Shifting Power

Private Banker Wegelin & Co Commentary No 265: "We live at a time of shifting power and influence in the world. Asia is on the rise, and Brazil too, probably. Australia will catch on to their coattails,  and Europe may once more be able to position itself within these countries’recoveries. The USA will remain the unquestioned military power and also an enormous repository of debt and other  problems. Because they are painful, and there is always an inclination to shift the blame for them onto third parties, redimensioning processes always harbour the potential for aggression. Switzerland is currently experiencing just this. But it won’t end there. Potential aggression and economic progress are mutually exclusive. Which is why we are well advised to take a general farewellof America. This will be painful, for the USA was once the most vital market economy in the world. But for now, it’s time to say goodbye."

In the same note Wegelin & Co. plant Verabschiedung aus dem US-Kapitalmarkt, attention is drawn to the detrimental policy that we see in the US now of favouring big companies over SME. At a crucial time where the EU is as it seems simply pushed to lead (networked hopefully with BRIC) we hope that innovation on the ground on a small scale by small business and loners will not be stiffled by regulations and paperwork that exceed common sense and good housekeeping: "This generally anti-entrepreneurial policy of discouraging investment is further reinforced by wholly disproportionate efforts to intensify the regulation of small businesses. From the Wall Street Journal, we learn that legislation already exists in Washington that would impose reporting obligations on small venture capital enterprises -exactly those that have powered the rise of Silicon Valley – whose administrative burden would be simply unsupportable. And this just because of the concern that hedge funds, which, rightly or wrongly, are felt to require greater control, might be able to operate in the guise of such venture capital companies. If Washington gets its way, this will mean the end for many small businesses with 10 to 20 employees."

Wegelin & Co, Private Bankers since 1741

Investment Commentary No. 265, August 24, 2009 KH, 24.08.2009