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(P&I) La Francophonie & The Commonwealth

December 19, 2014

Essay. La Francophonie and the Commonwealth are remnants of a colonial past that extends for more than five centuries, since at least the 15th century (and sometimes much earlier, as in Denmark and “Grønland” since the “Dark Ages”) and 1492 when “Columbus sailed the blue” – and there are over 110 countries and almost 3 billion people that are caught-up in this “time warp” that is often populated by dictators and army colonels and “politicians” that recall and then repeat the abuses of the past.

Moreover, “colonialism” is not dead (BBC News, December 15, 2014, Denmark challenges Russia and Canada over North Pole) and there is, obviously, a lot of “jockeying” for position, affinities, and spheres of influence in world trade that might lead to “favored nation” status, or “trade embargoes”, or war, and international trade is dominated by sovereign concerns that show-up as some shade of “mercantilism” that begs to be answered by some shade of smuggling.

La Francophonie has about 55 countries in it and 700 million people with an aggregate GDP* of $8.3 trillion (9% of the world total), of which the three largest players are France ($2.4 trillion), Canada ($1.4 trillion), and Egypt ($860 billion), and almost all of them have a high Trade Risk and a high rate of consumption in excess of 60% of the GDP.

The Commonwealth fares a little better; it also has about 55 countries and 2 billion people with an aggregate GDP* of $15.6 trillion which is about  17% of the world total, and greater than that of the US ($15 trillion) and China ($15 trillion); the three largest players are India ($6.1 trillion), the United Kingdom ($2.2 trillion) and Canada ($1.4 trillion), and again almost all of them have a high Trade Risk and a high rate of consumption in excess of 60% of the GDP.

Figure 1: La Francophonie & The Commonwealth

Figure 1: La Francophonie & The Commonwealth

Our conclusions are that if we want a more epicurean lifestyle, then it is better to speak French; but if we want more money to do it, then it is better to trade with the English (L’anglais) and live with the French; alas, please see Figure 1 on the right which relies on “The Barometer” and summarizes the aggregate experience that we will need to look at in more detail on a country-by-country basis below.

Figure 2: Savings, Investment and Consumption

Figure 2: Savings, Investment and Consumption

Without torturing the data, we might not be surprised that if the savings rates are low, then the consumption is likely to be high; but it is also the case that the savings rates can be high, but the consumption is still low, and that the low wages of civil unrest, and war with our neighbors, affects many of these countries, but not all, and there are a variety of reasons and possible solutions to economic ingenui; please see Figure 2 on the right for a few examples, and Exhibit 1 below for a few representative situations.

Exhibit 1: Country Risk & Trade Risk

Figure 1.1: GIN Guinea LAO Lao PDR

Figure 1.1: GIN Guinea LAO Lao PDR

Figure 1.2: BFA Burkina Faso RWA Rwanda

Figure 1.2: BFA Burkina Faso RWA Rwanda

Figure 1.3: GNQ Equatorial Guinea QAT Qatar

Figure 1.3: GNQ Equatorial Guinea QAT Qatar

Figure 1.3: VCT St Vincent and the Grenadines JAM Jamaica

Figure 1.4: VCT St Vincent and the Grenadines JAM Jamaica

Figure 1.5: CMR Cameroon NGA Nigeria

Figure 1.5: CMR Cameroon NGA Nigeria

Figure 1.6: LSO Lesotho BWA Botswana

Figure 1.6: LSO Lesotho BWA Botswana

For more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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