Households in most parts of the world are struggling to manage their finances. The cost of living is becoming unaffordable for most poor and lower middle class households. The basic necessities like housing, food, energy and healthcare have seen material inflation in most jurisdictions.
Even middle class households are finding it hard to maintain their current lifestyles as the wealth effect created by bloated asset prices is waning fast; savings are depleting due to massively negative real interest rates; and real wages have declined over the past 3yrs.
Historically, such conditions have provided a fertile ground for a workers’ (communist) movement. Countries face widespread civil unrest (anarchy) and anger against the wealthy (burgeon) and capitalist democracies are usurped by the authoritative (dictatorial) leaders. Peoples’ right to basic standard of life takes precedence over liberty and nationalism.
The latest election results in Sweden and Italy are surprising in this context. Both the countries have elected leaders holding extreme Right ideologies. In fact Giorgia Miloni is being compared to the fascist Benito Mussolini, who made the Pact of Steel with Adolf Hitler (Germany) and later Tripartite Pact, including Japan in the Axis Powers to establish the rule of “racial supremacist” in the world.
Until only a few months ago, it appeared that left leaning parties are taking control over major economies. However, that assumption has been belied completely in the recent events in UK, Sweden and Italy. It is also expected that right wing Republicans may take control of US Congress in the ensuing mid-term elections.
So how do we explain this phenomenon of ultranationalist leadership emerging in various parts of the world when one half of the global population is struggling to make two ends meet? In my view, it is important to decipher this puzzle for making a good investment strategy.
One view I got is that uprising of workers occurs only after burgeon excesses reach an extreme. We may therefore be one step away from the revolution.
I am however not inclined to accept this view. I believe that the quantitative easing (QE) that created thousands of millionaires and unicorns, while pushing almost a billion people back into poverty is nothing but a burgeon excess on the extreme. The pandemic and erratic weather patterns that have caused severe food and health crises globally are also an indication that Mother Nature is no longer willing to tolerate the excesses perpetrated by way of unsustainable exploitation of resources under the garb of industrialization, civilization, growth and development.
My view is that the lines between Left (communism), Center (Socialism) and Right (Ultra nationalism) political ideologies have got obliterated in the past two decades. Politics is now driven more by personalities than ideologies. The persons at the helm do not mind using the ideas of the French Revolution, Marx, Lenin, Hitler, and Keynes, et. al. to attain and/or stay in power. We have seen leaders like Trump, Putin, Xi Jinping, Narendra Modi, Imran Khan, etc. to be ultranationalist, socialist, and communist at the same time.
Thus, in this era of ‘Selfie”, personalities rather than ideologies & values are driving the politics. Obviously, the policy making is highly unpredictable. For example, in the case of India, in the same cabinet meeting we could have extremely populist (socialist); ultranationalist and burgeon (capitalist) decisions being taken. President Xi Jinping could liberalize the economy, dissipate Jack Ma, sign a watershed petro-yuan deal with Saudi and annihilate Uyghurs Muslims, threaten Taiwan, invade India and talk about global cooperation (Belt and Road initiative) in the same breath. Biden can leave Afghans on God’s mercy and pledge support to Ukraine and Taiwan. Trump can seek help from Russians to win elections, and Sunni Saudi Sheikh can talk peace and friendship with Jewish Israel and Shia Iran.
