Excerpted from 2011 Thesis Paper: Beggar-thy-Neighbor at Tipping Points
The conclusions of our "2011 Thesis - Beggar-thy-Neighbor" was that the world is on a glide path towards a global Fiat Currency Failure and the emergence of a New World Order. We are unclear whether it is planned or happenstance, but what the regularly conducted abstraction mapping process clearly indicates is that it is presently a high probability outcome.
The paper (which will be made available to non subscribers March 11th, 2011- sign-up) uses the Process of Abstraction to avoid the media noise, abstract the facts, synthesis key macro drivers and then arrive at the highest probability outcomes.
In the recent article "2011 Tipping Points" we laid out the 37 major Tipping Points we are presently tracking. These Tipping Points are show on the left hand side of the two charts below, which are the basis upon which our ongoing analysis process is conducted. These highly simplified representations of the process gives the reader a graphical perspective on what leads us to our conclusions.
I - ERA OF CONFLICT & TENSION
Our process has been signaling an era of conflict and tension was ahead for over 18 months. Our most recent analysis is showing this theme becoming much more pronounced and possibly accelerating.
DRIVER I: Debt Saturation
The Tipping Points of: 1-Sovereign Debt - PIIGS, 2- EU Banking Crisis, 3, Risk Reversal, 4-US State & Local Government, 6-Rising Inflation Pressures and Interest Rates, 8-Chronic Unemployment, 11-Residential Real Estate-Phase II, 12-Commercial Real Estate, 13-Public Policy Miscues (i.e. flawed fiscal & budget policy), 14- Oil Price Pressures, 15-Bond Bubble, 16 Pension-Entitlement Crisis and many more of our 37 Tipping Points are fundamentally about debt and credit. They are related in some fashion to the inability to service this debt and the problems which that incurs.
DRIVER II: Social Unrest
The Tipping Points of: 5-Food Price Pressures, 8-Chronic Unemployment, 6-Rising Interest Pressures and Interest Rates, 16-Pension-Entitlement Crisis 19-Credit Contraction II are just a few of the Tipping Points that are creating the underpinnings for the beginnings of Social Unrest in many countries and regions around the world.
CATALYST I: The combination of Debt Saturation and Social Unrest are the catalyst for:
THEME I: Currency Wars & Political Policies of 'Beggar-thy-Neighbor'
- Competitive Currency Devaluation
- Protectionism, Tariffs and Capital Controls
THEME II: Banking & Credit Crisis II
- Toxic assets & massive hidden 'underwater' Residential and Commercial Real Estate loans.
- Looming government debt 'haircuts' and possible defaults (Iceland, Ireland?)
DRIVER III: Geo-Political Tensions
The Tipping Points of: 10-Geo-Political Events (such as presently seen throughout North Africa and the Middle East), 30-North and South Korea, 35-Iran Nuclear Ambitions, 33-Terrorist Threats and operating factions, all are creating Geo-Political Tensions. They appear to be broadening and touching all regions to various degrees.
DRIVER IV: Global Economic Income and Growth Imbalances
The Tipping Points such as: 31-US Fiscal, Trade & Account Imbalances, 24-Shrinking Revenue Growth Rates, 25-Global Output Gap, 17-Central and Eastern Europe, 9-China Bubble and 29-Slowing Retail & Consumer Sales are just some of the Tipping Points within Driver IV. The seriousness of global income and growth imbalances is continuously stressed by all economists as a central dilemma that must be addressed.
CATALYST II: The Social Unrest, Geo-Political Tensions and Global Economic & Income Imbalances drivers are the tinderbox for:
THEME III: A Collapsing Western (G7) Social Net
- EU countries attempting to strip entitlements as part of 'austerity' policies.
- US State / Local government crisis over public union benefits versus Private sector compensation.
THEME IV: West-to-East Power Shift
- We are already seeing a well defined shift from the US to Asia.
- Manufacturing and Supply Chain migrations is accelerating to Financial, Banking and R&D.
RESULT:
A FIAT CURRENCY FAILURE
There are many indications that we are well along towards an evolving Fiat Currency Failure..
II - NEW WEALTH CREATION & VALUE PROPOSITION
DRIVER V: Regionalization
The Tipping Points of: 1- Sovereign Debt-PIIGS, 2- EU Banking Crisis, 9-China Bubble, 10-Geo-Politcal Events (Middle East and North Africa), 12-Central & Eastern Europe, 20-Japan Debt Deflation, 27-US Reserve Currency and 26-US Dollar Weakness are indicators of increasing Regionalization around the world. Sovereign States are more and more becoming trading blocks for competitive advantage and economic survival.
DRIVER VI: Resource Shortages
The Tipping Points of: 5-Food Shortages, 14-Oil Pressures, 6-Rising Inflation Pressures coupled with an explosion in global Commodity prices is an indication of shortages. The world's population is growing rapidly along with elevated standards of living in the Emerging Markets. These are putting serious strains on global resources
DRIVER VII: Emerging Markets
The Tipping Points of: 31-US Fiscal, Trade and Account Balances, 26-US Dollar fears, the sustainability of 27- US Reserve Currency and other imbalances are driving the emergence of new players until the world stage. What was only recently the 'G5' center of power, is now the G20. The twice yearly G20 meeting now takes center stage in global issues.
CATALYST III: Regionalization, Resources Shortages and Emerging Markets
THEME V: Global Corporatocracy
- Mercantilist driven Export Policies & Strategies which place corporate brands and jobs creation in positions of control and extensive power.
- Globalization through Privatization, Free Trade, the World Trade Organization are now being realized.
CATALYST IV: Resource Shortages and Emerging Markets
Resources and Emerging Markets leads to Theme VI.
THEME VI: Shifting Value Creation
- It's about Jobs, Jobs, Jobs Creation
- Knowledge Based societies versus resource centric.
- National Competitive Advantage Strategies,
- Critical Sovereign Dependencies,
If we couple THEME: V - Global Corporatocracy withTHEME: III - Collapsing Western Social Net and THEME IV - West to East Power Shift we have the following directional result.
RESULT:
AN EMERGING NEW WORLD ORDER
Either by design & plan or just happenstance a new world order is on the horizon.
All of the above lead to an overall thesis of CHANGE in 2011 and 2012.
We delve into all the of the above in detail in our 2011 THESIS: BEGGAR-THY-NEIGHBOR.
sign-up for your free copy to be released to Non-Subscribers March 11, 2011.
"I care not who Rules but who controls the Money.
The REAL Power lies with who controls the Money!"
Nathaniel Rothschild
"The Banker wins in the Era of Corporatocracy"
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