118 Pall Mall London SW1Y 5ED | +44(0)207 1010 718
PODCAST
In their latest podcast, Brunello Rosa and Manas Chawla discuss the pros and cons of the introduction of CBDCs by governments and central banks and their impact on banks and financial markets.
22 July 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the ongoing governments crisis in Italy, how it may evolve, and its implications for ECB policymaking and the bond market.
20 July 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the UK political crisis emerged after the resignation of Boris Johnson as leader of the Tory party, and its implications for the government.
13 July 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the emergence of a G7 forum for emerging markets, in which Saudi Arabia may be playing an important role.
07 July 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the pros and cons of an embargo on Russian oil and gas versus a price cap enforced by the US and their trading partners.
3 June 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss how many leading indicators seem to point to an upcoming global recession, and how this may impact the more fragile economies, with low potential growth and high indebtedness.
26 May 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the causes and possible development of the recent volatility in financial markets, and its links with the crypto-asset environment.
18 May 2022
In their latest podcast, Brunello Rosa and Manas Chawla take stock of the recent elections in Germany, France and Italy and their implications for the European integration process.
13 May 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss how Europe could be re-organised in concentric circles to permit a more effective and inclusive governance, and prevent conflicts, such as that in Ukraine.
11 May 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss the latest revision to the IMF's forecasts, which certify the stagflationary shock to the global economy.
29 April 2022
In this podcast, Brunello Rosa and Manas Chawla discuss the rationality China's apparent decision of embarking Russia as an ally in Cold War 2 vs US.
22 April 2022
In their latest podcast, Brunello Rosa and Manas Chawla discuss how the UK aims at becoming a global hub for crypto finance technology and investment.
18 April 2022
News
Best Independent MacroEconomic Research & Advisory Firm-2022
Rosa & Roubini Associates has been recognised as the best independent macroeconomic research & advisory firm 2022 by Corporate Vision Magazine in the issue to be published in January 2022
Weekly Column
Geopolitical Corner
Latest Research
Latest Research
Geopolitical Corner
Latest Research
Geopolitical Corner
Geopolitical Corner
Geopolitical Corner
Looking Ahead
Latest Working Paper
Geopolitical Corner
Last Week's Summary
Latest Working Paper
Latest Working Paper
Latest Working Paper
Latest Working Paper
Latest Working Paper
R&R Weekly Column
The World’s Geopolitical Landscape Is In Flux
The World’s Geopolitical Landscape Is In Flux
The World’s Geopolitical Landscape Is In Flux
by Brunello Rosa
15 August 2022
The visit to Taiwan by US Speaker of the House Nancy Pelosi on August 2nd, and the reaction to that visit by the Chinese authorities, were widely reported upon by all media outlets. Pelosi had programmed her visit for April 2022, the first trip by a senior US lawmaker since House Speaker Newt Gingrich’s visit in 1997; but her trip was cancelled due to Covid-19. Already at that time, the Chinese Ministry of Foreign Affairs said that the visit was a “malicious provocation” and that the People’s Republic of China (PRC) would “take strong and resolute measures to thwart any interference by external forces”.
In effect, the reaction by the Chinese authorities was resolute. On 1st August, the PRC announced a military exercise opposite Taiwan. A military build-up was also seen in cities and on beaches directly opposite Taiwan. The Chinese military has also continuously sent fighter aircraft and naval ships over the median line and into the Taiwanese Air Defence Identification Zone (ADIZ). These drills have also been planned for areas east of Taiwan. During Pelosi’s stay, various Taiwanese government sites were hit by DDoS attacks, bringing down the Office of the President’s website, the Ministry of Defence website as well as the website of the Taoyuan International Airport.
Since the Russian invasion of Ukraine, many commentators said that China was keen to establish a new, privileged relationship with Putin’s country because this invasion would legitimise, at some point, the Chinese invasion of Taiwan. But things are a bit more complicated than this.
First, already in July 2021, six months before Russia’s invasion of Ukraine, we said that China would aim at taking back the “rebellious province” of Taiwan over the next 5 to 10 years, initially with a series of destabilising actions and provocations. The Chinese government will likely use a tactic not dissimilar from the one it adopted to take back control of Hong Kong.
The World’s Geopolitical Landscape Is In Flux
The World’s Geopolitical Landscape Is In Flux
Secondly, we said that China would not make such a move this year, as many had expected, simply because Chinese President Xi Jinping’s energy is devoted to being re-elected as party leader for the third time (effectively paving the way to a lifelong tenure as Chinese leader, irrespective of the official title) during the upcoming 20th Congress of the Chinese Communist Party (CCP). A war with Taiwan, which may have unpredictable consequences, would likely cause more harm than good to Xi’s hopes of re-election, paving the way for a victory of the opposing factions within the CCP, and in particular the faction led by Prime Minister Li Keqiang.
Third, and perhaps most importantly, when geopolitics is in flux, unexpected events may develop which make “mechanical inferences” less obvious than they would seem to be, prima facie. For example, recently Putin – the arch-enemy of the enlarging NATO alliance – and Erdogan, the President of Turkey, a long-time NATO member, decided to deepen the economic ties between their respective countries. Initially Erdogan established himself as the mediator between Russia and the West to free the grain stuck in Ukrainian ports (chiefly Odesa) besieged by the Russian army.
But during the meetings, which led to a partial unfreezing of those crops, badly needed to avoid famine in many African countries, Erdogan and Putin clearly found time to speak about their own respective interests. Although not many details were released of the intended increased cooperation, Western countries fear that Russia may find a way to circumvent the West’s sanctions, and that Turkey may be less aligned with the rest of the alliance in its opposition to Russia.
This example shows how the war in Ukraine, which has polarised the world, has set in motion the entire geopolitical landscape, and that – in any case – a new world order is likely to emerge in coming years.
LATEST RESEARCH
Economic Saudi-Israeli Relations Are Headed Towards Normalization
Gulf State Analytics
3 August 2022
Deep Dive Into The Near-Term Future
What Lies Ahead For Global Geopolitics, Macroeconomy, Policy And Financial Markets
Brunello Rosa
22 June 2022
Flash Review: Fed Hikes Fed Funds by 75bps, But Ongoing Rate Increases Will be Data Dependent
by Brunello Rosa and Nato Balavadze
27 July 2022
Flash Review: BOE Raise Rates, but Now Needs to Strike a Balance Between Rising Inflation and Upcoming Recession
Brunello Rosa and Nato Balavadze
4 August 2022
The Geopolitical Corner by John Hulsman
A Man-Made Crisis: The International Technocracy Is Culpable in the Assisted Suicide of Sri Lanka
A Man-Made Crisis: The International Technocracy Is Culpable in the Assisted Suicide of Sri Lanka
A Man-Made Crisis: The International Technocracy Is Culpable in the Assisted Suicide of Sri Lanka
by John Hulsman
19 July 2022
Introduction: The Perils of Ignoring the World’s Differences
There is nothing so gut-wrenching in political risk analysis than chronicling man-made crises, which by definition could have been avoided. So much of our world revolves around grand historical forces, which can be mitigated against, but not changed. That is why when one comes upon a crisis that is utterly avoidable, it is more than a tragedy; it amounts to an immoral error.
So it is with the crisis in Sri Lanka, which came to a head last week, after three months of an economic tailspin. The Presidential Palace of Gotabaya Rajapaksa was dramatically sacked by thousands of protestors, boys with T-Shirts who swam in the opulent presidential pool. Reportedly, and in line with the Emerging Market venality that often accompanies such crises, $50,000 was found in a suitcase under the presidential bed. By the end of the week, Rajapaksa had resigned and fled the country, leaving economic chaos in his wake.
So far, on its surface, this sounds like the garden variety implosion of a once-promising Emerging Market economy, a political risk fact of life that roils the international scene at least several times every year. Indeed, there was the standard, generic signs of the chaos to come: Elite corruption and mismanagement; The pandemic crippling tourism (a staple of the Sri Lankan economy); Hyperinflation (which hit a stratospheric 55 percent in June); The hapless government defaulting on its debts; Rolling energy blackouts.
Crucially, the Rajapaska administration advanced politically popular but economically ruinous tax cuts when he came to power in 2019, funded largely by debts accrued to China. Presently, Sri Lanka owes Beijing at least $5 billion, though some estimates put its debt at double this. In addition, the country is on the hook to India for an additional $3.8 billion and Japan for $3.5 billion. As things began to fall apart, Colombo defaulted on $51 billion in international debt in May 2021, after years of heavy borrowing and tax cuts. Crucially, unlike the other major debtor countries, China has shown little inclination to help Sri Lanka restructure its debts, taking its characteristic hard line on debt relief, even as it earlier secured a 99-year lease on Hambantota, the major Sri Lankan port as debt collateral.
A Man-Made Crisis: The International Technocracy Is Culpable in the Assisted Suicide of Sri Lanka
A Man-Made Crisis: The International Technocracy Is Culpable in the Assisted Suicide of Sri Lanka
But this is only the foreground, with conditions not much different from those in Lebanon, Pakistan, and Venezuela. However, the political risk triggering event was far more pernicious and entirely avoidable; the near-psychotic self-harm the Rajapaksa clan did to their country in an effort to curry favor with the international technocracy’s delusions of living in a net (carbon) zero world. To reach the goal of becoming a net zero nation overnight, in April 2021 the Rajapaksas put in place a clumsy, arbitrary, and immediate ban on chemical fertilizers and pesticides, all to gain the coveted ‘organic farming’ sticker so beloved of Davos Man, in a wrongheaded effort to jumpstart Sri Lanka’s food exports.
The results have been as catastrophic as they are predictable. And the western globalist technocratic elite, always looking at the totality of the world, and never (as Lawrence of Arabia did) at the many historical, cultural, economic, and social differences between countries and regions, must be held at least partly to account for the man-made calamity.
The Mandates Are Global, The Price Paid Is Local
Although – due to widespread protests from the farmers who until recently formed the backbone of support for the Rajapaksa political dynasty—the abolition of chemical fertilizers and pesticides came to an end in November 2021, the practical damage had already been done. Only a trickle of fertilizers were actually used on the year’s crops.
[...]
(This is an excerpt of Dr. Hulsman's latest article, which you can read here).
Dr. John C. Hulsman is the widely-read Senior Columnist for City AM, the newspaper of the city of London. Dr. Hulsman is also a Life Member of the US Council on Foreign Relations. His most recent work, the best-selling, To Dare More Boldly; The Audacious Story of Political Risk, was published by Princeton University Press in April 2018 and is available for order on Amazon. His original writing work can all be found at johnhulsman.substack.com.
Looking Ahead
The Week Ahead
The Quarter Ahead
The Quarter Ahead
Week: 15 - 21 August 2022
The Week Ahead: EZ And UK Headline And Core Inflation To Rise; EZ QoQ GDP To Advance; UK Retail Sales To Shrink
In the US, in July, IP is expected to recover by 0.3% m-o-m (p: -0.2%). In July, retail sales are seen decelerating to 0.1% m-o-m (p:1.0%), whereas monthly retail sales ex-autos are likely to stagnate (p: 1.0%)
In the EZ, in Q2, according to second estimate, GPD is expected to rise by 0.7% q-o-q (p: 0.5%) and decelerate to 4.0% y-o-y (p: 5.4%). In July, inflation is likely to surge to 8.9% y-o-y (p: 8.6%) and cool off to 0.1% m-o-m (p: 0.8%). Core inflation is also likely to rise to 4.0% y-o-y (p: 3.7%).
In the UK, the unemployment rate is likely to stay unchanged at 3.8% in June. Headline and core inflation are expected to surge to 9.8% y-o-y (p: 9.4%) and 5.9% y-o-y (p: 5.8%). However, monthly inflation is seen decreasing 0.4% (p: 0.8%). July’s retail sales are seen shrinking 3.3% y-o-y (p: -5.8%) and 0.2% m-o-m (p: -0.1%). In August, Consumer Confidence is expected to contract by -42 (p:-41).
The Quarter Ahead
The Quarter Ahead
The Quarter Ahead
The Quarter Ahead: FBI Executed A Search Warrant At Trump’s House; Musk Sold Twitter Shares; Gas Prices Fell
Trump’s Florida home was searched by the FBI. The search is reportedly connected to an investigation looking into White House records from the White House that Trump took with him. In January 2022, the National Archives and Records Administration discovered that Trump removed 15 boxes of White House documents and retrieved those documents from Mar-a-Lago, personal residence of Trump in Florida. In April, the DOJ started an investigation at the request of the National Archives. In June, DOJ and FBI investigators met with Trump attorneys to enquire about the handling of classified material. The investigation escalated in August, when the FBI executed a search warrant at Mar-a-Lago. Trump invoked the Fifth Amendment.
Elon Musk sold $7 bn in Tesla stocks for Twitter Deal. As Musk said, he might use these funds to finance a potential deal in case he loses a legal battle with Twitter. Social Media Platform sued Musk to force him to complete the transaction worth $44 bn.
US gasoline prices fell below $4 per gallon for the first time since March. The gas prices decreased as oil prices keep falling amid fears over an upcoming recession.