Tag: populism

Weekly Geopolitical Report – The 2018 Geopolitical Outlook (December 18, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

(N.B.  This will be the last WGR of 2017.  Our next report will be published January 8, 2018.)

As is our custom, we close out the current year with our outlook for the next one.  This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape in the upcoming year.  It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward.  They are listed in order of importance.

Issue #1: The Big Picture

Issue #2: China Deleveraging

Issue #3: European Politics

Issue #4: North Korea

Issue #5: South American Populism

Issue #6: The Middle East

Issue #7: U.S. Domestic Politics

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Weekly Geopolitical Report – Reflections on Nationalism: Part III (September 11, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

Three weeks ago, we began our series on nationalism.  In Part I, we discussed social contract theory before and after the Enlightenment.  We examined three social contract theorists, Thomas Hobbes, John Locke and Jean-Jacques Rousseau.  In Part II, we recounted Western history from the American and French Revolutions into WWII.  From there, we examined America’s exercise of hegemony and the key lessons learned from the interwar period.  This week, we will begin with an historical analysis of the end of the Cold War and the difficulties that have developed in terms of the post-WWII consensus and current problems.  We will discuss the tensions between the U.S. superpower role and the domestic problems we face.  Next, we will analyze populism, including its rise and the dangers inherent in it.  As always, we will conclude with market ramifications.

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Weekly Geopolitical Report – Reflections on Nationalism: Part II (August 28, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

(Due to the Labor Day holiday, the next report will be published on September 11.)

Last week, we began our series on nationalism.  In Part I of this report, we discussed social contract theory before and after the Enlightenment.  We examined three social contract theorists, Thomas Hobbes, John Locke and Jean-Jacques Rousseau.  This week, in Part II, we will recount Western history from the American and French Revolutions into WWII.  From there, we will analyze America’s exercise of hegemony and the key lessons learned from the interwar period.

In two weeks, in Part III, we will begin with an historical analysis of the end of the Cold War and the difficulties that have developed in terms of the post-WWII consensus and current problems.  We will discuss the tensions between the U.S. superpower role and the domestic problems we face.  From there, an analysis of populism will follow, including its rise and the dangers inherent in it.  As always, we will conclude with market ramifications.

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Weekly Geopolitical Report – Reflections on Nationalism: Part I (August 21, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

Over the last decade, the West has seen a series of tumultuous events.  Of course, ten years ago the world was trying to cope with the Great Financial Crisis which raised fears of a repeat of the Great Depression.  Although that outcome was avoided, deep underlying problems remain.  Southern Europe faced a series of debt crises, which were followed by a refugee crisis.  Global economic growth has stagnated.  A steady drumbeat of civil unrest continues in the U.S.  Terrorist acts have been occurring in Europe.

As these problems festered, unrest has been expressed through a series of electoral surprises, including Donald Trump in the U.S., Brexit in Europe, Macron in France and nationalist parties in Hungary and Poland.  Meanwhile, Russia has become more aggressive, using hybrid tactics to expand its influence.

In the face of widespread turmoil, it appears appropriate to offer some reflections on one of the key elements of the modern era—the rise of the nation state and how it has evolved to the present day.  This evolution is part of how humans organize themselves.  Human beings are both social creatures and individuals, and how we manage both sides of our nature is a constant tension expressed throughout history.

In Part I of this report, we will begin with a discussion of social contract theory prior to the Enlightenment period, focusing on Thomas Hobbes.  From there, we will examine the two key thinkers of social contract theory during the Enlightenment, John Locke and Jean-Jacques Rousseau.  Part II will recount Western history from the American and French Revolutions into WWII.  We will analyze America’s exercise of hegemony and the key lessons learned from the interwar period.  Part III will begin with a historical analysis of the end of the Cold War and the difficulties that have developed in terms of the post-WWII consensus and current problems.  We will discuss the tensions between the U.S. superpower role and the domestic problems we face, followed by an analysis of populism, including its rise and the dangers inherent in it.  As always, we will conclude with market ramifications.

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Weekly Geopolitical Report – The Mid-Year Geopolitical Outlook (July 10, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

As is our custom, we update our geopolitical outlook for the remainder of the year as the first half comes to a close.  This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape for the rest of the year.  It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward.  They are listed in order of importance.

Issue #1: The Political Fragmentation of the West

Issue #2: North Korea

Issue #3: An Unsettled Middle East

Issue #4: A Resurgent Russia

Issue #5: China’s Financial Situation

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Weekly Geopolitical Report – The Rise of AMLO: Part II (March 20, 2017)

Posted on by Rebekah Stovall

by Thomas Wash

In their next general election, Mexicans will cast their vote for the 64th president of the country’s history. The two frontrunners are Margarita Zavala from the National Action Party and Andres Manuel Lopez Obrador (AMLO) from the National Regeneration Movement (MORENA). Although the election won’t be held until July 2018, current polls suggest that AMLO would win by a small margin if the election were held today. His recent surge can be partially attributed to growing nationalism in Mexico due to Donald Trump’s election as president of the United States.

AMLO’s core supporters can be broken into two groups, those who are against neo-liberal economic reforms and those who want more social benefits. He derives most of his support from the southern region of Mexico, primarily in the states of Tabasco and Chiapas, where there is a significant indigenous population. To get an idea of how his supporters view him, imagine a politician with Bernie Sanders’s righteousness and Donald Trump’s brashness. AMLO is known for participating in protests, and was once left bloody from an altercation with police. He also hurls insults at his political rivals in the PRI and PAN parties, labelling them as the “mafia elite.” Recently, he held a pep rally in California to criticize Donald Trump’s immigration policies and vowed to take his complaints to the United Nations. If AMLO wins the presidency, it could adversely affect the already tense relationship between the U.S. and Mexico.

This week’s report will be divided into three sections. First, we will offer a brief biography on AMLO. Next, we will analyze his possible policy agendas and discuss the likelihood that he wins the presidency, followed by possible market ramifications.

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Weekly Geopolitical Report – The Rise of AMLO: Part I (March 13, 2017)

Posted on by Rebekah Stovall

by Thomas Wash

Although many populist movements today, especially in the West, are viewed as a recent phenomenon, it is worth noting that Latin America has had a long history with populism. Populists in South American history include Hugo Chavez in Venezuela, Juan and Eva Perón, along with Nestor and Cristina Kirchner, in Argentina, Juan Evo Morales in Bolivia, and Alan Garcia in Peru, just to name a few. It should then come as no surprise that the leading presidential candidate in Mexico is also a populist.

Andres Manuel Lopez Obrador, who goes by AMLO, is no stranger to the presidential election process. He has run for the Mexican presidency twice, in 2006 and 2012, losing both highly contested elections by a margin of 0.59% and 6.62%, respectively. Prior to running for Mexico’s highest office, he was the mayor of Mexico City, where he left office with an 84% approval rating. His supporters, especially those located in the southern region of Mexico, view him as their champion.

In Part I of this report, we will examine the history of Mexico to understand AMLO’s appeal and relevance in Mexico today. The report will be divided into four sections: 1) Mexican Revolution; 2) Nationalization of PEMEX; 3) Post-Cardenas Period and the Mexican Miracle; and 4) The Lost Decade. This historical background will help readers understand the rise of AMLO, which will be discussed in Part II next week.

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Weekly Geopolitical Report – The Gordon Dilemma (August 12, 2013)

Posted on by Rebekah Stovall

by Bill O’Grady

Robert Gordon is a well-known economist who teaches at Northwestern University.  He was a member of the Boskin Commission that assessed the accuracy of the CPI and is also a member of the National Bureau of Economic Research, the body that dates business cycles.  Part of his research has focused on long-term economic and productivity growth.

In August 2012, he published a working paper suggesting that U.S. economic growth was “over.”[1]  Gordon’s thesis is that the first two industrial revolutions, the first starting in 1750 in England and the second in 1870 in the U.S., were so remarkable that nothing else has had a similar impact.  Although Gordon does acknowledge a third revolution, the computer and internet revolution which began around 1960, he suggests the impact pales in comparison to the earlier two revolutions.

From there, Gordon argues that the jump in growth that occurred from the first two revolutions will not likely be repeated, meaning that growth will slow down to the pre-revolutionary trend.  That isn’t to say that growth will become non-existent.  Instead, growth will slow to around 1.5% per year permanently.

The geopolitical impact of such a slowdown would be significant.  The global superpower generally is dominant in both the military and economic spheres.  It will be difficult for the U.S. to maintain such dominance with such slow growth.  Not only will fiscal restraints develop because of this slow growth, which will make military budgets problematic, fulfilling the reserve currency role and the global importer of last resort function will become nearly impossible as well.

In this report, we will discuss Professor Gordon’s thesis, examine the geopolitical impact if he is correct and offer some criticisms of his thesis.  We will conclude with potential market ramifications.

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[1] NBER Working Paper 18315, “Is U.S. Economic Growth Over?  Faltering Innovation Confronts the Six Headwinds,” Aug 2012.