22 Comments

India has always struck me as being in an analogous position to pre-revolutionary Iran. The parallels are inexact, but it has a nominally democratic government which appears outwardly somewhat US leaning but in reality wishes to pursue an independent foreign policy (of course with significant geopolitical constraints). The social tensions in rapid economic development coupled with an intense conservatism (not to mention the religious - caste - sectarian dimension) make social upheaval inevitable.

Expand full comment
author

Hard to disagree

Expand full comment
Sep 26, 2023Liked by Russell Clark

The question is whether that is currently priced into Indian financial assets.

I would suggest not.

Expand full comment
author

The market will probably being to price it when US politics begins to turn against India... so Chinese assets turned in 2011 (for me anyway), when China went more competitor to US, rather than just manufacturing base...

Expand full comment

Russ, jamie Dimon today said world cannot handle 7% yields and you were looking for doubke digits. Right now US is paying a trillon in interest payments next year at current. How could they go to 7..10%?? How would debts be paid?

Expand full comment
author

Given the current structure that emphasise capital growth over income growth, a wealth tax would generate the government revenue need to pay off debt pretty quickly.

Expand full comment

Good question. I know this is a topic that triggers a lot of people, but from my perspective the USD remains the principal reserve currency for the next 10 years. For as long as this remains the case, I think of treasury issuance as economically akin to issuing equity, not debt. So the debt monetisation issue is like TSLA raising equity, as long as the market continues to digest the supply there is no solvency issue.

Expand full comment
author

The performance of GLD/TLT is suggesting a rapid change in the attitude of investors - its just that all the major areas (except China) are also seeing bond weakness. Which suggests investors are making a fair reasonable assumption on the attitude of governments and the voting public to public spending

Expand full comment

Russell is there a way you can chart the equivalent of Gold/Bunds Gold/JGBs Gold/Gilts for €,¥,£ investors?

I have a hunch "GLD/TLT" actually works best outside the US with a higher sharpe ratio too.

Expand full comment
author

Pretty easy to do. Gold in Yen is by far the most interesting, so will do that soon

Expand full comment

looking forward to it!

Expand full comment

If true, why is that not happening now?

Expand full comment
author

Which part? The indian goverments harrassment of sihks and muslims is ongoing... and rich indians tend to park alot of.cash off shore... particularly in UAE

Expand full comment
founding

How interesting. Am off to Delhi to live next week. Suspect UAE would boom if you are right. Rich Indians hate living in India.

Expand full comment

lol..that is what i thought...

On GLD/TLT, as TLT short rips, does GLD start to work?

If so, why?, as GLD historically does not like higher rates?

Expand full comment

Huh? We are talking about rising US debt and interest rates no?

Expand full comment
author

Sorry - the way this thread works is.very confusing... GLD/TLT is pointing to rising pressure... but for the moment politicians are ignoring it

Expand full comment

Yeah but that is the issue. Many long time buyers are not buying anymore. TSLA never had that issue.

Expand full comment

Thanks for highlighting the book. Check out Henrich's "The WEIRDest People in the World" for more on how Christianity shaped the psychology and culture of the Europe aka "The West", allowing for the conditions which gave rise to much of modernity (including the Dutch, British and US empires) and how this psychology / culture is actually very unusual compared to that of most humans (WEIRD is an acronym for western, educated, industrialised, rich and democratic). I found it to be a huge eye opener.

Expand full comment
author

Thank you. Will take a look

Expand full comment

What are the main points?

Expand full comment

Its a bit too complex and nuanced to layout in a comment. Here is an interview with Henrich that may help. https://news.harvard.edu/gazette/story/2020/09/joseph-henrich-explores-weird-societies/ More than that I'm afraid you'll have to read the book or at least listen to an interview with the author.

Expand full comment