World Disorder Beyond 2020
World Disorder Beyond 2020
By Lushfun
What has been seen through one prism will be seen through many.
It is fairly apparent that the world as we know it is coming to an end. Economics and industrial progress which dominated the 20th century is coming to an end. These aspects in themselves dominated the discourse and the concourse of learning and action. We are simply transitioning from one era to the next where the focus of human learning and dynamics will center around something other than aggregate consumption. This is apparent in some areas like ecology and ideology, but is completely ignored in the holistic aspect of how people perceive the world around them.
The most important thing people have to understand is that leadership by the United States in the sphere of where to go, what to do, and which future others have to look forward to, is coming to an end. That leadership provided an easy way for other countries to direct themselves and shape their societies in their own image to follow the coalescing goal of global prosperity through, trade, freedom of movement, and freedom of ideological expression.
Is it a good thing or a bad thing that this change is coming? Neither, it is just coming and one can accept it or fight it but sooner or later the reality has to be confronted. Global imperatives change but people move on, to other things they strive for and focus upon.
Globalization has run its course and the aggregate maximum it could have reached has been had. It is not for the lack of trying nor willfulness that is coming to an end, on the part of some interest groups pushing it along. Simply put the world as a whole and even the United States itself can no longer afford it. Maximum benefit has been reached and transition to a different system has to occur if entropy of the system as it is will be maintained in any shape or form to continue onwards in development of the futures different nation states strive forward toward.
Good Music
Turkey Calculus of Syrian Intervention Factors
Turkey Calculus of Syrian Intervention Factors
By LushFun
Unilateral intervention into Syria breaches NATO aegis.
Ergo, if the flow of battle is unfavorable and Turkey calls for article 5 guarantees they will not be provided due them being the aggressor state and this may be deemed an internal conflict or an external conflict with a non-state actor.
Financial ramifications of intervention are uncertain in the respect of levers available for U.S. to deny refinancing of short-term dollar denominated debt. Financial sector issued bonds in dollars and euros may become particularly challenging factors in the spiral of capital outflows that may trigger a credit freeze.
A force majeure situation in regard to intervention into Syria would allow a certain ability to call a Security Council resolution to exert pressure. Here we enter the twilight zone because it would allow for a de-facto freezing of NATO commitment without de-facto statements due to isolation factors. The problem in such a situation is that guarantees no longer apply intra-alliance.
Hypothetically, an aggression against ‘Turkey’ in Northern Cyprus would no longer trigger NATO defensive guarantees but would trigger CSDP commitments if those are called onto by Cyprus or UK via a “provocation” of some sort. In essence due to EU-NATO cooperation there would be a backward induction of NATO into any security operation EU conducts through the CSDP mechanism, this is extremely cynical but theoretically possible.
Turkey going against the EastMed pipeline which is backed by Italy, Greece, Cyprus, and Israel sets it up against economic interests of the EU in the energy sphere to a degree. Granted it will become more apparent once the feasibility study is done in a few months.
Critical issue at hand is that right now the position Turkey is taking sets it up against more and more actors in various sectors and spheres. There seems no bargaining on its’ part and consolidation of others’ interests will likely backfire, especially if there is an opening to re-configure those interests to overcome Turkey blocking certain developments.
Four scenarios below.
Scenario A, security council resolution is blocked by Russia and China
Scenario B, security council resolution passes, effectively suspending NATO guarantees until conflict is deemed resolved, this sets up for financial leverage and other factors to draw out concessions that Europe and U.S. wants.
Scenario C, involves failure of Scenario B with possible military intervention. Ergo, UK bases on Cyprus activated as facilitators of CSDP push to “de-occupy” Cyprus due to energy interests. Full support for Kurds in Europe and U.S. and possible financial sanctions that would risk default on dollar denominated debts Turkish banks and other parts of the economy have as an overhang.
Scenario D, two to three months pass to see if Turkish involvement in Northern Syria is successful or not, gradual escalation of covert support to exert more pressure on negotiable tenets with possible follow up of Scenarios A through C.
This is simply my opinion of possible futures in the next six to nine months. In my view the most dangerous aspect is the duration of foreign denominated debt since the maturity schedule is known and positioning of actions by various actors would be more impactful without full blown hostilities. Theoretically pressing liquidity concerns very slowly onto the stage while coordination of actions behind the scenes would allow not only stripping away liquidity, but drawing down on outside possible sources of funding Turkey has into the culminating bargaining matrix. Essentially a hedging position by Europe and U.S. that is pressed into fruition via secondary action mechanisms.
The following questions come to mind.
What could Europe and U.S. get from Turkey by putting it into such a position? If one imagines Scenario D, B, and then C coming to life, what is the ultimate goal of the reconfiguration? If someone thinks this is about a pipeline or Kurdish autonomy those are the things we see on the surface but they do not validate such leverage by themselves.
Be well dear reader
https://www.nato.int/cps/en/natohq/topics_110496.htm
https://eeas.europa.eu/topics/common-security-and-defence-policy-csdp_en
https://ahvalnews.com/afrin/turkish-occupation-afrin-could-result-calamity-ankara
http://cyprus-mail.com/2017/12/05/cyprus-greece-italy-israel-back-natgas-pipeline-europe/
North Korea Two Basis Scenarios
North Korea Two Basis Scenarios by Lushfun
Basis Scenario A – North Korea invaded and folds under. 90%
Basis Scenario B – North Korea survives and wins against South. 10%
Let us first note that in each scenario these truths will more or less occur. Korea as a whole will have around 70 million people. The combined economy will need to spend tens of billions to modernize infrastructure. Energy consumption and demand for most goods will go up significantly. As a market a lot of additional capacity will be available for all external and internal actors. Military spending as a combined aggregate will go down.
Several North Korean scenarios.
Basis Scenario A – North Korea invaded and folds under. 90% likelihood in my opinion.
Variation of Scenario As are below.
Variation 1 of North Korean invasion goes as follows.
Russia and China are negotiated down to receive certain guarantees. There are global trade offs, some of which are economic others are geopolitical. North Korea is on its’ own and is essentially bombarded by conventional munitions for about a week, with no ability to retaliate as any trajectories outside the peninsula are intercepted and shot down. Regime collapses as landings occur in weakly defended points on the coasts and communications are cut off. Most of the assets that were flaunted including artillery are destroyed with low losses via consistent bombardment by high altitude and long range missile strikes. Full destruction of the regime is apparent in the first week. Armed forces of North Korea give up to the South Koreans and it becomes clear that the North is essentially liquidated to be folded into the South.
What is the likelihood of this scenario? Well it depends on what the U.S. trades for said force projection. Theoretically even if the price is steep the additional stature in having said victory under the belt would re-configure perceptions on U.S. foreign policy and allow exits from different areas that the U.S. needs to get out of without loosing prestige, or face, or general perception of weakness. This is extremely important since it would provide a background of strength for actions that may provide overarching agreements to modify and minimize certain commitments without them seeming disadvantageous.
What could Russia and China actually get? Both could get a certain sphere of influence where U.S. involvement not just ends but the abandonment of U.S. support provides significant asymmetric bargaining positions for these countries. Economic amelioration of sanctions for Russia and China in certain spheres, in addition to possible re-financing of certain areas of their economies via third parties. Economic participation in accessing a combined Korean market to supply infrastructure development, capital goods, and raw materials, and so on. One of the biggest benefits for all three parties would be a reduction in direct confrontational forces. Ergo, Neither South Korea, China, Russia, or United States would need to expend as much on conventional warfare capabilities in that focal point to offset each other without the overwhelming mass forces of the North Koreans foreshadowing presence. If one goes back in time one can see China cutting forces, perhaps in anticipation[i] of said dividend in regard to lower strategic density required in a post NK world.
Variation 2 is more or less the same as the above, ergo Russia and China do not intervene. The only difference is there are major casualties from the liquidation of North Korea. U.S. still looks strong on the global stage with it and allies willing to take pain to remove a strategic threat. There are still trade-offs for Russia and China.
Variation 3
Everything goes wrong. Russia and China provide covert support, massive casualties and expending of energy, people, and other aspects with the eventual subjugation of the North. Multiple hidden agreements with China and Russia to pay for cutting off aid in the conflict and essentially sell down the North Koreans.
On the facade U.S. power will still seem strong, however the cost of said conflict will require major re-configuration of power the U.S. projects. South Korea and China border will essentially have token forces on opposite sides and have relatively open trade relations. U.S. will remain in the South but at a lower capacity and mostly in the missile intercept, air support capacity, with limited ground.
Russia will probably gain a pipeline into the combine Korea and be able to finalize the peace treaty with Japan. Essentially a reset of the region.
[i] https://sputniknews.com/asia/201703111051467574-china-reduce-army-reserves/
The next 18 months a forecast of Geopolitical events
The next 18 months
by LushFun
Kurdish referendum will set off a large scale change in the Middle East. It is very likely that in a sense delineation of border with Syria and the emerging Kurdistan will lead to U.S. and Iran coming closer together. This may sound counter intuitive but the fragility of each others proxies creates a necessity to push forth bilateral relations that would create a stable front at least on one perimeter of the states in question.
Turkey will be between the choice of attempting to go into a large scale conflict where it will most likely be cut off both from European and Dollar sources of funding. Not because Europe and U.S. want it replaced or gone but because it’s politics in the region are too autonomous and have begun to clash with the wider implications that are necessary to reboot the region as a whole.
North Korea is probably in the last year of existence. One day we will wake up to multi-spectrum air attacks and a landing into the jugular of the north. It is very likely that China will have no choice but to watch from the sidelines. In the event it does intervene the economic decimation will be the most likely long term side-effect. Pretending that China would not be cut off from maritime trade and simultaneously be in the position of insolvency in its’ ability to buy on the world market and be able to clear those transactions is a dream. Upon reunification China will receive more contentious Korea-Japan-U.S. alliance that will be seen as extremely credible. In all likelihood other actors like Vietnam, Indonesia, and Philippines will assert themselves in their territorial waters.
China does not understand that the reason Soviet Union could contest Western influence is due to ability to share its’ resources globally to create strategic partnerships that did not always favor itself. We can see this with U.S. giving market access to Japan and South Korea as an example. China wants influence without paying for it, via pure dominance in a one on one relationships. Long term this simply antagonizes the counter parties and they form a coalition against you. This is seen from the times of Ancient Greece to WW2 to today. It is fascinating that a country with such lengthy history does not understand this basic tenet.
De-dollarization may continue but not because countries want to get rid of the dollar. It continues because the debts they made in dollar denominated liabilities are coming due and there is no circulation of new credit to restock the investments of dollars that are flowing out. What this is doing is taking the cover of all mal-investments and white-elephant projects that are worthless globally and pushing those whom made them to eat the losses without the ability to push out further the day of reckoning via ‘refinancing’ windows.
Russia will likely have a major internal purge. This will most likely coincide with a ruble devaluation. The problem is internal division of resources and the ability to muster than in order to either reform, rebuild, or restart society on a new path. Part of the problem rests on the fact that there is no vision of the future at least publicly that may be reflected by the populous at large.
South Africa is in a very similar position to Russia in this regard. It is in some sense worse because the agricultural sector has been shrinking at an accelerated rate. For anyone interested one can look at white maize production their staple more or less and other grains and in some sense see that the import and export balance is shifting. Importing foodstuffs not only puts pressure on the balance of trade and the stability of the currency, with things as they are today it is theoretically possible for supply chain disruptions to create increasing pressure for people on the ground. This is different from Russia since there the purge will most likely be at the top. In South Africa it may permeate society as a whole.
Brazil has been in dire straits for the past two years and nobody noticed. What is increasingly ignored is the lack of refinery retooling that can take place as they lose market share to U.S. refineries due to price differentials. In a way this is most likely the picture of the Brazilian market as a whole lack of capital investment with attempts to squeeze out last amount of capital from equipment that is past its’ depreciation life. When this equipment starts to give out there will not be enough capital in their economy to replace it due to the housing bubble being popped and covered up. Ergo the funds are essentially lost but the refinancing of the banks is propping them up, but their lending is frozen since their tangible capital doesn’t really exist. On the façade though they are showing terrific growth. In a way this is seen through lending growth turning negative. One can argue about terrific loan growth on the whole, however I would assume those are old credits being refinanced with the unpaid interest balances to keep perceptions alive. The banks in Brazil hope to gain on the capital equipment loans side since that area is tuned into the export monetary flows, but those are cut off since the rates they are charging are unsustainable for the added value those capital goods produce.
Europe is on the whole being spun out of control. This is not due to refugees but the monetary policies which are creating a negative supply of Euros and propping it up into the Euro-Dollar market where dollar denominated debt is issued. In a way one can understand the need for Europe to have a strong Euro since otherwise its’ insolvency will become apparent on the international stage. Internally quiet a few banks in Europe are essentially insolvent and the question everyone should ask is: what is it waiting for? A major event that would freeze debt payments can only occur if there is a large scale war. The problem Europe faces is that it has no access nor ability to an ideological construct that could resolve the issue without it recurring a few decades down the road. All that debt will be destroyed and the claims it is attached to are simply pushed down into the cemetery as their ability to compete on the global stage is impaired daily. Europeans as a whole do not seem to understand that when the clearance occurs the system is a whole will break down. Ergo on the fringe of Europe, one will not trust the Euro because its clearance will be tied to an insolvent system that may not honor your holdings due to qualitative factors such as you being “corrupt”, or gaining it in a “black market” operations. In a sense this defensive posture for the banks and the financial system as a whole to keep everyone inside will backfire longer term. Simply because defecting from it is cheaper than staying with it. Ergo when your minimum capital is frozen, putting more into the system makes no sense and staying outside of the system permanently becomes the norm. This essentially puts the monopolization of licensing and other permits in Europe at risk and creates a huge black market since that will be the only way to survive. Theoretically national currencies could emerge to fill the clearance void at this time and most likely will be the ones that are pushed into the void.
Scandinavia is slowly but surely changing. The social contract in those countries has been broken. People as a whole are abandoned by their government and will eventually challenge the system. Once one of the countries takes charge in rebooting the others will follow.
India still has not brunt the full cost of the economic game it has played. The government nor the financial actors have realized what their ‘experiment’ has wrought. The conflict in the North was essentially a diversionary tactic. It will not clear out the long term consequences. Population will in a way switch to barter which will shift the real division of exchange in its’ favor. However, the need for gov’t to expand the budget will further push for taxes and other measures to prevent trade from escaping the financial sphere.
Be well dear reader.
Turkish future predicament, update August 2017
Turkish future predicament, update August 2017
by Lushfun
It is becoming obvious that once Kurdistan becomes independent there will be a conflict with Turkey that is internationalized. Ergo, what has been a slow but fairly successful suppression of Kurds inside Turkey will become a multi-state conflict with Kurds gaining recognition through extra-territorial sovereignization. Turkish government does not understand that once this occurs it will not be able to continue the current policy due to pressure from its “allies” to come to terms with the new reality.
Why is the question?
If one looks at the current tribulations in the U.S. – Turkish relationship and the EU – Turkish relationship, one realizes that the give and take is mutual. Both the U.S. and EU cannot influence or overcome Turkish interests with their own, furthermore Turkey essentially leverages said influence for it’s own ends to manipulate in the dichotomy between them. As time went on positions of EU and U.S. on Turkey and the region adjoining it became similar. For one the discipline expected out of Turkey being part of NATO and in partnership with the EU to a degree, never quiet materialized. This did not mean that Turkey was supposed to be subservient to the other parties, but it did have to match some expectations in regards to not blackmailing them in the Incirlik saga, and in certain other ways. Military cooperation and alliances require robust understanding that allies will not cut off links during the actual activities of said alliance. While Turkey can be understandably upset at Syrian outcomes, it did sign up for whatever the interventionist ideas were pushed between parties behind closed doors. It is now challenging the ramifications of negative outcomes by defecting in a way to limit them.
NATO suspension and ramifications for Turkey.
First and foremost is the damage to the arms industry from separation of cooperation from European and U.S. suppliers. Especially in regards to aeronautical parts and anti-air capabilities. Sanctions from EU and U.S. in regards to Turkey may gain traction, not necessarily to modify behavior but to equalize capabilities in the possible Kurdish state conflict between the parties. While one can argue about the possibility of sanctions not being sanctioned by the UN, in reality this is a moot point. The problem is once things spiral into this direction other grievances in Europe will spring forward. Ergo, issues of Northern Cyprus, immigration, market access, and so on. It is very likely that the access to funds will be the primary venue where things will start out.
What could go wrong?
The problem in recognizing a Kurdish state is the borders it will submit to the UN for said recognition. If those borders overlap with Turkey and other actors in the region it would essentially mean that those whom recognize the Kurdish state, expect modification of those borders in some fashion. While one can think of reasons for the state to be limited to Iraq and Syria, there are probabilities for maximizing the claim since recognition from key actors U.S. and EU will be forthcoming.
Referendum for Kurds is set for 25th of September just for reference.
Be well, reader.
http://www.reuters.com/article/us-mideast-crisis-iraq-kurds-idUSKBN18Y284
Geopolitical Trends with Long Term Horizons, July 2017 thoughts.
By Lushfun
North Korea.
All that military equipment that has been moved, positioned, armed and readied for action is not there for naught. The drills held by the U.S. in the air, and Japan and South Korea in the sea are most likely a part of a larger simulation. We can only speculate that after an extreme wave of bombing by strategic and tactical bombers into the oblivion, tomahawk barrages from the sea there will likely be landings deep into North Korean territory. If one looks back at “Desert Storm” with Iraqi generals essentially moving aside once the push occurred, one can to a degree gauge that if communications are cut off and the perception of the center of command being destroyed, resistance on the line of control especially in light of significant destruction pre-emptively wrecked upon the abilities to project and conduct operations would make it more likely for sections of the front to be taken over with low resistance. Whatever one may think about the resilience and self-reliance, brainwashing and belief, there is an underlying realization that the other side in the South is just as Korean as the North, thus the factor of being treated well after giving up arms, is on an innate psychological level present. This is one of the reasons the leader of the North has to act so ‘decisively’ to reinforce the ideological and repressive machine of the state to defend against such a forced ‘reconciliation’ on the Korean peninsula.
My sense on Chinese involvement occurring is that if they cross the border and become entangled the reputational losses from combat and economic suppression during said involvement would completely outweigh the current or future potential of a unified Korea that is in alliance with the U.S. Distance from South Korea to major cities in China from a missile ranger perspective would not change materially. Reputational loss for China in the client state being absorbed by the South while significant would be survivable. The problem for China is that it does not understand or wants to for that matter that plausible deniability for having North Korea use nukes on any neighbors or military assets be it Japan, South Korea, or U.S. forces is too much of a liability to continue. Having an ability to say the North Koreans are crazy and thus they can retaliate or pre-emptively strike with ballistic missiles is a non-starter nor a defensible long term position on world stage. No country can accept random threat project from another continuously while the later country attempts to blackmail them via this potential use of force for leverage into extracting subsidies or concessions.
China, Russia, South Korea, Japan, and U.S. will all benefit once the North is gone. Economically the integration will stimulate the regional economy. Militarily if the border is not militarized the declines in military spend by the united Korea and U.S. in the region will be re-directed to better uses.
Syria and Kurdistan
It is becoming obvious that longer term Kurdistan is emerging. Contrary to popular belief in my view the beneficiaries of Kurdistan existing are U.S. and Iran. While U.S. may use new bases in a client state for force projection and leverage with neighboring states, Iran would be a significant winner. Iran would gain access to an emerging country which it would be able to supply from the North-South corridor as it struggles against Turkey. Longer term the economic ties may become significant. It is extremely apparent that the Syrian and Iranian routes of supply to the emerging Kurdish state would be the least antagonistic. Syrian route would funnel supplies from Europe and U.S. while Iranian route would funnel supplies from Russia and China. All of these actors may not necessarily want Kurdistan to emerge but the economic imperatives of their struggling economies and the profit motive would provide impetus for supplies to flow. It is slowly becoming apparent that Syria would be divided in one way or another.
If Turkey forces this division via force involvement and projection to liquidate the Afrin pocket near the North-West it would significantly accelerate Kurdish state emerging. The reason for this is that there would be no ability by the Syrian state to accept this involvement while simultaneously claim responsibility for the people living there. Ergo, if the people in those provinces are on their own than the Syrian state abrogates responsibility, even if it states otherwise. Turkish pressing to create a cordon-sanitare would backfire in the sense that it would provide leverage for both U.S. and Europe to retaliate in the politico-economic sphere. While one may think sanctions are not possible for a NATO member, one may be mistaken. The likelihood of retaliation is the suspension of financial access and/or trade preferences that are not treaty codified, or outside the EU-Turkey customs union. The mistake Turkey is making is thinking that it will be ‘paid’ for compliance in Syria. If there is an offensive in Idlib and the armed groups there are pushed into Turkey or elsewhere, there is no likelihood that Afrin will be traded for said event, nor that it would even have to be offered… In the long term the only answer to preventing a Kurdish emergence is to support and strengthen a Syrian state that would be able to prevent Kurds from break away. The viability of changing to this path for Turkey is a misnomer, yet it would mollify half of the opposition in the form of Russia, Iran, and Syria, with the U.S. having to accept Kurds existing as part of Syria. However, if Kurds are going to be pressed out then the choice for the U.S. will become to pick between what its’ strategic goals are which align with Kurds or to negotiate with Ankara. In my view the likelihood of former dominating the later is very high, unless the framework that integrates Kurds exists without destroying them.
What the Turkish government is oblivious towards is that the coalitions on the ground cannot support their position nor exchange with them, simply because longer term Turkish position is untenable. Neither the maintenance of it from geopolitical leverage of others nor sustainability in going against said coalitions is not present. If Turkey attempts to play it’s own game going full bore into conflict it may create a systemic payoff for both the Russia-Iran-Syria coalition and the U.S.-Europe-Kurdish coalition to not only push them out of Syria but to capitalize on said misstep. So far the impetus for action and the timeline for having leverage and using it for Turkey is closing.
From a Kurdish point of view while the loss of Afrin would be bad from a tactical stand point, in the geopolitical sense it would reinforce the necessity of a Kurdish state in their coalition. Syria would be de-jure divided due to inability to provide security to all its’ subjects especially after the civil war. Here the trade offs for Iran from the U.S. and to Syria as well for accepting a de-jure partition while it is occurring de-facto due to Turkish intervention would become paramount. While Turkey may end up having control on the ground it would wind up with a consensus of most if not all the actors in drawing up a map that systemically undermines it’s position precisely due to the intervention it makes to eliminate such an outcome. In the longer term it would not be able to not only to enforce said control but would be forced to give up even more concessions than it would be ready or willing of yielding.
Any thoughts, suggestions, opinions welcome.
https://en.wikipedia.org/wiki/European_Union%E2%80%93Turkey_Customs_Union
North Korea under liquidation? and why it may be?
North Korea under liquidation? and why it may be?
by LushFun
It is becoming readily apparent that the North Korean project is coming to an end. Both U.S. and China are signaling some sort of an agreement of no longer tolerating the regime as it currently stands. Both the nuclear posturing and the blackmail against both U.S. and China in order to gain economic means has slowly but surely skewed both to curtail engagement with the North Korean government. The tactical and strategic value North Korea may have had has been overturned by both technology and cost of confrontational tension on the ground, in the form of troops, and other military assets committed by U.S., China, South Korea, Japan and others.
Why now? Well considering the desperation of the regime once all economic “subsidies” in the form of “aid” for the promise of non-proliferation or other promises which the North Korean regime violated it became clear that the consensus between U.S. and China is the key element in ending things as they have been for decades. Giving up positioning of U.S troops above the 38th parallel and other weaponry does not impede nor endanger in any way commitments by the U.S. to its’ allies. Technological progress made proximity to the front lines more or less obsolete by more advanced weaponry, it did not however remove the ideological nor face saving value carried by giving up an “ally” even one that is more or less independently playing everyone against everyone else.
Ideological value removal from the global arena is another interesting aspect. Juche Ideological purge from the global milieu. Furthermore alleviation of confrontational dynamic in the region that is tied to something other than strategic, tactical, core economic, and realistically based interests creates a far more reasonable ability to come to terms with others as the amount of random variables and players is reduced. Speculation on cost of removal one may expect certain savings that will be re-directed to more poignant points of contention in the region.
Unified Korea as a stimulus project may provide; U.S., China, Russia, Japan and others in the region that may be able to participate in both infrastructure and other build outs that would be carried out to re-connect it to the South upon various levels. Ergo fiberoptic cable for internet, steel and other aspects, nuclear reactors or other energy and electricity producing infrastructure, and so on will need to be built providing hundreds of billions in demand both direct and indirect to the global and regional markets.
If China and/or U.S. succeed in removing the regime and re-integrating two Koreas, there will be a shift in the world stage. Perception of both powers will change and both will gain standing. Vacuum that is taken up by North Korean doings today will be taken up by someone else. All the time spent focusing on it as a problem along with other resources will make a considerable unseen influence in how we see new things presented to us. The context of difference on the world stage will lower.
Enjoy the summer
http://www2.law.columbia.edu/course_00S_L9436_001/North%20Korea%20materials/3.html
Changing Dynamics of Global Trade
Changing Dynamics of Global Trade
An existential economic crisis from spoilage of global debt that is having the asset base behind it turn into a swamp is essentially upon us. While professing of the “death” of Petrodollar and it being replaced with Gold or some other aspect ratio will not fix the overall problem. Creation of demand that is solvent without emission of some sort of controlled monetary base that is tied to something else. This is the crux of the matter. Pretending that gold fixing of oil to gold will manifest itself in solvency of the global demand via manifestation of consumers is an illusion. All this does is create a venue, yet another venue which lessens that overall pressure on credit everywhere that has become the be all solution in all matters of commercial and personal exchange.
Imagine for ea moment that almost all future consumption is insolvent because the amount of it has been pulled forward via credit creation is absolute to such a degree that the only way to create it again is to destroy the tie that binds. That may be a solution but everything and everyone involved will not and cannot allow this to happen, since the whole mechanism is integrated into the beneficiary cycle of actors whom cannot and will not be able to adequately adapt to the coming “clearance”.
It is fascinating to look at all sorts of prices that are beginning to come down due to consumer non-participation via inability to bid. As the whole chain shock takes place in supply and production chains there is huge impetus to alleviate it somehow. On the global scale governments will attempt to manipulate the process until it comes unglued and defenestrates those manipulators into the abyss.
Even countries like Russia or Saudi Arabia that have oil production will want to be able to have some sort of creation mechanism for emission that is not tied to a static product. Nor is it viable long term since it will not adequately accommodate technological progress and alleviate the strain necessary for growth mechanisms during the phase of technological implementation cycles.
Here we reach the problem of gold reference point being the be all and end all of the global trade and clearance system. Elasticity during clearance phases of the cycle when the economy is crashing and when it is growing beyond the ability of funds to adequately support its’ growth is nil. Nobody realizes this aspect at all. This will be apparent during phases of conflict since when gold trade stops and countries go to ‘mobilization’ war footing economies there is no inflation since backing of production is implicit by the explicit need present in the country to survive. Ergo, if one takes this aspect and applies it into segmentation of various processes one can understand how certain industries emerge even though no overt funding takes place, yet covertly they exhume that necessity which stimulates their need via mechanisms unseen until they take their place in some meaningful space within the economy. Startups are not these mechanisms since all they do is streamline technological clearance to already existing problem possibilities. However new fundamental metals or energy products or theoretical advances seem to be the vehicles where these things can manifest themselves.
On the cusp of this creation mechanism one can speculate several interesting thoughts. Imagine for a moment that just like with Schrodinger’s Cat where the Cat is simultaneously alive and dead in a single moment of time, we have trade mechanisms tied to a single and infinite exchange mechanisms of some form of clearance be they Petrodollars, Gold Fixed Exchange, Imaginary Money, or some other facilitator. Now for a moment imagine that on the hop from a single clearance mechanism there is a bifurcation into a multitude of various mechanism that is both more stable since the clearance of one mechanism will become elastic towards not its’ availability but its’ desirability and other factors. Ergo a sort of Ferris Wheel with Hub and Spoke Models that is constantly changing shape and direction of those spokes where alleviate pressure on a various sprockets in the turning wheel of trade, growth, and global development.
Be well dear reader.
http://www.zerohedge.com/news/2017-02-09/grant-williams-death-petrodollar-and-what-comes-after
World in Flux
Europe is slowly coming to a faulty realization. But the reality is far harsher than what they think.
“The world has entered into highly unstable times and Europe is sitting over quick sand. This may absorb the entire European construct in no time without any warning; a small, minor random event will be enough. A butterfly can flap its wings in Beijing, causing a storm to tear Europe apart.”[1]
The dichotomy here is that their perception is that this is an externally caused ‘tumult’. It is not, nor has there ever been. Europe is suffering because of Europe first and foremost. Inability to answer and deal with the times is the problem. Placing blame on other countries vying for their own interest is stupid.
Most troubling is the inability to form even national plans of action in regards to re-positioning internal ‘rules’ and conditions of operations for people. Germany is in complete financial hunger games moment.
“Germany’s top regulators met about 50 envoys from foreign banks on Monday to explain how they could move business to Europe’s biggest economy after Britain leaves the European Union, German financial watchdog Bafin said.”[2]
It is fascinating that the expectation to hold a monetary center once Euro Zone collapses due to debt issues is the paramount issue. I am certain all those banks will have something in Germany, BUT the flow of money will not be taxed by Germany nor flow to Frankfurt. The issue here is that the financial taxes on trading Europe inacted and the amount of control they like to exercise. Neither issue invites confidence. Hidden aspect that nobody realizes that is coming is the clearance of trade goods and services in the markets will become a sovereignizing issue, thus control will shift to the export market. Fairly obvious in the U.S., China, and other places.
The question nobody asks after Euro Zone and EU falls apart is what national interest blocks will the continent have? Since interests of the Nordic countries, Eastern and Central Europeans, Western Europeans, and Mediterranean nations all have different priorities. This extreme divergence is the unknown and how it manifests Is the fear of the elites since during this time those whom direct and lead get to shape things for the future.
Most importantly people ignore the stories that haven’t been in the news. Lybia, Yemen, Egypt, Greece, and others have severe problems that impact Europe, yet it is all quiet. People continuously ignore what is in front of them to look at what is shown them via media pictures.
[1] https://www.neweurope.eu/article/donald-trump-pitting-russia-china-dangers-european-union/
[2] http://www.reuters.com/article/us-britain-eu-frankfurt-move-idUSKBN15E1T7
Be well reader
Geopolitical Trends for January 2017
Geopolitical Trends for January 2017
Europe is shifting right which is fairly apparent by now. Quite a few elections should
occur this year from France, Germany, Netherlands, Norway, and Czech Republic.
Italy may also have a very big upsurge in popular shift with the 5 Star movement
likely to do well unless things are “adjusted” against them.
U.S. should finally have change at the helm in a few weeks. The fear of directional
change it is having on other global actors is interesting.
Turkey may reap a peace dividend if the agreement on Syria holds. In the past three
months the lira depreciated against the dollar by about ~17%. Deficits it has are
widening which was more or less understandable, energy and payback of debt in
foreign currency by enterprises and other actors is what is driving it in my view.
Reforms that will transition it into an presidential republic from a parliamentary
one are taking shape.
Two thoughts. It will stabilize and streamline decisions that need to be taken. Dissent
if squashed unabatingly may completely destabilize the country into civil war. I am
going to provide an example.Russia ended the war in Chechnya by coming to
agreement with the population, ergo at least half of the locals on the ground
supported re-integration and terms proposed by the central gov’t. How and through
what operations it was achieved afterwards is secondary. Turkey on the other hand
attempted and for a time succeeded using this model as well with the Kurds. However,
as of right now it is apparent that the compromise was breached a while ago and the
terms of reconciliation are simply not going to be followed by either side. Turkey will
attempt to purge any dissent in political sphere which will leave only the military
outlet for those locals on the ground. Perception that external communities of Kurds
that are already integrated into Turkish society is enough to coalesce the issue is false.
There has to be an agreement with the poor populous instead of the “elites” of that
society that is essentially outside.
Syria seems to be slowly transitioning into a positionary war. Which means that in the
next few years the processes will shift from military to politics even if no gains are
made on the ground by either side.
Korea is quiet even though the political process there with the impeachment and other
corruption scandals are gaining steam. What people ignore is during times of turmoil,
actions that were thought of as impossible can occur because leadership devolves
downward. This occurred in Ukraine after the presidential overthrow, when the
“acting” president essentially ordered military operations against Donetsk and
Lugansk. Focus should be made on the interregnum if Park leaves office and someone
assumes transitional duties. The Unification of Korea(s) is the event people
significantly discount. Note the headline “North Korea will declare WAR now” in the
express paper. Just saying the likelihood increases for this action.
The pressure on North Africa is bound to increase significantly once deportations occur
and migrants can’t get to Europe. The effect it may have will not be apparent for some
time.
Yemen is also forgotten. Problem with it, is that Saudis’ do not understand the
dynamics around them and have no consideration of the global influence around them.
Right now there is a chance to come to terms and “gracefully” agree to end the conflict.
Perhaps it will be seen as a loss but one that is recoverable from. In two to three years
it may be possible for Yemen to actually claim victory through force. If the Yemen
offensive fails, and it will due to various factors favoring those on the other side from
terrain, morale, initiative, maneuverability, and so on, there will eventually come a
simple question. Why back a looser? This question will be asked by the global
community that supported the conflict when it was begun. Changing the narrative
after cumulative losses will not be possible. Mentality in the east of “my way or the
highway” without realizing that sometimes giving something is better than losing
everything, will take precedence. My expectation is the conflict will spiral out of
control, completely unexpectedly. Especially since China is beginning to establish itself
in Djibouti on the other side of the Bab-el-Mandeb.
Be well dear reader and take care.
http://nationalinterest.org/feature/saudi-arabias-yemen-war-isnt-about-sectarianism-17581
http://time.com/4552712/yemen-war-humanitarian-crisis-famine/
http://www.salon.com/2017/01/02/yemens-children-starve-as-war-drags-on/
https://www.yahoo.com/news/yemen-offensive-looks-break-deadlock-151916529.html
http://www.reuters.com/article/us-china-defence-djibouti-idUSKBN0P51CV20150625
Housing Interest and Income.
What many ignore in the interest rate aspect when gauging housing affordability. Ergo, measuring the rate increases in mortgages a la decline in purchasing power and increases in mortgage payments, will be compounded by several factors. Overhead costs, such as: property taxes, water, and others will continue to move higher by government necessity until implosion forces them down, somehow.
In order for inflation in “assets” like housing to hold up pricing and push them up there needs to be a wage-inflation spiral, which thus far cannot materialize due to the jobs not being available for people. Not even mentioning the increases in salaries for those already working.
If during the course of this year 2017 we get to 5% to 6% rates for mortgages housing prices should get some reality into them. Ahem. Historically those are reasonable rates but check for yourself https://fred.stlouisfed.org/series/MORTG.
Another factor most people ignore is the slow exit of Freddie and Fannie will eventually occur. By this I mean the taxpayer will one way or another curtail exposure in both entities. Both FHFA and GAO will slowly push for reduction of possible exposure to the entities. Securitization of debts produced and sent to Freddie and Fannie will decline, while debts issued by them should decline as well. Ergo, banks and others will have to hold more on their books by virtue of not being able to sell and keep servicing thus churning loans and refinancing. Refinancing is essentially imploding since those whom could, already did, and rates already moved up significantly to lock everyone in their place.
Two more interesting aspects most people ignore. The massive amount of private investment capital that went into single family residential and general public housing that is going to be locked in until they decide to exit, which usually precipitate a stampede out. Considerable inventory that was most likely hidden by refinancing that was solvent until rates moved up, but won’t be once payments need to come from real earnings instead of appreciating re-financing to pay for their carrying costs.
Be well dear reader.
http://gao.gov/products/GAO-17-92
https://www.fhfa.gov/Conservatorship
https://mishtalk.com/2017/01/04/refinance-window-closing-fast/
Trump Presidency Ramifications.
Trump Presidency Ramifications.
Today as the markets open to an agony of negativity, people should be quiet positive about the future. Whom is president matters only in the sense if of belief in those people fulfilling the functions they were elected to do, ergo bargain on your behalf and keep you secure as a nation. Presdients do not impact your own personal success that is still up to you. Struggle, hard work, and perseverance on the part of you, alone or part of a collective group is what brings success or failiure.
It is uplifting to see some sort of change or feedback into the system from the electorate and population at large which was called stupid and moronic, by the powers at large. It is very absurd to know what is best for someone without letting them have some sort of representation they can believe in. It is tough to rectify ethics and morals in system which plays favorites or established division income so ingrained in society that it eats at the core of said society to make it rot as floatsam in a swamp. Perhaps some of the changes we experience will not be politically correct, but they will benefit the majority of the populous in this country, and that is what national leaders are elected to do after all. Lead others and ensure the ability to prosper and be secure in your person or property as we live our lives.
Foreign entanglements need to end.
Taxes need to be brought into line.
Privacy needs to be restored.
Government bureaucratic layers peeled back.
Turkish Economic Conundrum and Kurdish Emergence
Turkish Economic Conundrum by LushFun
Contrary to popular opinion that money wants tranquility and quiet of most emerging
markets Turkey held up the most, especially if one were to take into account currency
fluctuations. This is in light of all the political tumult of the past several years. It has been
one of the relatively stable emerging markets, especially in regard to foreign exchange
fluctuations.
This is likely to begin to end. It has less to do with politics but with the overall
orientation of the economy. Ergo, export oriented economic growth reliant on foreign
participation in various sectors; from tourism, energy, manufacturing, logistics services
and so on. Balance of trade will have a tough hurdle to climb in being able to make up
tourism currency flows and export market losses. Oversaturation of global markets and
increased competition make marginal producers the expendable capacity that gives up
utilization and operating fund flows to other participants. In some ways Turkey is reacting
to these aspects by fostering a more flexible financial system by expanding Islamic banking
and pushing down rate policy. However, there is a big problem on the horizon.
Coming dollar bond maturities in the financial sector that will begin to come more
frequently from the beginning of 2017 will pressure foreign reserves. This will create a drag
on the financial system since many of the banks have borrowed in foreign currency, U.S.
dollars and Euros mostly. It is very likely that the outflows of these funds will have a
multiplier effect on the Turkish economy that will magnify the pressure on the Euro/Lira
and U.S.Dollar/Lira, exchange rates. Posture of Turkish economy currently would have a
tough time adapting to these headwinds. A competitive devaluation in an environment
where utilization of factories and productive assets is levered via an ability to arbitrage
marginal demand in key industries, such as: tourism, construction, logistics, food
production may work over long periods of time. But, during a short to intermediate period
it would impact the ability of raw material imports, marketing, and other facets. The
coming crunch may influence a severe devaluation in Turkey over a two year period, to align
purchasing power carried by its’ potential markets of export, Russia and former Soviet
States, and the Middle East.
Math that is fairly straightforward. Total foreign reserves were around 112 billion dollars of
which 19 billion dollars were gold, about 1 billion in SDRs and the rest in other convertible
currencies, mostly dollars and euros. Ergo, 92 billion dollars with a rolling 12-month
rolling deficit of -27 billion dollars. At around 2-3 billion dollars in deficit a month Turkey
will face tough choices in the coming 18-24 months if one considers the contingent
liabilities of its government, corporate sector, and financial firms at around 74 billion
dollars. Something somewhere will have to give to curtail the outflows in light of lower FDI
and balance of trade aspects.
Three internal pressure positions have to be resolved. Lower growth and unemployment in
regard to marginal slack due to trade and tourism disruption. Immigration and
non-integration of culturally different minorities, ergo, Kurdish population and the
millions of Syrians whom are now living in Turkey. Finally Turkey will have to reconcile
capital constraints in the financial sphere either through capital controls or injecting of
capital that has to come from somewhere to offset the maturities of upcoming debt. Note
the last aspect is slowly but actively gaining some traction with attempts to entice FDI into
various sectors and a formation of sovereign wealth fund, but thus far it has not brought
the necessary results.
All three internal positions come against external political vectors. We can reconcile them
as following. North that includes the Post-Soviet space, South that involves Middle-East
and Africa, and West that include Europe and U.S.. Western vector is coming into increased
scrutiny due to conformity and compliance expectations that are in conflict with Turkish
power verticals being established to posture society for stability during the shifting phases
of re-configuration of politico-economic re-alignments. Abandonment or attempts to
significantly leverage away will put in danger the financial system and disrupt the last
remaining export markets Turkey is now dependent upon, while it mends its other outlets.
Contention for economic and political representation in light of the decline by minority
elements that are the most marginal on the economic curve; Kurds and Arab refugees from
Syria has to be addressed to mollify both the Western vector and situation at large.
Thus, Turkey is relegated to push forward maximalist leverage upon focal points where
minimalistic returns can be garnered. In some sense this is a path of desperation where
each of their external vectors may extract optimal concessions. Each concession will limit
the flexibility of future trade-offs and we can see this in Russian reconciliation position
that will lower the amount of Saudi and other financing that contends with other
geopolitical positions in the region.
There is one player that has the maximum amount of leverage that can provide Turkey with
breathing room, via opening of markets or capital participation. China, has the most
leeway to leverage a position in the economic space. Albeit, there would have to be an
integration into a larger scope system to yield out results that would make this
interventions worthwhile. Thus, Russian reconciliation ties into this tandem to create a
land bridge that would make it possible to approach such a proposition. However, the
economics of such a proposition are moot even under the best circumstances.
Right now we can see there is a hidden temporal constraint. It is tied both to economic
imperatives and necessity to stabilize the social structure into conformal amplitude that
could allow for development. Turkey still has a few cards it may play. NATO exit or frozen
participation may provide certain concessions but they would not be long term fixes. It may
freeze participation in EU customs agreement which be a fairly destructive undertaking,
closing the last market outlet it has. Such an event is highly unlikely though.
Certain hypothetical events do come to mind. If Turkey threatens to leave NATO, where
would it go? It is possible that it would be able to reposition into CSDP(Common Security
and Defence Policy) before exiting NATO, which would ameliorate differences with
European members, such as; Greece and other Balkan states, while simultaneously provide
it with the aegis of remaining part of the West, but on different terms. A bridge to
re-configure the relationship that would perhaps provide funds and gravitas to both EU
and Turkey. Granted the likelihood of this event is negligible it would allow a far more
flexible relationship to both parties in their foreign policy and solve short and intermediate
problems. It would also effectively provide Europe an exit strategy from NATO similar to
the Brexit event, only on a different strategic plane. It may also solve Turkish procurement
and technological problems, especially if one considers they already participate in some
OCCAR(Organisation for Joint Armament Cooperation) programs. An event such as this
would require major concessions from Turkey and Europe but would allow a competing
alliance that is under NATO umbrella but without compliance issues.
If we look at foreign policy Turkey aligned with, we can clearly see a policy where the
foundation backed into dominance to put forward an agenda that others should coalesce
into. This proved to be a failure for various reasons. An integrationist approach to gain
from overarching agreements between states would have yielded more robust results with
fewer strains while removing a winner take all mentality. It is obvious that transitioning to
integrative approaches that are feigned at by the leadership right now are a matter of
survival and once freedom of action returns, defecting to a different strategy may likely
occur. Trust internationally to view Turkey as a consistent actor is fairly low. Dependence in
trade, weaponry, raw materials, technology, capital, and other aspects, puts forward an
increasingly deterministic and opportunistic action map.
What does Turkey want from the United States? Even if Gulen was given up it would not
address any of the problems Turkey currently faces, other than provide it with expendable
clout. Access to a swap line from the Federal Reserve similar to what the ECB received
(during 2008 crisis) to bridge maturity gaps and secure a financial transition would be
extremely enticing. However, the likelihood of Turkey providing compliance guarantees
would be questionable. Technical transition and development assistance for local armament
industry is also unlikely.
If we put ourselves into the position Turkish leadership is currently in, we can somewhat
understand how their directional prerogatives change as various problems need to be
solved. Influence from migrants that fled into Turkey is completely ignored but it creates a
background of internal economic competition under the auspices of collapsing export
market outlets. Likelihood of civil conflicts expanding from current suppression attempts
by the regime in South-East is increasing. Agreements that could have allowed cooperation
were abandoned in light of attempts to re-format the regional relationships completely. Yet
the gains that were prescribed from said change of relationships are now necessary to
alleviate the strain on socio-economic actors. Re-conciliation is now a necessity instead of
an option, and yet the terms became far worse than before. There is a great need to
consolidate the body politic to generate enough cohesion in Turkey for the transition, which
we can somewhat glimpse right now. Interest groups will have to be brought to an
understanding that flexibility to placate their interests is much lower, which in my opinion
is going to be quiet unlikely. Under resource constraints nationalists, secularists, and other
–ists will press their political clout to undermine others on economic planes to gain
consolidation in various areas. Bringing objectivity to keep them all at bay away from
pressing their opponents too much, resulting in capital flight will be a very tough
proposition.
Hypothetical scenario for devaluation is as follows. Balance of payments deficit erodes
reserves closer to Forex liabilities(debt). Forex deposits in the system are taken to procure
material or service imports necessary by their owners. Banking system as a whole has
Forex outflows with Forex maturity mis-match which begins the devaluation process as
flows are directed one way to close out the maturities or purchase obligations by economic
actors externally. The crisis begins before the Forex liabilities(deposits) and borrowings
derived from them mature in the system. This can be seen in the example with Belarus. One
can see that maturities were set to be paid back after the devaluation crisis was under way.
We can also see from Malaysian example that it is possible to overcome these tumultuous
periods if one is pre-emptive in how the economy is positioned. The problem for Turkey is
at this juncture there is an attempt to foster growth and not to impede it in any way.
Towards winter if energy prices spike in regard to natural gas prices and balance of
payments begins to turn significantly negative investor confidence may begin to wane. As
curtailment of FDI gains momentum, herding impact of foreign investors will manifest in
the short term portfolio investor space, as they will begin an exodus slowly at first and the
forex flows will begin to increase outward even as balance of trade deficit shrinks. FDI was
what held up the balance of payments in 2015 (p25). FDI has turned down significantly,
if/and/or when it turns negative to cover credit used to deploy those funds in the first place,
there will be a significant strain and necessity to make tough choices on the part of Turkish
government. Pre-empting an investor exodus via the Malaysian example may be better if it
is done before their exit is underway and any psychological panics develop. Once investors
head for the exits cutting them off from an exit would create pandemonium and exacerbate
the possible impact, magnifying the damage to the Turkish economy. Dynamic in shorting
Turkish Lira Bonds in order to satisfy hedged exposure by FDI investors and portfolio
investors, especially large institutional ones, will be the prevailing headwind under a
culminating scenario, in all probability these hedges would have been established prior to
digressing macro factors influencing the flows and by cutting off the marginal investor,
Turkish gov’t would essentially strip liquidity from these instruments precipitating the
actual devaluation and rate spikes.
Kurdish Emergence
Kurdistan is getting closer and closer to emerging as a national entity. There are only
questions of when, how, and in what form it will emerge. Shifting foreign ties influencing
Turkey reinforce the necessity for a Kurdish entity to exist from the point of view of United
States and Europe. Not only have the Kurds been armed and organized into a fighting force
both in Syria and Iraq but they have been provided backing in some form from both U.S.
and EU. Turkish compliance thus far prevented that backing from imparting on Turkish
national interests, however, this is most likely at an end. Whether Turkey attempts to
blackmail NATO in addition to EU, no longer allows for a stable calculus in regard to its
actions. Desperation in order to cure economic, social, international, and other conflicts
simply detract from the ability to bargain in good faith and follow through on promises
provided. This has become apparent to both EU and U.S. interests in the region. Others,
Saudi Arabia, Qatar, U.K., Egypt, Jordan, etc. are coming around to view Turkish influence as
destabilizing and will most likely side with the idea of pushing them out of the region. How
that is done is another matter.
While, Turkey did negotiate with two out of three entities in Iraqi Kurdistan it is the
third entity which proliferated in Syria, that is on the cusp of being reinforced by foreign
interests. National emergence of a new sovereign and perhaps unified Kurdish entity
provides leverage that may be extremely long term in the region. Considering ramifications
from the military coup attempt in Turkey, long term purges in the armed forces, and
general decline in morale there would need to be a significant effort to re-integrate the rift
between the armed forces and polity at large to impede the situation from spiraling out of
control in the South-East of Turkey.
Syria will most likely give up the North to a new Kurdish entity under pressure from
the West. When this event occurs the ramification will be apparent to everyone. A buffer
state between Turkey and the Middle East will emerge, that will throw its’ weight into a
conflict of massive proportions, that was previously directed southward will be pushing
north. Benefits of such an entity for the West are very large. Destabilization of Turkey and
recognition of the new entity will go hand in hand, since any agreements crafted in regard
to Iraqi Kurdistan by Turkey and other Kurdish ‘isolationist’ actors will be broken.
One has to understand that thus far the proportions of the Syrian civil conflict were
perhaps half to a third the proportion of the possible conflict that may conflagrate Turkey.
This is based simply on the amount of forces in the region Kurds can bring to bear in sum
total and country population sizes in regard to possible contentious groups. Ergo,
approximately 300-500 thousand if one includes Syrian, Iraqi, and Turkish, Kurd
amalgamations, while a population intensity of around 20-40 million. Considering the
terrain and the possible scope and width of the area in question, the disruption would be
significant. Another influence point, that Turkey under-estimates are the possible
sanctions West could bring to bear against it, similar to what happened with Russia. This
point is completely ignored and in a sense Turkish government is quiet oblivious to such an
occurrence. In regard to forcing a solution and peace processes after the beginning of full
scale conflict, Turkey will be directed after some time by economic fallout it will be forced to
bear, especially if one overlays multiple events into single timeframes.
Kurds as an entity will have balance of power shifts that will favor their expansion(s).
Economic cooperation from the West, technical and military assistance, certain guarantees,
and the overall background of inverted situational parameters by their adversaries. It is
important to keep in mind, that just because one is an important state in the region, one is
not an irreplaceable actor. In the world of national interests irreplaceable actors don’t
exist. If one were to be objective the ability of a “Greater” Kurdistan to exist will provide
tremendous leverage to anyone whom will be given access to project power from said
entity. If one imagines having basing rights for airfields and port facilities to an entity that
is going to be dependent on your cooperation for the next two, three, or more decades to
form institutions and gain recognition and trade ties from hostile surrounding actors.
Hence the ability to shape and shift foreign policy through that foreign entity, especially if
conjunction of interests aligns over said time frames persist.
Catalysts on the horizon for acceleration of said emergence. While Turkey did go
through political turmoil and trade turmoil, it has mostly been spared a financial turmoil
that permeates a significant balance of payments crisis. It is likely that such an event will
occur in the coming few years and wreck havoc on the fragile stability that is eroding in the
business sector. Once the cumulative factors overlap they will create an impetus that is
internal in nature for separatism by the South-Eastern polity that has economic
imperatives. Imagine for a second that the Turkish national entity is under sanctions,
monetary control imposition, and social unrest. In these circumstances as the outlet to
compromise and negotiate a flexible solution is beyond reach due to internal political power
struggles, there will be only one solution for the fringe groups. That is to exit the entity.
Under such a background of cumulative constraints, being outside the system will outweigh
being part of it.
Kurds are slowly being induced in the direction of unified political field. Irrespective
of control in various regions, there is a push for an overarching position regarding
fundamental political framework that would accompany a sovereign entity. “Young Syrian
Kurds launched a new initiative on April 1 to give voice to the Kurdish youth who demand a
unified Kurdish position amongst political movements in Syria.” is one of a number of such
attempts to unify social strata. PUK-Gorran party unification in Iraq creates a platform
where an aggregation of national interests condenses the political spectrum behind itself to
create a more manageable push in directing initiatives. In light of these changes it is
apparent that “isolationist” Barzani(KDP) political entity will have to back initiatives they
have shied away from, or risk being eroded in the political spectrum. If a referendum were
to actually occur in Iraqi Kurdistan it would create a platform unto which other extra-
territorial groups could attach themselves. Either; politically, deterministically,
idealistically, or in other ways that would further their aims to carve out an entity.
References:
- http://www.dailysabah.com/economy/2016/08/11/turkeys-current-account-deficit-increases-in-june-amid-declining-tourism-revenues
- http://www.dailysabah.com/economy/2016/07/26/turkey-received-831-million-foreign-direct-investment-in-may
- https://www.imf.org/external/np/sta/ir/IRProcessWeb/data/tur/eng/curtur.htm
- http://www.oecd.org/economy/turkey-economic-forecast-summary.htm
- http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=21803
- http://www.bloomberg.com/news/articles/2016-04-11/turkey-duels-colombia-for-safest-stock-gains-in-emerging-markets
- http://www.tcmb.gov.tr/wps/wcm/connect/TCMB+EN/TCMB+EN/Main+Menu/STATISTICS/Balance+of+Payments+and+Related+Statistics/Balance+of+Payments+Statisticss/Balance+of+Payments+Developments
- http://www.avrupa.info.tr/fileadmin/Content/Downloads/PDF/Custom_Union_des_ENG.pdf
- http://www.oecd.org/turkey/economic-survey-turkey.htm
- http://www.euractiv.com/section/enlargement/opinion/accommodating-turkey-in-esdp/
- https://www.newyorkfed.org/medialibrary/media/banking/international/10-07-15-Turalay-Kenc.pdf
- http://aei.pitt.edu/2002/1/PB05.pdf
- http://www.pism.pl/files/?id_plik=16619
- http://www.edam.org.tr/en/File?id=129
- http://www.bis.org/publ/bppdf/bispap54c.pdf
- http://cepa.org/sites/default/files/documents/Central%20Europe%20Digest,%20August%201,%202011_Zlotnikov.pdf
- http://www.nsi-ins.ca/wp-content/uploads/2012/09/2012-How-to-prevent-the-next-crisis-Malaysia.pdf
Kurdish Emergence References:
- http://www.oasiscenter.eu/articles/peoples-of-islam/2016/04/28/which-kurdistan-are-the-kurds-fighting-for
- http://www.reuters.com/article/us-iraq-kurds-presidency-idUSKCN0PJ1U320150709
- https://www.yahoo.com/news/kurds-declare-federal-region-syrias-north-officials-114048729.html?ref=gs
- http://www.atlanticcouncil.org/blogs/syriasource/a-kurdish-youth-initiative-to-unify-the-kurd-s-political-vision
- http://fpc.state.gov/documents/organization/229895.pdf
- http://www.al-monitor.com/pulse/originals/2016/05/iraq-kurdistan-gorran-puk-kdp-agreement.html
Puerto Rico bankruptcy? Why and Where does it go next?
by Lushfun
Some questions arise from the coming ‘bankruptcy’ of Puerto Rico, which technically cannot go bankrupt. New York and Texas have as government workers about 1 out of every 7 people in their civilian labor force, while Florida is at 1 government worker out of every 9 people. Puerto Rico is at around 1 government workers out of every 5 people. While this number has gone down from 2008 or so it did so with migration off the island. So from around 1.133 million people 229 thousand are government employees. Which hides the fact that quite a few of the industries on the island are essentially government owned and run. The quiet reality is that there is simply too few dollars entering the island and the economy has been set up in such a way as to make it impossible for it to recover. Bailing the island out will only make certain that the next time the funds needed are larger and will not solve the problem. Structurally the way it operates has to change and the whole distribution of money within the system through essential government control of all if not most major industry will end one way or another.
It does not matter that the wages are lower than in the U.S., it does not matter that the island has “tax incentives” for businesses to operate upon it. What does matter is that the nepotism and regulations on the local level essentially make certain that investing in a foreign country is more likely to succeed than in the local economy. Sales tax becoming VAT of over 10% and other improvements to make the dead economy keel over are paving the way for insolvency. Tourism is dead precisely for the fact that costs for tourists are not competitive with any and perhaps all Caribbean countries. Why would a tourist pay New York prices for steak and wine in Puerto Rico?
Where will insolvency lead? Well theoretically when payments shut down due to them being re-directed to pay creditors government employees will no longer be paid. There will probably be court battles that are ongoing and future going but none of this will make disruptions go away. If the debt Puerto Rico was nullified tomorrow, none of the structural problems go away. The sales/Vat taxes will still be there, the tourism sector will still be dead, the government overhead will still be there, and insolvency in major enterprises will persist.
It is very likely the pension debt Puerto Rico has will be nullified, or to put it more realistically pensions will stop being paid because the amount of cash coming in will not be enough to cover them. Real Estate market will have to have a complete collapse for any enticement for non-island money to pour into it.
The truth is Puerto Rico will be a test case to a degree. Of How, When, What, and to what degree things can be turned on or off and the consequences of said actions in regards to a population. Yes, I know this sounds terrible but I am an observer and my opinion is just that. I think in a certain way there was a perception by the government in PR that they could have the last say while the flows of money were kept going to ‘stabilize’ the everlastingly ‘deteriorating’ situation. The reason I say this is that funds required to keep the system afloat increase constantly as expenses rise even in a contracting economic environment. I wonder if the governor of PR ever considered making a Plan B or a Plan C where the only way out was to abrogate pensions and get rid of at least half of government workers. It would have been possible to restructure things were there some realistic movements 8 years ago, but alas wait and prey is what occurred. True there were a significant decline in government workers, but it was in the context of an exodus of people out of the island. I think to a degree the governor will be deprived of financial ability to maneuver and will be sidelined in the matters of making decisions in that sphere, and the rest will flow out of these constraints.
“The Authority will ensure the payment of debt obligations, restructure the workforce of the Commonwealth government, and reduce or freeze public pensions. It will also supervise the entire budget of the Commonwealth government, including its pension system, legislature, and public authorities; and all leases, union contracts, and collective-bargaining agreements.”*link on bottom*
Hopefully whatever happens the people of Puerto Rico will do well and it will pass quickly.
Be well dear reader, stay healthy, and hopefully summer will visit us soon.
http://www.economicpolicyjournal.com/2016/05/breaking-puerto-rico-will-declare.html
http://www.governing.com/topics/finance/gov-congress-puerto-rico-pensions.html
*http://www.thenation.com/article/orwell-in-puerto-rico-congress-promises-a-new-dictatorship/
Status economics and ideological regression
Status economics and ideological regression
by Lushfun
If one slowly skims through the decay of global ‘growth’ and the economic implosion underway there seem to be three or even more paths that are coalescing together.
Path One.
Social groupthink is disintegrating as based by rating implosion via TV and other channels of mass conditioning. This carries with it dis-anchoring of what it is to mean of a person to belong to a specific socio-economic group. Don’t get me wrong the rich know they are rich and the poor know they are poor. The problem is in the meaning that carries forth for the people in between. These meanings are not just disappearing or being shaped into things we know nothing about but are diverging into aspects we have no understanding of in theory. Ergo imagine you are making seventy grand a year but can’t afford to buy any “assets” due to overhead such as; student loans, rent, food, insurance costs, and so on. Theoretically you are productive, yet you have no benefits other than the ongoing treadmill of your life, in an, as is condition. Without meaning or some foundation people in such ‘constraints’ burn out. This is easily seen in the treadmills of HR departments that are harvesting skill-set graduates into motion within a set environment where they have low-to-no growth prospects but are niche contributors, easily replaceable yet have no way of influencing their environment since their time constrained. Meaning is displaced by being, and there is no big idea to fill the void for people to create some sort of foundation upon. It is no longer ‘necessary’…
Path Two.
Social norms of what people can, may, or should do is going away. There is no religious constraint even for the fairly religious strata in society, it is simply replaced by either “I am going to get mine whatever it takes” in relation to some object, or a completely random set of behavior that makes people operate in the grey-zone of society while pretending to comply with society at large. Only fear of what may or may not happen is constraining these outward manifestations, but only to a degree. Monetary excess by some is dangled in front of public at large, while images of gluttony bombard the advertising channels of the internet, TV, radio, and other venues for the destitute to feast upon. There is some sort of idiotic self-righteousness that is put forth through the delivery of want for the sake of want because of want in idealism of want. Yet, even for people on the screen these things are hollow.
Path Three.
Trade and businesses are leveraged for growth in a world of imploding demand. There is no expansion of the cycle in the future unless there is a big wipe-out of inventory and credit overhead that will not go away to allow for the cycle to re-set. Even a big war would not solve this, since any aftermath demand will quickly be saturated due to better technological progress and access to raw materials already stock piled. There is no new way of doing things that allows consumers to consume without bending future demand forward by constraining credit. Other thoughts do not enter central banking heads for there is no other way to solve things in their mind. We are approaching the wall and it is us.
Imagine a world where costs are growing daily but income is imploding monthly. How long will such a world last? It may outlast you or I but it cannot outlast itself. Perhaps, prospects of evolving into some new way of social interactions is underway but I doubt it. Society is extremely set in operating the way it can, until it can’t no longer.
1) really liked this article: http://www.unz.com/ldinh/boys-ii-bums/
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