carefully, in my teenage years. And then it disappeared from the spectrum of my attention.

But I am now realizing how crucial it is to keep an eye on it, as a true witness of its time. That’s not just because of the magic of cinema, but it’s also because cinema from all corners of the planet is an ideal medium for each of us to learn from each other. In these troubled times and after more than 2 years where we have all been restricted in our travels, more than ever, cinema allows us to travel in the minds of other people in other countries. It gives a chance to explore different psychological dimensions, to open ourselves up to emotions and learn about ourselves. It acts as a powerful tool of self exploration when used properly and focused on deep works of art.

If I look at the last 70 years for example and take a look at the names of movies that won the Palme d’Or, it is possible to highlight very powerful patterns that I had not even noticed right when this was happening. It is in hindsight that these patterns emerge. There is a story that can be told just by taking a look at how these awards at movie festivals were awarded.

And by doing so, you will have a much more complete picture of economic cycles in the last 70 years. It’s a very unconventional method, but it is a different lens of observation.

There is indeed so much to learn from movies. I am personally surprised at what they taught me. Here is an example; believe it or not, I actually learned a lot in terms of monetary policy and economics just by watching a movie like “Once Upon a Time in the West” or “Roll Over.”

That’s what I am inviting you to do in the next few days. Looking forward to following up on that exercise.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.


The US$ Reserve Status; Likely to Last a Lot Longer …

What I’m about to share with you right now is kind of contrary to most of the views that you keep hearing regarding the status of the dollar. More and more, you keep hearing that the dollar is going to lose its status.

When it comes to this point, I have to admit that I’m a little bit of a contrarian.

I actually think that it’s still way too early to bet against the dollar as a reserve currency. I put myself in the camp of Ray Dalio who thinks that a reserve currency can continue to be the leading currency despite the lack of fundamentals that would sustain the status of that reserve currency.

In fact, I’m even going a little further and I believe that in this world which is going to be increasingly digitized, I believe also that there is going to be more space for digitized fiat currencies that have proven their efficiency, and their role as a conventional Fiat currency. That might surprise you too hear that the US$ did fulfill its role as a conventional fiat currency. But if you look at it from the standpoint of allowing free flow of capital, then you have to admit that the US$, followed by the Euro, did just that. And as such, the US dollar has done it, with the euro actually following on its heels on a more regional basis.

So I know that this is a little contrary to most of the views that you keep hearing and even some of the evidence that you see in front of you. But sometimes, you have to look at a basket of pros and cons and look at the net effect left in your basket.

So, here and there, you keep hearing that this is the end of the dollar and even the end of the euro and that this is gonna be the rise of the rise of the RMB. You even hear that cryptos will replace the traditional fiat reserve currencies.

But let’s provide a little bit more texture here to a picture that is a lot more complex than it appears.

First of all, cryptos have no long term track record at all and will need the time to establish it. Their current collapse just provides further evidence that it is impossible to see them as a stable and anchored into any tangible economic reality.

Second, the fact that another fiat currency is going to continue to rise versus the USS, here I am talking about the RMB, does not mean that the US$ will collapse. You have to look at it against a basket of many other currencies. And that’s what the latest update of the SDR basket of currencies is showing. So of course, the RMB will continue to assert its position, but that does not mean that it is going to be at the expense of the US$. In fact, I am not even sure that the Chinese People’s Bank of China is really interested in taking such a unipolar role in the global monetary system. It’s a lot more complex that it appears.

Third, in this increasingly digitized world, the dollar will continue to keep its leading role. In fact in a digitized world, a Fiat currency needs to provide efficiency, flexibility and trusted operationality. The dollar remains way ahead in that regard.

However, the fourth argument, and it is also the main argument, the dollar is also underpinned by a very powerful financial system and well functioning capital markets. These are very well organized, very sophisticated, where everyone in the world can come and raise funds. Every startup executive on this planet knows that they first have to talk to New York financial executives in order to find funding. Basically the whole world can come to US capital markets and raise funds. Of course, China is also building a similar capital market infrastructure and it is modeled after the structure of the US system with the RMB as a core currency. Yet, that does not mean the emerging Chinese capital market will fully replace the US. It is much more likely to coexist next to the US market.

So that is what I wanted to share with you. I know that my view is a little bit of a contrarian view and in fact you’re seeing that the weight of the SDR the the basket and the SDR basket continues to reflect a pretty strong share in the SDR basket.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.