A Matter of Trust

One night in Copenhagen keeps a hard man humble. April 29, 2024 [WEBSITE]( | [UNSUBSCRIBE]( A Matter of Trust SEAN RING Dear Reader, When Francis Fukuyama proclaimed “the end of history,” it was a declaration that seasoned historians couldn't help but scoff at. Yet, little did we know that their skepticism would be vindicated in just over three decades. Once on the brink of triumph, the neoliberal Western world order found itself snatching defeat from the jaws of victory. And instead of closing down NATO and the military-industrial complex, middle management at the Pentagon and Foggy Bottom have allowed Congress - and forced its vassal states - to milk its taxpayers into debt slavery. That’s what happens when you get too greedy and try to turn a victory into a rout. However, one subject that Fukuyama wrote about, a subject that continues to captivate and intrigue, is trust. In his book Trust: The Social Virtues and The Creation of Prosperity, Fukuyama asserts that the key to understanding variations in national economic performance is rooted in the concept of trust. Fukuyama makes this claim primarily because he believes that trust enables the formation of large, privately owned corporations. He thought this gave a considerable edge to “high-trust” countries like the United States, Japan, and Germany. “Low trust” countries like France, South Korea, Hong Kong, Taiwan, and (southern) Italy can only grow with good government past family company structures. I’m unsure if there’s a way to quantify and classify high-trust and low-trust societies. But I think we feel certain ways in certain places. There’s no doubt I do. After traveling to over 60 countries, there are places where I’m happy to walk outside at night and places where I wouldn’t leave my hotel after dark. At the risk of taking Fukuyama’s idea out of context, let me tell you what I learned about trust in Copenhagen. But first, a quick detour… Kelly’s Unfortunately, I didn’t turn 21 until December of my senior year in college. I was one of those late babies who had to pray my fake ID got me into places my friends were going to. Most of the time, I was gracious enough not to go out with them if I knew they were going to strict bars. But since I memorized my fake ID details, I got away with quite a lot. But one place at Villanova that didn’t tolerate fake IDs was Kelly’s, the local dive bar. I simply couldn’t get in until that December, and I was thrilled once I finally ordered a beer there. I was in heaven as I stepped over the peanut shells and other assorted sundries strewn on the floor. Dirty, smelly, and old, Kelly’s was the epitome of a college bar along the Main Line. I only had six months to enjoy it, and enjoy it I did. But when I revisited Kelly's ten years later for my college roommate’s wedding, I was in for a shock. The old, familiar dive bar had undergone a complete transformation. There were no peanut shells on the floor. They served food. And there was—GASP!—a salad bar! I’m reminded of the outrage of the future Senator John Blutarsky when Delta House was getting repossessed… “They took the bar! The whole f*cking bar!” “They put in a salad bar! A whole f*cking salad bar!” Essentially, they put lipstick on a pig to increase business. I get it. It happens. But it’s not natural. However, what I experienced this past weekend in Copenhagen was anything but artificial. [URGENT: Unclaimed Giveaway Offer]( We have an item of considerable value on hold for you in our warehouse. Valued at nearly $300, this [special item]( is an opportunity you wanted to miss. [Click here to see how to claim yours now.]( [Click Here To Learn More]( The Taphouse Friday night, Pam and her sister Meg went to the Michael Learns to Rock concert, and my brother-in-law Ken, Micah, and I needed to find something to do. Meg mentioned a place in Copenhagen with 61 taps of draft beer. Ken is a Belgian and, therefore, was born with the best beer palate on the planet. So we boys took a walk to [Taphouse](. As we approached, I was skeptical they’d let kids in, but a handsome young bartender who happened to be outside said kids are allowed. I was shocked, as in Northern Europe, most bars don’t let kids in… for good reason. But when we stepped into Taphouse, we were greeted by a sight that was anything but typical. The pub was the cleanest, coziest, and most trouble-free environment I’d ever seen. The wooden bar was a beauty, free of liquids and stains. The atmosphere was lively but not unhinged, and people of all ages were enjoying their time there. It was a unique experience, one that I couldn't help but contrast with the pubs I had visited in other countries. People of all ages were there, from as young as Micah to some grandfatherly-looking Vikings in the back of the room. During the night, I accidentally dropped a couple of potato chips on the floor. The sight of this minor mess in such a pristine environment was so jarring that I immediately felt compelled to clean it up. To be fair, I noticed this everywhere we were walking around. Danish hygge (pronounced HOO-ga), a cozy, contented mood evoked by comfort and friendliness, is now famous worldwide. But to find such a mood in a bar smack in the middle of a national capital shocked me. I asked myself, “What leads to such relaxed sophistication?” Is It Socialism… or Culture? Ever since Bernie Sanders called for America to look more like “socialist Scandinavia,” the Danes bristled at the notion of being called socialist. The World Bank classifies Denmark as a high-income economy, running on what is loosely termed a developed mixed economy. This means that while Denmark celebrates free trade and market economics (capitalism), it also provides considerable social safety net benefits. However, Denmark is not a socialist country in the strict sense of the term. The fundamental principles of socialism as an economic philosophy are central planning and public ownership of property and the means of production. These are not found in Denmark, where economics is based on the free market and the right to private property. It’s more accurate to say Denmark has a mixed welfare-state economy, combining capitalist free market principles with strong welfare provisions. This model is often referred to as the Nordic Model. Essentially, you do as you please for 364 days. But on Day 365, you pay up to 56% of your income in taxes. However, none of that perceived “collectivism” explains the cleanliness, calmness, and happiness I found all over Copenhagen. To be fair, it wasn’t perfect - there was some graffiti on the trains - but it was as close to perfect as I’ve ever seen in a city. Wrap Up As America moves from a high to a low-trust society, it’s worth asking ourselves how we got here… or how they got there. Trust is the grease in the economy’s wheels. If you feel safe enough to do business with someone, making deals and organizing capital is easy. But we no longer do things on a handshake, and I think that’s reflected in our society. Maybe there’s something we can learn from the Danish. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… Happy Rude Year! SEAN RING Greetings from stunning Copenhagen, Denmark. Pam and her sister, Meg, wanted to see Michael Learned to Rock, a Danish band from the 80s and 90s, perform in their native country. They play tonight at the local venue. Since Meg lives with her husband Kenneth in Belgium, and we live in Italy, it’s easy to make these trips happen with a bit of planning. Of course, Kenneth and I hadn’t even heard of this band, so we’re here with Micah, taking in the sights and eating superb Danish cuisine. It’s times like these I’m so grateful to have this job. But it isn’t a job; it’s more of a good habit I complete every morning. If only I could exercise as regularly! With this “habit,” I can work in the morning and then spend the afternoon walking around one of the most pristine cities on Gaia’s green earth. All I can say is, “Thank you.” Thank you for spending eight or nine minutes with me every morning, for putting up with my exasperated rants on the West’s downfall, and for trying to see things just a bit differently than everyone around you. I can’t overstate the importance of this particular point. That you do this really matters. On To Year Four This week marks the third year of me writing the Rude; quite frankly, it’s the greatest job in the world. I’d love to tell you I’ve planned what’s coming this year. But honestly, the world is so topsy-turvy that I don’t know what’s coming. As it stands, I pretty much wake up every morning and try to figure out what to write. Occasionally, I get a day or two ahead of schedule with some special inspiration, usually sponsored by Potatohead Biden and his muddleheaded minions. So instead of re-evaluating what I write and going from there, I thought I’d ask you about the Rude’s format. But before I do that, let me make a point about geopolitics as a subject. [BOMBSHELL: Apple Creates New A.I. Chip… To Rival Nvidia?!]( Take a close look at this A.I. chip pictured in my hands… While 99% of investors are focused on the popular A.I. chipmakers like Nvidia… [There’s quietly a much bigger story taking place behind the scenes…]( It involves Apple, the world’s second largest company… And [a bombshell announcement]( that could change how you think about A.I. forever. [Click here now for the urgent details](. [Click Here To Learn More]( Geopolitics as a Necessary Evil Yesterday, you may have chuckled at Nemo, who called my Suez Crisis comparison of the US and its current position “[The Dumbest Thing I’ve Ever Read on the Internet]( I cracked up myself. But he concluded, “Stick to financing, money, and stock suggestions, and keep your stupid, uninformed, ill-educated rants about politics out of our faces, please, and thank you!” Sorry, no dice. And that’s because geopolitics shapes our investable universe. Let me give you some hard facts. [This paper from the CFA Institute]( demonstrates it’s impossible to ignore geopolitical risk: - Caldara and Iacoviello (2019) constructed a dedicated Geopolitical Risk (GPR) index by looking for words associated with wars, civil wars, and terrorism in 11 newspapers in the United States, Canada, and the United Kingdom since 1985. For historical purposes, they went back to the year 1900 with the help of three newspaper archives. - Caldara and Iacoviello (2019) found that moderate increases in geopolitical risks tend to have a negligible impact, but for a two-standard deviation spike in the GPR index, they noted that company fixed investments declined by 1.8% over the subsequent 12 months. To put this into perspective, such a two standard-deviation event corresponds to a spike in the GPR index of 82 points and is roughly what happened when Russia annexed Crimea in 2014 and after the 2005 London bombings. - In addition to the decline in company fixed investments, Caldara and Iacoviello (2019) found a temporary setback in consumer confidence and a 0.4% decline in employment in the 12 months following a two-standard deviation spike in the GPR index. And finally: - Caldara and Iacoviello (2018) investigated the immediate impact of an increase in the GPR index on stock markets around the globe and found that in the month after a 100-point spike, stock markets typically declined by 1% to 3%. In short, I'm negligent if I don’t write about geopolitics. It’s that simple. Central banks, governments, and, yes, geopolitics are far too intertwined in our markets not to write about them. Enough about that now… back to the ask. Freeform Your Response, Please Questionnaires are littered with the biases of those asking them. So, instead of filling in one, I’ll ask you to write to feedback@rudeawakening.info after you’ve defeated the tyranny of the blank page. Just freeform what you’d like the Rude to look like every morning. I can’t guarantee it’ll happen, but you may give rise to a great idea that will happen. Would you like more cheap stock opportunities, like Jim T? More sarcasm? More politics? I’ll only ask you to remember that I have only four hours in the morning to write the Rude before we go to press. I write five Rudes and one Morning Reckoning each week, except when the esteemed Byron King gives me a break; bless his cotton socks! So, in-depth exposés are impossible, I’m sorry to say. But anything else, just ask… Wrap Up Once again, thank you for reading and subscribing. It’s a thrill to see you each day. Now, I must take a walk to the Little Mermaid statue, where the family awaits my arrival. Have a wonderful weekend! All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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