Lesson from Iran

American companies that have invested so much in the fracking technology are interested in raising the price of crude oil. It can only be done if the largest producers agree on the quantities that they put on the world market. Iran since the time when the pro-American shah was deposed has not been on friendly terms with the United States and so it will not go hand in hand with American plans. That is the reason why it must be put out of the equation, and that is also why Washington is looking for pretexts to go to war with Tehran.

Rumour about the impending war against Iran has persisted for some time now. After Yugoslavia, Afghanistan, Iraq, Libya and Syria Tehran appears to be the next target. Washington is taking firm steps against Iran. As for now these are economic only. Rumour about a possible coalition uniting, apart from the United States, also Saudi Arabia, Israel and Australia is already spreading. What does Iran stand accused of? Of attempting to produce its own nuclear weapons and supporting – yes, you guessed it right – terrorism. The usual stuff. Continue reading

The new ‘OPEC DEAL’ approved in Helsinki: the United States, Russia and Saudi Arabia

Crude oil is a product that has always given rise to intense speculation in which respect it is second only to cryptocurrencies. This commodity yielded lower and lower revenues, which was caused by its abundant supply which occurred after the international sanctions imposed on Iran had been lifted: in one and a half years the price of the barrel dropped from 110 USD in June 2014 to 30 USD in January 2016.

It is not only too low but also too high value of oil that is problematic for governments, and this is because citizens may show their dissatisfaction with expensive fuel at the ballot box (in the United States senate by-elections are scheduled for November), since more expensive oil means more expensive transport, which sooner or later entails a rise in prices of virtually all other goods. Continue reading

Sweden will remain Sweden but just in name

For some time now the Gefira Team has been keeping track of the demographic processes that are taking place in Europe, especially in its Western part. This time Gefira published a report on Sweden, a well-developed, typical Western state, member of the European Union. The report includes independent calculations, using dedicated demographic software Cerberus 2.0. The report is based on the input that is taken from the official bureaus of statistics.

The Gefira findings based on the official data provided by Statistics Sweden SCB reveal what follows:

  1. the fertility rate of native white Swedes is much lower (1,6) than the country’s overall fertility rate (1.9);
  2. the Swedish parental system fails to deliver more babies;
  3. the number of children with an Islamic name is growing at a fast pace. Since 2010 it has increased by more than 30%, so that now around 8 to 10% of the newborns in Sweden have an Islamic name.
  4. the native white Swedish population will be a minority within a maximum of 40 years. The same source shows that 22% of the newborns have a non-Western migration background.

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Inflation and unemployment as a result of the demographic explosion – the new Arab Spring is in the making

Every now and then we receive information about the outbreak of social protests in the Middle East and North Africa. January: strikes were staged in Tunisia against the rise in prices for basic products. February: riots broke out in Jordan against the rise in food prices. July: mass protests in Iraq caused by unemployment.Egypt has not yet followed suit, but it is just a matter of time before the unhappy population takes to Tahrir Square again.

These events are said to have been caused by social dissatisfaction with the rise in prices of elementary goods and high unemployment rates, but the root of the problem is deeper. Continue reading

Europe cannot cope with any further armed conflict on the continent

European leaders are not only unable to counteract the demographic crisis on the Old Continent, but also lose ground in terms of defense. President Trump’s skepticism and reservation about the military ideas of European bureaucrats Ankara’s increasingly aggressive actions towards Cyprus and Greece, and the rapprochement between Turkey and Russia highlight NATO’s weakness on the eve of its summit in Brussels.

Europe stands no chance if forced to face conflict on three fronts. Two of them are of conventional character: on the eastern flank, where there are continuous tensions with Russia, and in the Balkans near the border with Turkey. The third concerns the Mediterranean area, where young and strong men from Africa and Central Asia cross European borders with the support of a thousand people from the continent’s heartland. Europeans are also militarily involved in Afghanistan, Syria and take part in the growing conflict in Mali.

While Europe is losing its allies, Russia and Turkey are looking for alternative directions of cooperation. Turkey has ceased to be a credible member of NATO, and there are growing fears of the US’s non-engagement in European conflicts. The Gefira team compares the capabilities of the North Atlantic Alliance, without taking into account the American and Turkish armed forces, with those of Moscow and Ankara. The conclusion is clear: the European potential is too weak to deal with any dispute on NATO’s eastern and south-eastern borders. Continue reading

Italian debt; a financial disaster waiting to happen

The new Italian government will increase public spending and public debt. It promised to reduce taxes, introduce basic security and reform pensions. Italy’s Northern League’s leader Mateo Salvini surged in the polls and the party is now the strongest in Italy. A couple of years ago it was inconceivable that this regional group could become Italy’s leading political party. We should expect more to come. As the saying goes, it just could not happen till it happened. The financial establishments in North European countries like Germany and the Netherlands assume that the politicians of M5S and Lega Nord will follow the Greek script and will backtrack on their promises. But Mateo Salvini and Prime Minister Giuseppe Conte know that if they do not live up to the expectation of the voters, they will be voted out of office. They are also aware of it that the Italian voter has still another alternative called “CasaPound”, a much more radical, if for the time being insignificant, social and anti-migration movement.

The planned reforms could burden the state budget with an additional 125 billion euros per year. Can the Italian government afford such a thing?

The question is rhetorical when you look at Italy’s growing debt mountain.

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The Global Economy is Running out of its Most Valuable Resource

The current state of the financial markets and the global economy depends on one single resource that nobody, even such renowned economists as Paul Krugman or Robert J. Shiller and dissenters like Max Keiser and Jim Rickards, dares to talk about. In private discussions central bank managers told us that they were aware that none of the existing economic theories and models fit this new situation. Yet, they do not broach it in their public speeches and lectures, preferring to deal with such topics as balance sheets and business cycles. All of which reminds one of a family visiting a terminally sick relative: everybody knows that he will never recover, and nobody whispers as much as a word about it.

All productive nations whether in East Asia or the West, have reached the peak of their 250-year-long development. Even the most devastating wars could not prevent their populations from growing in the long run. It is only now, during the many decades of peace and affluence, that the numbers of the inhabitants of the developed countries have been decreasing and the trend continues. The phenomenon has not been brought about by any famine or natural disaster but by the sheer fact that people do not want to have children.

Gefira Financial Bullletin #25 is available now

  • Trump’s pivot shifts to Asia while the Europe Union disintegration continuous
  • Saudi Vision 2030: The Saudis have given up on their own nation
  • North Korea presents a tremendous investment opportunity
  • Lithium and fuel cells – investing in the future of the automotive industry

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