Thursday, October 23, 2008


Parabolas describe so many things. From markets to V2 rockets, events are shaped by unseen gravities that compel them to follow paths with varying degrees of predictability.

Nature abhors a void. Where there is a nutrient supply (even something as ubiquitous as sunlight) natural destructive forces only serve to test systems and create opportunities for new organisms to fill niches. Populations rise and fall in parabolic shapes.

The parabolic rise and fall of global stock markets also serves as a reminder that economics is "everything" when determining future human behavior.

So enough prattling and curve worship. What are some of the geo-political ramifications given the current circumstances, keeping in mind the LOCAL (present) position on our parabolic (sine) WAVE.

The European experiment is creaking along. Its (French at the moment) President is uttering populist rhetoric regarding the wholesale nationalization of economies and seems to advocate central control of banking systems. Of course, the central problem, and the assumptions that went with it, is not discussed. No "responsible" EU political figure has called for an open debate regarding the viability of the Union. A political fiction built by "elites" which the constituent people mistrust and which has no real economic power at the national country level. Can anyone think such a system will last? And then there is the problem to the East...

We are also seeing the fissures that create a capital route in "Emerging Markets". Foreign capital inflows manifest themselves in parabolic shapes which follow the unseen "gravity" of human fear and greed. I have said here on multiple occasions that "Latin America is next", this should be obvious by now and the vacuum thus created WILL be filled by other, more socialist/Marxist, niches of political leaders.

As for the Paper Dragon, I am slightly less pessimistic about its prospects given its return to earth. But only just. While it still has control over currency and debt issuance (unlike the Euro area), the political system is a horrid mess of cronyism and the ruling party is devolving into a USSR-type aristocracy, far more concerned with relative prosperity than the plight of the proles.

All of the above throws into stark relief what our current security position is now vs. what it will be in 10 years. Once Iraq is stabilized, I fully expect an antipodean emphasis in Africa and Latin America, with a steady eye on instability in all of Europe. This neo-Monroe Doctrine, pan African emphasis will allow the U.S. to achieve its strategic goals of cheap hydrocarbon fuel, cheap labor/gains from trade, and to capitalize on the plentiful natural resources in both continents.

Thus, I am positioning for the above to happen in the financial markets...and in some parabolic way may help strengthen the causational links to same. The irony is not lost.

But gravity is what it is.

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