Cornerstone Global Associates

The faith of crisis

Posted by: msomos on: January 30, 2012

(Photograph by the author)

Mark Somos, Cornerstone

Last week’s “Athenian Legacies: European Debates on Citizenship” was an unusually thought-provoking conference. The technical thoughts were professionally and well-provoked, and the setting prompted unbidden reflections. It’s hard to think of a better place than Athens to discuss topics like assumptions about human nature in constitutional law, ingroup-outgroup formation, contested and reassertive circles of family, tribe, village, state and federation, or the asynchronous imperatives to gradually form and suddenly rally a citizenry. The papers rolled on, and we strolled between sessions, talking and admiring the overwintering fruit trees. Read the rest of this entry »

Spain: the unseen multiplier to Greek political risk

Posted by: msomos on: November 4, 2011

Since yesterday, markets around the world have been breathing premature sighs of relief. If Papandreou falls, and elections are called to around late November, it'll coincide with, or shortly follow, the Spanish elections of 20 November. Spain posted 21.52 per cent unemployment last week, the highest in the industrialised world. It is unlikely that the new Spanish government, which may even get absolute parliamentary majority, will be able to keep its electoral pledge to boost job creation and cut spending, and also honour its commitment to cut Spain's deficit from 9.3 per cent of the GDP last year to 6.0 this year, 4.4 per cent in 2012 and 3.0 per cent in 2003. Spain has a significantly larger economy than Greece, with a GDP of over one trillion euros in 2010 (more than three times the Greek), and a labour force of more than 23 million (compared with Greece's 5 million.) The new Spanish government's first measures, and the inevitable renegotiation with the EU, will take place in the shadow of the Greek crisis – perhaps simultaneously with renegotiations with a new Greek government. If Spain's Popular Party shows that it is unable to keep the deficit reduction pledge despite its best efforts, it will seem responsible; if not, it can blame eight years of Socialist rule. In either case, EU leaders will be hard put to blame Spanish economic woes on bad leadership, as they do with Greece. The media will point out that despite the differences in individual EU members' leadership and success in juggling economic and political priorities, domestic economic crises, and their EU-wide and global ripple-effects, the two countries' troubles point to systemic and deep-running flaws in the EU as an on-going project. By the end of this month, the roller coaster ride of the last two weeks may seem like a lullaby; yesterday's and today's market exuberance will certainly prove irrational.

Summary: Yesterday's and today's market optimism and the dearth of discussion about the Greek-Spanish political risk multiplier suggest that the market has not yet priced in the short-term effects of the Spanish election later this month, including the announcement of inevitably anemic austerity measures and probable deficit cut renegotiations with the EU.

Recommendation: Selling at a profit while the mood is optimistic – which may not last much longer – is obvious advice. Later this month a range of undervalued European financial products could become available.
 

We are not a financial or investment advisory service and are not licensed or regulated to provide investment advice. The blog only represents our views from a political and economic risk perspective, and no investment decisions should be made solely based on our thoughts. Cornerstone Global Associates, its associate companies, partners or individuals take no responsibility for decisions that may be made on the basis of this blog piece.

FIFA 2022 must remain in the region, for Qatar’s sake

Posted by: ghanem on: May 20, 2011

The recent allegations of bribery surrounding FIFA and the way it is run must not be allowed to undermine the fact that Qatar's bid has deservedly won the right to host the 2022 World Cup. Sepp Blatter's refusal to rule out a re-run is especially worrying, given that he is standing for election against Asia's candidate to the post of FIFA President, the Qatari Mohamed bin Hamman. Read the rest of this entry »

Leonie Timmers:

Posted by: jkomuves on: May 13, 2011

On the 30th of April one is supposed to celebrate queens day in the Netherlands, however this year I was instead pleading in the Peace Palace in front of Judge Koroma and Judge Yusuf (ICJ) and Judge Bengt Broms (US-Iran claims tribunal). Why? Because my team (University of Leiden) reached the finals of the Telders International Law Moot Court. This year 18 universities prepared for the 'Case concerning the Umarghela River', which involved issues relating to the law of international watercourses, transboundary pollution and the extradition of terrorists pursuant a Security Council Resolution. My team, consisting of 4 students and 3 coaches, had been working very intensively on the case since October, first on the written memorials and afterwards on the oral pleadings. Our efforts paid off: we became runners-up, just after UCL against whom we pleaded in the finals. Our respondent memorial was granted a price for the best memorial, and for the applicants there was the 'best oral argumentation price'. I was especially overwhelmed when I was awarded  an individual price as well  for 'runner-up best oralist'. All in all, it was an overwhelming, challenging and rewarding experience. I hope that one day it will be my job to plead in front of ICJ judges but even if that dream does not come through I can say that I have done it once, and at the age of 22.