Monthly Archives: October 2012

U.S. Presidential Elections in Perspective

U.S. Presidential Elections in Perspective

October 30, 2012 | 0900 GMT

Stratfor

By George Friedman

The U.S. presidential election will be held a week from today, and if the polls are correct, the outcome will be extraordinarily close. Many say that the country has never been as deeply divided. In discussing the debates last week, I noted how this year’s campaign is far from the most bitter and vitriolic. It might therefore be useful also to consider that while the electorate at the moment appears evenly and deeply divided, unlike what many say, that does not reveal deep divisions in our society — unless our society has always been deeply divided.

Since 1820, the last year an uncontested election was held, most presidential elections have been extremely close. Lyndon B. Johnson received the largest percentage of votes any president has ever had in 1964, taking 61.5 percent of the vote. Three other presidents broke the 60 percent mark: Warren G. Harding in 1920, Franklin D. Roosevelt in 1936 and Richard Nixon in 1972.

Flash Point: When Austerity Fails – the Case of Spain

We have argued before that austerity measures – spending cuts and tax increases – fail when they are implemented at the bottom of an economic cycle. On July 13, Spain increased the VAT on goods and services from 18% to 21% effective September 1, 2012. Today from Mike Shedlock, we read that Retail Sales in Spain [in September] Plunge 10.9%, Largest Drop on Record; All Pain, No Gain.

It is likely that the expected revenue increase from the tax increase has turned out to be negative with major damage done to the economy. The impact on GDP will be to deepen the recession (depression really). If Greece wasn’t proof enough that eurocrats have a complete misunderstanding of the economic crisis they have on their hands and the correct way to deal with it, now we have the example of Spain, soon to be followed by Italy and then France.

Flash Point: A Resurgent America

Ambrose Evans-Pritchard of The Telegraph has published a beautiful essay that succinctly describes the re-industrialization of America that is just beginning. In Europe left behind as shale shock drives America’s industrial resurgence, he argues that the impact of shale oil and shale gas will make the US independent before 2020. The geopolitical implications are enormous. As he puts it,

The implications are momentous. America will no longer need a single drop of oil from the Islamic world. The strategic burden will fall on Europe, which is meekly disarming itself to meet Wolfgang Schauble’s austerity targets. Russia and China will be pleased to help.

 Japan and much of Europe are shutting down much of their nuclear power industry. Renewable energy has proven to be an enormous unreliable expense. As Evans-Pritchard notes, Prices on the Pacific rim [of liquified natural gas] are near $15 per million British thermal units (BTU), compared to $3 in the US. The differential in energy costs is making European and Asian manufacturing uncompetitive with a newborn American petrochemical industry which is shuttering plants across Europe while building new world-class facilities in the US. He notes:

This is happening just as other clusters of manufacturing – machinery, electrical products, transport equipment, furniture, etc – are “re-shoring” back from from China to the US. A 16pc annual rise in Chinese wages over the last decade has changed the game. PricewaterhouseCoopers calls it the “Homecoming”.

In short,the US is witnessing an industrial rebirth that will once again make it the economic powerhouse it was once. And this will happen quickly being aided by disastrous policy decisions in much of the rest of the developed world.

Flash Point: Long Live the US Dollar!

We hear repeatedly how sick the USD is, how it is collapsing, how it is near the end of its reign as a reserve currency, and any number of other catastrophic predictions for its existence. The evidence speaks otherwise. Certainly the USD has been in a slight downtrend as seen in the 10-year chart below.  However, for the last 5 years it has been going sideways. Chart technicians would call the pattern a triangle, somewhere between a symmetric triangle and a descending triangle. The pattern is bearish but not conclusive.

In the short-term, the dollar will move in a narrowing trading range governed by activity around the other major world currencies, the euro and the yen, both of which have current fundamental weakness. Granted the US fiscal situation id dire, but the future strength of the USD will depend on how the matter plays out. Certainly on one, let alone the dollar doomsters, knows what this may be. A recitation of dire economic numbers proves nothing towards the dollar’s future. And few players have the depth of analysis to take into account that the dollar acts not in isolation but in concert with all other currencies.

The dollar is just fine, thank you, and is likely to remain in this state for the near to mid-term at least.

The Spread of Instability from Syria to Lebanon

Here is another of Stratfor’s capsule comment videos (5:39 minutes), this time on the Levant.

Stratfor Videos: Spain and the Northwestern Persian Gulf

Spain’s Geographic Challenge

This 2:05 minute video gives a brief outline of Spain’s geographic challenges. It’s useful when considering the recent calls for provincial  secessions.

Geopolitics of the Northwestern Persian Gulf

A short (1:59 minute) video outlining the problem between Iraq and Kuwait for Persian Gulf access.
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Global Warming Revisited

Our friend Jim Vanne just sent us this short note to put the current “global warming” panic in context.

Is today’s warmth unprecedented? If you would like a short answer, this is “no.” If you would like a few more details, read on.

The EU Crisis and the Issue of Sovereignty (Agenda)

Early in the life of this blog we identified threats to national sovereignty by end runs around the process of democracy. Stratfor offers this 9:31 minute video reviewing the progress of integration in the EU and the effects of the current crisis on the process.

Israel and Christian Opinion

Here is Part 12 of a multipart series on The Isolation of Israel: Peril and Opportunity. Reprinted by permission of Paul and from The Bayview Review (yet to appear).

Israel and Christian Opinion

In this series of essays, I have identified a variety of forces that have entered the world since the advent of the so-called Arab Spring — all of which, I have argued, have magnified the isolation of Israel. I see opportunity as well as peril for Israel in this increased isolation.

Defining al Qaeda

Defining al Qaeda

October 18, 2012 | 0900 GMT

Stratfor

By Scott Stewart

The Obama administration’s efforts to counter the threat posed by al Qaeda and the wider jihadist movement have been a contentious topic in the U.S. presidential race. Political rhetoric abounds on both sides; administration officials claim that al Qaeda has been seriously crippled, while some critics of the administration allege that the group is stronger than ever. As with most political rhetoric, both claims bear elements of truth, but the truth depends largely on how al Qaeda and jihadism are defined. Unfortunately, politicians and the media tend to define al Qaeda loosely and incorrectly.

The jihadist threat will persist regardless of who is elected president, so understanding the actors involved is critical. But a true understanding of those actors requires taxonomical acuity. It seems worthwhile, then, to revisit Stratfor’s definitions of al Qaeda and the wider jihadist movement.

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