Where Have All the Statesmen Gone?

January 2, 2015January 13, 2015 / Bruno de Landevoisin

Submitted by Marin Katusa – Casey Research

One of the most striking things about the Colder War—as I explore in my new book of the same name—has been the contrast between the peevish tone of the West’s leaders compared to the more grown-up and statesmanlike approach that Putin is taking in international affairs.

Western leaders and their unquestioning media propagandists appear to believe that diplomatic relations are some kind of reward for good behavior. But it’s actually more important to establish a constructive dialogue with your enemies or rivals than your friends, because that’s where you need to find common ground. Indeed, it’s been the basis for diplomacy since time immemorial.

Reassuringly, despite having been the target of the Ukraine crisis rather than the instigator, Putin still sees the West as a potential partner, not an enemy. Nor does, he says, Russia have any interest in building an empire of its own. In theory, if Putin is sincere, there should be plenty of room for cooperation, especially in the fight against terrorism.

As Putin said in his speech at the Valdai International Discussion Club in Sochi in October—whose theme was “The World Order: New Rules or a Game without Rules”—he hasn’t given up on working with the West on shared risks and common goals, provided it’s based on mutual respect and an agreement not to interfere in one another’s domestic affairs.

Putin has, of course, already shown that he can rise above the fray. By negotiating the destruction of Assad’s chemical weapons arsenal under international supervision, he did Obama a big favor and got him off the hook in Syria.

But his collaboration with Obama went further than that. Putin had helped persuade Iran to consider making concessions on its nuclear program and was working behind the scenes on North Korean issues. Continue reading →

2015 – A YEAR OF IMPLEMENTATION

January 2, 2015January 2, 2015 / Bruno de Landevoisin

Submitted by JC Collins – philosophyofmetrics

“The G20 has so far taken significant strides in designing and launching policy frameworks in many areas. In November 2014, as the members of the G20 we have agreed on the Brisbane Action Plan and pledged to undertake about 1000 commitments that, if fully implemented, will add more than USD 2 trillion to the global GDP and generate millions of additional jobs for our citizens by 2018. Likewise, for a number of work streams within the G20 including financial regulation, international tax, and international financial architecture, words have played their part. 2015 will be the time for the deeds and the year ofimplementation.”

From the official Turkish G20 Presidency Priorities for 2015

Only 2 days into the new year and we have the official outline of G20 priorities. They are, as expected, a continuation of alternate framework policies and financial architecture. One thing that is different right out of the gate is the terminology utilized by the Prime Minister of the Republic of Turkey. The quote above makes clear the intention of transitioning from “words” to “deeds” and to “implementation”.

It also references the 2018 time frame which we have discussed as the end of this stage, and the beginning of the next stage of multilateral transition. We will review the three stages of transition further down the road but for now it is important to understand that we are moving from Stage One into Stage Two, and the third and final stage will commence in 2018. Continue reading →

Inflation, Prices and Economic Outlook Through Them

January 2, 2015 / Bruno de Landevoisin

Submitted by Jeffrey Snider – Alhambra Investment Partners

The biggest challenge for the Federal Reserve in 2015 is going to be trying to convince everyone that it is meeting its dual mandate. That is true of every year, but this one is unique given the threats to undo ZIRP after more than six years of it. On the one hand, there is the “maximum employment” mandate seemingly arrived as millions continue to stay out of the “booming” payroll expansion. However, the “inflation” mandate (as that is what it is, it is nothing to do with stability as you can’t have a “little” instability just as you can’t be a “little” pregnant) is getting more and more away from them. FOMC members continue to say all the “right” things about being able to meet their 2% target, but they haven’t done so since so conspicuously since 2012.

Fed Chair Janet Yellen and her colleagues probably will face a communications challenge as they pave the way for the central bank’s first interest-rate increase since 2006. Policy makers have said they believe the plunge in fuel prices will prove temporary, which will be more difficult to substantiate as inflation gauges keep sliding six months from now.

In other words, it is much more than a “communications challenge” as this primary metric (for them) does the opposite of what they say is going to happen. Even Bloomberg, in the article linked above, provides a helpful graphic about how the Fed has failed in that objective. It’s almost as if “something” happened in 2012 that has yet to let loose of the economy; an obvious and evident occurrence that is totally unrecognized at any official level as if it were simple random chance.