The recent spate of ‘Geopolitical Economic’ news has been turning increasingly negative. The broad based economic recovery, much anticipated due to the massive on-going financial stimulus by most major economies, is not taking hold, in spite of the collective consensus of some of the best economic experts Worldwide - that in face of the unprecedented, consistent financial stimulus, the recovery was largely inevitable. We begged to differ, consistently, in our first three reports.
Global Economic Recovery – Not Yet – dated September 20th, 2012;
Global Economic Recovery – Not Yet – Part 2 – dated September 27th, 2012; and
Global Economic Recovery – Outlook Choppy – dated November 25th, 2012.
All the fundamental conditions we identified in our reports that we thought would make a sustainable recovery highly unlikely, are responsible for the current economic conditions that are deteriorating significantly in Europe, the U.K., Japan, India, and now even in Canada - the near mythical economy that incredulously seemed to be insulated from all negative influences in this ongoing recession. In our report of November 25th 2012, we had pointed out that Canada was the beneficiary of “its tighter banking regulations, and an overshooting strong international commodities market”, rather than any particular brilliance on the part of our bankers or government, in the planning and management of the economy.
The two largest economies, China and the United States, are strenuously struggling against the strong undertow of unhealthy internal fundamentals, and the increasing international headwinds that are gaining in strength on a daily basis. In spite of continuous pumping of massive cash injections ($85 Billion per month in the U.S.) the two economic giants are barely making headway. Again, we expressed our concerns for just such a scenario playing out in our past reports, as we read the fundamental factors that made any other outcome highly unlikely.
The current global geopolitical economic situation is deteriorating fast. The surprise for us is that so many experts would not have seen it coming, again!