Welcome to Geopolitical Economics, where we research the growing link between Geopolitics and Macroeconomics. Outlooks for Geopolitics, Economics & Markets.

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 (only a fraction of our geopolitical research is available to the public and uploaded on this website)

EDITORIAL

By Christian Takushi, Macro Economist – Zurich & Geneva on 14 March 2017: Elections in the Netherlands, France and Germany (text adapted for public release on 15 Mar 2017)

Voter Revolt in the EU is likely to fail – the EU could shift further to a liberal- left course in 2018

“Continental Europe is not the USA“

Tomorrow Dutch voters elect the new parliament and this will subsequently form the government. The similarities to the UK and US shocks are there indeed: the experts and the polls predict the outsider has no chance. But then, Western Europeans are not as risk-friendly as Americans. There could be a surprise tomorrow with the Freedom Party of Mr. Wilders winning the elections. But barring a landslide, he will be unable to form a government. Putting emotions aside, we feel the Dutch vote is not critical for the survival of the EU. It is elections in France and Germany that really matter. The Dutch vote is simply not a foretaste of the French nor German votes; despite the wave of discontent against the liberal pro-immigration & pro-globalization establishment of left, center and right parties, all of these nations are distinctly different cases. 

I stick to my assessment from earlier this year: The Voter Revolt we saw in Britain and the USA in 2016 is unlikely to be repeated in the EU in 2017.  I am expecting either the SPD or CDU to form the new German coalition government. To some extent a missed opportunity to set Europe on a better course. The European Union actually needs to rethink the policies it has been using for 4 decades – it is time for a reflection and pause of strategic dimensions. The EU is flawed at its core. A future European Federation should have a more democratic and efficient foundation to compete and thrive. But the power of the state & state media and the reliance of EU citizens on the state are simply too big, at least for now.  

Based on our current analysis, I expect the remainder of the EU to become even more left-leaning and liberal from Q4 2017 onwards. Without the U.K. the EU will veer further left into deficit spending, without reducing regulation and state controls. With consensus currently obsessed with the political risks, EU markets and the EURO could experience a temporary upward move in 2017. One that will not last for too long, though. 

After promoting millions of immigrants to move countries, removing borders, weakening the Rule of Law and allowing big firms to become gigantic Oligopolies, the EU now can make the case that individual nation states can no longer cope with today’s challenges. And they have a point. Thus, overwhelmed nation states have to come together into Super States, of which the EU (or its successor, the European Federation) is the first one. In a not too distant future, individual nation states may exist only on paper.

It would be wise for the West to look at the example of Japan in this context. Not every modern economy has to sacrifice its identity, culture and religion to simply be able to grow GDP a little bit more and at any cost. Over the past decade the EU took millions of immigrants, while Japan only a few – Japan has the strictest immigration policy of any major industrialised nation. Did the EU do so much better than Japan since the Financial Crisis? With so much immigration by the EU and Japan’s traumatic triple catastrophe of 2011, one would expect that it did, but the growth happened only at the surface. Japan’s GDP per capita grew actually marginally faster than the EU – currency moves included. That is astonishing, because the EU did not only take in millions of migrants, it also aggressively devalued her currency (EURO) against other major currencies to support her export industries. During the same time Japan had to face a sharp appreciation of the currency, followed by a correction.

The mayor of London recently implied that radical Islamic terror was a ‘normality’ in every major city of an advanced society: but he erred, the biggest city in the world, Tokyo, doesn’t have that problem. I am sure there can be an open-minded but controlled “middle way” between the two opposite extremes of the EU and Japan of recent decades.

Christian Takushi MA UZH,Macro Economist & Strategist, 14 Mar 2017, Zurich-Geneva, Switzerland. Text adapted for the public on 15 Mar 2017. 

General Disclaimer: Global Macro and Geopolitical Analysis are highly complex and subject to sudden changes. No analytical method is without certain disadvantages. We may change our 3-pronged outlook within less than 3-6 hours following an event or data release. Global geopolitical macro analysis can be extremely time-sensitive and the first 24 hours after an event are critical for the response of a government, corporation, pension or portfolio. Only qualified investors and seasoned decision makers should make use of our geopolitical macro reports and treat them as an additional independent perspective. Every investor should weigh different perspectives as well as “opportunities & risks” before making any investment decision. Not all our reports, research and intelligence is published here. What we release here is delayed and adapted. The research & views we post here for public access are aimed at fostering research exchange (to improve our assessment) and helping decision makers adapt their long term & strategic planning to changing realities, not for short term decisions. If you are not a qualified or professional investor, you should get professional advice before taking any investment decisions.

Voter Revolt in the EU is likely to fail – The EU could shift further to a liberal-left course in 2018

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You can scroll down to recent Editorials 

Global Geopolitical Macroeconomic Outlook:

Released to the public on 19 Oct 2016
Focus on how the BREXIT aftermath is weighing on US elections, German-Turkish relations and the fight for the US Supreme Court. Ironically, under a Clinton administration our independent research sees a higher likelihood for large scale wars.

Quarterly Global Geopolitical Macro Outlook: Brexit weighs on US elections, Germany, Turkey & US Supreme Court

 

Martial Law is coming to the West:

16 July 2016 – Switzerland

As some of you may be aware, we have been forewarning of Martial Law to be imposed in many nations, also in the West, in the future. The unprecedented confluence of political, economic, military, religious and geophysical crises & threats is likely to overwhelm many nation states. Many Western democracies are particularly vulnerable. I reiterate my analysis from 2015 that Martial law and even the postponement of Elections cannot be ruled out.

After decades of fostering a system in which (1) the law is no longer enforced for certain groups of people, (2) hypersensitivity & “entitlement thinking” have shaped culture, and (3) activist movements have taken over media and news channels to shape public opinion, Civil Unrest is only waiting to be ignited. 

The recent highly organised violent paid-for demonstrations, racial/religious tensions, and planned killing of police officers may be only the foreshadows of what lies ahead. 

by Christian Takushi MA UZH, Macro Economist & Strategist, Switzerland, 16 Jul 2016

 

Turkey moves closer to Schengen & EU:

In our GGMO from 7 April 2016 we shared our independent analysis of the US Elections 2016 and Turkey’s Rise; how it would impact the EU – it also contains an update of our Global Risk and Business Alertness models

The fruits of 12 years of assertive Turkish Security & Foreign Policy are bearing fruit. Ankara faces complex security threats, but has forced its way into the EU. Turkey is projecting influence and impacting Europe way beyond its weight of 4.3% of EU’s GDP. The attacks in Brussels are not just a sign of EU’s lack of strategic foresight and the proliferation of radical Islam, but Turkey’s destabilisation.

To read more scroll below .. or click the link http://geopoliticaleconomics.org/?p=2098 

 

A RECENT STRATEGIC EDITORIAL:

The Death of Freedom of Speech in Europe may foreshadow its inexorable Strategic Decline

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by Christian Takushi on 421 Dec 2016: On terror attacks in Germany.

Subtitle: “Continental Europe is not the USA, Voter Revolt may not repeat in continental Europe in 2017“

As Germany is rocked by the worse terror attack in decades, this is a summary of strategic thoughts.

For years we have been warning that as a result of catastrophic strategic errors by European leaders over three-four decades, Europe’s Security Deterioration is inexorable. It lays bare that Europe has been led by politicians & administrators and pushed by lobbying corporate managers. None of which had the necessary strategic foresight at geopolitical-macroeconomic meta levels or even the interest therein. Europe is in a geostrategic trap of her own making. 

That Liberal Policy Mix that impoverished the Middle Class was silently supported by established Conservative parties in Europe & USA 

There have been independent minds that raised questions about the downsides of an European Integration Process that lacked a clear mandate by the people. Instead Europe financed and favoured an army of think tanks, universities and so-called expert institutions that shaped the Consensus, one that its exceedingly liberal media gladly propagated. It is healthy for a society to have an open competition of liberal and conservative ideas. I personally follow liberal, conservative and independent thinker – It is enriching. But in Europe, pro-globalization liberal leaders together with big businesses have gone too far; they have practically taken over the state media, most universities, think tanks and business forums. They actively shape public opinion. Just as we saw before and after the BREXIT vote.

In my analysis, the almost complete dominance of Public Opinion by liberal & pro big business political parties is something that backfired and led many voters to accept BREXIT, i.e. reject the EU membership, despite all the risks and threats. Although well-intentioned, such a dominance of mainstream media and financial media by “liberal-globalist-big business interests” was increasingly perceived as totalitarian and intolerant of any criticism. Thus, destroying the very image of “tolerance” they have painstakingly built for themselves over 30 years. Voters saw this confirmed after BREXIT, when political leaders in London, Paris, Berlin and Brussels rushed to say (I paraphrase) “we were not wrong, our main mistake was not to communicate & spread our ideas in a stronger way”. Leading the leading media channels and state media to increase its control of the narrative in the news even more. That has only contributed to the further erosion of public trust in the Press, because they are now fighting against the stated will of the people.

And I am not here bashing liberal forces in Europe alone, many of those pro-Big Business groups are the conservative parties. Conservative Parties have let down the Middle Class and many of their constituencies. Yes, In Europe, the almost uncontrolled influx of migrants benefitted both the established Liberal and Conservative Parties: Liberal Parties welcomed their new voters, while Conservative Parties rejoiced in the bigger support & funding by Big Businesses. The latter rejoiced in the cheaper cost of labor induced by migration. Thus, while millions of migrants flooded some European states, thousands of factories and millions of jobs went overseas, established parties and bigger businesses benefitted. And we are talking here about part of the Liberal Policy Mix of the past 40 years.

Europe’s decline cannot be explained by the above alone though. The replacement of Europe’s Judeo-Christian values with Humanism & Political Correctness did the rest, making people ever more “sensitive” and unable to deal with ambiguity or criticism. The EU has de facto removed the Freedom of Speech. Mainstream Media interviews mostly those experts that support their narrative and world view. More interested in shaping or controlling Public Opinion than in informing, European media has added to the confusion and lost credibility. In all fairness also, they are afraid of offending any group of people, and of departing from the liberal script that has served them well. We saw this during BREXIT, Syria, the US Elections etc.

The lack of fresh ideas and introspection is exemplified by this: The same experts that explained viewers why BREXIT and TRUMP would never occur, were asked by Mainstream Media to give an outlook for what comes next for Europe. But I will not spare the citizens – the majority in Europe tolerate or consume this.

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A short strategic review

Well-meaning pacifists dismantled Europe’s strategic military, while enthused globalists led to the unrelenting EU’s territorial expansion and the erection of a protectionist Fortress Europe that has weakened its competitiveness, benefitted Big Businesses and impoverished its population. Only the most competitive Nordic countries benefitted as the Euro became endemically weaker than their former currencies. The EU expanded territorially aggressively into the East, encircled Russia and kind of supported a Regime Change in Ukraine. All of which emboldened Russia’s nationalists. Can the EU defend herself against Russia? No.

The EU is today by far the most vulnerable economy in the world: economically, politically, militarily and security wise. Unable to defend herself, the EU says it relies on NATO, which is to mean the USA. But NATO – as a growing number of US military leaders view it – is a highly asymmetric defence block. Trump is simply speaking out what many generals don’t dare to say anymore under the current US Administration. Fast forward to December 2016, EU leaders are boldly lecturing and defying the new incoming US administration, on which Europe’s security depends.

Despite the risks and threats, Britons had the strategic foresight that they needed to exit a sinking ship. 75 years after the Battle for England, Britain decided again to defy the Continental Forces stemmed against it. Maybe, because staying bound & entangled to a bureaucratic EU was a larger leap into the unknown than a messy divorce. Many observers say the wave of populism will sweep from the UK and USA over to Europe. But the use of the demeaning term populism shows they are disconnected from citizens’ reality, and we are skeptical that French & Germans will show that much ruthless introspection. The political landscapes in Europe will be shaken (we think the AfD could get 12-20% of the votes), but at this juncture I doubt it will be enough to set a new course for Europe. As long as these two nations support the established parties that led them into the EU, changes will be shy of radical, and the EU will remain vulnerable and in a slow-motion decline: gasping from one crisis to the other.

France and Germany may be tired of 4 decades of ultra liberal policies, but …

The result of Europe’s four decades of an ultra-liberal Policy Mix and Protectionism has been the destruction of vast segments of Europe’s Middle Class with the subsequent Political Polarisation and growing systemic risks to Political Stability. The explosion in regulation did the rest in advancing giant oligopolies. To make things worse, Europeans are misled to believe that the European Union stands for Democracy and Free Trade. The EU is not only undemocratic and unaccountable, it ushered a period of Protectionism and Managed Trade (so called Free Trade bilateral agreements). Few firms can hire the best of the best, most are restricted to hire EU nationals.

European citizens can’t simply blame their leaders, though. The untold truth is that most European citizens on the continent are too risk-averse to induce a political change – this being specially true of Germany and France. On the one hand, they have become utterly dependent on an ever growing State and State-run pensions & programs. On the other hand, Europeans like the deceptive “protection” the EU promises them. Even if this has only led to Europe’s economic decline.

Europe labels those that want a course correction: “populists” 

To make things worse, Europe’s establishment in politics, media and academia furiously label any critics of their 4 decades-long ultra liberal course as populists, racists and isolationists. In short, any one wanting a course correction is equaled to varying degrees with “uneducated extremists“. Thus, the only mistake EU leaders and media acknowledge is that they have not informed or educated voters enough, leading them to intensify their Information Offensive, which independent observers now perceive as propaganda. They are now making people aware of Fake News, but are not pointing to their own systematic News Bias – which in my opinion is the more subtle and dangerous of the two. Our research shows that while there are extremist minorities at work in Europe, millions of normal citizens wish simply a course correction or normalisation.

Flawed Diagnosis

Even in the aftermath of the tragic terror attacks in France, Belgium and now Germany, European leaders’ diagnosis is flawed

  1. All that Islamist terrorists want is to take away our Freedoms (read freedom of movement etc.)
  2. If we integrate immigrants better, then home-grown terrorism would vanish
  3. Lack of economic opportunities are main driver of Radical of Islam

Sadly, even leading experts share these views. They are not wrong, but they fail to address the main causes. Neither politicians nor so-called experts dare to acknowledge the real source of the radicalisation and threats. As a result, Europe’s economic, military and security deterioration will only gather pace.

Daring to look out into the Future of Europe

While our research points to a slow-motion deterioration of the EU and its eventual implosion, we see the rise of a European Super State or Federation in the long run. What the experts won’t tell you: The best friend of Berlin-Paris-Brussels is ongoing crisis: EU leaders need unending crises to weaken the national states and to induce them to freely hand over their sovereignties in exchange for bail-outs and protection. The migrant crisis is a good example of this strategy of Integration through the back door. This is straightforward geopolitical-macroeconomic reasoning (I reject to work with conspiracy theories).

Just like the United Nations, the European Union is not as unprofessional or incapable as many critics say. They are quite a genius indeed. The EU simply allows crises to rise and simmer, because this helps them achieve their undeclared well-meaning goal: Total Power Concentration, for the good of humanity of course. What I criticise as an independent analyst is that they don’t openly talk about it. nor would they let citizens vote over it. It of course sounds better to say: all we want is Unity and Freedom. With most people following the narrative of mainstream media and others reading only superficial Social Media “bits”, the EU and UN are making good progress towards their respective goals of Power Concentration.

After promoting millions of immigrants to move countries, removing borders, weakening the Rule of Law and allowing big firms to become gigantic Oligopolies, the EU will tell you that individual nation states can’t cope with today’s challenges. Thus, overwhelmed nation states have to come together into Super States, of which the EU is the first one. In a not too distant future, individual nation states may exist only on paper.

Christian Takushi MA UZH,Macro Economist & Strategist, 21 Dec 2016, Zurich-Geneva, Switzerland.

General Disclaimer: Global Macro and Geopolitical Analysis are highly complex and subject to sudden changes. No analytical method is without certain disadvantages. We may change our 3-pronged outlook within less than 3-6 hours following an event or data release. Global macro analysis can be extremely time-sensitive and the first 24 hours after an event are critical for the response of a government, corporation, pension or portfolio. Only qualified investors should make use of macro reports and treat them as an additional independent perspective. Every investor should weigh different perspectives as well as “opportunities & risks” before making any investment decision. Not all our reports, research and intelligence is published here. What we release here is delayed and adapted. The research & views we post here for public access are aimed at fostering research exchange (to improve our assessment) and helping decision makers adapt their long term & strategic planning to changing realities, not for short term decisions. If you are not a qualified or professional investor, you should get professional advice before taking any investment decisions.


GROM – GLOBAL RISK OVERLAP MODEL 

A summary of the 24 Global Geopolitical Macro Factors we are constantly monitoring

Our GLOBAL RISK OVERLAP MODEL (GROM) is relevant for governments, multinational firms and investors. It is continually monitored and updated.

During Spring of 2015 our Global Risk Barometer reached the level of 9, it receded to 8.75 in Q4, but rose back above 9 in early 2016.

In Dec 2016 the Barometer declined to 9, contrary to the uproar among consensus experts and media.

Conditions are present for a crisis, but since there are many possible triggers, timing the crisis eruption is difficult. That is why we continually monitor multiple factors.

I am closely monitoring three factors currently misjudged by Consensus that could potentially affect the economy and financial markets. The EU is most vulnerable to them. After the humiliation of having missed the BREXIT and US elections outcome last year, Consensus is overstating geopolitical risks emanating from the USA and Europe, but underestimating the aftermath of the US-Iran Deal and structural shifts at the macroeconomic front. The impact of Deregulation and Tax Cuts on the US and UK economies are being underestimated.

We expect the Global Risk level to remain elevated throughout the Transition Period 2015-2018. Powered by deregulation and tax cuts, the USA could see an economic and social revitalisation. Uncertainty and Distrust could weigh on Potential Economic Growth though. People should ready contingency plans for their businesses and families.

NOTE: on 15 July 2015 our LEV-AL Status was raised to 4. Businesses should prepare for limited disruptions. LEV-AL is on watch for a possible upgrade to 3 prior to August-September 2017. 

LEV-AL ALERT SYSTEM

Our continuous service to businesses and investors. It indicates the LEVEL of ALERTNESS they should apply to meet the RISK of DISRUPTIONS to business & investment operations (LEV-AL is a DEFCON for the economy)

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Terror attacks in Europe and large-scale evacuation drills & preparations for war confirm our LEVAL assessment of 4 and our Global Risk assessment of 9 are on track. The Level of Alertness was put on watch on 18 October 2016 to be raised to 3.
In case of a risk event or the likelihood of such we would be updating the Lev-Al Status within 3 hours.
A broader base for Economic Forecasts, one that includes multiple geopolitical factors:

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During this vulnerable Transition Period 2015-2018 the USD could weaken as far as 1.30 or 1.40 to the Euro, but in the event of a large-scale war (i.e. Iran-Israel or Iran-Saudi Arabia), the USD could strengthen to 1.0 or 0.9 to the Euro. The price of Gold and the Swiss Franc should see more upward pressure than downward. We see a decline in consumer discretionary demand growth in Europe, China, Japan, South Korea, Thailand, Mexico, Chile, Brazil and Taiwan, but from Q1 2017 robust energy, security and military spending will in some economies help compensate this weakness.

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” Honor the Lord with your wealth “

 

Below you can find some of our Outlooks, Updates and guest articles ..

Takushi Geopolitical Update after US Airstrike on Syria: Trump, Iran war in 2017 likely, EU to shift left, SCOTUS

April 8, 2017

Short Video Clip with Geopolitical Outlook after US Strikes on Syria (April 2017) Christian Takushi addresses the US air strike on Syria and 3 geopolitical factors that consensus is underestimating: 1) Trump’s defining moment, 2) Iran could unleash War in Aug-Sep 2017, a byproduct of US-Iran Deal and Turkey remembering…

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Sanci says Reflation Trade is at a crucial junction – still, US economy has momentum

March 27, 2017

By Maurizio Sanci – 27 March 2017, Geneva – Switzerland. (editor: Maurizio Sanci is a seasoned investment specialist with a unique blend of “technical & macro charts with investment knowhow”. After following his market research over the past four years, I’ve invited Maurizio to share his personal views on our…

Read More

Voter Revolt in the EU is likely to fail – The EU could shift further to a liberal-left course in 2018

By Christian Takushi, Macro Economist – Zurich & Geneva on 14 March 2017: Elections in the Netherlands, France and Germany (this is an adapted version of the original) The EU could shift further to a liberal-left course in 2018 “Continental Europe is not the USA“ Tomorrow Dutch voters elect the new parliament…

Read More

Death of Freedom of Speech in Europe may foreshadow its inexorable Strategic Decline

By Christian Takushi, Macro Economist – Zurich & Geneva on 21 Dec 2016: On TERROR IN GERMANY. “Continental Europe is not the USA – Voter Revolt may not repeat in continental Europe in 2017“ As Germany is rocked by the worse terror attack in decades, this is a summary of…

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Maurizio looks ahead: A wind of reflation to impact the world economy

November 25, 2016

By Maurizio Sanci – 25 November 2016, Geneva – Switzerland. (editor: Maurizio Sanci is a seasoned investment specialist with a unique blend of “technical & macro charts with investment knowhow”. After following his market research over the past four years, I’ve invited Maurizio to share his personal views on our…

Read More

Agefi Interview on Trump, Emerging Markets & some positive Trump effects

Interview with L’Agefi in Geneva on 23 November 2016. Christian Affolter interviewed Luc D’Hooge (Fund Manager at Vontobel Asset Management AG) and Christian Takushi (Macro Economist & Strategist at Geopolitical Economics AG). After having correctly forecast the outcomes of both, BREXIT and US Elections in 2016, Christian Takushi spoke at…

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Post-Election Day thoughts: “Is Trump’s new coalition enduring? + An early peak into his supply side elixir”

November 10, 2016

By David Schane, USA – 10 Nov 2016. Dear Christian, Congratulations on your accurate election analysis!  I always told my colleagues and friends to not be complacent about a Clinton victory – although for academic honesty I must acknowledge that my family supported Hillary in the end (despite her flaws,…

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Video: Possible Surprise in US Elections: unusual & late shift in favor of Trump among Evangelicals

Title of Message: “Possible Double Surprise at US Presidential Elections 2016″: A Trump victory and one by a bigger margin than few would expect”. Takushi points to an unusual late convergence of economic and religious factors that could favor Mr. Trump in the Rust Belt, South and Mid West. 15…

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Special Geopolitical Macro Update: Possible US Election surprise, Moral decline, US-Russia escalation & Syria-Iraq war

By Christian Takushi, Switzerland – 4 November 2016 Dear reader The 3-4 weeks leading to the US Elections are as expected a tense “radio silence”, with many decision makers in waiting mode. Nevertheless, some developments deserve our attention. Their timing and inter-connection call for close monitoring. Interestingly, some of these developments…

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Late shift among evangelical & unregistered voters could deliver a Trump upset

(A late shift among evangelical and unregistered voters could deliver an upset in favour of Trump)  Editorial by Christian Takushi on 4 November 2016 The lead of Clinton has imploded from 6 to only 1.9 points over the past week. More importantly key battleground states are now a perfect tie….

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