George Orwell

Good Morning Ladies and Gentlemen

„It is frightful that people who are so ignorant should have so much influence.“
by George Orwell

Last week

Many thanks for all the messages and comments I received for last week’s «Stefan’s Weekly». I want to share some excerpts from my email conversations with Shauna and with John, a former winner of the year-end competition.

«Countries have interests, not friends. Eventually, Germany’s high energy costs can cause a shift in the political landscape. It is the Wild West in terms of countries interacting with one another. Rules are thrown aside or rewritten if they benefit the more powerful entity. The concept of rules or freedom is irrelevant at a high political level. It is who is more powerful.» 

Wow, what a comment; I agree, and it reminds me of a quote by Henry Kissinger.

«Is it power? Is it greed? Is it insanity to kill fellow humans and sleep well after those decisions?»

I do not know and am as puzzled.

«People will give up their freedom for security when times get tough (citizens are more open to authoritarianism). However, yearn for more freedom when times are more prosperous (less regulation).»

Yes, at least to me, understandable everyday human behaviour.

«Another point is accountability. Some people do not make good decisions. What happens when their choices lead to poor outcomes? Is there a push for a rule that allows for a bailout?» 

Accountability

The general population pays the price for the risks politicians and authorities take. Yes, Ladies and Gentlemen, citizens pay the price for all the risks and incompetent decisions made by politicians and authorities. Under normal circumstances, politicians and authorities are not held accountable for their mistakes. In some instances and only in reasonably functioning democracies, politicians risk not being reelected. That is it.

Serve the people

The primary goal of politicians and authorities should be to serve their people. I am not sure if this is fully understood by politicians and authorities, and quite frankly, I am not sure if voters fully understand this either.

Germany, IFO Institute in January

On January 17, the IFO Institute estimated that Germany’s GDP would fall by 0.3 % in 2023. Due to persistently high inflation and falling purchasing power, it anticipated a mild economic recession. However, according to the Economic Institute, GDP is expected to grow slightly again in 2024.

Germany, ZEW Centre in February

This week, ZEW (LEIBNIZ CENTRE FOR EUROPEAN ECONOMIC RESEARCH) President Professor Achim Wambach commented on the latest survey results: «The German economy is in a bad place. The respondents‘ assessment of the current economic situation has decreased since June 2020. In contrast, economic expectations for Germany have improved again. Accordingly, more than two-thirds of the respondents expect the ECB to make interest rate cuts over the next six months in light of falling inflation rates. Almost three-quarters of respondents expect imminent interest rate cuts by the American central bank.»

Interest rates expectations

Once more, it seems to all come down to interest rate expectations. Better economic outlook thanks to falling interest rates. If most market participants expect lower interest rates, the effect will be priced in by market participants well before the final announcement, which bears a certain risk of disappointment, no?

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li