Party Logic

US, China and Asset Allocation

It seems to me the quality that makes any book, music painting worthwhile is life, just that. Books, music, painting are not life, can never be as full, rich, complex, surprising or beautiful, but the best of them can catch an echo of that, can turn you back to look out the window, go out the door aware that you’ve been enriched, that you have been in the company of something alive that has caused you to realize once again how astonishing life is, and you leave the book, gallery or concert hall with that illumination, which feels I’m going to say holy, by which I mean human raptness.

-This Is Happiness, Niall Williams, 2019

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THIS IS NOT INVESTMENT ADVICE. INVESTING IS RISKY AND OFTEN PAINFUL. DO YOUR OWN RESEARCH.

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The title of today’s piece applies equally well to the US and China, in different ways. First, I’ll talk about the US, then, for subscribers, China.

US

Two thoughtful people I know offered starkly different assessments of what is going on in the US, something on my mind after just watching President Biden’s news conference. One, Jay Newman, a subscriber, sent me his thoughts after my post last week. Another, Ray Dalio, my former boss published his thoughts.

I don’t think this Presidential race rises to quite the level of crisis from past extraordinary moments in US history (Great Depression), but it is close and it could become one. What Ray wrote that resonated is that a) the Democrats “hid President Biden’s weakness” and b) Trump represents “a strong, unethical, almost fascist Republican Party.”

The beauty of transparency is that we can see all this. The question is what happens next and what are we all to do?

I am not a doctor, but my father died of a terrible neurological disease, Shy-Drager’s Syndrome, one of whose features is loss of facial affect as the autonomic nervous system fails. Biden’s slack face during the debate painfully reminded me of my father. I also started my career in Russia and have seen just how much damage a bad leader can do. Russia had enormous potential and Putin has turned it into a criminal state, murdering tens of thousands of people. Similarly, one bad leader, Xi, is doing unfathomable damage to China and if a country as developed as Germany can get wildly off course, as it did in the 1930s, it can happen anywhere. So the stakes are high.

Why is Biden holding on? Jay, a renowned investor in his own right, who I had on my podcast, here, better captured what is going on and allowed me to quote him.

Biden said this, 50 years ago:

“Lemme tell you something,” Mr. Biden says, with a clenched jaw. “There’s a river of power that flows through this country. . . . Some people—most people—don’t even know the river is there. But it’s there. Some people know about the river, but they can’t get in . . . they only stand at the edge. And some people, a few, get to swim in the river. All the time. They get to swim their whole lives . . . in the river of power.”

The decision to stay or quit revolves exclusively around what’s good for him and his own. Nothing else. His party? Nope. The American people? Irrelevant. His big donors? Spare me. The fate of the world? 

When he and Jill and Hunter discuss quitting they ask what it looks like the minute after. What will it feel like the minute after? What does quitting get him?

Oblivion. 

He becomes a nobody. 

He’ll be thinking about LBJ… if he quits, he becomes a zero. No one will care, no one will call…he will have ended his career as a quitter. Not just a loser, but as a failure. A mumbler, a stumbler, who was led off the stage…by his wife….If he wins, he’s a genius. And if he then steps down and hands the keys to Kamala, he’s an American (left) hero. 

That’s why he’ll keep swimming. 

And, if he loses, he pardons Hunter. 

It’s the easiest decision he’s ever made. 

I am energized when this Substack brings thoughtful people together. I’ve also had guest posts from Alexander Vanuykov, Jason Bedford and others. My instinct when I wrote last week’s piece was along the lines of Ray, but it looks like Jay has it right.