Entente non-cordiale

Carlos Ghosn’s car alliance is still in limbo

The former boss of Renault and Nissan dismisses his legal team as his replacements discuss the future

CARLOS GHOSN’s long sojourn at the top of the car industry ended suddenly when Japanese prosecutors boarded his plane in Tokyo last November to detain him on charges of financial misconduct. Dismissed soon afterwards as chairman of Nissan and Mitsubishi, he has since been replaced as chief executive and chairman of Renault, the third partner in an alliance that is the world’s biggest carmaker.

Mr Ghosn protests his innocence of under-reporting his pay and shifting potential trading losses from personal foreign-exchange derivatives contracts to Nissan during the financial crisis. His chances of acquittal in a country where the conviction rate is 99% may have lengthened further. On February 13th Mr Ghosn, who has occupied a prison cell since his detention, dismissed his legal team and appointed new Japanese lawyers to represent him. The reasons are unclear—Mr Ghosn may be unhappy that his previous lawyers had not secured his release on bail, or his counsel may have doubted their ability to win his case when it comes to trial later this year.

Renault initially gave Mr Ghosn’s financial activities as its own boss a clean bill of health, and stood by him. Many of its executives may have privately agreed with his claim that Nissan’s bosses wanted to take him out to prevent his plans for a French-dominated merger to replace the looser alliance structure. Nissan executives resent that Renault owns a controlling 43.4% in the Japanese firm but Nissan has only a non-voting 15% stake in Renault.

Now Renault appears to have uncovered suspect activity. It has asked French authorities to investigate Mr Ghosn for benefiting from a sponsorship deal between the carmaker and the palace of Versailles, which he used as the venue for his lavish wedding. Mr Ghosn says it was an error and that he will repay €50,000 ($56,500) to Renault. On February 13th Renault cancelled deferred pay to Mr Ghosn and a non-compete deal together worth about €30m.

Relations between Renault and its Japanese partner remain in the deep freeze. The French firm is livid at the way Nissan has handled the investigation of Mr Ghosn, especially its refusal for a long while to share any details of his alleged misdeeds. But both parties accept that relations must be revived, and quickly, as joint decisions on investments are required to keep the alliance on track as car markets around the world start to weaken. Poor results at Nissan, announced on February 12th, underline the necessity of making up. As well as revealing an $84m charge linked to Mr Ghosn’s compensation, it said that margins and profits had drooped.

Jean-Dominique Senard, Renault’s new chairman, is in Japan this week to meet Hiroto Saikawa, Nissan’s boss, to discuss the alliance’s future. Both realise they are stuck with each other. Unwinding a partnership built over nearly two decades would be fiendishly hard. Neither company looks strong enough to survive alone in the competitive mass market.

But resolving issues such as who should become chairman of Nissan, and who should lead the alliance, will not make for easy compromise. France’s government, Renault’s biggest shareholder, wants Mr Senard to assume the latter role, to keep Nissan firmly under French control. Nissan, for its part, has said that its aim is to rebalance in its favour an alliance to which it contributes the bulk of profits. Neither the future for Mr Ghosn nor for the alliance he created is getting any clearer.

Investors urge tech start-ups to hoard cash

VC groups say the slowing economy will make fundraising more difficult

Aliya Ram and Tim Bradshaw in London

Venture capital investors are warning their start-ups to hold more cash as worries about the global economy and stock market volatility threaten to trickle down into private tech financings. “

We are certainly telling [entrepreneurs] they need 18 to 24 months of runway right now, to make sure they can weather any situation,” said Danny Rimer, a partner at Index Ventures.

Just a year ago, Mr Rimer would recommend companies to hold enough cash to cover nine to 12 months’ worth of expenditures and delay raising new funds if they thought they believed they could achieve higher valuations in future. Now, he suggests start-ups seek more capital sooner rather than later, and at more modest valuations.

Venture capitalists make record investment in 2018. Deal value increases from $40bn in 2008 to over $120bn in 2018 in the US

Ten years ago, Silicon Valley venture firm Sequoia sparked concerns about a tech bubble with a presentation to its entrepreneurs declaring “RIP good times”. Sequoia’s presentation, which was sent out to portfolio companies at the height of the financial crisis in late-2008, warned that any start-up without a year’s worth of cash in the bank could find itself in trouble as the economy slowed.

While investors are not yet using such dramatic language, some have warned tech companies that a downturn in the economy could cause bigger businesses to cut IT spending and make it more difficult for funds to raise capital.

“We’ve started to be a little more cautious about that run rate . . . it should be a year or one-and-a-half years,” said Klaus Hommels, founder and chief executive of Zurich-based venture firm Lakestar. “The likelihood of being refinanced and achieving a huge valuation is less.”

SoftBank’s decision to slash a planned investment in WeWork, the shared office company, from $16bn to $2bn has also led to fears that valuations for private tech companies will come down, just as they have for high-flying public tech companies such as Nvidia, Snap or Apple in recent months.

However, some investors say there is far more capital available for tech companies now than in 2008. Investment has flowed into both traditional venture capital firms and later-stage funds such as Softbank’s $97bn Vision Fund, in search of better returns while interest rates remained low.

Nonetheless, despite the emergence of more start-ups with multibillion-dollar valuations, tech start-ups are still seen as a riskier investment than the public markets. UK augmented-reality start-up Blippar was forced into administration before Christmas after a shareholder dispute over funding when Malaysia’s sovereign wealth fund blocked emergency investment from property tycoon Nick Candy. Last month, the company relaunched under the same name after Mr Candy’s investment firm bought its intellectual property assets.

It is not uncommon for tech start-ups to end the year without enough cash to cover a year’s worth of costs, in anticipation of future funding rounds.

According to its most recent public filings, London-based artificial intelligence start-up BenevolentAI, which is valued at more than $1bn, had £19.6m of cash and cash equivalents at the end of 2017, but that year recorded research, development and administrative expenses of £36.7m. The figure includes £12.2m of share-based payments that only impact cash holdings when employees leave.

But the following April, the company was able to raise $115m from investors including Woodford Investment Management.

For investors, the concern is that start-ups founded in the last 10 years will only have experienced a strong economy and could be unprepared for a downturn.

“This year we want to look at all the companies in the portfolio and see they have enough cash in the bank,” said Lars Fjeldsoe-Nielsen, general partner at Balderton Capital. “There are some companies that are burning a lot of cash right now . . . many of the companies we invest in haven’t seen the downside.”


A new initiative aims to modernise global trading rules

It will pit the world’s big powers against each other

“SATISFACTION GUARANTEED!” promises the seller of “The Law and Policy of the World Trade Organisation” (WTO). The magic of e-commerce means that the doorstopper can be exported from America to Tajikistan for a cool $35.95 (plus shipping). A new initiative on digital trade at the WTO strives to add to the laws and policies described within its pages. But far from increasing general satisfaction, this plan is controversial.

At first glance, it is hard to see why. On January 25th representatives of 76 WTO members gathered at the annual shindig in Davos announced plans to negotiate new rules covering “trade-related aspects of electronic commerce”. Compared with the trade talks between America and China that restarted this week in Washington, this venture seems positively collegial. It makes sense: trade rules were written when cloud computing was the stuff of science fiction. What better way to demonstrate the value of the WTO, just as President Donald Trump is busy undermining it?

But a closer look reveals conflict. Though the 76 members account for 90% of global trade, they are a minority of WTO members. Many developing countries claim that tighter e-commerce rules would tie national regulators’ hands and that the issue is a distraction from others they care about more, such as limiting rich countries’ agricultural subsidies.

The plan is to sidestep such complaints, which have blocked agreement at the WTO for years. Instead of getting all members to sign up to a multilateral deal, a like-minded group will set rules among themselves. Hold-outs, like India and South Africa, will not be able to block progress if their demands are not met. The cost is the legitimacy that a broader group would generate—and the fact that non-signatories will free-ride on any deal, gaining from others’ commitments, without having to make any themselves.

Further battles lie ahead. “Countries don’t have a shared definition of what they’re negotiating,” complains Susan Aaronson of George Washington University. The WTO defines e-commerce as the “production, distribution, marketing, sale or delivery of goods and services by electronic means.” That is broad.

An agreement could include regulations covering spam emails or rules helping digital purchases zip through customs. It could reach deep into members’ domestic regulations to cover cybersecurity or the protection of personal data. It could prevent barriers to cross-border data flows, or ban requirements to store citizens’ data on local servers. Every two years WTO members renew a promise not to tax digitally provided goods, such as films from Netflix. A new deal could make that permanent.

American negotiators would like all of the above. Their technology firms benefit from data flowing freely, which helps them train algorithms and generate sales. Data-localisation is expensive, and could weaken security by giving hackers more targets. And, obviously, they would rather their digital sales were not taxed.

This powerful lobby group’s ambitions have already been enshrined in deals away from the WTO. The United States-Mexico-Canada Agreement (USMCA), which America’s Congress is supposed to ratify later this year, bans customs duties on digital products. So does the Trans-Pacific Partnership (TPP), which was negotiated by 12 countries, including America, and revived by the others when Mr Trump pulled America out. The TPP bars governments from forcing companies to hand over their source code, and the USMCA goes further by including algorithms, too. Both ban data-localisation requirements.

Many worry that American technology companies are using trade rules to neuter national regulators. In theory, there are exceptions to the rules regarding data localisation and technology transfer. But critics fear that governments will be wary of invoking those exceptions, and that arbiters at the WTO will side with companies.

It will be hard to get European negotiators on board with some of this. European law treats privacy as a fundamental human right, and the free flow of data as secondary; the Americans (and Japanese) start from the premise that data should flow and only then consider exceptions on privacy grounds. Still, a recent deal between the European Union and Japan suggests the differences may not be insurmountable.

The biggest fight will be with China. Its government views data as an issue of sovereignty, and trade in data as a national-security matter. Chinese representatives reportedly tried to narrow the scope of the talks, threatening not to participate. They joined in the end, presumably deciding that it would be better to have influence over any new rules rather than see standards that could become global set without them. Other countries see little value in rules that enshrine China’s draconian approach to data, but also know the value of having a country of China’s size involved.

American administrations have tried to resolve these differences in the past. The Transatlantic Trade and Investment Partnership, a proposed deal between America and the EU, was supposed to cover the two sides’ differing approaches to data. Together with the TPP, it was meant to draw China into a less hostile regulatory pattern.

Americans are once again working with other countries to pull in China. In December Roberto Azevêdo, the WTO’s head, described American efforts on e-commerce as “very active”. But negotiators may be short of bargaining power. Plurilateral negotiations on narrow topics at least mean that China cannot block all discussion. But they also remove the opportunities to bargain unrelated concessions against each other, which is how trade negotiators reach consensus. This initiative could be the success the beleaguered WTO desperately needs. Or it could be another demonstration of its weakness.

Over 60, and Crushed by Student Loan Debt

Older Americans are struggling under the burden of student loans—their children’s and their own.

By AnnaMaria Andriotis

                                                                                                                                     Emiliano Ponzi

One generation of Americans owed $86 billion in student loan debt at last count. Its members are all 60 years old or more.

Many of these seniors took out loans to help pay for their children’s college tuition and are still paying them off. Others took out student loans for themselves in the wake of the last recession, as they went back to school to boost their own employment prospects. 
On average, student loan borrowers in their 60s owed $33,800 in 2017, up 44% from 2010, according to data compiled for The Wall Street Journal by credit-reporting firm TransUnion. Total student loan debt rose 161% for people aged 60 and older from 2010 to 2017—the biggest increase for any age group, according to the latest data available from TransUnion.

Some are having funds garnished from their Social Security checks. The federal government, which is the largest student loan lender in the country, garnished the Social Security benefits, tax refunds or other federal payments of more than 40,000 people aged 65 and older in fiscal year 2015 because they defaulted on student or parent loan debt. That’s up 362% from a decade prior, according to the latest data from the Government Accountability Office.

At 66, Ante Grgas-Cice owes about $29,000 in student loans. His only income is a roughly $1,600 monthly Social Security check, which the federal government garnished for a period last year because he wasn’t paying his student loans.

Ante Grgas-Cice stands outside the building of his former restaurant in New York City.
Ante Grgas-Cice stands outside the building of his former restaurant in New York City. Photo: Michael Bucher/The Wall Street Journal

Mr. Grgas-Cice looks through a pile of bills inside his apartment in New York City. He owes about $29,000 in student loans.
Mr. Grgas-Cice looks through a pile of bills inside his apartment in New York City. He owes about $29,000 in student loans. Photo: Michael Bucher/The Wall Street Journal 

Mr. Grgas-Cice said his decision to go back to school continues to haunt his life.

He signed up for student loans to attend the Art Institute of New York City in 2003 and 2004, after a restaurant venture failed. At the Art Institute, he studied culinary art and restaurant design and layout to upgrade his skills, he said. Subsequent restaurant ventures didn’t work and he’s currently unemployed.

Struggling to keep up with his rent and other bills, he went to Croatia for the summer to live with his elderly mother. To pay for daily expenses, he relies on financial help from family and often turns to credit cards to pay for food and other necessities. He limits his food expenses to around $7 a day.

“I put all my money to better myself,” Mr. Grgas-Cice said, adding that he was cautious in his spending. He says it’s painful to think about his current conditions.

Student debt is one of the biggest contributors to the overall increasing debt burden held by seniors. U.S. consumers who are 60 or older owed around $615 billion in credit cards, auto loans, personal loans and student loans as of 2017. That is up 84% since 2010—the biggest increase of any age group, according to the TransUnion data.

The borrowing buildup has upended the traditional arc of adult life for many Americans.

Average debt levels traditionally peak for families headed by people aged 45 to 54 years old, according to the Employee Benefit Research Institute based on data from the Federal Reserve’s Survey of Consumer Finances. But between 2010 and 2017 people in their 60s, like most other age groups, accelerated their borrowing in nearly every category, according to the TransUnion data.

Seniors are finding they have to work longer, holding onto positions younger adults might otherwise receive. They’re relying on credit cards and personal loans to pay for basic expenses. People 65 and older account for a growing share of U.S. bankruptcy filers, according to the Consumer Bankruptcy Project; unlike most consumer loans, student debt is rarely dischargeable in bankruptcy.

Perhaps the most surprising element of this surge is the rapid run-up in student loans, an issue that used to be mostly concentrated among young adults. Changes made in the wake of the last recession help explain the shift.

In the years after 2008 banks and other private student lenders began tightening underwriting standards for their loans, requiring more parents to sign on to student loans along with the student borrower. Cosigning makes the parents equally responsible for paying back the loan, resulting in a lower credit score and crimping their ability to borrow if they or their child miss a payment.

Roughly 93% of all new private student loan dollars extended to undergraduate students during the current academic year also included parent or other adults’ signatures on them, up from 74% in the 2008-09 school year, according to MeasureOne. Though federal loans still account for more than 90% of outstanding student loan debt, the private market for student loans has been growing.

In recent years, private lenders including SLM Corp., better known as Sallie Mae, and Citizens Financial Group Inc.,have increased their focus on parents. They’ve rolled out student loans that are just for parents who want to pay for their kids’ college education. The loans’ main pitch includes the possibility of a lower interest rate for parents who have high credit scores than what the federal government charges on its own parent loans; it also allows parents to spare their children the burden of debt by taking it on themselves. A spokesman for Sallie Mae says that parent loans accounted for around 2% of the student loan dollars the company originated last year. A Citizens spokesman says the majority of parent loans come from the federal program.

Older adults are increasingly carrying more student loan debt and incurring serious setbacks when they are unable to pay.

Another problem: The federal government caps the dollar amount of loans that undergraduate students can borrow for college, but no caps exist for the aggregate amount that parents can take on. That has contributed to parents increasingly borrowing to cover the gap between tuition costs and the amount of free aid and loans their children receive.

The federal government disbursed $12.7 billion in new “Parent Plus” loans during the 2017-18 academic year, up from $7.7 billion a decade prior and $3.3 billion in 1999-2000, according to an analysis of Education Department data by Mark Kantrowitz, publisher of Savingforcollege.com. Its underwriting standards are generally looser than banks and other private lenders, making it easier for more applicants to qualify. Parents on average owed an estimated $35,600 in these loans at the time of their children’s college graduation last spring, according to Mr. Kantrowitz. They owed nearly $6,400 on average (not adjusted for inflation) in the spring of 1993.

One parent who falls into this category is Christopher Raymond of North Danville, Vt., who was a high-school history teacher for 32 years.

Christopher Raymond owes around $136,000 in Parent Plus loans that he signed up for to help pay for his two children’s college education. Photo: Ian Thomas Jansen-Lonnquist for The Wall Street Journal
The debt upended his retirement, forcing him to find new employment in order to pay the loans. Each month, he pays some $1,100—about a quarter of his monthly take-home income—toward the loans. His ex-wife, Lori Raymond, 56, pays an additional roughly $800 a month toward the loans. Unable to pay for emergency expenses, including replacing his broken stove and fixing his roof, he used a personal loan to cover those costs.

Mr. Raymond, 60 years old, believes he will be stuck paying this bill into his 70s.

After retiring as a high school teacher, Mr. Raymond started working at an airport in order to be able to pay the loans. Photos: Ian Thomas Jansen-Lonnquist for The Wall Street Journal

“It’s a very dark cloud that’s
always in the back of my mind,”
he said.

His decision to sign up for the loans stems back to his own upbringing. Both of his parents lived through the Great Depression, and his mother who was a teacher and father who was a university professor instilled in him the belief that a college education was a ticket to a better life. When his daughter got accepted to Ursinus College more than a decade ago, he found it difficult to tell her it would be too costly to attend.

“How do you say to your child, ‘We insisted you work hard and go for the brass ring’ and ‘oops we can’t help you?’ ”he said.

 Pictures of Mr. Raymond’s children hang in his office. .
Pictures of Mr. Raymond’s children hang in his office. . Photo: Ian Thomas Jansen-Lonnquist for The Wall Street Journal

His daughter received some grants and signed up for student loans. Mr. Raymond also signed up for loans to help pay the remaining college costs. Later on, when his son began college at the University of Maine, Mr. Raymond took out more loans.

Despite the burden, Mr. Raymond said he doesn’t regret giving his children the opportunity to go to college. He just wishes there was a way to make his monthly payments more manageable.

For seniors, adding student debt is not an isolated problem. When an older borrower has a student loan, it can often force that person to take on other loans, such as credit cards, to pay for everyday expenses.

Raymond Abdullah, 65 years old, has around $40,000 of credit-card debt and a balance of about $11,000 on a federal Plus loan he signed up for to pay for his son’s tuition about 22 years ago.
The credit card debt grew over the past decade after he retired from work as a jeweler. He finds himself turning to cards more often to pay for everyday expenses including gas and groceries. He says he needs to keep cash on hand to pay for other expenses, including the $400 monthly payment towards the college loan.

The debt, he says, “affects your blood pressure, it affects your overall well-being,” he said. “At this age you don’t expect to be in debt. It’s not where you want to be.”

Mr. Grgas-Cice, meanwhile, has found some relief. He consulted with Evan Denerstein, senior staff attorney at Mobilization for Justice, a civil legal services organization. The attorney helped enroll him in a federal payment plan that stopped the garnishment tied to his student loans. That plan allows people whose income is below 150% of the federal poverty guideline to technically be considered on time with their payments with the loan while making no payments toward it. As long as Mr. Grgas-Cice meets the requirements of the plan every year, his balance will continue to grow for 20 years and it will eventually be written off by the U.S. government. However, the debt that is forgiven may be taxable.

“I have no savings—what are they going to take from me?” he said.

 Mr. Grgas-Cice at his West Village apartment in New York City.
Mr. Grgas-Cice at his West Village apartment in New York City. Photo: Michael Bucher/The Wall Street Journal

Justin’s note: The 2019 World Economic Forum Annual Meeting is in the books.

This is an elite conference that takes place at the end of January every year. It’s held in the exclusive ski resort town of Davos, Switzerland, and is attended by billionaires, heads of state, and members of the mainstream media.

This year, the so-called Davos crowd met to discuss the rise of nationalism, economic equality, and climate change.

Now, I know most people agree that these are some of the biggest problems facing the world today.

But I can’t help but wonder if these are the people who should be trying to solve those issues. After all, you could easily make a case that these “masters of the universe” are to blame for these issues.

So I got Doug Casey on the phone to hear his take…

Doug Casey on the WEF Meeting in Davos

Justin: What do you make of the World Economic Forum [WEF] and the people who converge at Davos every year?

Doug: There are many conferences like the one in Davos every year. Including the famous Bilderberg Meeting, the Council on Foreign Relations, and Bohemian Grove in California.

The WEF meeting in Davos has become perhaps the richest and most important. The WEF has about 700 employees. I went on their website, and the emphasis is on things like “public-private partnership,” “stakeholders,” “social entrepreneurship,” “sustainability,” blah, blah, blah. All the usual virtue-signaling catchphrases. It was founded by a German academic named Klaus Schwab. Interestingly, he got a PhD in Economics from the University of Fribourg in 1967, when I was also there. If I’d met him, it’s most unlikely we would have gotten along.

It’s “invitation only” to top business executives, celebrities, bureaucrats, fund managers, academics, heads of state, NGO executives, and the like. The usual suspects. These people form a subculture. They’re all members, or hangers-on, of various Deep States. They prefer to associate with other people they consider to be peers. If it turns out you don’t share their worldview, you won’t get invited back.

Davos is basically a love fest for the international ruling class. They like to get together, hang out, and schmooze because they all know about each other, even if they don’t know each other personally. That’s the essence of what goes on at Davos.

Now, I know the conspiracy types will say, “These people have gotten together to conspire against all of us little people.” And some of that undoubtedly happens. That’s nothing new. In The Wealth of Nations, Adam Smith pointed out that whenever people in the same business get together they always conspire against the public. Of course. That’s human nature, and nothing new. It’s just the normal state of things that should be accepted as reality.

Justin: Have you ever attended the conference in Davos?

Doug: No. Although I passed through when I was living in Switzerland many years ago. In the unlikely event I was invited, I wouldn’t have much in common with the other attendees. I know that because I was invited to Concordia in New York a couple years ago. It was made up of exactly the same people who show up at Davos and conferences like it.

I found that I didn’t like them. And I strongly suspect they didn’t like me. Even though I was on my best behavior. But that’s nothing new. I occasionally get invited to dinner parties in Aspen, with the same kind of people. But usually not more than once. Why might that be? Well, as you know, I say what I think. And that’s usually at odds with what the Masters of the Universe think.

I ran something called the Eris Society in Aspen from 1980 to 2010. I described it as a gathering of people that should know each other but probably didn’t know each other. It was, of course, invitation only. Attendees, generally, had to have done something to stand out. Lots of well-known people flew in to Aspen to give a presentation, and just talk to the other attendees for three days.

Justin: What sort of people attended your event? Was it the same crowd you’d find at Davos?

Doug: A very different crowd. Typically about 100, not very large, but with very few corporate bigshots, NGO types, government officials, or the like. Although we did get an unofficial – I think – visit from the FBI one year. They wanted to be sure nothing subversive was going on.

Eris drew lots of writers, scientists, and thinkers. I’m not looking at a list, but people like Paul MacCready, inventor of the Gossamer Condor. Stewart Brand, who founded the Whole Earth Catalog. Sonny Barger, the president of the Hells Angels motorcycle club. Eric Drexler, the leading light of nanotechnology. Harry Browne. Ron Paul. Karl Hess. It was always a lively and entertaining gathering.

I enjoyed running Eris, but decided that 30 years was enough of putting on an expensive party.

That, and everything winds down over time. The 2nd Law of Thermodynamics is evident in all things…

Frankly I’m underwhelmed by Davos. It’s just a bunch of rich busybodies, flying in on hundreds of private jets, pretending to be do-gooders. Well, maybe not pretending. Some actually are do-gooders, which is worse than pretending. I despise that class of people.

Justin: Doug, what do you make of billionaires getting together at events like the WEF Annual Meeting to tackle issues like economic equality? Do these people really have the little guy’s best interests in mind? Or is that just window dressing?

Doug: It’s window dressing, and hypocrisy. These people know they can’t solve the world’s problems by giving speeches and eating hors d’oeuvres at cocktail parties. The rich have been getting richer at an accelerating rate for at least the last generation. And I promise you they’re looking to get richer. They absolutely don’t want to see any basic changes in the system.

They’re rich mostly because of central bank money printing. It benefits them most directly because they’re closest to the fire hydrants of money that spew out of Washington, New York, and similar places around the world.

These people are the self-righteous epitome of the Establishment. They’re absolutely opposed to free minds and free markets. These people are, however, in a position to take advantage of governments that control so much of the world’s economy. That’s why you’ve got heads of state there along with heads of corporations, along with so-called opinion influencers.

They get conventional “economists” together to explain that’s happening and what “we” should be doing about it. Of course they all pontificate about how much money they give to charity, and how they believe in helping the poor. Coming from these people, it’s all hypocrisy and BS. Of course my views on “charity” aren’t very mainstream.

These people are basically there to show the flag, establish the pecking order, feel important, plant some seeds for government policies, and maybe do a deal or two. Somebody described Davos as the place where billionaires tell millionaires about how the middle class should work harder to help the poorest class. That’s correct.

The bigshots at Davos aren’t going to fix anything, except maybe a few elections. They don’t even understand the problems. But it’s not hard to understand the attendees. Everybody, including the African goatherder with flies buzzing around his face, wants to be a bigshot.

That’s true whether you’re hanging out at your local bar, the local VFW, or local Rotary Club.

If you’re running with the big dogs, you probably want to be a bigshot at Davos.

Most of these people aren’t the founders of corporations or creators of wealth. They’re mostly managers and bureaucrats. They’re basically high-level cubicle dwellers. If there’s any justice, most of them lose most of their money when we enter the trailing edge of the Greater Depression hurricane. It would be nice to see the average guy do better. But preferences mean nothing; that’s just a pipedream. Instead, we’re going to see huge growth in the welfare state and an accelerating collapse of Western Civilization. As well as increasing the celebrity status of borderline morons like AOC.

Justin: Yeah, I also find it ironic that many of these billionaires flew to Davos on private jets to discuss how “we” can stop climate change.

Doug: These fools love to talk about global warming, which they attribute to carbon dioxide. Their jets and limos are a small price to pay for the invaluable moral hectoring they give to the hoi polloi, in their billions. Davos people see the common man as the real problem.

As far as I’m concerned, climate change has been around for about four billion years. And the biggest driver of it, by far, is the sun. Not carbon dioxide. Without the sun, earth would be a ball frozen at about two degrees above absolute zero. Not counting the effects of cosmic rays, the planet’s changes in orbit and tilt, the solar system’s rotation around the galaxy, and a score of other critical factors. But these people don’t talk about that, because it has nothing to do with controlling the masses.

Justin: Doug, the elite who attend the WEF meeting in Davos and conferences like it are also deeply concerned about the rise of nationalism and populism, and the threats they pose to globalism. Should the average person be concerned by this?

Doug: Populism – that’s really democracy. They’re both bad ideas, but not for the reasons the Davos crowd would say. The fact is that Brazil, Turkey, China, the U.S., the Philippines and other countries installed have elected populist leaders. Pretty similar to the ‘30s and ‘40s when the world was run by “strong men.” The ‘30s and ‘40s were not mellow times.

As for globalization – Davos is all about globalization. Which is the politicization of world trade, culture, and everything else. It’s about governments making trade treaties the size of the New York telephone book – which I guess doesn’t exist any more, but you get the idea.

International trade – or any other kind – needs government regulation about as much as a fish needs a bicycle. No… that’s an inadequate image. About as much as a healthy human needs an affliction of cancer, syphillis, and toothache.

I’m all for buying the world a Coke and seeing it become a big, happy Kumbaya place. But that’s not what globalization actually means. In today’s context, it’s the politicization of trade.

That’s not a good thing. But it’s exactly what the Davos people talk about, because they control what governments do.

You have to remember that the people who go to Davos, and meetings like it, are totally wired and hooked up with governments. And the people who run governments all expect to become centimillionaires by associating with the bigshot business types, and doing favors for them.

That’s really what Davos and the like are all about. These people are all welfare statists.

They’re not necessarily socialists, insofar as they don’t want to see government nationalize industries. They understand how totally dysfunctional that is, and that there’s no way they would benefit from it. Strict socialism, defined as the State owning the means of production, is off the table.

They are, however, very happy to have welfare states, throwing some table scraps to the unwashed masses.

Again, they’re not socialists. They’re welfare statists. Completely opportunistic, and absolutely unprincipled. Despicable people, actually. Few are entrepreneurial, independent thinkers, or free-market oriented. The attendees are almost all managers, bureaucrats and politicians that thrive on stolen money – but not so much directly stolen, in the form of briefcases of cash.

That’s quaint in today’s world. They steal indirectly, by making sure they benefit from state regulations, state favors, and the inflation of the currency. That’s not only much safer, but the money is bigger, and the way it’s rigged adds to their prestige.

I’m very unimpressed by Davos, Bilderberg, CFR, Concordia, Bohemian Grove, and their clones. And most unimpressed by these people, although I assure you they’re very impressed by themselves, and getting to hang out with each other.

Justin: Thanks for sharing your thoughts with us today, Doug.

Doug: No problema.