Geopolitical Research

CS has passed the point of no return. A likely controlled failure offers policy makers an opportunity to engineer a sector consolidation and a contained credit squeeze that could ease inflation pressures. That would allow for an earlier pivot by the FED and ECB.

Christian Takushi talks about inflation in 2023 and the outlook for this decade  Even if inflation would normalise down to 4% by 2025 the cumulative impact of inflation during 2022-2025 could have destroyed more than 20% of the purchasing power of peoples' savings. It is a massive wealth destruction, but also a wealth transfer that benefits indebted governments and households.    Independent Balanced Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi - 12 Jan 2023 - Switzerland   If you want to have instant access to Takushi's independent research you can write to info@geopoliticalresearch.com   Disclaimer:  No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis.   This Channel has been designed to provide additional complimentary information to our newsletter subscribers. 

US based Financial Sense's Cris Sheridan interviews Swiss-based Macro Economist Christian Takushi on 29 Dec 2022. - In this new Cold War Europe finds it has no friends - it's Everyone for Himself  - America strikes back and stuns Europe  - The rest of the world is rising and decoupling from the West  - With Total Debt near 300% of GDP, Western governments seize markets and sideline central banks by issuing massive state guarantees on loans & credit   The interview is a courtesy of www.FinancialSense.com If you want to have instant access to Takushi's independent research you can write to info@geopoliticalresearch.com   Disclaimer:  No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis. We do not work with conspiracy theories.    Independent Balanced Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi - 3 Jan 2023 in Switzerland

By October 2022 Berlin & Paris had ascertained that Western Europe really has no friends at all.  Five things of strategic importance that consensus is overlooking and media barely reporting about.  Disclaimer:  No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses, available information and our own analysis. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis. We do not work with conspiracy theories nor informers/insiders.   Independent Balanced Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi - Dec 2022 in Switzerland

(released Sun 23 Oct 2022). Rishi Sunak may be the leader the UK and the world need the next two years A year of political upheaval may have been the "blessing in disguise" that opened the door for Mr. Rishi Sunak to become the next UK Prime Minister for one of the most challenging periods in post-WW2 history.  The UK has two formidable candidates: I humbly think both Mrs. Penny Mardaunt and Mr. Rishi Sunak are fit to lead the UK and the free world in the years that lie ahead. A joint ticket could be even a greater blessing for the country. A Sunak-Mardaunt government or the reappointment of Johnson and Truss cabinet members could unite the party and allow Britain to take advantage of its regained independence post Brexit. The UK can be both a close US ally and also a nation rebuilding the relationship between East and West (emerging and developing nations want trade opportunities that improve their geopolitical and security situation - the UK is a respected geopolitical and military power).  The UK and the free world need a leader that brings the following to the table .. 1) Character - integrity, being thoughtful and even-keeled. The risk of nuclear war is elevated  2) Intelligence - he or she will have to understand dynamic complexities and handle multiple crises  3) The trust of financial markets - this can be a decisive asset 4) Help ease the growing West-East conflict and distrust - A well mannered British gentleman, Mr. Sunak, stands out with his Asian connection and understanding. As nations need to rebuild supply chains outside of China, the UK can play a key role with its maritime tradition and the Commonwealth. I think Mr. Boris Johnson has made a brilliant move by not entering the race (if confirmed). He has been the right man for BREXIT and in an uncertain and challenging world he might in the future lead the UK again. Downsides of Sunak: there are obviously downsides with every political figure. Mr Sunak is being criticized for being open to the advancement of Central Bank Digital Currencies research. Which has its risks (social scoring etc). But all G7 and G20 nations are working over time on it. Even Brazil, led by a very conservative Christian President. I would be careful with believing everything the head of the WEF “supposedly” says or is being said about him. I have respect for his achievements, but sometimes it comes across as if the WEF shapes and runs the world. Just because people attend the WEF forum, and have overlaps with the WEF, it doesn’t mean that the WEF kind of owns them. No single man is currently owning or running the world at his will. Which doesn’t mean the risk is not there. Nevertheless as I have said before, digital currencies are coming and governments will run them. I am not taking sides, this is pure balanced analysis. My personal opinion does not shape my research. At this juncture Sunak’s rise is stabilizing and a rather positive shock for the UK, the West, India, East Africa .. and negative for China.

The world needs a stable and able UK government to help lead the West and the Free World in the months to come.  The new UK PM should rethink the global security situation. The UK and Germany are being devastated and may never recover from this economic shock. The new PM should rethink the sanctions: The sanctions looked only good on paper. Since powerful emergency nations are not supporting it, Russia is being barely affected, the UK and EU are being devastated while the USA and Saudi Arabia are profiteering in a huge way. In two years the bankrupted EU won’t be able to defend nor rebuild Ukraine. Also mentioned: Five other areas of geopolitical-economic tension we are monitoring around the world 

America wages economic war with a triple onslaught and could re-industrialise at the expense of Europe. Europe doesn't seem to be fit for the highly complex convergence of geopolitical and monetary forces of our time.  The strong USD, a fast-paced increase in interest rates and high energy prices are reinforcing America’s Superpower status. Washington is definitely hurting China-Russia and their allies, but the biggest victim or collateral damage by far is likely to be Western Europe: the EU and UK. Some say the EU can only blame itself, and ironically Britain has been America's most loyal ally. Europe runs the risk of being devastated.  Other victims are indebted developing countries. Emerging Nations with disciplined monetary and fiscal policies superior to the G7's are likely to overcome the geopolitical-economic onslaught by Washington much better. But when they do, they are likely to move away from the USD. I expect the USD to go from 60% share of the world's reserve currencies to just 40% during the course of this decade. It will limit the extent to which Washington can simply print money and spend beyond its means at the expense of the rest of the world. Thus, following this massive onslaught, Washington is likely to want to usher in a monetary reform - retaining the initiative.  To play geopolitics,  - you need to know your weaknesses and strengths - you also need to know which assets you can deploy and your competitors' assets - you need to be exceedingly pragmatic  Risking your entire future by banking on so-called loyal friends - as Europe is doing - works only in movies. In an existential crisis, every nation is on its own, because every government's first duty is to its own people. Common interests can unite them, but they tend to be temporary.  Their differing needs and assets will lead to conflicts of interests or betrayal: UK-US relations during and after WW2. Those nations that over-emphasise how "united they are with other nations", are the ones that fail to prepare for  tough times. Washington doesn't need Brussels, but Brussels needs Washington and London. 

Britain is shining these days - Today we look at how the passing of Queen Elizabeth II is a rare event that is allowing world leaders to pause, reflect, meet and hopefully review some of our policies or reach reconciliation.  Washington is using the USD as a powerful geopolitical and economic weapon. The super-strong Dollar is causing untold pain and inflation acceleration all over the world: in Western Europe, Asia, Africa and Latin America more and more political leaders are furious at the combination of high energy prices with a super-strong USD.  On this track not only developing nations, also Western Europe could see economic devastation and social unrest. The problem is not so much how to overcome the next winter, but how Europe can stay competitive after the next winter. Will European manufacturing and jobs move to the USA and elsewhere? 

In Europe, Berlin is increasingly facing having to decide between supporting Ukraine's war effort or the stability of the EURO financial system. A crisis in the EURO Zone is gathering pace as Germany is staring at a possible unprecedented depression. As we said in March, our sanctions were not really thought through. The EU and USA have underestimated the response of the non-aligned world (more than a dozen large nations) to our economic war on Russia. Eleven South East Asian nations will follow the lead of the BRICS to trade without the USD and avoid our European payment system. Other important economies like Mexico, Argentina and Nigeria are considering their options to also reduce their dependence on the West.  Over time this will further erode the influence of the West and reduce our ability to print money and finance our massive fiscal deficits without inflation.  Takushi also addresses the possibility of the rate of inflation and interest rates peaking over the next 12 months. 

World events explained for you. Independent Economist and Geopolitical Strategist Takushi takes us through all major flashpoints around the world in just 30 min and gives you his balanced assessment.

Although the UK Prime Minister made a series of bad decisions, his ouster would send a wrong signal. Celebrations would go off in Brussels, Paris and Moscow. With the war raging in Eastern Europe and the EU in need of British military deterrent, now is the time for PM Johnson to finish the job (addressing the NI protocol) out of a position of relative national strength. Let Johnson finish the job!

A growing number of powerful non-aligned nations have enough of the West and are increasingly defying it! Geopolitical economic adviser Christian Takushi was interviewed by US journalist Ron Myers on 18 May 2022 on French radio.  Are we missing an important global shift? In our righteous anger about the desolation that has befallen the Ukrainian people and the war, many in the West have eagerly accepted a popular view: The world is with us, united in support of our stance against Russia. There is the West’s view; and that of Russia & China. Geopolitical economic adviser Christian Takushi gave a keynote speech at UBP’s Investment Conference last week – he focused on the much overlooked 3rd view, that of powerful non-aligned & multi-aligned nations (more than half of mankind). They are rather neutral and increasingly “walking away” from the West. Not primarily because of the war in Ukraine, but because of our – rampant money printing – double moral standards – threats we have used to force them to support our UN motions (our behaviour is deemed undemocratic & colonial) Rising non-aligned nations are now actively looking for ways to stop buying and accepting our debased USD and Euros. That could mark the end of our “living beyond our means .. and paying our import bills with printed paper money” Let’s rethink the condescending way in which we treat India, Brazil, Mexico, S Africa, Indonesia etc. The West is making strategic mistakes and many are reading only Western news that support our own views. That is not being well informed in the XXI century.

Most of the world is fighting inflation - it seems we are all on the same boat. We aren’t. The West’s situation is a disaster for this reasons: it is highly indebted, it has been printing money to artificially push up asset prices (stocks, bonds and real estate) and to pay for its fiscal spending. The debt is so huge, G7 central banks cannot even raise interest rates above 1% although inflation is running hot for more than a year. The West sits in a trap of our own making.

In this special analysis of the current security crisis I am focusing on the perspective of non-Western nations. It is remarkable how different it is. Among non-aligned nations some critical questions are being raised on both Russia and NATO involvements of the past. Military experts around the world are for instance reviewing the Falklands War: 40 years ago the UK armed forces surprised the world with its speed, combat skills, physical toughness and courage. Britain succeeded although the USA had said it couldn’t be done so far away from home and it would be a disaster. But Britain also deployed 31 nuclear weapons to the South Atlantic when it went to war with Argentina. Britain was thus prepared to escalate with nuclear weapons. Interestingly, and unknown to most Europeans, Latin American nations were not allowed to support Argentina - doing so would have made them combatants and a target. Experts in Asia and Latin America are asking if NATO can convincingly expect Russia not to consider an escalation with nuclear weapons when the UK itself was ready to do so in 1982? The issue is being raised especially by nations that are blaming us (the West) of a series of unacceptable “double standards”. When I look around across all continents, I have to admit that I have never seen the West this isolated. This is relevant, because our media has repeatedly portrayed that the whole world is united in support of our condemnation of Russia. It is very clear that key neutral nations believe our narrative is as one-sided as the Russian one. Our reported facts are mostly true, but we carefully omit everything that implicates us or doesn’t support our narrative. When I do the math I also realize that leaders representing more than half of mankind are increasingly distancing themselves from our narrative. That is how they call it: the Western narrative. Some of these nations are also very angry about the fact that the West used threats to force them to vote in favor our our motions at the UN. This has also unleashed a significant backlash against our (I quote:) condescending colonialist attitude. What is most worrisome is the fact that among those critical nations are strategically important countries: India, Saudi Arabia, Brazil, South Africa, Indonesia, Mexico etc. If these nations shift in support of China-Russia, the days of the US-European supremacy over the world economy would come to an end soon. I humbly believe that we need to pay careful attention at how our actions are being perceived around the world. The future of the USD as world reserve currency, the dominance of the European Banking System and our standard of living (built on unsustainable debt, money printing and huge bubbles) are at stake.

France could shape the geopolitical-political course of Europe if Macron wins a second term - especially as credibility of Germany and of the new German chancellor is at a new post-war low. From a global perspective leaders in non-aligned nations see President Macron as the most credible and constructive Western leader in this highly complex Ukraine crisis so far. I try to analyse the French elections from a truly global perspective - including the so often forgotten view of non-Western nations. These nations see most Western leaders as constrained and driven by strong domestic forces. They remember well that Chancellor Scholz was insecure and that PM Johnson and President Biden were in a terrible spot at home before the war in Ukraine, so they have second thoughts about their roles. In their view, only President Macron has been able to detach himself from domestic politics to embrace a steady course and to help avert a devastating worst-case scenario involving a nuclear Russia.  Many experts are saying the final vote on April 24 will be extremely close. I believe that Le Pen has momentum aided by disenfranchised left voters that may abstain, but Geopolitics is likely to help the incumbent. Ms Le Pen has over the years evolved, worked hard and successfully pivoted to moderate conservatives and those that desire a more sovereign France. But the war in Ukraine has changed everything. The view outside the West matters and it differs from our Western narrative: No Western leader has played a more responsible, constructive and balanced role in the War in Ukraine than President Macron. If the world was able to avoid the worst-case scenario last month, it was to some extent thanks to the cautious and wise stance of President Macron. Other Western leaders played tough, but outside the West they are seen as opportunistic rather than truly committed freedom fighters. I think many French voters understand the world has entered a very dangerous & geopolitical period and that Mr Macron has been able to help navigate France and the West through it. To some extent this may seem unfair to Ms Le Pen, who left the extreme far right to embrace a more acceptable and moderate conservative course. I personally think she deserves a chance, but geopolitics is a highly complex global challenge that few Western leaders master as well as Mr Macron - he is the safe option. In the French general public opinion the global situation is likely to play an important role this April 24th. Many criticised President Macron for having focused exclusively on the Ukraine-Russia war for months and campaigning for only 1-2 weeks. I disagree and believe President Macron did the right thing and this will be accounted to him as responsible leadership later this month. Should Ms Le Pen win, that would mark a historical turn for the republic with a woman at the helm of the country and a chance for conservatives to steer France to a more independent & sovereign course. Change can be good. In either case France has somehow something to win from candidate Macron and candidate Le Pen. The risks are not evenly distributed though.

For the first time in my long career as economist and geopolitical strategist, I’d like to share a prayer with you. It is something I’d like to do in favor of the Ukrainian and Russian people, but also for their leaders. They along other world leaders need our prayer support to find a solution for this complex problem. Today’s Scripture-from-the-Bible from Herrenhut is amazingly relevant for our troubled times. The text in German is actually slightly more insightful than the one in English in our context. Herrenhut was founded more than two centuries ago by Count Zinzendorf. He took in early Protestant refugees from Eastern Europe and gave them shelter. This gave birth to the modern missions movement. For over 200 years a word for every day has been read. Those passages are chosen long before the year begins. Today’s word is remarkable As if God were inviting us to receive this word in faith. While we can help and pray for the suffering people, we can also pray for peace and that this conflict will not escalate to the whole continent or the world. I humbly believe the risk of an escalation is significant. Let us pray for our world leaders - they need our prayers more than at any time since 1962.

Given the risks of confronting a nuclear power, kindly allow me to look at the risks of our current NATO strategy. Many experts are saying the worst case in the Ukraine Crisis is an extensive or protracted conventional war. I always try to look at what consensus might be overlooking. Our analysis points to the possibility of a massive "First Strike" by Russia against EU nations. A sober unemotional analysis shows they are the weakest link in the NATO alliance. They have no credible defence nor a credible nuclear deterrent. Article 5 of NATO is so far untested in Europe, and It is an asymmetric alliance with over 20 states with small armies and only two powerful militaries that instil respect. Also worthwhile noting: The last time a NATO power was attacked, no NATO member came to help or fight: Britain's Falkland Islands invaded by Argentina in 1982 (Buenos Aires still claims them). NATO members let Britain down. We have indeed come across several scenarios where Washington and London would have to think twice before risking "Mutual Assured Annihilation" with Russia. In a conservative assessment Russia might be fighting a last desperate effort for her future. Thus, if they can’t keep NATO outside of Ukraine, they know Russia will fall. That may explain the level of frustration and desperation in Moscow. I think Moscow has already decided to consider a First Strike option if their efforts to neutralize Ukraine fails. The First Strike may also be executed if the political, human & economic costs of the invasion would get out of control. That, ironically, is exactly what Western Europe‘s intervention may result in. By not having acted before the invasion, but with massive wartime sanctions and weapon supplies to Ukraine, Western Europe may be putting herself de facto in a state of war with Russia. I pray daily for the courageous Ukrainian people, but sympathies aside, a sober analysis shows: an encircled & cornered Russia may now have nothing to lose, the West everything.

For 12 years I have been warning about the West becoming exceedingly dependent on autocratic rival powers that don’t share our values. I warned more than 10 years ago about the EU becoming too dependent on Russia, and the EU and America becoming too dependent on China. Especially after the EU began to rush to green energies that were not ready yet. The idea was great, but it completely overlooked the geopolitical risks. Now Europe is making two major mistakes: 1) Destabilizing the delicate East-West security balance by pulling or encouraging Ukraine into the EU and by default into NATO. That is forcing a Russia run by hardliners to respond with force; 2) Once Russia amasses a major offensive force, almost all European members of NATO fail to stand up to Russia with a strong military deterrent. Only Britain is doing that. The EU is merely promising economic sanctions, but failing to deter Russia militarily. That show of division and weakness can only embolden an aggressor. I believe that autocratic nations like Russia and China understand the the language of strength very well. If Western Europeans are not willing to fight for their freedom, they will lose it - soon or later. In this complex world, if you want to avoid war, you have to be ready for it. If the EU is bold enough to unsettle Russia, but too weak to stand up to it, it has just emboldened Russia to demand more. The next stop could be Poland and Romania. US missile defense batteries are being built up there.

The global geopolitical-economic landscape is proving increasingly conducive for a resurgent Britain as a global geopolitical power.   As we have been predicting for years Brexit and now the Ukraine crisis are accelerating the rise of Britain as a global geopolitical power. Britain is stepping in the vacuum that a retreating divided America is leaving in parts of the world. The harsh way President Biden treated German chancellor Scholz this week in Washington will only encourage Berlin to seek more military protection from the U.K. As we have been warning for years the EU is a compromised NATO ally, but this still doesn’t mean Washington can ignore that France and Germany have a difficult history and economic ties they cannot overlook when trying to help Ukraine. Thus, while the USA and Britain can help with weapons, Germany and France have to take a slightly more cautious approach. After all both powers invaded Russia with tragic outcomes. This is something that London seems to have more understanding for than Washington.

If the FED sand ECB were really serious about fighting inflation, they would be holding key interest rates at 5 to 7% or 2 to 4% respectively. They don’t want to do it, because they are so indebted, they need as much inflation and zero interest rates as possible. They talk instead about eventually raising interest rates by some mini steps later this or next year. Nevertheless policy markets have several options people should not underestimate - one of them is to shock markets with a massive hike, in order to stimulate soon after. The problem is that this would come at the expense of risk assets.

FS Insider interviewed macro economist Christian Takushi this Wednesday 12 January 2022 at 3 PM GMT to discuss FED Policy and Interest Rates. Christian explains how markets are unprepared for what is coming. Misled, they are focusing on guessing the number of rate hikes - which is not really the issue in 2022.  Consensus thinks the FED has had a change of heart on inflation, it will hike rates 3-4 times during 2022, but if markets crash, the FED will immediately rescue them. Christian believes FED chair Powell is only deviating from his script, because of massive pressure from his new boss, President Biden. It is about politics. Americans are furious about rising inflation and they are on track to hand over both the House and the Senate to Republicans this November. Thus, the FED has to shock markets within the next 6 months, not 12 months. The FED may allow interest rates to overshoot in the 1st half 2022 to achieve this! Christian expects a rate shock outside of the FED schedule. What matters most in 2022 is the degree of surprise.  After taming inflation the FED wants go back to over-stimulating the economy and printing money. Thus, while the FED doesn't want sustained high interest rates, it surely could use a strong interest rate spike before August 2022 - that opens the door for more monetary and fiscal stimuli after the Fall. Without excessive liquidity and stimulus G7 economies will otherwise shrink - thus, inflation and negative growth would set in (stagflation). Both FED and ECB are working together for years to create inflation, letting it run hot (by keeping rates near zero while inflation runs at 7%) and taming markets with "we will hike interests rates next year".  In a nutshell, the high inflation we are facing around the world has been induced by central banks and aided by the financial industry's rush into ESG and green investments. Good idea, but flawed implementation - For over one decade energy companies among many other industries have not been investing enough in facilities. Banks and investors wouldn't even lend them the money. Now, in desperation a totally Russia-dependent Europe is trying to put nuclear and coal plants back on the grid. The same they did with Europe's military. Another example of Europe's lack of strategic foresight. 

Politics matters! FED chairman Powell has said "We've got a problem with inflation", but since he won't do nothing today and has only announced some hawkish measures for 2022, many investors think it is the old "trick". They talked for 10 years they will normalise monetary policy, markets moved, FED did nothing. Investors think they know the FED - that served them well over the past 12 years: Buy the dips no matter what.  But over the next 10 months investors may pay a high price for this FED view. They grew accustomed to the fact that political and geopolitical factors were mere noise. Not so this time. Politics rules: The FED is on a "short leash" by President Biden and he won't let the FED hand over the House and the Senate to Republicans next year. Currently it looks very bad for Democrats. Americans are upset about higher consumer prices. Thus, President Biden must have said to the FED Chairman "Fed policies funned this inflation for years, now you bring it under control". This is why Powell II has nothing to do with Powell I - Not over the next 10 months. Once the Mid Term Elections are over, President Biden will let Powell have more leeway again in monetary policy.  G7 Central banks became Russia's and China's best friends  During the next 10 months there will be more volatility for equities and other risk assets - the Dollar could easily break out on the upside and markets may build in expectations of higher interest rates. All that could make overpriced assets correct significantly. Worse off, the enemies of the West are now closely monitoring our highly vulnerable economies and stretched financial markets. They are conceiving plans to set off events so that the implosion of our financial markets, inflated wealth and vulnerable supply chain do most of the damage for them. As I have been saying last year, our Central Bank Policies have become the biggest threat to our National Security. G7 central bankers became in a way President Putin's and President's Xi Jinping's best allies. 

After inflating the price of bonds, stocks and real estate, central bank policy is now inflating consumer product prices thanks to excess money. But there is now a "policy bias" tension between the FED and ECB - something we didn't have over the past decade. The former has been given a mandate to fight inflation again to help President Biden avert a disaster at the Mid Term elections, while the latter is still fanning inflation and keeping interest rates at zero in order to reduce its debt burden. While most experts talked the USD down for months, a stronger USD could emerge. President Biden is shifting to the centre in order to lure back moderates. After years of fanning inflation a new role for central banks. And they are now been held on a "shorter leash" than in past years. Less central bank independence means more deficit spending in the long run. In the short term though governments can fight inflation by overreacting to the new Covid variants this coming winter. But the geopolitical-structural problem "energy" won't go away. Europe sits in the trap.  

President Biden is shifting to the center to avert a catastrophic outcome at Mid Term elections. Pres. Biden has given Mr. Powell a mandate to fight inflation in order to avert a Mid Term Elections disaster. This is also affecting Fed policy, the USD and real interest rates. Now a new "policy bias" between FED and ECB (which is still fuelling inflation) has opened that could feed a stronger USD. Swiss Franc is also winner in the short term, while Bitcoin and Gold have to digest the shift.

How crypto investors are helping central banks - The coming Normalization of inflated asset prices to catch most investors wrong-footed. Interview with Financial Sense’s Chris Sheridan