Author: Rebekah Stovall

Weekly Geopolitical Report – India’s Maoist Problem (October 28, 2013)

Posted on by Rebekah Stovall

by Kaisa Stucke & Bill O’Grady

India has fought numerous wars with outside forces in its history and has also had several internal conflicts.  The most notorious civil struggle has been the conflict with Kashmir insurgents, a border conflict between India and Pakistan that has claimed tens of thousands of lives.  So it generally came as a surprise when the Indian Prime Minister Manmohn Singh declared the Maoist movement in the eastern part of the country to be the single biggest internal security challenge ever faced by India.

The Indian Maoist movement can be traced back to the 1920s; however, the Naxalite group became a formal movement in 1967 after it became actively violent.  The group was inspired by the agrarian revolution ideology as a means to achieve equality.  The long-term goal of the organization is to capture political power by violently overthrowing the Indian state.  Although the central government has boosted efforts in the fight against these extremists, the group has spread to involve about a third of India’s territory.  The Naxalites are considered far-left radical communists and are declared a terrorist group under Indian law.

In this report we will look into the Maoist movement in India, starting with its history.  We will then explore how the movement has survived centralized efforts to eradicate it, paying special attention to the unique context of Indian society and politics.  We will conclude by assessing the likelihood of the group’s success and the global geopolitical consequences.

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Weekly Geopolitical Report – The Turmoil in Washington (October 14, 2013)

Posted on by Rebekah Stovall

by Bill O’Grady

At the time of this publication the budget situation has not been resolved, although it appears that both parties are backing away from the default abyss.  However, given that these crises seem to come once or twice a year, it seemed appropriate to weigh in on the geopolitical impact of the intractable problems of American government.

In this report, we will discuss the evolution of the American political system over the past century, examining how these changes have affected governance.  From there, we will move to how the uncertainty surrounding American governance affects global geopolitics, including a discussion of what we believe is the root cause of this turmoil.  As always, we will conclude with market ramifications.

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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.

Weekly Geopolitical Report – Syria and the Red Line (May 6, 2013)

Posted on by Rebekah Stovall

by Bill O’Grady

On Thursday, April 25, Secretary of Defense Hagel acknowledged that evidence that chemical weapons exposure occurred in Syria was probably accurate.  This news dominated the Sunday talk shows, mostly because President Obama had indicated that Syrian military use of chemical weapons would be a “game changer” and a “red line” that would trigger a U.S. and international response.  Now that it appears that somehow chemical weapons exposure did occur, the world awaits to see what exactly the president meant by a “response.”

In this report, we will discuss the problem President Obama has created, why he likely declared the “red line,” and his reluctance to intervene.  This reluctance is varied and complicated—essentially, it is difficult to see how there are any good options for the U.S. in intervening in the Syrian Civil War.  At the same time, not taking some sort of action will undermine his and America’s credibility which will be closely watched by North Korea, Iran, Russia and China, as well as by America’s allies.  As always, we will examine the ramifications of this event on the financial and commodity markets.

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Weekly Geopolitical Report – The 2013 Geopolitical Outlook (December 17, 2012)

Posted on by Rebekah Stovall

by Bill O’Grady

As is our custom, in mid-December, we publish our geopolitical outlook for the coming year.  This list is not designed to be exhaustive.  As is often the case, a myriad of potential problems in the world could become issues in the coming year.  The lineup listed below details, in our opinion, the issues most likely to have the greatest impact on the world.  However, we do recognize the potential for surprises which we will discuss throughout the year in the weekly reports.  This will be our last report for 2012; our next report will be published on January 14, 2013.  And so, we wish all our readers happy holidays and a joyous 2013.

Issue #1: The Continued Evolution of U.S. Hegemony

Issue #2: The Rearming of the Axis

Issue #3: The Arab Spring Develops Unabated

Issue #4: The Problem of China

Issue #5: The Great Game between China and Russia

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Weekly Geopolitical Report – The 2012 Geopolitical Outlook (December 19, 2011)

Posted on by Rebekah Stovall

by Bill O’Grady

As is our custom, we use this last report of the year to offer our outlook for next year.  In this issue, we will discuss what we see as the key geopolitical issues that will affect the markets and the world in 2012.  This list is not exhaustive but highlights our greatest concerns.

Issue #1: The Eurozone

Issue #2: The Weakening of U.S. Global Dominance

Issue #3: The Rise of Iran

Issue #4: Questioning Globalization

Issue #5: The Passing of Kim Jong Il

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Weekly Geopolitical Report – The Geopolitics of Geoengineering (May 11, 2009)

Posted on by Rebekah Stovall

by Bill O’Grady

Climate change has been a major issue for the past two decades.  An outgrowth of the environmental movement which began in the 1960s, there is growing concern that the atmospheric accumulation of greenhouse gases will lead to a catastrophic rise in temperatures and threaten human life on earth.  Thus, there have been steady streams of proposals designed to reduce the burning of fossil fuels which are primarily responsible for accumulation of greenhouse gases, mostly carbon dioxide (CO2).

We will not debate whether climate change (a) exists, and (b) is primarily caused by humans.  Although these are worthwhile questions, our stance over the two and one-half years we have written these reports is to focus on what is likely to happen, not what policymakers “should” do.  Because the preponderance of policymakers believes climate change is a threat, we assume that some policy changes in that direction are likely.

In this report, we will define geoengineering and examine the possibility that it will be used to combat the problem of climate change.  Although the generally accepted method of reducing carbon emissions is through “clean energy,” our perspective will be to discuss the economic and political costs of such a program which increases the attractiveness of geoengineering solutions.  We will also look at how geoengineering increases the possibility of a geopolitical “event.”  As always, we will conclude the discussion with a view of how it affects markets.

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