Governance is Everything! I never tire of saying this because it is so often true. Moreover, difficult economic circumstances highlight deficiencies in a country's government.

There are two main categories of governance, at least in a democracy. One is political governance; the other is corporate governance. In a totalitarian regime, political governance is often all-powerful. For this reason, totalitarian regimes can be more efficient, at best, but have less flexibility. Consequently, they are less able or less willing to adapt to changing circumstances.

In the USA, the standards of political governance have certainly declined in this century, although the process started earlier. Fifteen to twenty years ago, my impression is that there was not much difference between the standards of political and corporate governance. However, since the depths of the credit crisis recession, corporate governance appears to have reinvented itself and is clearly superior.

I have often made this point and it is the single biggest factor behind the rise of corporate Autonomies which dominate so much international trade today. With its large economy the USA has by far the greatest number of corporate Autonomies. However, most developed economies are the home base for at least a few Autonomies.

In contrast, totalitarian regimes, led by Russia and China, have few if any corporate Autonomies which attract international investor interest, not least because they remain state controlled. Twenty years from now I would not be surprised if Russia and particularly China had more genuine Autonomies. However, I am also guessing that these two countries will have become somewhat more democratic, hopefully including rule of law, an independent judiciary and property rights.

David Fuller's view The monetary tailwind remains massive. However, we know from generally rising valuations and a number of at least temporarily overextended uptrends, including the influential US stock market indices, that both current and anticipated additional quantitative easing (QE) from the Fed has already been discounted.

As we approach yearend, the risks in chasing any further near-term gains (SPX & NDX) are increasing. A number of institutional investors are clearly nervous. The debate is whether to hold out for a strong yearend, or to play it safe and book substantial gains. Against this background it would not take much in terms of selling to trigger a self-feeding corrective phase. In the immortal words of John Maynard Keynes, part of our challenge is "to guess better than the crowd how the crowd will behave."