By Christian Takushi, Independent Macro Economist & Geopolitical Strategist. 26 Jan 2020 (public release capped & delayed by 3 days)
I have been monitoring several developments around the world, where a “delta” is building between my independent analysis and consensus. But three issues stand out the most: Israel-Palestine, Libya-Turkey and the China coronavirus. The world’s response to this virus raises many troubling questions.
1) Peace Deal
Israel and Washington are very close to agree on a Peace Deal this week. Given the level of division within the Muslim world and the anger between Palestinians and Arab states after the Palestinian Authority gave in to Iranian-Turkish pressure, it is not incomprehensible that Palestinians will accept to negotiate a Deal. The Palestinians have the weakest position in two decades. I maintain the view that a Peace Deal between Israel and Palestine is more likely under the current Trump administration than consensus believes. Practically all the experts have emphasized over the past three years how President Trump had utterly destroyed any chance for such a Peace Deal.
I am also following for several months worrisome developments in Libya in connection with Turkey. The West is about to double down on its strategic errors of the past decade, when Western nations violently removed the autocratic regimes in key Sunni-Arab States, while shielding the regime in Teheran. In Libya the vacuum generated by the West has led to two governments and chaos. One of them has asked Turkey to intervene on its behalf. A pro-Ankara government should be installed with Turkey’s military help. The new regime in Libya wants to help Turkey block the Mediterranean Sea (if needed) with a wide stretch of controversial territorial waters linking both nations. Ankara feels emboldened as the EU has long tolerated Ankara’s moves in this direction.
3) China Coronavirus
It is remarkable that nations around the world have been passive in accepting the free movement of passengers, especially from the affected regions in China – This, despite the fact that it could not be ruled out that the virus could be transmitted before affected persons could show any symptoms. Beijing has conceded this already and air travel goes on for days pretty much unchecked.
This is also a side-effect of a global passenger growth model that has run amok. The gigantic flow of passengers around the world is not only unsustainable, it poses diverse risks. Real full-cost prices should apply to bring in some common sense; something we have been asking for since 2005. After having exaggerated the potential number of deaths in past outbreaks, I have warned that this time, the UN and international medical experts run the risk of underestimating the threats from this China coronavirus.
Among other developments
Trump Impeachment – a highly political issue, driven almost entirely by partisan politics and the US Elections 2020. Both parties are fighting to sway independent voters. I continue to see the GOP winning the 2020 elections. The Democrats are developing competitive strategies to take the Senate though.
Venezuela – China had visibly swayed Brazil and Peru not to actively support a US intervention in Venezuela. But Washington is launching a two-pronged counter-move, and military exercises have commenced. South America looks to Lima today, where Congressional elections could help accelerate several mega-projects across Peru that could in turn help boost growth across the region for years to come.
Russia – Moscow continues to prepare the Russian Federation for a global reset – global crisis – war. The latest reshuffle in the Kremlin is being widely underestimated by Western experts. I continue to warn that the West is pushing Moscow into a corner where Moscow may be forced to take preemptive measures for her national security. I ascertain that Moscow is now close to having solid interests to seek a Global Reset. I am monitoring several potential scenarios for a reset.
Fiscal-monetary push by the EU and ECB: As we have been saying for three years, the EU will shift “left” as soon as the UK exits the EU. A concerted monetary-fiscal push by Mrs. von der Leyen and Mrs. Lagarde is very likely. The UK will increase its deficit spending and this will put the EU under more pressure to follow suit, except that the EU is stepping up her regulatory machinery, while the UK will seek to roll back regulations.
BREXIT: I continue to see a rather hard Deal than a soft Deal at the end of the process by December 2020. On the current course Britain will recover faster than the EU from BREXIT.
Money Illusion – While key central bank chiefs around the world wait for a crisis, mid-sized central banks are increasingly rallying behind fewer alternatives for a currency reform. Only an independent audit of all central banks and a geopolitical truce could help reduce the distrust between them. As a result I see three alliances supporting rivalling monetary reform concepts. Whether a USD- or digital currency-based system wins, it is likely that it will be backed by Gold during a transition period. Long term, policy makers will want more discretion though, thus Gold-backing is too much of a disciplinary force. Central bankers know that they may need to rescue the system again. The increase in political instability across the Northern Hemisphere will reinforce this view. The truth is that no major Western government can afford to ever pay back the huge outstanding government debt. Most policy makers are therefore accepting to finance more fiscal spending directly with printed paper money. I personally think that Gold will exceed $ 5’000 before the end of this decade. This needs close monitoring though.
Demonetisation – I continue to recommend investors and decision makers to de-monetise as fast as possible, giving some preference to real assets, sustainable activities and humanitarian projects in the Equator and the Southern Hemisphere. Much of the wealth accumulated in recent years is inflated and debased paper money and it is likely to be extracted from the system through several normalisation processes or resets.
Unfair bashing of the Iranian Revolutionary Guards’ missile defence officers? I don’t agree with the consensus view on the tragic loss of the Ukrainian passenger aircraft over Teheran – I am surprised that European authorities and airlines allowed their aircraft to fly over Iran-Iraq despite war conditions after the Iranian missile attack. They did the same during the Ukraine-Russia conflict in Eastern Ukraine last decade. It is somewhat unfair to put all the blame on the Iranian officers that were acting in “state of war” conditions. I assume those men were doing their duty under stressful conditions – They should not be singled out and become scapegoats.
Greatest Threats to humanity: I keep my assessment that the greatest threats to humanity this decade emanate from
- Massive excess of thermonuclear weapons
- Massive excess of paper money (money illusion)
- Overlap of unresolved and misunderstood Middle East conflicts
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There are other issues that I am monitoring, but our “delta” to consensus is still moderate.
By Christian Takushi MA UZH, Independent Macro Economist & Geopolitical Strategist. 26 January 2020.
Disclaimer: None of our comments should be interpreted or construed as an investment recommendation
A distinct broad approach to geopolitical research
(a) All nations & groups advance their geostrategic interests with all the means at their disposal
(b) A balance between Western linear-logical and Oriental circular-historical-religious thinking is crucial given the rise of Oriental powers
(c) As a geopolitical analyst with an economic mindset Takushi does research with little regard for political ideology and conspiracy theories
(d) Independent time series data aggregation & propriety risk models
(e) He only writes when his analysis deviates from Consensus