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Isn’t it a pity, isn’t it a shame?

J Mulraj | Updated on October 18, 2019 Published on October 19, 2019

World leaders should listen to George Harrison’s song, ‘Isn’t it a pity, isn’t it a shame, how we break each other’s hearts, and cause each other pain’. For, they are spreading far too much distrust and hatred amongst nations. This, in turn, leads to far too much spending on arms race, and too little for the human race, causing each other pain.

Earlier it was nuclear bombs that were expected, and for a long while did, ensure peace. Thanks to joint efforts, the stockpile of nuclear weapons has fallen from 70,000 in 1986, to just under 14,000 now, of which 90 per cent are with the US and Russia. This is enough to destroy the world several times over, and it is hoped, they would never be used.

So, why spend money building assets which we hope will never be used, and deprive humankind of resources to build assets that can be used? Isn’t it a pity? Isn’t it a shame?

This is egged on by the Military-Industrial-Complex (MIC), which, of course, benefits nations that build and export weapons. The US developed the finest fifth generation stealth aircraft the F-35, the Russians developed the best anti-missile the S400 to stop them, and the US, Russia and China started developing hypersonic gliders flying at Mach 8+, which cannot be stopped by missiles or planes flying at Mach 2, and pose an existential threat.

The price of crude spiked after an attack on an Iranian oil tanker in the Gulf of Hormuz, and the drone attack on a Saudi oil refinery.

Displaced Syrians

This affected poor countries such as Haiti, on which the IMF imposed conditions to phase out subsidies for petro products (the people couldn’t afford to pay the higher prices created by the hatred and enabled by the technologies of remote warfare). So, in effect, the arms race trumps the human race.

The war on Syria was, essentially, due to its refusal to permit a Qatari oil pipeline to pass through Syria, rather than the trumped up charge against Assad. It has displaced millions of Syrians, who have fled to Europe, thus disrupting both societies, in order to satiate the MIC. Isn’t it a pity? Isn’t it a shame?

So, with such a disturbing geopolitical background, what does an investor do? Invest in equity or debt mutual funds?

A study by Professor Bessembinder reveals that only 4 per cent of all US stocks contributed the entire gain of the stock markets since 1926.

Just last week, top British fund manager Neil Woodford shut down all equity funds. And at home, we have seen debt mutual funds suspending payments, after the NBFC crisis.

We have also seen the helplessness of bank customers, most recently in the PMC Bank fiasco, which over-lent (73 per cent of its funds) to just one group (HDIL), whose promoters and senior management were living a lifestyle they would not have been able to afford on their own earnings, even as two depositors died of heart attack and one committed suicide.

Suspension of pension

GE, once a leading US company, is suspending promised pension benefits to 20,000 employees because of the huge gap in its pension fund.

Fewer resources for economic activity result in slower growth; Moody’s has cut India’s 2020 GDP growth forecast to 5.8 per cent.

In this situation, investors must invest only in businesses which are sustainable, in companies whose managements are of good quality and are mindful of its investors, and grow with them. And, of course, pray that world leaders listen to John Lennon’s ‘Imagine’ and George Harrison’s song and start working together.

The writer is India Head — Finance Asia/Haymarket. The views are personal.

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Published on October 19, 2019
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