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We, The Deplorables

I recently saw a German movie called “Look Who’s Back” on Netflix, which I strongly recommend.  The film fictionally chronicles the return of Adolf Hitler to modern-day Germany and does a tremendous job of illustrating how Hitler’s call to arms for a better Germany for Germans resonates with the average German in the film. It cannot be lost on anyone who views this film that the message repeatedly heard from these average Germans that “what he says is mostly true…” is a frightening one, and one that is easy to imagine not only Germans saying but French, British, and Americans too.

Have you ever wondered why history repeats itself?  I mean, do you think that people don’t read, or are plain dumb and incapable of learning from past societal failures? There clearly is a segment of that, but I think the answer lies elsewhere. In my life, I’ve witnessed how historic events are frequently misunderstood even in the moment that they occur, and then are reported on inaccurately, which leads to the drawing of incorrect conclusions. The lessons that are thus learned are usually not the right ones, and the lessons that should have been learned are not – thus leading to a likelihood of repeated mistakes. For example, in the late 1980’s the U.S experienced a catastrophic financial crisis that resembled that of 2008-09 in many ways. In the early 1980’s, a large group of specialized financial institutions, called Savings & Loans, had their business of residential mortgage finance come under siege from new competition and to survive they successfully lobbied Congress to broaden their investment mandate to include many areas in which they had no prior experience and most of which should have been off limits for those investing taxpayer-insured deposits. Unsurprisingly, they lost tons of taxpayer money and nearly took down much of the U.S. financial system. Instead of learning our lessons that banks who are investing taxpayer-insured deposits presents a significant risk that calls for stringent limitations, the prevailing takeaway was that Savings & Loans were mostly run by crooks, whose self-dealing cost the taxpayer dearly. As a result, in 1996, when U.S. commercial banks found their business model under siege and they predictably petitioned Congress to liberalize their investment mandate, the Glass-Steagall regulation that had been in effect since the Great Depression was reversed by government and the seeds were sown for the ’08-09 crisis that nearly destroyed the global financial system. This is one example of many such times that the incorrect lessons were learned and history was doomed to repeat its painful lesson.

Today, the governing global elite, infatuated with their globalist and borderless vision, have become too detached from too large a swath of its citizens that has resulted in a tumultuous year in global politics. This complete disconnect between leaders and their flock was on display with great transparency when Hillary Clinton referred to Trump supporters as “a basket of Deplorables,” in the heat of the 2016 campaign. But this is not a problem that runs in one party or ideology, nor is it a new problem. In the 2012 U.S. presidential election both Barack Obama and his opponent Mitt Romney made similarly alarming comments, trashing a large swath of the electorate they sought to represent – Obama disparaging those voters who cling to their guns and religion, and Romney being caught on secret tape at a small fundraiser disparaging the masses as being hopelessly misguided. And yet, the elite and the media that fawns on them and somehow thinks they’re in the “in group” too, continues to not get the joke. They mount a non-stop attack attempting to undo Donald Trump and his Presidency, forgetting that more than 60 million Americans voted for him.  What they miss is that these voters are by and large ordinary folks who had no real reason to connect to the rich Donald Trump with whom they share very little in common, but were instead energized by the promise of an outsider who at least acknowledged them and their concerns cracking into the leadership elite.  These were votes for a promise and an idea - with Trump as the vessel - and not votes for Trump the man. This same phenomenon is also at the root of the Brexit, which the elite and media deride, and is bubbling up all around the globe.

Fundamental to the people who are rallying around this movement is, I believe, the craving for the type of human connection and accountability to one another that can only exist in a nation-state with self-determination. It is an idea that stands in direct opposition to globalism, which might reward a small elite, but which most others instinctively understand is hostile to their best interests, or at least completely indifferent.  When considering nationalist ideology, the media and the globalists always point to the darkest examples of to disparage it. I suggest that we recount JFK’s famous speech in which he implores American nationalism with the powerful words “think not of what your country can do for you, but what you can do for your country.” In that same vein, the shrinking of the federalist government and the empowering of local and state governments are also a key in enhancing accountability and self-determination and are thus also antithetical to globalists.

In my role as an investor I am frequently asked what worries me the most. For many it is the risk of rising interest rates, which is not mine. For me it is rooted in global politics and is best exemplified in the out of touch and unyielding effort to take down President Trump. Should this happen I envision that the “Deplorables” will not sit idly by and the conflict can easily become messy and disruptive.  In this case, the sense of abandonment these people will inevitably feel will be a siren song for a leader far more challenging than our President. See the movie.

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